Okay, let's get started. I'm George Kelly with Roth. Excited to have the team from Kura Sushi with me on stage today. Thanks for being here. From the team, we have Hajime Uba, who's CEO. Jeff Uttz is CFO, and Benjamin Porten is SVP of IR & System Development. Thanks again for being here. We only have 25 minutes, so I'm just gonna get started with Q&A and happy to open up the floor if folks have questions. I wanted to start with I guess kinda revisiting. You reported your Q1 in January, so whenever that was, a couple months ago now. The trends that you sort of walked through in that report, you mentioned that you saw comps accelerate throughout the quarter, ending stronger in November than what you reported.
It was a negative two and half comp in the quarter. You commented that that strength continued through December. I'm curious if there's any more detail you can give or whatever you're comfortable sharing just about the trends you've seen so far in 2026 with respect to comp.
So, uh-
Before you go into just the context of the fiscal year. Just so everybody knows also, we're an August fiscal year-end, so when George talks about Q1, it's September, October, November, and we release that in January, just for context.
Yeah, George, thank you for your questions. To answer these questions, please allow me to speak in Japanese. You will translate.
The positive momentum that we saw in November and December has continued through calendar 2026. We're very pleased. We've got earnings coming up very soon, and so you'll have to wait for the print for the specific numbers. In terms of the full year targets that we set, in terms of, you know, flat to positive comps, 18% restaurant-level operating profit margins, 100 basis point improvement in labor year-over-year, we're very, very pleased with the progress that we're seeing.
I think we said at the earnings call that November was our best month of Q1. That momentum, as Jimmy and Ben both mentioned, continued into January and we've been very happy with where it's gone. We did mention at ICR in January that the strong same-store sales, including traffic, really has continued throughout most of the quarter. Without giving any specific numbers, which we'll do on the release first week of April, the momentum has been really good.
That's great. That's wonderful. Nice. You've had a series of promotions during that time though, right?
Mm-hmm.
I mean, I think promotions, you've had some big ones too, including, you had One Piece in part of your Q1 , and then since then you had Kirby in December and January. So, it's me trying to understand the dynamics of what you just mentioned, you know, the improving comp performance and traffic, is there a way to isolate for the promotions, or are you feeling better just about the sort of general environment, or are there other sort of factors that you think are driving that improvement to traffic?
The promotions are certainly a factor. As a refresher, last year we had a five-month gap, where we didn't have promotions from December through the end of April. By promotions, I mean the IP collaborations. This year we had that fully slotted through, and so it makes for an easier comparison. We also had what we think is, you know, probably the strongest collaboration of the year in December and January with Kirby. And that was followed up by an unexpectedly strong performance with Sanrio. The promotions are certainly working well, but just looking at the performance overall, I don't think it's solely because of the promotions. Just from every perspective, we're very encouraged. As it...
We actually have kind of a clean counterfactual because there was a sort of inspection delay with one of our giveaway or Bikkura Pon prizes. There was a two-week gap where we didn't have a promotion or promotional items, and we still performed very, very well. We think part of it's macro, part of it could be coming from the improvements to the reservation system, opening it up to non-rewards members. But we think cumulatively the efforts that we're making are very going very well, and we think that those are being further buoyed by consumer sentiment.
That's great. Still staying on the promotion, the IP collaborations that you've done so effectively, I think your sort of monetization around those promotions and how you market them and how you drive attention to them has morphed over time as you've learned and better understood how they work. Is that an element that is really helping you these days? Do you feel like there's been real improvements to your execution of them, or is it more just that these are big brands and they just get attention and that's kinda just, you know, more steady state than anything else?
It's really both. The amazing execution by our PR teams are what have convinced the larger brands to partner with us. Once you have that first partnership, you can iterate. That's really what we saw with Nintendo is we started with Pikmin, and then they gave us Kirby based off of the performance with Pikmin, and they were very, very happy with Kirby as well. I would be very shocked if this was our last collaboration with Nintendo.
Yep. Okay. Still sticking on the comp dynamics. Pricing, you took in calendar year 2025 late in the year. What are your expectations for pricing going forward?
Our typical pricing is approximately 1%-2% per year. If you go back to the COVID years, clearly you can throw those out. Right now, we're running 4.5% price. We don't see running that much price in the upcoming fiscal year. Like I said, we wanna keep up with CPI, but we also wanna make sure we maintain our value proposition. One of the things that we did on our last price adjustment that I think we did really well was kind of understanding where we could raise prices and where we shouldn't. We have a customer survey that guests take at the end of their dining experience, and we added a question. It asked questions about service and food and cleanliness, but we added a question on value.
Once we were able to get so much data, you know, four or five months worth of data on which restaurants were perceived as much higher value, you realize there that you do have a little bit more pricing power than restaurants that didn't score quite as well on value. While all restaurants scored well just through the law of averages, there's some that are good and some that are not as good as those. We looked at the ones at the top and said, "We can probably take some more pricing here." We largely didn't touch appetizers and our sides. Our increases were mainly concentrated on our sushi plate price because all of our sushi plates that go on the revolving belt are priced the same.
We can take $0.05 or $0.10 on those and get a blended increase of 3.5%, which is what we got on November 1, 2025.
as some additional context, we'll have 1% falling off as we lap it in June.
In June. Okay. One last question from me, and then I'll open it up to the group. Back to your initial comments on seeing a continuation of momentum into January and February. Is the traffic improvement broad-based geographically, or are there certain pockets that are really outperforming the whole?
We're very happy, as you probably heard, Jimmy said we're encouraged. We're very encouraged. The performance is broad-based. You do see a level of geographic differences, but those are really more artifacts of timings of infills than anything else. Just across the board, we're very happy with what we're seeing.
Okay. Happy to take questions if there are any. Okay. Oh, no. I have a full sheet here. I wanna step back a little bit, and talk about the longer-term opportunity. We'll get to margins in a second. Before doing that, you mentioned, Jeff, the pricing survey work you've done and the value you guys deliver. There aren't a lot of competing sushi brands doing anything like you guys are, at least with the scale that you have. You've hit, since your IPO, on this 20% unit growth a year. It's still a massive TAM that you're just scratching the surface on. I guess the direct questions would be a couple. A, are you still comfortable with your 20% unit growth target?
Do you think there's years ahead of that? And B, when you think of sort of your offering, I would think value is of utmost importance, but what else do you have to really work to preserve, as you try to grow your unit base, you know, a lot from where it is now?
I'll answer this question.
We believe that we can maintain that 20% unit growth for the foreseeable future. We're very pleased with the results that we're seeing. The one thing that would really cause a reevaluation of this growth rate would be if our new units weren't performing to expectations. Fiscal 2025 was one of our strongest years, you know, in recent memory. Fiscal 2026 has been just as strong. All those things don't give us any cause for concern in terms of growth.
Maybe a part two of that just covering that topic. Are there changes that you contemplate or, you know? I'm kind of going long-term here, over the next, call it three-five years. Do you think the box might change at all or how you deliver product to customers? Do you see that kind of? I mean, there hasn't been a lot of sort of variation in what you've offered. Just curious if that's something that's on your radar that we could expect longer term.
You're talking about different prototypes or different business models?
Yeah, different prototypes or different business models. Can you sort of leverage what you have or tweak it a little bit as you contemplate going to smaller markets or selling in a different channel or I'm not sure what it would look like.
はい、まあ実はKura Japanで、まあ違うモデルあるんですけども、今のところ現在の方、標準モデルっていうのがすごくワークしてると思うんで、まあ当面は今の、標準のモデルをしっかり広げていくことに注力したいと思ってます。
So far, the model that we have right now is. It's working very well for us. While there aren't different sort of like categories of restaurants, there's massive variation. Our smallest is 1,600 sq ft. Our largest is almost 7,000 sq ft. I wouldn't say that we've got no variation between our restaurants. We see a lot of runway with what we have now. One adjustment that we've been contemplating is if you look at our restaurants, almost all of them have three lanes. Lanes are how we think of the belts going out with the booths on both sides. If we open up boxes with two lanes, that opens up smaller markets as well, and that's something that we've been contemplating.
まあそのスモールレストランっていうのは、おそらく、メトロポリタンエリア、一回ちょっとCOVIDでストップして、ストップというか少なくしてるんですけど、まあそこのところっていうのはちょっとひょっとしたら再開するかもしれないです、状況によっては。
For those smaller boxes, we see the greatest opportunity in metropolitan areas. This was very exciting to us pre-COVID. It became less attractive post-COVID. Our smaller units in heavily trafficked areas are some of the strongest in the system from a, you know, sales per square foot, cash-on-cash perspective, and so opening up more of those is obviously very attractive.
Okay. Managing your balance sheet, just to continue powering this growth, you ended your Q1 with $75-ish million of cash. You have a shelf out. Maybe just walk us through what your goal there is, and how comfortable are you taking cash lower? Like, where's an ideal kinda cash range for you?
Yeah, we do have the shelf. We filed a $100 million shelf at the end of the calendar year, at the end of December, and we haven't put any timeline on, you know, if and when we may raise more capital. It's certainly on the table. We will be cognizant of market conditions, certainly the share price and, you know, external factors and everything that goes along with determining when to raise capital. I do think that with $75 million on the balance sheet as of the last print, that we have a year and half to two-year runway with the cash, so there's no urgency with it, and that's why we can be selective to think about when we might wanna raise capital, just, you know, when it would be most advantageous for our shareholders and for the company.
Okay. Any questions from the group? Happy to take them if-
How would you characterize the improving trends? It seems like it corresponded a lot to that decoupling of the reservation system. If you had to characterize the impact of that versus, you know, broader trends with consumers or something other, you know, what's more important, you think? What are you guys seeing that being a consistent driver of the improved traffic?
まずやっぱり一番大きな、インパクトっていうのはIPですとか、あと、comparison がeasyだっていうことが大きいと思います。まあそれに加えて少し、reward program、reward memberへのreservation system、まあその効果もあると。まあそれぐらいの形で我々認識してます。
In terms of the main drivers, the biggest that we see is the easier year-over-year comparisons combined with the strength of the, you know, IPs that we had most recently. The incrementality from traffic from the opening up of the reservation system is basically icing on the cake.
あとは先ほどちょっとJeffがちらっと言いましたけど、もう少し、もう一つ我々の、ここ最近のtailwindになっているところというのはpricingです。これ我々、先ほど4.5%のeffective pricingって言いましたけど、他のindividual restaurantだと、もうほんとに10%、まあそういったレベル行ってますと。まあこの辺のtailwindも長期的に来てる。これも少しこう、incrementalで来てるんじゃないかなと思ってます。これもちょっとお願いします。
We see our value perception as only growing. We've seen this dynamic play out. This is probably the third time that I've personally seen this play out. But the pricing that we took, the 4.5%, against a per person average, it translates to about $1. But if you think about your local mom-and-pop sushi restaurants, they're not able to absorb, you know, the massive impact of not just the tariffs, but overall inflation by taking an extra $1 per person. It takes. You know, there's a delay between when those prices go up and when you sort of see consumer behavior change. But we think that they've sort of hit price resistance with their local mom-and-pops, and they're rediscovering value with us. We saw this happen during COVID.
We saw this happen during the supply chain issues post-COVID, and each time it's resulted in a traffic redirection for us.
For those who haven't been to our concept, thinking about value and pricing, we're priced about half of what your mom-and-pop sushi is. New York aside, let's throw New York out, but your typical suburban mom-and-pop sushi restaurant, if you go in and you order two pieces of, you know, salmon nigiri, usually $8-$9. We serve it for about $4 for two pieces. We're about 50% of mom-and-pops, so that value proposition, you know, as George mentioned at the beginning, there's nobody really doing what we're doing at the scale we're doing for the value that we're doing in the sushi market.
Any other questions from the group? Yeah.
Since traveling to Japan, I've been to a number of sushi restaurants, mom-and-pops, and I've noticed they're not. They're listed as Japanese sushi restaurants, but no one is Japanese in the entire store. I wonder how authenticity plays into your-
How many other calls require a translator?
I mean, that's, you know. We're both from Japan, he more so. We care very deeply about the food.
I sit up here and nod when Jimmy speaks, like I know Japanese, but I don't.
Okay, one more from me. You gave 18% four-wall guidance when you reported for the year. That was before the tariff ruling. Your expectations before the ruling were, call it 200 basis points or slightly more, of all-in tariff costs outside of your COGS, but, you know, just all in. How does the ruling, you know, what's come out, and I know it's still a dynamic environment, but have tariff expectations changed?
When the tariff ruling came out, what, a month or so ago, Trump put in the global tariff so that the offset is not as much as we would like. However, we did some negotiations with our suppliers several months ago, and then in the last four-six weeks, maybe four weeks ago, Hajime Uba met with our suppliers and got even further reductions.
He basically sat with them and said, you know, "We're good customers of yours, and we would like to see you take even more of this than you've already offered to do." All the puts and takes associated with that, we still believe that we're in good position to have our COGS of about, you know, approximately 30% for the year, which is what our guidance was, and we're still on track to hitting that approximately 30% COGS number.
If you go out a little bit further, and historically you've been at a 20% or higher than 20% four-wall margin, what are the main elements that you think need to happen for you to get back there? We're actually feeling very good about our ability to get back to 20% restaurant-level operating profit margins, even without, you know, change in the COGS landscape as it relates to tariffs. Obviously, we would love, you know, to get those points back, but we think we can get back to 20% without it, and that's how we're planning our business. This year we're projecting flat to slightly positive comps. If we can get back to the low single-digit to mid single-digit comps that we've historically seen, that gives us better leverage. We have the robotic dishwashers.
They're starting to come online this fiscal year, but we'll have bigger benefit in fiscal 2027. For fiscal 2027, we have a number of tailwinds that are idiosyncratic to that year. We have a pipeline that's 50/50 new and existing markets. That should cut the headwind that we have from cannibalization, which has been between 300 to 400 basis points. Yeah, so about 300 basis points that we're seeing now. Half of that should actually be a tailwind for next year. We'll get that better comp leverage. The newer markets outperform, just all things equal. Between all those things, we think we can get reasonably close to that 20% in fiscal 2027.
One thing we made an unofficial promise to the street. It wasn't part of our official guidance, and Jimmy touched on this earlier, was a 100 basis point improvement in labor in this fiscal year compared to last year, and we are more than on track to hitting that.
Can you quantify the robotic dishwasher impact?
About 50 basis points all in.
Okay. We just have a few minutes left. Any more questions from the group? Yeah.
When you think of retail, POS, all your financial systems, obviously you've probably got a lot of different stuff. How real-time is your access to financial data? Are your systems integrated, and how scalable are they?
Systems are integrated. We get daily data. The restaurant operators get information daily on you know, how they need to schedule, what we need to do in terms of pivots that we need to make based on what's going on. We are not a full ERP system right now, but we do have interfaces between all of our systems such that they do all speak. I do think that probably in the next couple, three years, we might wanna start thinking about an ERP. But right now, it's put together very well with good bridges between the financial systems so that everybody gets the information that they need timely enough to make decisions.
I mean, sales for one thing, and most restaurant companies are like this, but we get sales and labor data, you know, real time when we need them to make those decisions.
Any other questions from the group? Okay, one more from me. You mentioned the robotic dishwasher. Are there any other sort of robotic or otherwise tech enhancements that you're either testing or watching closely in Japan that you think might make sense at some point that are maybe not necessarily this year or next year, but longer term? In terms of the labor tailwinds that we're expecting for the near future and what we've been discussing today, those would be primarily coming from the robotic dishwashers as well as sort of a restructuring of our managerial staffing practices. Historically, we've had four managers per store, so one GM and three assistants. Now that we've achieved a level of density throughout our markets, we don't need as deep of a bench to continue our growth.
We've scaled back to three, and that's been a pretty meaningful improvement in labor. That is partly driven by, you know, our proprietary software, but really it comes down to the operations team doing a great job. We have various technologies in the pipeline, but I have learned better than to speak on them until they're pretty thoroughly baked. Keeping our cards close to the vest, but you know, we see it as our jobs to constantly be introducing new things. Understood. The labor issue you just walked through, that's been completed?
Largely, yes.
Largely. Okay. That's helping that 100 basis points.
Yes
that you talked to earlier. Okay. Understood. 100 basis points might be conservative. Okay. We have time for one more really quick one if-
How do you define value?
Just, I imagine most restaurants use the same sort of math, but we think of it as experience divided by price. From that perspective, we think, A, like, the experience is amazing. We know that our proteins are just as high quality as the doubly expensive restaurants. From a value perception, I really don't think anybody can beat us. Let's end there. That was a good ending message.
Thank you, everybody. Appreciate it.
Thank you. I really appreciate it.
Thank you.
Thanks, everyone.
Thanks, Kelly.
Thank you.
Appreciate it.