Kura Sushi USA, Inc. (NASDAQ:KRUS) Q2 2023 Earnings Call Transcript

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Benjamin Porten: So to clarify, we took pricing during the first week of December, not the first day, and so the benefit was still partial, but more meaningful that if we had taken in the last quarter. The effective price that we were carrying throughout Q2 is 14.4% with us hitting March, we’re enrolling up 2%. We’ll be carrying around 12.4% for Q3. As we mentioned in the prepared remarks, the traffic being up 700 basis points in Q2, traffic being positive in March as well. We’re extremely happy about consumer sentiment. We think we’re in a very strong position.

Joshua Long: Understood. That’s very helpful commentary. I appreciate that. I was curious if you might be able to talk about the inflation outlook for the year. Obviously, you had gotten some good visibility earlier in the year, it seems like things were cooling down. That sounds to be more or less the case. Is that what is driving kind of much of what we should expect to see over the course of the year? Previously you talked about maybe some sourcing initiatives, maybe longer term opportunities to optimize the supply chain. Anything you could share there in terms of just how to think about some of these cost line items as we go through the rest of the year would be helpful.

Jeff Uttz: Yes. Josh, it’s Jeff. In terms of inflation, I think I mentioned at ICR that what we had started to see, we’re very happy with and that came to fruition as you can see in our results with the cost of goods sold number. The year-over-year inflation is about 7.5%, which is deceleration from what we had seen from in Q1 where we leave the year-over-year by 10%. So the numbers are improving, they’re continuing to show €“ we’re continuing to be happy with what €“ where they’re coming out, and we’re getting really a double benefit because we’re seeing not only a leveling off of the inflation, but because we took the pricing increase, we’re kind of getting that benefit and that flow through on both sides of the equation. So going forward for the rest of the year, I’m really happy with where our COGS forecast is.

Joshua Long: Great. That’s super helpful. But some of the tech initiatives or efficiencies from tech initiatives have been talked about in prior calls and maybe alluded to a little bit here. Can you talk about the impact of those initiatives in terms of driving the better year-over-year labor margins? I imagine some of that was priced, some of that was operational execution just momentum, but you have had some pretty interesting tools, whether it’s robot servers, order the table drinks. I think there had been some discussion of maybe some robot dishwashing at some point, but could you remind us kind of what is €“ what is embedded here in the 3Q results and how we might think about the rollout of some of those initiatives over the course of the year?

Jimmy Uba:

Benjamin Porten: In terms of the labor impact of the tech initiatives that we rolled out last year, the touch panel drink orders, the tableside payment, and the server robots. As we’ve mentioned in the last call, we’re seeing about 50 to 60 basis points in labor improvement and we’re continuing to see that today. One thing to keep in mind is that when we rolled out the robot servers, that was also a traffic lift as well because the experientiality, it’s one of the reasons our Q4, which was the first quarter, we had a full rollout of robot servers. Our track was up 14% in part because of that experiential edition. And so as we lap that rollout in Q3, we’ll still have the labor benefits, but we’re not going to have the traffic tailwinds that we had from that €“ from the novelty of the robot servers.

Jimmy Uba:

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