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

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Westfield wants us everywhere. And so at the time of the €“ when we first signed these leases, we were extremely excited, but there was an internal concern that this boost will be limited to the fiscal 2021 and 2022 stores. But what we’re seeing is that this success is really just €“ it’s snowballed. It’s just getting better and better. And so our expectation is that our AUVs are going to stay just as strong, if not even stronger. The development is as strong as it’s ever been. We’re very pleased.

Jimmy Uba: Did we answer all of your question?

Sharon Zackfia: I had a follow-up question, but Jimmy, I didn’t know if you had more to add.

Jimmy Uba: No.

Sharon Zackfia: Okay. Just one follow-up, I mean, the traffic growth remains very impressive. I guess, I’m curious, are you seeing consumers try to manage the check at all though when they come in? Are you seeing fewer plates or lower beverage attach or anything that might suggest any kind of check management starting to creep into the business?

Jimmy Uba:

Benjamin Porten: We’re extremely pleased with consumer sentiment. As we mentioned earlier, the €“ of the Q2 comps, 14.4%, 10 of that €“ we saw about 10% price and mix. And so that’s great. Last quarter of our 6.9% comps, only 2.9% was from price and mix. And so we’re seeing even better flow through them before. The guests are eating more per plate €“ more plates per person than they were over the prior quarter. And our average check has grown to about $28. And so in spite of the pricing that we’re seeing, guests are actually eating more. It’s been very encouraging to see.

Jimmy Uba:

Benjamin Porten: We believe that Kura has fundamental advantages as a concept even when consumer sentiment is weak. Certainly, we’re not saying that it is. But just given what we’ve seen, it has been extremely strong. But if there is a downturn, we do have some structural advantages. I mean, if you’re reducing the frequency of times that you’re dining out, you want your entertainment dollars to go as far as possible. And so you can make a sandwich at home, you can even grill a steak at home. Nobody makes sushi at home, certainly not with the conveyor belt. And so that’s one of the reasons that our traffic has been so strong. Additionally, the way that we build our €“ the way the guests experience the meal, where they build it plate by plate means that nobody is ever priced out. And so we’re in an excellent position. We’re very pleased to be where we are.

Sharon Zackfia: Okay. Great. Thank you.

Benjamin Porten: Thanks, Sharon.

Jimmy Uba: Thank you, Sharon.

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

George Kelly: Hey, everyone. Thanks for taking my question. So just a couple for you. The first one, I was curious if you could update us on a couple sourcing initiatives that you’ve talked about in prior calls, specifically the potential for Japanese sourcing and then the utilization of broadliners?

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