Welcome, everybody. Thank you so much for joining us. My name is Joshua Long. I'm the restaurant analyst at Stephens, covering restaurants and food service distribution. Really excited about our next panelist. We've got one of the preeminent growth stories here in restaurants, super differentiated. It hits a lot of the thematic points that we write about in our research. You know, I have the team here from Kura Sushi. Would love to turn it over to them to at least kind of level set some of the conversation coming out of earnings here recently, but we've been doing a great job of keeping the conversation very organic here in the room, but we're also taking questions online. So feel free to email me at joshua.long@stephens.com, and we'll work those in. But we've got about 45 minutes and a lot to cover, so really excited to have you here. You know, Ben, Jimmy, Jeff, thanks so much for being here, and turn it over to you. Great. So for those that aren't familiar with the concept, Kura Sushi is an extremely quickly growing technology-enabled revolving sushi concept. We opened our first restaurant in 2009. We went public in 2019 at $14 a share. And we've since more than doubled our units. We've grown our AUVs from the IPO AUV, AUV of $3.5 million to $4.3 million. Our restaurant-level operating profit margins have grown from 20.2% to 21.9%. And we're- we were in three states, now we're in 15 states and D.C. And so we've expanded very, very quickly. We think the opportunity for Kura Sushi is exceptionally unique within the casual dining industry. The sushi industry is extremely fragmented, with the top two players, ourselves included, controlling, you know, between 1% and 2% of revenue. So it's a level of fragmentation that's simply not seen in other restaurant verticals, and this was further exacerbated by the pandemic. Unfortunately, because so many Japanese restaurants were mom-and-pops, they didn't have the balance sheets to survive month after month of no revenue. And so there's been, you know, I call it a die-off of Japanese restaurants, and so I think that's had a very meaningful impact on our white space potential. It's resulted in traffic tailwinds for us. We've had positive traffic for, you know, pretty much since the pandemic ended, we've had positive traffic every quarter. And turning to, you know, the current macro environment, you know, on that traffic note, we're one of the very few casual dining restaurants that have positive traffic. You know, in the most recent quarter, our comps included 5.6% positive traffic. We're extremely resilient in, you know, whatever sort of economic environment. If there are macro pressures, you know, our guests come to us. People tend to reduce frequency of eating out occasions every month. And if you're only going out two times a month instead of four times a month, you really want the best bang for your buck. And you can make a burger at home, you can make a pizza at home, you can roll a burrito at home. Nobody makes sushi at home. And so that's one of the reasons that we've seen so much traffic growth over the last year. We've also been able to offer an exceptional value to our guests. Because we're you know a chain, we've been able to weather inflation, this inflationary environment much much better than the mom-and-pop peers, who are now charging approximately double what we are. And so that's been another reason for you know the traffic growth. Looking at the most recent fiscal year, we've already opened four units. We're projecting you know 11-13 units, which we think we can actually beat. We've got positive traffic for every month that we've had so far in our fiscal year, and I think you know I could not be more excited. We just launched our rewards app. We're seeing all kinds of tailwinds. I think this is the best setup that we've had in a fiscal year beginning that you know since we've gone public. Would totally agree. I mean, there's a lot of points here to dig into, but, as we think about it from our research perspective, I mean, this touches on a lot of thematic points that just have long tails of growth, really unique differentiation. So we think about kind of value and convenience. You touched on just the overall affordability and the price point. We can dig into it more, but regardless of the economic environment, this is a really unique experience, something that no one else is really offering. And then, oh, by the way, you know, where consumers might go to a restaurant concept and have to choose between a, you know, price point of X or a price point of Y, the experience is built up plate by plate, and we can talk a little bit about that too. So there's any way you slice it, there's a lot of really compelling value that's built into this, just from a pure price point perspective, but then also an experience and just a differentiated dining concept. And so when we think about that value piece, we think about the kind of unique tech components which we'll dig into, and then the replicability of it. So that size and scale is super important, especially as we think about you know, just you know, at or under 50 units right now, and then with a massive opportunity going forward. So really exciting from you know, from our perspective. Maybe as a starting point, can you talk about for those that might be newer to the story, and I'm sure there's a general level of awareness here, but and not to kind of over or understate it, I mean, Jimmy, you've had experience building this type of brand and kind of seeing this level of growth before. So, what level of confidence do you have? I imagine it's high, but what can you share about kind of your prior experience and now what we're- what you and the company are unveiling here in the United States? Sure. Thank you for your question, Josh. But please, allow me to speak in Japanese- Of course ... so I can translate. ... So you might not be familiar with Jimmy's professional history, but he actually began with the parent company when they only had 30 units. He helped them grow to 180 before he was tapped to lead entry into the United States. He's been here from the United States, from unit zero to now unit 54. And so he's really had experience all across the spectrum of growing, you know, a chain from, you know, double digits to triple digits. And so there's every confidence that we'll be able to replicate the success that we've seen in Japan. In terms of you know, Jimmy's sort of philosophy for managing the company, unit growth is a primary consideration. We think about it in terms of three gating factors: liquidity, which, after our April raise? Uh, April. April. Yeah. After our April raise, you know, we've got abundant capital, the availability of high-quality sites, which has never been better, and then our management pipeline. And the reason that we think about these gating factors is because we want... it's very important for us to preserve our unit-level economics as we continue to grow. And this measured growth is the reason that we've actually been able to, you know, double our unit base, vastly expand our geographic footprint, but actually improve our unit economics along the way. Whereas typically, you know, after an IPO, where you're heavily concentrated geographically, you tend to see the other... you tend to see the opposite. And so we're exceptionally proud of the growth that we've done, and we're, I'd say that we're firing on every cylinder. Mm. あと、もう一つ、あの、典型的には、最初の1店舗から10店舗まで、この成功が一番難しいんですけど、その間、我々は特に時間をかけてね、あの、特にメニューのローカライズとか、あとストアデベロップメントストラテジーですとか、あとこのカルチャーの違いとか、そういったことをアジャストできたんで、ここから先っていうのは、あの、最初の10店舗を成功するよりかは非常に、まあ、易しいとは言いませんけど、十分自信ありますと。 Generally speaking, when you're starting up a restaurant chain, the first 10 units are the most difficult. And we spent a very measured time, you know, in the first 10 years that we were here, we opened fewer than 20 units. And the reason for that is that we were very deliberate with our menu localization, with our developing our site selection strategy, understanding American culture, and that's the reason that we've been able to accelerate that growth subsequent to the IPO. And without this sort of incubation period, this sort of success, we don't think is possible, which is another, you know, defensive moat we have relative to any other potential competitor, which we're not really concerned. So speaking about those gating factors, so liquidity, not a concern. High quality sites, you mentioned that's the pipeline of that is the best that you've seen. And then, kind of management pipeline, it feels like you've got that largely, you know, buttoned up as well. I mean, Jeff, you're familiar to a lot of those in the industry and on the webcast from, you know, prior experience within restaurants. Can you talk a little bit about what attracted you to the brand? And you've been here, I think it's maybe a little bit over a year now. Yes. You know, how is that unfolding? And I imagine there, as we talked about last year, a lot of excitement, but just curious what you've learned over the last year or so. So the company has turned out to be everything I thought it was and more. It's been a little over a year since I've been with Kura, and one of the things that attracted me to the brand, besides the people, you know, the brand is all about the people, ultimately you know, at the end of the day, but really the numbers. The restaurant-level margins and the AUVs and just what numbers that the company was constantly being able to pump out. Those have continued and improved since I've been with the company. The value proposition that we provide the guests, the high-quality food, the quality service, and then to be able to put up the margins and the numbers that Kura has been able to do consistently over the last year, and even prior to me being there, you know, pre-COVID mostly, 'cause, you know, the COVID years were sort of a throw-out, it has been amazing. And like I said, it's everything I thought it would be, and I'm very happy to be part of the story. We're happy to have you, too. I mean, this is really exciting for us. I mean, it touches on a lot of the elements of, you know, core consumer, great brands, technology, I mean, themes that your peers are looking to adopt, where this is, I mean, intimately intertwined into what the brand is. This is a really unique position, going from 54 units to something massively larger. I know you previously, you know, pre-COVID had commissioned a study, and there was something in kind of maybe the 300-400 unit range. A lot's changed since then, and so, I mean, our numbers, not yours, but it feels like there's a massive opportunity for scaling up units over time. Can you talk about what that's like in the current environment? No doubt there's, you know, no shortage of challenges, whether it's supply chain, permitting, et cetera, but you've got a very unique model, and so just curious on your perspective and how you really go at attacking that high-quality pipeline of sites that you mentioned? Mm-hmm. まあ、あの、我々300、400... まあ、300ってところで、我々、あの、White Space Studyしたときあったんですけど、まあ、そこからね、新たにやってないんで、まあ、これからしっかりupdateしたら大きくなっていく可能性あると思いますけど、まあ、少なくともこの300ってところに関しては、先ほど言ったみたいに、全てこう、supply chainも含めて、management pipelineも含めて、あとsiteのqualityも含めて考えて、すごく、あの、on trackだというふうに、あの、考えてます。まあ、ちょっとここまでです。 So while we haven't commissioned a white space study subsequent to that 300-400 unit white space study that you'd mentioned, we do expect, for the reasons that you mentioned, especially with, you know, the COVID closures of Japanese restaurants, for the, you know, whatever subsequent white space study we commission to be, you know, meaningfully larger than our original one. But the 300-unit white space study certainly bakes in our ability, you know, like, our management pipeline capabilities, our supply chain capabilities, and so we have zero concerns about being able to achieve that 300-unit initial white space. Mm-hmm. Absolutely. And when you think about kind of other typical constraints for restaurants, I mean, human capital is always a big one for your peers. You've got a really interesting model in that very tech-enabled- Mm-hmm ... and so that creates additional layers of opportunity in terms of how you execute at the store level. Can you talk a little bit about that and maybe just what the, you know, for those in the audience on the webcast, contextualize how many people, how many store-level team members you need to kind of put up these great numbers that you're doing? まあ、あの、ちょっと私も他のレストランがどうかは分からんだけど、我々のレストランで言ったら、大体3人か4人の、あの、マネージャーがいて、60人... まあ、50-60人のチームメンバーがいると。まあ、これがちょっと他とどうかというのは分かりませんが、あの、セールスパースクエア人に比べたら少ない人数でいけてるんじゃないかなと思います。あとはすごく、あの、簡単なオペレーションになってるんで、まあ、こういった形で25%レベルのユニットグロスが実現できると思いますと。今はちょっと新しいニューレストランのところにあってね、少しちょっとタフな、あの、時間を過ごしてるんですけど、もう少しこう、インフィリングのマーケットになったら、そういったところも、あの、薄れてきて、もっとね、多くの店舗を、あの、出店できるんじゃないかなというふうに思ってます。これちょっとお願いします。 Right. So I'm not sure what staffing's like at other restaurant chains, 'cause I haven't worked at them. But, you know, for a typical restaurant on, you know, looking at it across the full payroll for a restaurant, we've got maybe 3-4 managers or submanagers, and then we've got maybe 50-60 people working in the front and back of the house. I'd say for the AUVs that we produce, that's... I think we're, you know, it's pretty low. I think, you know, Jeff has mentioned in the past that to achieve the AUVs that we do, you typically have a payroll of maybe 100 people. But the automation is really key to this. It's, it's why we're able to deliver such high restaurant-level operating profit margins. But it's also key to the entire, you know, the viability of the concept. One of the reasons that there's never really been a truly national sushi chain in the United States is because the skill involved is prohibitive. You simply can't build a chain when you need really highly skilled labor. Our approach to automation is to have all of the tasks that are typically done by the executive chef completely automated. So that's why we've been able to grow you know, so quickly. Right now, you know, as I mentioned, we're in 15 states and D.C., and so a lot of these are single-unit markets. You know... From a human capital perspective, this is, I'd say, you know, one of the most difficult times that we're gonna go through. These are our growing pains. But as we infill, that's only gonna be a tailwind. You know, right, right now, people have to train out of state, and that's, you know, that leads to greater attrition. But at the same time, this non-contiguous growth strategy is what has allowed us to discover where the best opportunities in this country are, which, for us, is our top three units have been in New Jersey, Washington State, and in Texas, which you really can't get more geographically diffuse than that. And this non-contiguous growth strategy is what's allowed us to discover that. On the strength of those units, we've infilled those markets. So, you know, subsequent to the success in Fort Lee, we've opened, we have three units in New Jersey. Mm-hmm. We've got two in New York, three in Boston, one in Philadelphia, two in D.C., and the East Coast has been a bonanza for us. Right now, we're, you know, we're starting to open up additional units in the Pacific Northwest, and I expect the exact same pattern to continue there. And so, yeah, we're pretty pleased. And rightfully so. I mean, this is a really unique story, best-in-class in terms of unit development, potential, execution, and just, again, a really unique model that creates added layers of, you know, kind of a moat and, you know, competitive nature- Yes ... in what is otherwise, an industry known for relatively low barriers to entry. Mm-hmm. So this is super exciting, all wrapped up in a really compelling value proposition. So you mentioned being about 50% less expensive than your peers, and I think the common question that we get is, they go, "Oh, that's an easy opportunity. We've just gotta take menu prices up." And this is a really thoughtful approach that you've brought to the brand, in that you're driving positive traffic on positive traffic, which no one else in the industry really... There are a very limited set who can really talk about something like that. How do you balance pricing, the value proposition, and then what you see as a very long-term opportunity to grow the unit base, in the right way? Sure. まず、我々、あの、同じ我々カジュアルダイニングの価格と、あの、価格と比べて我々がちょっとインラインのところにあるっていうことをしっかりやってるのと、あと先ほどまあ上司が説明したみたいに、他の、あの、レストランと比べて我々がすごく、まあ、我々半額ぐらいを目指してるんですけど、まあそういったぐらいの破格の安さっていうところでいってるか。もうこの二つをしっかり保って、value propositionを維持していきたいと思ってますと。まあ、それプラスね、それやりながら、まあマージンがね、あのレストランレベルで言ったら20%以上っていうところが出来れば我々としてはいいのかなというふうに思ってますと。これちょっとお願いします。 Right. So just as some additional context on that traffic, that 5.6% that we achieved in Q4 was on top of 14% positive traffic this previous year. And so it's, it's really a spectacular number. And, it, it really does, it does come down to our value proposition. So the way that we think about it is, we wanna be in line with our casual dining peers in terms of average check size, and we wanna be about, you know, half of what a mom-and-pop sushi place is charging, so that it's just a no-brainer decision for the average guest. And, you know, this, this traffic is really what's allowed us to build those restaurant-level margins above 20%. It's... The margin growth that we've seen in the last couple years has come from, you know, increased traffic growth and greater sales leverage against fixed costs. And so it's not really a fight between price and margin. They can really work in tandem if you have the right product. Definitely makes sense. And, I mean, I think underlying, obviously, great, amazing traffic trends, and then I think, also on the recent calls, we've talked about, and you've shared, a relatively consistent approach from maybe a per-plate consumption or kind of some of the mix trends. I know there were some moving pieces, within the quarter that we had gotten questions about, but really, the punchline was that this was really a function of just multi-year stack comparisons- Mm-hmm ... and really strong promotions from the prior year. Right. Underlying that, it felt like there was a lot of consistency from the model that had kind of carried forward. Can you talk a little bit about that and just what you've seen in terms of how the guest is using the brand, you know, above and beyond just the great traffic numbers you mentioned? Sure. In terms of the mix, specifically for Q4, I neglected to mention this on the earnings call, so I'm happy to have this opportunity now. But we were lapping an exceptionally strong promotion, where for any brand collaboration that we do, they're all two months each, and we'll have giveaways, typically, you know, for four days out of each month, where if you spend $60-70, you get a free T-shirt or a hat or a tote bag that's associated with that brand. In July and August of last year, it was easily the most popular brand collaboration we've ever had, the most excitement leading up to it, and so we knew that we could set it at a higher ticket. And so we set the pr- ... price limit at $100, and people were gobbling down sushi happily to get those T-shirts. And so the mixed deceleration year-over-year, I, I'd say, is more a reflection of that as opposed to anything with consumer sentiment. And to your earlier comment, if a guest eats one fewer plate but it's still coming in the door, that's, that's lovely. Mm-hmm. That's great. You know, it's not like a steak where if you don't have the $40 for a steak, you just can't eat it. For us, you know, you can always come to Kura, and that's one of the reasons that, you know, our traffic, it's just clobbering everybody else. Absolutely. I mean, that plate-by-plate building, I mean, like you said, you don't have to choose between kind of a price point of X or Y. I mean, you can come in and have whatever level of experience you want, and that's a really exciting, you know, tool that you are able to leverage as you go forward. We've a reminder, we're taking questions via email as well, so for those in the room, feel free to raise your hand. But, joshua.long@stephens.com. And one of those ones that came in was kind of shifting gears to maybe the G&A targets and the optimization- Mm-hmm ... opportunity there. I know that that's been a part of the overall story. There's gonna be scaling and natural leverage that happens over time- Mm-hmm ... but it also feels like there were, as we talked about in maybe prior calls, some pretty distinct opportunities for you to lean into, whether supply chain, size and scale in an otherwise fragmented industry. Can you talk a bit about what you're seeing, you know, across the entire P&L, but particularly on the G&A side? Yeah. Our biggest opportunity in G&A leverage going forward, in the short term, is gonna be the regional G&A. So we have area managers that have four or five or six restaurants that they're in charge of, and right now, because of our geographic dispersion, they may have to get on an airplane to go see some of their sites. Mm-hmm. As we continue to infill markets, our strategy going forward, or at least this year, is to get about 75% infill, 25% new markets for our real estate strategy. So as we continue to execute on that strategy, we have the regions, these regions where a lot of our area managers are gonna be able to visit all five or six of their restaurants in a car, perhaps in one day, and it's gonna really reduce some of the spending that we have, and we're gonna get leverage on the regional G&A side. I'm very happy with what we saw from fiscal 2022 to fiscal 2023 on our total G&A leverage, about 80 bips, which exceeded my expectations for the year, and we're very proud of that. This year coming, going forward, we're also gonna see G&A leverage. We have slight headwind this year in terms of public company costs. This is our first year where we have to be 404 compliant, so we have some added, you know, audit costs and some, you know, people helping us get through the 404 to make sure we're compliant with that. We've hired the director of internal audit and SOC. She's amazing. She's done a really good job, but these are all added costs, so there'll be slight headwinds. Even with those headwinds, we're gonna have G&A leverage this year. I wouldn't expect 80 basis points a year going forward, but it'll still be meaningful G&A leverage. Long-term goal, long-term, years and years down the road, single digits probably at some point, but that's down the road. Mm-hmm. But to have the leverage to get the leverage that we saw this year is something that we are very proud of and think is very a success for the year. We consider it a success. Yeah, and rightfully so. I mean, when you think about the, you know, the headcount add that you mentioned there in terms of getting, you know, 404 compliant, I mean, are there other elements that need to be added to the model? I mean, as you think... You've been here now a year, kind of building out your team. I know one of the first things we talked about was just kind of coming in, right-sizing, and really balancing investment and timing for kind of unit growth and just efficiency overall. You've got a year under your belt. You're driving great efficiencies on G&A, but just curious, how's that team kind of lining up? And as you think about the opportunity to scale growth, what... You know, do you have enough, enough capacity with the current team as is, and where are those kind of inflection points for what's gonna be massive growth coming forward? In the year before I was hired, we filled many high-paid, you know, C-level type positions and, you know, vice president-level positions, and those were in the year before I was hired. Going forward, and we've said this in many calls, we're gonna continue to invest in those areas that we have to invest in in order to maintain the growth level that we want. So you think about operations, recruiting, training. Those are the areas that we believe that we're gonna continue to invest in, and we have. To go back to what we were talking about a little while ago on recruiting, the management pipeline, our Chief People Officer runs this spreadsheet of all of our restaurants and how many you know, if we have managers for them. Red means we don't have a manager for that slot, and blue means we do. The amount of red that has gone away and become blue in the last five months is incredible. I, our pipeline, our management pipeline is set up, and she has done an amazing job at getting that to where we need to be. The reason is, we've invested in recruiting- Mm-hmm ... like we said we would do. And we're gonna achieve results, and that's gonna flow through to restaurant-level margin, G&A leverage, and all the lines on the P&L that you would expect to see leverage from investing in those areas. We're also investing in construction of the real estate. Yeah. Also. Yep. Rightfully so. When we think about the unit development pipeline, I mean, that's exciting to hear, especially the 75, kind of 25 split in favor of infill. I mean, that's a, that's a big opportunity, and you're still in a unique position with that remote management system, being able to go out and scour, find sites, and get to them sooner than you otherwise would. You know, what kind of adjustments, if any, I mean, other than, say, kind of just adding that scale and depth and density in markets, you know, how are you thinking about kind of the infill opportunity? I mean, that's gonna be, you know, obviously top of mind here near term, but what kind of either opportunities, leverage, what does that unlock? I mean, you mentioned kind of density in the markets and from a training perspective, but it feels like you probably offer some tailwinds from just even sourcing kind of team members and human capital at the store level, but also drives brand awareness. tailwind.... ヘッドウィンドとしては、このキャニバライゼーションがあるので、まあ、その辺をすごく気をつけながらね、あの、いいとこだけ取っていくように、あの、すごく気をつけてますと。なので、エグジスティング、ニューマーケットの時のほうがどちらかと言うと、あんまり気を使わなくて良いんですけど、インフィーリング75の時に、そういったところをすごい気をつけながら、サイトセレクションやってますと。いいところだけ取るようにしてますと。 Yes. And so you're right. The most immediate tailwind is in human capital. It's a big deal to be able to have somebody drive 30 minutes away is to get their training, as opposed to have to fly to a different state, especially if they're a management candidate. You know, 3 months out of state, away from your family, that leads to a lot of attrition- Right ... which is part of the growing pains that we mentioned before. And so it's. You know, from that perspective, we couldn't be happier to be seeing these infills. On the other hand, if you're opening up your first restaurant in a market, you really have zero cannibalization concerns. And so now that we're infilling markets, we have to be more mindful about that. You know, pleased to say that the cannibalization that has happened is completely in line with our expectations, if not less. And so, so far, it's gone pretty good. It's always an interesting dynamic, right? Because at the end of the day, you might be cannibalizing, but you're growing dollars in the market, and that's ultimately what this is about, too. Exactly. So, definitely, as we think about this from a longer-term perspective, it's always a delicate balance between percentage growth or percentage comp, and then just the raw dollar opportunity for- Exactly ... you know, what is an amazing brand. yeah. まあ、それが我々の、まあ、あんまり comp sales とか AUV とか、こう target にしたくない理由の一つでもあるんですけどね。やっぱり 25% の成長率で、そこを、こう target にしてしまったら、どうしてもやっぱり違うね、site selection 選ぶ時に、そういったことが入っちゃうんですよ。うん。やっぱりしっかり bottom line 維持しながら、成長もやっていくよ。うん。その結果、AUV とか comp 高かったらいいというふうに、あの、考えてます。もちろん、positive で来ればいいですけども。 This was a theme in the last earnings call, but we really don't want people to focus on comp or AUV as the barometer for our success, especially because our base is, as you mentioned... You know, we only have 54 units, and so a couple units in one direction or another can have a pretty meaningful difference. Where we do want people to be focusing on is our unit growth potential. So, you know, our midpoint of our growth is 24%. We've already opened 4 units to date. We have seven under construction, guiding, you know, 11-13. We think there's upside on that. And so we can, you know, maybe achieve some of the highest growth rates that we've seen, you know, since going public. The other is maintaining the bottom lines. Our, you know, restaurant-level margins remain very strongly intact. And I really do appreciate you bringing up that point about, you know, comps versus absolute dollars, because if you have, you know... Let's say, like, Fort Lee, as an example, has an AUV of about double, you know- Mm-hmm ... the system AUV. And, you know, in the last year, we've opened four units that are within 30 minutes driving distance. And so naturally, that's gonna have an impact on Fort Lee's sales, completely in line with our expectations, but that's gonna be a comp headwind without it necessarily reflecting anything about our system comps. And so just because, you know, a single unit can have that sort of thing, we don't, our strong preference would be for people to not focus as much on comps until we're, you know, a bigger company. Absolutely. It's a fun one, right? Everyone loves to talk about comps and some of these KPIs, but there's a lot of other layers here to the story, especially when we think about this going off into the next two, three, four, five, 10 years of growth. Right. I mean, there's a lot of opportunity and a lot of new units to be built, so definitely can appreciate that perspective. Jimmy, you mentioned the strength of the store-level economics and the store-level margin. I know there's a lot of work going on there. You've had a series of initiatives over the last couple of years that really- Right ... speak to just the overall brand and the unique experience at the consumer level. That's great for guests, but it also provides some operational efficiency- Right ... and some leverage there. Can you talk about that? And then maybe secondarily, we could get into some of the interesting work that, Ben, you've been talking about from a kind of robotic dishwasher- Yeah, sure ... and other things down the- Sure ... down the pipeline. First, last year, as many of you know, we implemented the robot server, table-side payment, and drink service, where drinks can also be ordered via the touch panel. This really improved customer convenience, and regarding the robot, children were especially delighted. So, it’s both labor-saving and something that makes customers happy. As a result, we saw really great outcomes, and in fact, that has become a kind of combined effect. Looking ahead, as Ben is working on now, things like the robotic dishwasher, and there are several other initiatives as well, we are continuing to do these kinds of things. We will continue to do this for our customers, and... できればね、お客さんの、その、fine dining experienceをimproveしながら、labor savingしていくと。まあ、これをずっと続けていきたいと思ってますし、まあ、Kura Japanはずっとそれを続けてるので、今後もできると思ってます。これちょっと一杯すぎた。 Hi. So, as some context for some of the initiatives that we had in the last year, we had three major initiatives: robot servers, our tableside checkout, or tableside payment, and tableside drink orders. I don't know if people remember, but you know, there was a pretty significant server shortage last year, and so this actually had a really meaningful impact on customer satisfaction. The robot servers, you know, were an absolute delight for our guests. We're in a very unique place in that, you know, technology is so much a part of our brand, that when we introduce this, you know, new technology like the robot servers, it's seen as, you know, accretive to the experience. Whereas I've seen, you know, other restaurant chains that I don't need to name, try it. Mm-hmm ... and then roll it back because their guests are thinking, "where, where did my server go? Mm-hmm. This is just a cheaper, this is a worse experience." And so that really works in our favor. And so last year, you know, the robot servers, combined with the Demon Slayer, that gave us our 28% comps, which have, you know, made for a tougher comparison for this year. But, you know, it's certainly... It's not something that we can really complain about. In terms of our philosophy, certainly if something can be guest-facing, if something can improve the dining experience while improving our bottom line and helping, you know, operational efficiencies, improving the workload for our employees, that's really the trifecta. Right. That's what we wanna hit every single time. The robot servers would be a perfect example of that. The robotic dishwashers, they're gonna be amazing. So 70% of our dishes, or 70% of our sales are on the sushi plates. With the implementation of the robotic dishwasher, it's gonna be a completely closed loop, where our employees just don't need to touch them anymore. Mm-hmm. It's just not something that we need to think about. And so that's one full headcount reduction in dishwashers. And you know, dishwashers work extremely hard, and nobody really wants to be a dishwasher- Very, very important role. It's a- Not everyone's signing up for it. It's a brutal job, right! Mm. So there's a lot of turnover. So, you know, being able to reduce headcount, not only do we reduce headcount, we reduce the workload for the remaining employees as well. That's gonna improve retention, and so we get G&A benefit as well because we don't have to spend as much time and money recruiting. We're really very lucky to have had a parent that's been, you know, operating for 40 years. They have over 50 patents. This goes back to the competitive moat that we mentioned before. One thing that's truly special about us is that for, to make the tech investments that we have access to or that we do, you really need to be, like, a multi-hundred-unit chain. But at that point, it's pretty prohibitive to retrofit your restaurants. Mm-hmm. You need to be doing it from the beginning. Because of this relationship that we have with our parents, that's something that we're able to do, and it's one of the reasons that our restaurant-level operating profit margins are among the best in the industry. If you look at our expenses, we don't have an R&D, and you know, a really meaningful R&D budget. Mm. Like the robotic dishwashers, the parent put up $1 million- Nice ... for the initial R&D investment. We didn't put anything. We just garnished. So that was, yeah! I mean, we're very... we're in a very blessed position. Very unique, and I mean, even if someone hypothetically had the budget to do it, then there's still the testing, the implementation, like you said, retrofits. Right. I mean, there's a lot of other hurdles that- Right ... just aren't necessarily as much or if at all, a consideration for, for your brand. And so- Exactly ... that's really unique when we think about kind of an industry that is super relevant for consumers. I mean, we can see long-term charts and the engagement of food away from home and food service overall. Consumers really want to and are engaging with the brand, but then also, just, you know, offering that unique experience, which is super important. And so kind of a one-two punch for a really exciting long-term growth story as well. Yeah. So that's definitely from our perspective, and something that we try to keep in mind. When we think about the other initiatives, where you mentioned earlier, Ben, about the kind of loyalty or rewards revamp program. Mm. Can you talk a little bit about that? I mean, I know there was kind of a migration period, and you saw really strong engagement there that was, you know, highly encouraging for just- Mm-hmm ... your core customer. But what does this unlock for you? And, you know, when we think about down the road, you know, what should we be thinking about in terms of just next-level opportunities for the brand? Yeah. So, we launched the new app in mid-October. I'd encourage everybody here to download it, especially if you've downloaded the prior app, so that you can see just how much of a leap in improvement it's been. In terms of the membership growth, we've seen new user sign-ups more than double since we've rolled out the new app, and that's excluding users that are migrating from the old app. And that it's a big part of that is just the user experience has been vastly improved. One thing that we're really excited about the new app is that it allows us to come up with lots of clever marketing ploys that aren't necessarily, you know, incremental in cost. So one example would be, you know, for every $50 that you spend, right now you get a $5 coupon. But, if we give guests the option to skip the line, which, you know, we're, we're exploring now with our rewards program, that... You know, like, 25% of our sales come from 10% of our guests. I know that if those people don't need to wait in line, they're- we're gonna get additional frequency from those people. Mm-hmm. The other is, you know, less discounting, and so it's a win-win. Another example would be, you know, with the promotion that we mentioned, where you spend $70 or $100, those are typically limited to four days a month, and so the impact is significant, but it's limited to four—those four days. Now that we can track, you know, frequency more easily, we can say, "If you come three times during this two-month period, we've got a special prize for you." And so we can unlock entirely new promotional opportunities without spending incremental marketing dollars. And so- Yeah ... it's. I'm so happy. I mean, just from a brand perspective, you've had a lot of engagement at the store level, you know, at the table, but this obviously is on your phone, takes it with you. I mean, the mind share opportunity here, the ability to engage, that creates a lot of interesting, again, engagement opportunities that can then funnel back into added traffic, which is really the core piece- Exactly ... of the story. So we've got about 10 minutes left, so any questions here in the audience? Would love to take them. We've got one more inbound, which was really around the longer-term distribution. That's been a key conversation for us over time, over the last week or so. But just, you know, coming out of the last couple of years where distribution was really seen for the industry as kind of a key strategic partner, which it obviously is. I mean, restaurants don't really work if we don't have the raw materials coming in the back door all the time. And Jeff, I know that you've seen a lot of other brands, size and scale over time. That, that was an initiative that you had mentioned in prior calls in terms of maybe there's ways to do things a little bit more effectively, optimize that, scale it up to really support the long-term unit growth. Can you talk a little bit about that, as you spent more time with the supply chain, and kind of just maybe what near-term opportunities you've uncovered? Yeah, we talked about, in the last year, going to a broadliner, and we had talked about some of the U.S.-based broadliners. And as we started to dive into that, we realized that U.S.-based broadliner for a, a sushi concept really doesn't work that well. And one of the reasons is, or the main reason, is because of the number of unique and proprietary Asian food, you know, Japanese products that we, that we use- Mm-hmm ... in our food. So what we did is, we had three Japanese-based broadliners that have U.S. operations, and we've consolidated from three down into two. So we have one that handles mostly the West Coast, and states, and Southwest, and then one that handles the rest of the country. And what that's done for us is, also created redundancy between those two as well. So if one of the suppliers can't supply, say, Northern California, the other one could step in and supply those products. So really reduces the risk of us having outages or shortages on our deliveries. In terms of negotiating the prices, that's something we're also gonna do. We just completed this process in August, so it's relatively new. August 31st was our self-imposed deadline of consolidating from the three to the two, and we met that deadline. And that was logistically, you know, a pretty big project. So once we logistically got that done, now as we work through fiscal 2024, we can start thinking about negotiating prices and things like that. That's a go-forward project, but that's an opportunity also to get a little bit of leverage. But also, if you look at our food costs over the last couple quarters, it's been really good. And the team has done a great job, and operations has done a great job, and, and all the things that, that go along with great food costs: reducing waste and, you know, purchasing synergies. And so together as a team, we've done really well with that, and I'm excited going forward about potential further opportunities. But the other thing is, too, we don't wanna get over our skis, 'cause you don't wanna get your food costs too low- Right ... because then you compromise quality. There's a point where in order to get your food costs to, you know, at least for us, if we were to wanna get our food costs to 27% or 28% or something like that, probably would involve compromising quality, and that's not something we're going to do because we believe that the quality of our food and the quality of our service is one of the reasons why we had 5.6% traffic last quarter. That's great. I mean, and we've talked about this as well over time, as well. It wasn't lost on me. I mean, if there was kind of... Again, thinking about that pricing point, people go, "Oh, we can really drive the margins here." You've been very clear that you would reinvest back into the experience to really support that. I mean, then that could be either through heightened food quality, that could be through, maybe bringing something in, still high-quality product, but maybe that streamlines operations even further, just to really drive store-level execution. So I, I think what we- and correct me if I'm wrong, but we've talked about kind of, you know, 30% or low 30% food cost margins. That, that's a decent target for where you would go. If it gets much below that, that's where probably the team starts to think about areas where that could be reinvested back into, you know, a even stronger guest experience. Yep, that's exactly right. Got it. But with a growing base and just a long-term opportunity here, you've got a lot of different tools in terms of how to do this. And kind of building off that point, maybe it's a little bit less important now, maybe not, I'm not sure, but there was a period of time where we were talking about kind of diversifying some of the manufacturing partners, particularly for kind of the revolving belt. And I know you know brought some of that onshored some of that. Maybe it gives you a little bit of redundancy, but curious, is that nearly as important now? Obviously, we wanna build scale over time, but has the supply chain and the ability to get some of those key products for your brand, internationally, has that improved at all over the last year or two? Sure. Sure. So the reason that we cultivated this relationship with a U.S. conveyor belt maker during the pandemic was because shipping costs had... They'd really ballooned, and we were seeing very meaningful delays because your conveyor belts could get stuck at port. Mm-hmm. You could have everything else ready for your restaurant, but without the conveyor belt, you just can't open your restaurant. After, you know, staring at the L.A. port and just becoming incredibly frustrated, we set up this relationship, and we're really happy about that. But the environment's different now. Shipping costs have meaningfully gone down, and the Japanese conveyor belt makers are very attractive to us because, you know, the exchange rate has never been better. Yes. Mm-hmm. As we're growing, you know, the Japanese conveyor belt makers are realizing, "Uh-oh, well, these guys are actually, you know, our growth opportunity. Mm-hmm. And so they're all fighting over us, and so we're getting better deals from them. And so it's really just a matter. You know, You know, we're leveraging both relationships right now. Yeah. I think keeping the American one's gonna be, you know, very important in the future as well. Right now, Japan is a great opportunity. That's one of the reasons why we've been able to keep our guidance at the $2.5 million per unit. Mm ... build-out year-over-year. It hasn't increased. Yep. I mean, you'd probably be shocked to hear that during, you know, the pandemic, and even after the pandemic, a little bit in previous years, it could cost up to $300,000 to have a conveyor belt shipped over from Asia, which is nuts. Mm-hmm. Now that that's gone away, we're able to keep our build-out costs relatively even and keep those cash-on-cash returns at industry-leading numbers. Yeah, that's very impressive. And I mean, I think when we pair that with then the opportunity around just driving overall awareness, obviously, a key piece of that's gonna be growing the unit base and just getting kind of the accessibility of the store base higher as you scale that up. But Ben, I know also in prior calls, we've discussed the opportunity for just driving, you know, general awareness, maybe through some, you know, maybe basic or kind of, you know, blocking and tackling type ideas, whether it's search engine optimization or just driving the overall awareness and optimizing marketing and kind of positioning out there. Can you talk a little bit about that and just where the brand is at in terms of, you know, being top of mind with the consumer? Yeah. So the search engine optimization, we really started in earnest of December last year. December, yeah. And it's been like a quiet tailwind for us. It's not glamorous, but it's really... it's been a meaningful contributor to traffic. I do believe that, you know, just infilling is gonna be the single biggest factor in terms of our brand recognition, but we've seen, you know, very nice pops when we partner with the right IP. And so We Bare Bears, you know, like, the creator came to one of our restaurants, drew cartoons, had, like, a whole event, and all these people on TikTok that had never heard of Kura now heard of Kura. Mm-hmm. Demon Slayer was that, like, times 10. Right. Mm-hmm. And so there's all... I know that there's already awareness of us in markets that we've yet to enter. They might not know our name, but they know us as, like, the cool revolving sushi place where you can win prizes from animes and video games and whatever. And so that's one of the reasons that, you know, whenever we open in a new market, our wait times are frankly, they're crazy. ... Yeah, and I mean, another exciting layer for us as we think about this, again, long term, there's no one silver bullet. It's a lot of layers that then build upon each other. But you mentioned, you know, I know this last year you had meaningfully expanded into some more mainstream properties with DC Comics, and I think you had teased as well, that, you know, the pipeline this year was really exciting from your perspective. You know, we'll, we'll stay tuned for kind of more specific updates, but can you talk about that? I mean, there's obviously core engagement with kind of the, you know, the anime side, but then it feels like you're also, as a brand, moving elsewhere and kind of broadening that, that horizon. It feels like there's a lot to be talking about over the next couple of years, in addition to just that kind of infilling strategy, which drives awareness from a unit perspective. Right. So with every collaboration that we do, it's certainly a learning experience. And one thing that we've realized that sometimes, you know, a deeper fan base can be more meaningful than a broader fan base- Mm-hmm ... especially 'cause if it's a smaller property, they're more willing to do stuff with us. I mean- Sure ... Batman was not visiting our restaurants. Superman was not flying around our restaurants. Our next collaboration is Peanuts, which I'm really excited about. It's one of my favorite comics, but Charles Schulz is dead, so he's not gonna be coming down to do in-store- Right. Yep ... signings. Every single one's a meaningful learning experience, and we tailor, you know, the upcoming pipeline in relation to that, but it takes about, like, a year, or like our pipeline's, like, a year forward. Mm-hmm. And so those learnings aren't necessarily immediately reflected. That being said, we have a lot of the very deep, passionate brands in the pipeline. And, licensors, for whatever reason, really, they really don't like me discussing anything until it's, like, a month before. But this is... I'm genuinely. I think it's the best pipeline we've ever had, and I think we can top Demon Slayer. Yeah. I mean, rightfully so. We'll stay tuned, and I know we'll be out in the restaurants looking for that as well. But, I mean, it's an amazing growth opportunity, amazing margin profile, and just really rich, deep opportunities to kind of drive those brand collaborations which, again, as we think about just where the universe is from a publicly traded perspective, where kind of we think thematically, where the consumer and where restaurants are going. I mean, this comes together for kind of the pre-eminent growth story out there from a restaurant perspective. So really appreciate you and the team being here today to tell us about that. And, I know you'll be here shortly as you transition to the next meeting, so if anyone wants to come up and say hello, please do. But-