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

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Keeping in mind that with such a material change, this is — the impact would probably be limited more to new restaurants, but it is something that I’m extremely focused on. But the other part about margin is, we’re a growth concept. And so as Jeff mentioned in his opening remarks, our G&A grew by 18% against revenue growing by 30%. And so I can get to do my best to deliver incremental restaurant margin improvements, but really the meat of the story is in leveraging.

Mark Smith: Okay. Maybe I’ll squeeze one more in. You’ve talked quite a bit about labor. Are you guys seeing any difference in retention rates here over the last couple of months?

Jimmy Uba: [Foreign Language] [Interpreted] So it’s always been a point of pride for us that we outperformed industry turnover averages for pretty much the entire than we did in the United States. We think it’s because we provide a really great place to work and our take home compensation is probably the highest of own casual dining restaurants. I think it’s really hard to compare with the tips you can get with our efficiencies. But — just being a relatively new concept to the United States, most people are familiar with revolving Sushi being in a lot of new markets. So for instance, if we’re trading a management candidate outside of their home state, there’s greater attrition associated with that. But that’s really just a growing pain for us given our current position, where we are in the United States.

We know that as we infill this is only getting it easier for us. And as I mentioned earlier, we’re already meeting the industry average and so we’re very happy with our retention.

Mark Smith: Thanks a lot. Thank you, guys.

Benjamin Porten: Thank, Mark.

Operator: Thank you. Our next question comes from George Kelly with ROTH MKM. Please proceed with your question.

George Kelly: Hi, everybody. Thanks for taking my questions. So first one for you on the — back to the dishwasher, Ben, you were just going through your excitement around that. Curious, you said that, that alone should have a bigger impact than the three initiatives from last year. Can you just quantify and remind us those three initiatives and how much savings they drove?

Benjamin Porten: Yeah. So the three initiatives is — and as a reminder to the other people on the call, we’re referring to the robot servers, the table-side payments and the touch panel three (ph) orders. Our expectation is about 50 basis points to 60 basis points in labor improvement from those three initiatives. And the dishwasher, we are confident would be more meaningful than that.

George Kelly: Okay. That’s great. And then — sorry, I interrupted.

Jimmy Uba: [Foreign Language] [Interpreted] Keeping in mind that the impact on Cascade from when we put it in, just because it’s not going to be — the robot servers we put into all of our existing restaurants, the robotic dish washers will probably get on a go-forward basis. And so you’re not going to see like a light switch. It will be a steady improvement. But the dish washers as we mentioned before, they’re actually the highest paid position in the back-of-the-house or among the high state position because they’re not eligible for tips. The one position that the DOL has not given us approval for — our other employees are technically serving guests through the conveyor belts so they’re eligible for tips — and it’s a physically growing job.

And so it’s an expensive position with high turnover and being able to automate this and make it easier for the better — sort of the remaining person, their workload will — the remaining workload, even for them will be materially less than what they’re dealing with now. And so the benefits, it won’t just be the restaurant level. It will be at the G&A level where we don’t have to focus on recruiting and constantly replacing people and stuff like that. Yes, I’m really excited for it.

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