Kura Sushi USA, Inc. (NASDAQ:KRUS) Q3 2023 Earnings Call Transcript

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We tended to outperform that. And actually, we did 25% the year before 28%, midpoint of our guidance this year is 25%. And so that’s the neighborhood that we’re comfortable with and that’s the number of neighborhood that we think that we can continue to deliver. One other thing that we’ve mentioned in past earnings calls is that just a sheer number of new markets that we’re in. We’re going through additional growing pains on — in terms of building up regional management teams, not in terms of a regional manager by region. And so once these single unit markets become infills become two, three, four unit markets, then you get that sort of ability to self-sustain. And so that’s another opportunity. But regardless just with the number, if you look at the number of units we’ve been putting out over the last five years, even if our growth as a percentage doesn’t change, that number grows materially every year.

And so we’re very quick with our growth.

Jeff Uttz: And to keep that growth trajectory going, Todd, it kind of ties back full serve to the G&A question you just asked. That’s why we’re going to be continuing to invest money into recruiting because it’s all about eliminating potential bottlenecks. And as you mentioned, with the $70 million of cash on the balance sheet, we’ve eliminated a potential bottleneck for cash, we’re set with cash for a while. But then as we continue to invest in the recruiting side, we want to make sure that we eliminate any potential bottleneck as it relates to hiring managers. So we’re very well shored up in terms of development going forward to keep that pace.

Todd Brooks: Perfect. Thank you all.

Jimmy Uba: Thanks, Todd.

Operator: Thank you. Our next question comes from Mark Smith with Lake Street Capital. Please proceed with your question.

Mark Smith: Hi, guys. I want to follow up on the development question just a little bit. Any additional insights in what you’re seeing on deals these days any change in TI dollars and kind of availability of real estate deals that you’re looking at?

Jimmy Uba: [Foreign Language] [Interpreted] So the biggest shift would really just be going from the smaller developers to really national developers. And national developers, especially if they’re — whatever mall they have is quite large, their TI dollars can be a lot bigger than a Mom and Pop Strip mall developer. And so we’ve seen that change, but that’s more of a structural take. I don’t think that’s necessarily reflective of economic trends or anything like that. It’s just a different position that we’re in, in our growth cycle.

Mark Smith: Okay. And then just wanted to look kind of further out. You guys did a good job driving margins here. You’ve got some initiatives that you talked about a little bit, like some back-of-the-house dish washing technology, things like that, that could maybe be margin drivers down the road? Any updates on that or any other initiatives that you have that maybe can help improve some restaurant margin as we look forward?

Benjamin Porten: Yeah. There’s absolutely. That’s always the case. And so — in terms of the dish washer, that is the single most exciting thing that we have in our pipeline. I’m very pleased to say that I’m actually now in charge of these initiatives. And so, you’ve got only one neck to strangle. But yeah, no, I’ve been extremely hands on. Right now, we’re beginning the testing in a physical restaurant in Japan. Pending that, we’re actually trying to get approval in the United States in parallel. And so unfortunately, it’s impossible for me to give a time line on a moment to roll this out. But the impact from the dishwasher alone would be greater than the three initiatives that we rolled out last year. And so the upside is tremendous.

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