KURA SUSHI USA, INC. Q1 FY2026 earnings call

• Making progress towards annual guidance goals, with 10 units under construction and 4 restaurants opened. G&A as a percentage of sales reduced by 80 basis points on an adjusted basis. Confidence in improving labor cost by 100 basis points in fiscal 2026. Total sales of $73.5 million, comparable sales growth of negative 2.5%. Sequential improvement at the end of the quarter. Opened 4 restaurants in the first quarter (Arcadia, Modesto in California, Freeport and Lawrenceville in New Jersey) and have 10 under construction. Marketing campaign with Curvy, I IP themed press stones and touch panels. Robotic dishwasher manufacturing proceeding on schedule, to begin installation in Q3 and have majority of 50 eligible existing restaurants fitted by end of fiscal year.

Total sales for the fiscal first quarter were $73.5 million. Comparable sales growth was negative 2.5%. Food and beverage costs as a percentage of sales were 29.9% compared to 29% in the prior year quarter. Labor and related costs as a percentage of sales were 32.5% compared to 32.9% in the prior year quarter. Occupancy and related expenses as a percentage of sales were 7.9% compared to 7.4% in the prior year quarter. Depreciation and amortization expenses as a percentage of sales were 5.4% compared to 4.8% in the prior year quarter. Other costs as a percentage of sales were 16.1% compared to 14.5% in the prior year quarter. General and administrative expenses as a percentage of sales were 13% compared to 13.5% in the prior year quarter. Operating loss was $3.7 million compared to an operating loss of $1.5 million in the prior year quarter. Net loss was $3.1 million or negative $0.25 per share compared to a net loss of $1 million or negative $0.08 per share in the prior year quarter. Adjusted net loss was $2.8 million or negative $0.23 per share compared to an adjusted net loss of $1 million or negative $0.08 per share in the prior year quarter. Restaurant level operating profit as a percentage of sales was 15.1% compared to 18.2% in the prior year quarter. Adjusted EBITDA was $2.4 million as compared to $3.6 million in the prior year. At the end of the fiscal first quarter, there was $78.5 million of cash, cash equivalents and investments, and no debt.

• Expect total sales to be between $330 million and $334 million. Expect to open 16 new units, maintaining an annual unit growth rate above 20% with average net capital expenditures per unit continuing approximate $2.5 million. Expect G&A expenses as a percentage of sales to be between 12-12.5% and full year restaurant level operating profit margins to be approximately 18%.

• Forward-looking statements are not guarantees of future performance and subject to numerous risks and uncertainties that could cause actual results to differ materially from expectations. Tariffs on imported ingredients impacting food and beverage costs. Sales deleverage affecting other costs such as marketing and operational expenses.

Q: Talk about the decision to decouple the reservation system from loyalty.

A: Ben Porten said that more than half of visits by rewards members are done through the reservation system, uptake is better than expected, and they wanted to open it up to a bigger audience.

Q: Expect comps to be positive in the February quarter?

A: Hajime Jimmy Uba and Ben Porten said they absolutely expect positive comps for Q2 as the trend continued into Q2 with better traffic and price mix.

Q: Impact of tariffs on food costs and other operating expenses?

A: Jeff Uttz said food costs take time to see benefit from tariff changes as they buy 4-6 months' worth of product, and other costs were impacted by tariffs on promotional materials.

Q: Shelf registration and margin target?

A: Jeff Uttz said they have the shelf registration ready and the margin target of 18% is on track with pricing flow through and labor leverage.

Q: Comp trends due to company efforts vs macro?

A: Ben Porten said they outperformed the industry on metrics and the consumer improvement is encouraging.

Q: Promotions in November and replicability?

A: Ben Porten said the November promotions like bacon sushi were a hit, and they're putting energy into LTOs.

Q: Labor line item and milestones?

A: Ben Porten said pricing and initiatives are driving labor improvement towards 100 basis point target.

Q: Collaborations in Q1 and long term growth?

A: Ben Porten said Q1 collaborations met expectations and they'll update on long term growth if there's a formal plan.

Q: Tariff impact on COGS and other expenses?

A: Jeff Uttz and Ben Porten discussed tariff impact on COGS and other costs.

Q: Promotions like Kirby and future plans?

A: Ben Porten said Kirby promotions were well received with customized elements and there are future promotions like Sanrio and Jujutsu Kaisen.

Q: Same store sales guidance and other costs?

A: Ben Porten discussed same store sales guidance and other costs' deleveraging with positive comps.

Q: Tariffs and competitive closures?

A: Ben Porten said tariffs affect competitors and their pricing highlights Kura Sushi's value.