Kura Sushi USA, Inc. (NASDAQ:KRUS) Q1 2023 Earnings Call Transcript

And if we can maybe get into some a little bit longer contracts with some people, where we promise them the growth — same sort of growth that we’re promising out to the street right now, and they can see that there’s an opportunity for them to make a lot of money in the future, I think we can leverage some better pricing. And don’t know how well we’ve done that in the past because I am still relatively new, but I really want to push those types of initiatives to see if we can reduce those costs and get our COGS down somewhat. Even in an inflationary environment, I think that’s possible.

Benjamin Porten: Just to add on that. We do have a number of things that we’re looking forward to in the back half of the year, such as improved supply lines for select items, which means that there’s no compromising in quality, but we’ll see a certain amount of savings. And those are savings here and there, they’re not going to be enough to really move the needle. What’s tricky about our basket is that, we’ve got over 100 inputs, and it’s one of the reasons we were so resilient. In the past year in terms of our COGS, we had our all-time best. But it also makes it trickier to — there’s never just one big thing that you can address. And so like Jeff mentioned, being able to move to a broad liner is going to be a tremendous opportunity for us.

Joshua Long: That’s very helpful. I appreciate that. And one more kind of housekeeping item for me. In terms of just we think about the price that you’re running now, you mentioned taking an incremental pricing window here in December. Can you provide us when and how and at what pace you would think about more pricing in the future or just kind of what the philosophy of the approach is there? And yes. Thank you.

Benjamin Porten: Given that we just took price in December, I think it’s a little bit early to discuss future pricing decisions, but I think the philosophy is going to remain largely the same. Historically, we’ve taken price about twice a year, typically to offset minimum wage increases, which we’ve already done, and then we’ll adjust based off of inflation. But given that it’s impossible to predict when inflation is going to end or what degree it’s going to look like, it’s hard for us to give any numbers at this point. But that being said, it’s really clear that the traffic here is being driven by the value proposition, and so that’s certainly something that we don’t want to compromise.

Joshua Long: Understood. Thank you.

Operator: Our next question comes from the line of George Kelly with ROTH Capital Partners. Please proceed with your questions.

George Kelly: Hi everybody. Thanks for taking my question. So just a couple, most of my questions have been asked and answered, but a couple for you. The first one, you mentioned on last quarter’s conference call about potentially sourcing from Japan. So I was wondering if that’s something you’re still contemplating. And how meaningful could that be to your gross margin?

Benjamin Porten: Yes, that’s something that we’re still looking forward to. We’re in the process of exhausting the inventory we have with our existing vendors and the agreements that we have in place. But that’s something that we continue to look forward to. I think even in the last call, you mentioned that we don’t expect to benefit from that until the back half of the year. And the benefit is going to be dependent on ForEx. But right now, I mean the American dollars is so strong that the benefit seems meaningful.

Jeff Uttz: And some of that challenge, too, will be making sure that if we do find a supplier that we’re happy with in Japan that we can get with — I’d really like to get that into the broad line distribution once we get that a little bit more streamlined, too, and that will really help as well. But a lot of the suppliers in Japan, from my understanding, won’t be able to distribute through a broad liner. So we may have some challenges there, but that’s something that the team is really working through now to figure out the best path to take.

George Kelly: Okay, okay. And then second question for me is on just your staffing levels right now. Curious if you’re seeing much change if it’s becoming easier to find people, what kind of wage pressure there is, et cetera. Just if you could expand on any of those. Thank you.