Kura Sushi USA Inc., an Irvine-based sushi restaurant chain that opened its first location at the city’s Diamond Jamboree shopping center in 2009, has its eyes on being the first Orange County restaurant company to go public in nearly four years.
Last week, the company filed plans to raise about $57.5 million in an initial public offering. It operates 21 restaurants under the Kura Revolving Sushi Bar name.
Kura intends to list its stock on the Nasdaq Global Market under the symbol “KRUS.”
An expected stock price and estimated valuation of the company was undisclosed; the deal’s underwriters include Newport Beach-based Roth Capital Partners LLC.
The company’s parent, Osaka, Japan-based Kura Sushi Inc., has about 400 restaurants in Japan and is publicly listed on the Tokyo Stock Exchange with about an $820 million valuation. It is poised to remain the U.S.-based unit’s largest shareholder after the IPO, regulatory filings indicate.
Proceeds from the offering will be used toward funding new restaurant openings, working capital, and to pay down debt.
There have been no traditional IPOs in Orange County from any type of company thus far this year.
Per Plate Pricing
IPO documents indicate that Kura Revolving Sushi Bar is the largest revolving sushi chain in the U.S.; food items travel from chef to table via a conveyer belt.
Most sushi plates at its restaurants come at a flat per-plate price, around $3. Other items, like noodle soups and hand rolls, can also be ordered.
The conveyer belts are more than a gimmick, filings note.
“Our use of conveyor belts to serve our guests allows us to minimize the number of servers in our restaurants,” the company said in its IPO paperwork.
Additionally, in its kitchens, “we use automated equipment and systems such as sushi robots, RFID readers, robotic arms, and food replenishment algorithms to reduce labor and food costs. The technology in our kitchens has been honed over the course of our parent company’s 35-year history of operating revolving sushi restaurants.”
Sales at the company grew nearly 40% to $51.7 million last year thanks to an uptick in domestic restaurants; it now operates in California, Texas, Georgia, and Illinois—there’s a dozen locations in California.
Kura was one of the first tenants at the Diamond Jamboree shopping center that opened in the later part of 2008. Other local spots include Brea and Cypress.
A new location is coming soon to the Garden Grove Plaza along Brookhurst Street, according to the company’s website. It closed a location at the largely empty Five Lagunas mall in 2018.
The company believes there’s the potential to have over 290 restaurants, and “we aim to achieve a 20% average annual restaurant growth rate over the next five years.”
Typical Kura restaurants run about 3,200 square feet, hold 110 customers, and cost about $1.5 million each to build out.
The restaurants employ between 30 and 70 people each. The company said it has “developed a remote management system whereby our senior operations team is able to monitor restaurants in real-time from our headquarters using approximately 20 to 30 cameras installed in each restaurant.”
Its headquarters are at the Koll Airport Business Center.
IPO Gap
Average unit volume for its restaurants is about $3.5 million, and it reports an operating profit margin of 3.6%.
The IPO would be the first for an OC-based restaurant chain since Irvine’s Habit Restaurants Inc. (Nasdaq: HABT) roughly $90 million offering in 2015; it has a market value of $260 million.
Lake Forest-based Del Taco Restaurants Inc. (Nasdaq: TACO) went public the following year via a reverse merger with a blank check company; it’s valued at about $475 million.
Kura will become the sixth publicly traded restaurant chain based in Orange County.
The Business Journal will feature in next week’s issue its annual list of the largest restaurant chains based in Orange County. Last year’s list had 39 chains, led by Taco Bell Corp., a unit of Yum! Brands Inc.
