Rising guest traffic and a growing base of restaurants boosted Irvine-based Kura Sushi USA Inc. (Nasdaq: KRUS) over the past year.
“In spite of ongoing concerns of a deteriorating macro environment, more guests are coming to Kura Sushi than ever before,” Chief Executive Hajime Uba told analysts this month.
“Our traffic is absolutely outperforming pre-pandemic levels.”
Kura Sushi opened 10 new locations in the past year, including four in the revolving sushi chain’s latest quarter, its most openings in a quarter to date. The latest additions bring the company’s total to 54.
More’s in store, with another seven spots currently under construction, according to Uba.
“Our momentum on the development front is better than ever,” Uba added.
Kura’s stores are known for being tech heavy, with everything from digital ordering screens to robot servers. The tech aspect, along with new menu items and marketing partnerships with mostly Japanese brands, drives both new and repeat business, company officials said.
Profitability
Total sales for Kura Sushi’s fourth quarter increased 31% to $55 million.
This figure slightly missed analysts’ expectations of $55.7 million in sales, resulting in shares dropping around 11% the day after the report. Kura Sushi was trading around $65 apiece as of last week with a $722 million market cap.
Kura Sushi executives said that this year’s fourth-quarter results were one of “the most difficult comparisons” the company had faced since going public in July 2021.
Same-store restaurant sales increased 6.5% for the quarter compared to a year ago and average unit volumes (AUVs) grew from $3.8 million in fiscal 2022 to $4.3 million in 2023.
“These successes absolutely translated to improvement in profitability,” Uba said.
More Tech
A recent shining light for Kura Sushi has been its newly updated rewards app, unveiled in October. It was the latest initiative to be rolled out on the tech end after introducing server robots in 2022.
“While our previous reward app has been very effective in growing traffic by encouraging repeat visits, the visual presentations and its usability was lacking,” Uba said.
The wait time algorithm was also a major focus in the upgrade.
The executive told analysts that “the number of weekly new user registrations has more than doubled” since launching. He encouraged those on the call to download the app “to immediately see the difference in quality.”
Robot Dishwashers
The next tech update planned for Kura Sushi will be robotic dishwashers, though integration isn’t expected to reach U.S. restaurants until fiscal 2025, officials said.
“Development of the robotic dishwashers will continue to progress with the first in-restaurant implementation in Japan expected in spring of 2024,” Uba said.
It will be a slow rollout with priority installation for newly opened restaurants. The dishwashers are expected “to have a meaningful impact on our labor model in future years,” the CEO said.
Next Year
For its 2024 outlook, Kura Sushi expects sales between $238 million to $243 million, a projected increase of 27% or more from this fiscal year’s $187 million.
Kura Sushi also raised its planned openings from 11 to 13 new restaurants.
“What we believe is that getting people in the door and getting traffic to increase is a huge part of the battle when it comes to [same-store sales]. And we feel we’re winning that battle,” Chief Financial Officer Jeff Uttz told analysts.