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

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Benjamin Porten: To add on that, the G&A spend in terms of operations, like the regional managers that that spend is going to sort of follow a bell curve. So as Jeff mentioned, as we infill, we will be able to assign more units to each regional manager, but the opening teams are a pretty meaningful part of our G&A as well. We’ve got two right now, each cost about a $1 million per year to operate. When we were talking about the pipeline before we mentioned how markets like California, you don’t need an opening team. And so as we continue to infill, those very meaningful G&A investments become unnecessary and can actually €“ the hope is eventually those teams will just €“ they’ll become store managers or regional managers and we won’t need opening teams once you reach a certain point.

Jeff Uttz: And also while the expensive G&A hires have , we’ve filled most of those positions, we’re going to €“ not going to cut back on making sure that we have a development and real estate team in place that we need in order to keep the pipeline as robust as it is. As Jimmy mentioned in the prepared remarks, we have nine restaurants under construction and nine more executed leases, and we need to continue to add that pipeline and we want to make sure that we have the right teams in place in order to keep it as robust as we need it to be in order to continue the growth pattern that we’ve seen in the number of units and then the other area that we just talked about is regional management. As we add restaurants, we are going to have to continue to add area managers to make sure that we continue to support the restaurants and provide the best customer guest service that we possibly can and that we’re known for.

Joshua Long: Thank you.

Benjamin Porten: Thanks, Josh.

Operator: Our next question comes from the line of Sharon Zackfia with William Blair. Please proceed with your question.

Sharon Zackfia: Hi. Good afternoon. My cell actually went out for a part of Jeff’s commentary, so I apologize if you talked about this. But in terms of the development pipeline, how far out now are you working? Are you working on kind of fiscal 2025 at this point? And can you talk about kind of the quality of the kinds of sites that you’re able to get now and maybe contrast it to, I don’t know, 2019 or before the pandemic?

Jimmy Uba:

Benjamin Porten: Generally speaking, the units in our pipeline, they’re for fiscal 2024, there’s a couple of fiscal 2025 sprinkled in there, but what we’re looking at is mostly 2024.

Jimmy Uba:

Benjamin Porten: The quality of the sites that are being brought to us just they’re improving every day. Jimmy, he tries to personally visit as many of the sites as possible and it’s obvious the quality of the sites are amazing. One thing that’s been really, really fun is, some of the sites that Jimmy and I have been looking at for the last five years, been waiting to get into, we’ve been able to get into them and they’ve been just as successful as we hope. And so that’s been really fun to see. I know for people that are familiar with the story we mentioned how during the pandemic, we made very aggressive investments in terms of real estate. We built that $45 million revolver with a parent. We hired our first Chief Development Officer, who’s opened thousands of units, and we aggressively signed leases in places that we would’ve otherwise been inaccessible to us at that point, like, Westfield, but because we have one to two hour dinner lines, we’re great tenants now.

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