Kura Sushi USA’s Financial Performance and Outlook

Overview

Kura Sushi USA is a technology-enabled Japanese restaurant concept that provides guests with a distinctive dining experience by serving authentic Japanese cuisine through an engaging revolving sushi service model. The company aims to make quality Japanese cuisine accessible to guests across the United States through affordable prices and an inviting atmosphere.

Financial Performance

Three Months Ended November 30, 2024 vs. Three Months Ended November 30, 2023

Sales

• Sales increased by $13.0 million, or 25.2%, to $64.5 million. This was driven by sales from 16 new restaurants opened since November 30, 2023, as well as increases in menu prices.
• Comparable restaurant sales increased 1.8% during the period.

Restaurant Operating Costs

• Food and beverage costs increased by $3.3 million, or 21.5%, due to the new restaurants. As a percentage of sales, food and beverage costs decreased to 29.0% from 29.8% due to menu price increases, partially offset by food cost inflation.
• Labor and related costs increased by $4.8 million, or 29.4%, due to the new restaurants. As a percentage of sales, labor costs increased to 32.9% from 31.9% due to higher wage rates.
• Occupancy and related expenses increased by $0.9 million, or 21.6%, due to the new restaurants. As a percentage of sales, occupancy costs decreased to 7.4% from 7.6% due to lower pre-opening lease expenses.
• Depreciation and amortization expenses increased by $0.6 million, or 24.8%, due to the new restaurants.
• Other costs increased by $1.9 million, or 25.5%, due to the new restaurants.

General and Administrative Expenses

• General and administrative expenses increased by $0.1 million, or 1.4%, primarily due to higher compensation costs, partially offset by decreases in professional fees and litigation expenses.
• As a percentage of sales, general and administrative expenses decreased to 13.5% from 16.7% due to leveraged benefits from the increase in sales.

Other Expenses and Income

• Interest expense increased slightly to $13 thousand from $8 thousand.
• Interest income decreased to $565 thousand from $840 thousand due to lower invested cash.
• Income tax expense was $39 thousand compared to $38 thousand in the prior year period.

EBITDA and Adjusted EBITDA

• Adjusted EBITDA increased to $3.6 million, or 5.5% of sales, from $1.8 million, or 3.4% of sales, in the prior year period.

Restaurant-level Operating Profit and Margin

• Restaurant-level operating profit increased to $11.7 million, or 18.2% of sales, from $10.1 million, or 19.5% of sales, in the prior year period.

Outlook

• The company expects to open a total of 14 new restaurants in fiscal year 2025, increasing revenue and restaurant operating costs.
• General and administrative expenses are also expected to increase to support the company’s growth.
• The company believes its cash on hand and cash provided by operations will be sufficient to fund its lease obligations, capital expenditures, and working capital needs for at least the next 12 months.

Overall, Kura Sushi USA delivered strong financial performance in the three months ended November 30, 2024, driven by new restaurant openings and increased menu prices, while managing costs effectively. The company’s outlook indicates continued growth and investment to support its expansion plans.