Hajime Jimmy Uba: [Foreign Language] [Interpreted] So in terms of the cost, as we mentioned earlier, we can’t really provide numerical guidance as to what our expectations are. But we’ve maintained this 20% restaurant-level operating profit margins for years, and we’re very, very happy to be able to grow that. In terms of maintaining or growing that further pricing to be an element, certainly, there’s — it’s a sensitive decision for us given the ongoing macro environment. And for us to potentially sacrifice the traffic advantage that we have is maybe something that we have to very seriously think about. For us to have such a significant traffic lead, I think really sets us up for the next several years and not just on a quarter-to-quarter basis.
In terms of serious impacts to restaurant-level operating profit margins, we do — the dishwasher really does have the opportunity to move the needle. But as we mentioned before, that’s going to be not in fiscal ’24, and it’s going to be limited to the new store basis. And so it’s going to be a slow ramp, but that’s something that is very concrete that we’re excited for.
Jeff Uttz: And also, as you know, the prime costs are the biggest piece of restaurant-level margin and the initiatives that we’re putting in place like the dishwashers, that will have impacts. But at the same time also, we can’t compromise food quality and we can’t compromise service quality, and there becomes a point where we really think the leverage that we’re going to get on the margin will come from increasing sales, and we’ll get the leverage on some of the fixed costs that we have in the operating cost line. But we really need to be careful, like I said, to — when you get to a point under 30% on food costs, you really don’t want to play too much with the quality there.
Hajime Jimmy Uba: [Foreign Language] [Interpreted] Yes. So Jeff makes a really good point. I mean we could be very aggressive and try to achieve 25% restaurant-level operating profit margins and certainly that would have an impact on traffic. Our strategic preference is to grow traffic and use that to leverage our fixed cost and grow restaurant-level operating profit margin more organically.
Jeremy Hamblin: Got it. Thanks for taking the questions, guys. Best wishes this year.
Jeff Uttz: Thanks, Jeremy.
Hajime Jimmy Uba: Thank you, Jeremy.
Operator: Thank you. The next question comes from Sharon Zackfia from William Blair. Please proceed with your question, Sharon.
Sharon Zackfia: Hey, good afternoon. I’m just going to beat the dead horse of the quarter-to-date comp. I do have in my notes that last year, comps were, I think, up like 11.5% in September and 6.3% in October. And we’ve heard a lot of companies talk about kind of more normal seasonality, and I’m not sure you saw that in 2022. So I guess my question is, have you seen what others have seen, which was kind of slower traffic trends in September, followed by more of a rebound in October as we’re comparing a little bit of an apple and an orange maybe year-over-year?
Hajime Jimmy Uba: [Foreign Language] [Interpreted] So as Jeff mentioned earlier, as everybody has seen in the restaurant industry, September and October has been deeply influenced by macro factors. And considering that, we’re extremely pleased to have been able to grow traffic the way that we did. So there are a couple of factors for October. One would just be that we had more weekend days in the year prior October versus 2023. But considering those, October was a little favorable relative to September. I’m sorry, October was — yes, so we didn’t really see the same thing that the others did. Our performance was not that different between September and October. Yes. And then the timing of Halloween certainly didn’t work in our favor, didn’t work in anybody’s favor. But if you control for everything, yes, it’s pretty much flat or October is a little bit favorable, but not a big difference between the two months.
Sharon Zackfia: Okay. And then it was good to hear about labor inflation moderating. But I’m highly aware of your concentration to some extent in California that remains. And I know you’re not directly impacted by the FAST Act, but we’ve had some other full-service operators say that they still expect that to be an impact for wage rates in California just more broadly outside of limited service. So curious what your perspective is on what you may or may not need to do next spring in California? And how — if you need to raise wages, how you would approach pricing in that environment?
Hajime Jimmy Uba: [Foreign Language] [Interpreted] So thank you for asking us. We were hoping to have an opportunity to address this. But we really — we believe the impact from the FAST Act is going to be minimal or in fact, a tailwind for us. And so we love to go through the reasons why we’re — we think this is actually going to be a benefit. So the first two factors would be — as you know, the FAST Act doesn’t directly apply to us. And considering the comments that our peers have made about the knock-on effects even at a $20 minimum wage for California employees or you’re making competitive wages relative to that. And so it’s not like we’re going to have to raise wages to $20. And so that’s — it’s really not a consideration for us.
Another thing is that we are very unique in — we’re so tech driven that we have these initiatives to reduce headcount, which is specific to Kura, not really something that anybody else could emulate. And so I think this makes us — this is a competitive advantage for us. And lastly, as QSRs need to catch up from the $16 or so they’re currently paying out $20 minimum wage, they’ll have to aggressively raise prices. And so as the price between a QSR meal and a Kura meal shrinks, the appeal and value of Kura only grows. And so we think this could ultimately be a traffic catalyst for us as well.
Sharon Zackfia: Okay, thank you.
Jeff Uttz: Thanks, Sharon.
Operator: Thank you. [Operator Instructions] The next question comes from Mark Smith from Lake Street. Please proceed with your questions, Mark.
Alex Sturnieks: Hi, guys. This is Alex Sturnieks on the line for Mark today. Just firstly, and you might have touched on it already, but could you walk us through the menu price increases that are built into the comp? And any new increases or increases that you anniversary this quarter?
Benjamin Porten: Yes. So the effective price was in — was about 10.7% for Q4. As of July, 7% fell off and we offset that by 2%. And so June was 14% and then September — I’m sorry, July, August were about 9%, and there’s been no change since.
Jeff Uttz: So Q1 will be all 9%. And we’ll lap 7% on the first week of December. So starting — at the beginning of December, we’ll only have 2% pricing in our top.
Benjamin Porten: Right. And we touched on this earlier, but the fact that we only took 2% to offset that 7% coming off is really just a reflection of our bullishness on the labor environment as well as the actual inflation that we’re seeing on the commodity front.
Alex Sturnieks: Yes. Perfect. That’s good there. And then just my last question. You guys have to collapse the updated app, your tech initiatives with the automated dishwashers, but are you guys looking at any other areas of the customer experience, you guys could improve anything to leverage there?
Hajime Jimmy Uba: [Foreign Language] [Interpreted] Yes, there are billion things. But a couple of low-hanging fruit that come to mind. The first is that we haven’t really communicated the impact, the upgrade to the wait list to our guests yet. And so they’re benefiting from it, but they’re not changing their behavior based off of that. And so that’s what I aim for. The other is that we have this technology. I don’t know if you’ve been to one of our restaurants, but if there are four people at your table, it could be hard to reach the conveyor belt if you’re on the outside of the table. And we have this technology that allows you to directly place orders from your cellphone, so you don’t have to reach over your friend to hit the order panel.
