On April 4, 2024, Kura Sushi USA Inc (KRUS, Financial), a technology-enabled Japanese restaurant concept, released its financial results for the fiscal second quarter ended February 29, 2024, via an 8-K filing. Despite an increase in total sales to $57.3 million from $43.9 million in the same quarter of the previous year, the company reported a net loss of $1.0 million, or $(0.09) per diluted share, consistent with the net loss in the second quarter of 2023.
Kura Sushi USA operates revolving sushi chain restaurants in the United States, offering a unique dining experience with features such as revolving and express conveyor belts, on-demand ordering screens, and a rewards machine. The brand is known for dishes like Dashi Olive Salmon and Garlic Tuna Steak, with revenue primarily derived from its U.S. operations.
The company's performance reflects the challenges of managing increased labor and related costs, which rose to 32.8% of sales due to wage rate increases and higher pre-opening labor costs, among other factors. Occupancy and related expenses also climbed to $4.0 million, up from $3.1 million in the prior year's quarter, largely due to the opening of fourteen new restaurants since the second quarter of 2023.
Despite these challenges, Kura Sushi's restaurant-level operating profit stood at $11.2 million, or 19.6% of sales. This financial achievement is significant for the restaurant industry, where margins can be tight and profitability is closely tied to effective cost management and operational efficiency.
From the income statement, food and beverage costs as a percentage of sales decreased to 29.6%, a positive sign reflecting the company's ability to manage costs effectively through menu price increases and supply chain initiatives. The balance sheet shows a strong cash and cash equivalents position of $56.8 million, and total assets increased to $315.5 million from $304.7 million as of August 31, 2023.
President and CEO Hajime Uba expressed confidence in the company's direction, stating:
“I‘m very pleased to report the ongoing strength of our business as we progress through a record fiscal year... We’ve opened 10 restaurants to date, putting us well on track for our new unit guidance and giving us the confidence to upgrade our revenue guidance."
Looking ahead, Kura Sushi has reiterated its full fiscal year 2024 guidance, projecting total sales between $243 million and $246 million, and plans to open 13 to 14 new restaurants. The company aims to maintain general and administrative expenses as a percentage of sales between 14.0% and 14.5%.
Value investors and potential GuruFocus.com members should note that while Kura Sushi's sales have increased, the company's net loss and missed earnings per share estimates suggest areas for improvement. The company's strategic expansion and operational initiatives, such as the introduction of DoorDash delivery, could offer pathways to enhanced profitability and shareholder value in the future.
For more detailed information, investors are encouraged to review the full earnings report and listen to the earnings call webcast available on the company's website under the investor relations section.
Explore the complete 8-K earnings release (here) from Kura Sushi USA Inc for further details.
