Good afternoon, good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Kura Sushi USA, Inc. Fiscal Third Quarter 2023 Earnings Conference Call. At this time, all participants have been placed in a listen-only mode, and the lines will be open for your questions following the presentation. Please note that this call is being recorded. On this call today, we have Hajime "Jimmy" Uba, President and Chief Executive Officer, Jeff Uttz, Chief Financial Officer, and Benjamin Porten, SVP, Investor Relations and System Development. Now, I would like to turn the call over to Mr. Porten. Thank you, operator. Good afternoon, everyone, and thank you all for joining. By now, everyone should have access to our fiscal third quarter 2023 earnings release. It can be found at www.kurasushi.com in the Investor Relations section. A copy of the earnings release has also been included in the 8-K we submitted to the SEC. Before we begin our formal remarks, I need to remind everyone that part of our discussion today will include forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance, and therefore you should not put undue reliance on them. These statements are also subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. We refer all of you to our SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition. Also, during today's call, we will discuss certain non-GAAP financial measures, which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation, nor as a substitute for results prepared in accordance with GAAP, and the reconciliations to comparable GAAP measures are available in our earnings release. With that out of the way, I would like to turn the call over to Jimmy. Thanks, Ben. Thank you to everyone for joining us today. I'm pleased to announce another excellent quarter for Kura Sushi, both in terms of restaurant-level performance and corporate initiatives. Year-over-year revenue has grown by approximately 30%, driven by our aggressive unit growth and industry-leading comparable sales performance. Our GM leveraging efforts continue to bear fruit with an improvement of 130 basis points over the prior year as well. I'm exceptionally proud to see Kura Sushi continue to mature as a company as it expands its footprint and takes strides towards greater profitability. Third quarter revenue was $49.2 million, with comparable sales of 10.3%, which breaks down to 3% traffic growth and 7.3% in price and mix. Our traffic continued to lead the casual dining industry with our third quarter traffic outperforming industry averages by 830 basis points. June performance has been even better, with total sales of $17.6 million and comps of 14.7%. As these results demonstrate, guest sentiment for Kura remains extremely strong. The inflationary pressures that we saw earlier in our fiscal year continue to ease, with cost of goods sold as a percentage of sales coming in at 30%, which is in line with the all-time best we saw in fiscal 2022. Labor costs as a percentage of sales were 29.2%, representing an improvement of 180 basis points over the prior year. Our third quarter restaurant-level operating profit margin of 23.5% represents an improvement of 100 basis points over the prior year. I'm also very happy to note that between our growth in restaurant-level operating profit margin and improvement in G&A, we were able to grow our Adjusted EBITDA margin by 200 basis points over the prior year and our net income margin by 210 basis points. During Q3, we opened one new restaurant, Buford, Georgia, and one more new restaurant subsequent to quarter end in Framingham, Massachusetts, for a total of seven new restaurants opened to date during this fiscal year. We have seven units under construction, as well as 11 more executive leases. We are in an excellent position to achieve our unit growth goals for fiscal 2023 and couldn't be happier with the pipeline we have showed up for fiscal 2024. Our new wait list app has been successfully rolled out across our entire restaurant system. While it's too early for us to provide quantitative data on its impact, we are very encouraged by early results. Wait times are meaningfully more accurate, and we believe this is part of why we continue to outperform our peers in terms of traffic, which is further underlined by the exceptional performance we've seen in June. Our rewards membership continued to grow, with approximately 120,000 new members over the course of the quarter. Our Demon Slayer campaign, held during April and May, again proved to be another great success and comp driver. Our current collaboration with We Bare Bears, a television program on Cartoon Network, has far exceeded our initial expectations and has delivered some of the strongest guest responses we've seen of any collaboration, which set our restaurants up for our amazing June. As a final note, I would like to provide some updates on pricing. We left approximately 2% of pricing on March 1st, bringing our effective pricing for our fiscal third quarter to 13%. Subsequent to the quarter, we left 6% of pricing on July 1st, which was partially offset by 2% pricing that we took concurrently. The relatively modest scale of this most recent pricing event reflects our confidence in the normalization of inflationary pressures seen earlier in the fiscal year. Lastly, I would like to share my deep appreciation for the amazing work by our employees, both at our restaurants and corporate support center. Thank you, everyone. With that, I'll turn it over to Jeff to discuss our financial results and liquidity. Jeff? Thanks, Jimmy. For the third quarter, total sales were $49.2 million, as compared to $38 million in the prior year period. Comparable restaurant sales performance, as compared to the prior year period, was positive 10.3%, with regional comps of 15.5% in California and 4% in Texas. Turning to costs. Food and beverage costs as a percentage of sales were 30%, as compared to 29.7% in the prior year quarter. We're very pleased to see that the flattening of the inflation curve that began during our second quarter has continued to hold, and we continue to be encouraged in the trends that we are seeing. Labor and related costs as a percentage of sales decreased to 29.2% from 31% in the prior year quarter. This decrease is due to incremental efficiencies created by the implementation of technological initiatives and sales leveraging from increased traffic and pricing. This leveraging was partially offset by wage increases. Occupancy and related expenses as a percentage of sales were 7.2%, compared to the prior year quarter, 7.1%. Other costs as a percentage of sales increased to 12.5%, compared to 11.5% in the prior year quarter, due to an increase in marketing costs as well as general cost inflation. General and administrative expenses as a percentage of sales decreased to 14.2%, as compared to 15.5% in the prior year quarter. On a dollar basis, G&A expenses were $7 million as compared to $5.9 million in the prior year quarter. As we've mentioned in the last several calls, leveraging our G&A line has been a main focus of ours this year. The quarter-over-quarter increase of $1.1 million represents an increase of 18.8% against a revenue increase of approximately 30%. We're very pleased with this level of leverage, and we will continue to keep this as a main focus going forward, while making sure that we continue to make the key hires necessary to fuel our aggressive growth, such as in our construction and in our operations departments. Operating income was $1.3 million, as compared to operating income of $0.5 million in the prior year quarter. As a percentage of sales, operating income was 2.7%, as compared to 1.2% in the prior year quarter. Income tax expense was $41,000, compared to a benefit of $2,000 in the prior year quarter. Net income was $1.7 million, or $0.16 per share, compared to net income of $0.5 million, or $0.05 per share in the prior year quarter. Restaurant-level operating profit as a percentage of sales was 23.5%, compared to 22.5% in the prior year quarter. Adjusted EBITDA was $5.1 million, compared to $3.2 million in the prior year quarter. Turning now to our cash and our liquidity. At the end of the fiscal third quarter, we had $70.5 million in cash and cash equivalents and no debt. This large increase in our cash balance is due to the follow-on offering, which we closed in April of this year. Lastly, I want to reiterate and update the following guidance for fiscal year 2023. We expect total sales to be between $187 million and $189 million. We expect to open between nine and 11 new units with average net capital expenditures per unit of approximately $2.5 million. Lastly, we expect general and administrative expenses as a percentage of sales to be between 15% and 15.5%. Please note also that our guidance assumes no material changes in consumer behavior or broader macroeconomic trends. In addition, as mentioned during our previous earnings calls, at the conclusion of the current fiscal year, beginning with our first quarter earnings call, we will no longer quantify quarter-to-date performance. With that, I'd like to turn the call back over to Jimmy. Thanks, Jeff. This concludes our prepared remarks. We are now happy to answer any questions you might have. Operator, please open the line for questions. As a reminder, during the Q&A session, I may answer in Japanese before my response is translated into English. Thank you for your attention. Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. Thank you. Our first question comes from Jon Tower with Citigroup. Please proceed with your question. Great. Thanks for taking the questions. Just curious if you can dig in a little bit on the quarter to date? I believe you said 14.7% comps quarter to date. Do you attribute that primarily to the promotional activity that... And And I apologize for not following exactly the promo that's on air at the moment, but would you attribute most of that to the promotion, and how long do you anticipate that promotion to stay intact? Thank you, Jon, for your first question. Please allow me to answer your question in Japanese, Ben is going to translate.[Foreign language] We're extremely pleased with the results with We Bare Bears. Our marketing team did an amazing job with setting us up with that collaboration, and it's definitely It's played a very meaningful part in those 14.7% comps that you'd mentioned. The all of our campaigns are over a two-month period, so we began in June for We Bare Bears, and we're going to go through the end of July with We Bare Bears. The historical pattern that we've seen is typically the excitement for a given campaign is greater in the first month than the second month. Our, you know, expectations are relatively tempered for, you know, July's We Bare Bears impact versus June's. For the first week of July, it, the enthusiasm is certainly helped. We're very pleased. Great. Just to kind of continue that line of thinking, I believe you had a planned promotion with DC Comics still on track for hitting in August, if I'm... Is that correct? Yeah, absolutely. We Bare Bears is one of our first sort of, you know, nationally known American brands, and DC being another one of those brands, we're very excited about August. If we had to put anybody up against Demon Slayer, I'm glad that it's DC. Okay. Then just on the labor cost per operating week, I was just looking at that in the model and was surprised to see it actually go down on a year-over-year basis, considering, I'm assuming, some of the inflation you're seeing. Can you perhaps speak to what the drivers were behind that? Anything funky in last year's third quarter, or are we just talking about a combination of sales leverage and technology rolling through the system, and therefore, you know, the sustainability of this trend moving forward? How should we think about that? [Foreign language] Looking at labor cost performance year-over-year, you're right. The two driving factors or the three driving factors, one would be sales leverage. The other would be the effectiveness of our three initiatives. We've completed rollout at the end of Q3 of last year. This year we had benefit for the full quarter from the server robots, whereas we only had a partial benefit in the preceding year. The other is our operations team and our COOs taken, you know, store operations, store management or labor management. They've made that one of their top priorities, and they've really been executing on that. We're very pleased with where we've come in for Q3. In terms of sustainability on a go-forward basis, we'd like to provide some more context because we'll be coming up against some difficult comparisons. Looking to Q4, historically, we've always seen leverage from Q3 to Q4. We do expect a degree of leverage, but certainly not, you know, in the range of, you know, 200 basis points or anything like that. The first factor being that the three initiatives have, you know, they've been live for full 12 months, so they're baked in from a comps perspective. The other is that we had a bonus adjustment in Q4, which we don't expect in Q4 this fiscal year. While we do expect leveraging in sales, basically, We think the way to look at it is just look at Q4's labor, as a percentage of sales, and that's probably going to get you pretty close to Q4 this year, as opposed to look, you know, trying to triangulate from the quarter-over-quarter basis point step down that we saw in Q3 2022 to Q4 2022. All right. Thanks a lot. I'll pass it along. Thanks, Jon. Thank you, Jon. Thank you. Our next question comes from Joshua Long with Stephens. Please proceed with your question. Great. Thank you for taking my question. I was curious if you could talk about some of the trends through the quarter. I know as we left off last quarter, started off in that sort of low double digit, 11% range. Very strong. Curious if there's any, you know, any additional color you could share on just how things transformed through the quarter overall, and then maybe by region with, you know, the California and Texas comp numbers that you called out as well. [Foreign language] Looking at a regional basis, as Jeff mentioned in the opening remarks, California outperformed Texas comps for this quarter, but that's on a single-year basis. If we do a multi-year comparison, you know, the comparison becomes much closer simply because the operating environments for California and Texas have been so radically different, especially over the last two, three years, that, you know, the year-over-year comparisons, just the frame of comparison can really determine your answer. In terms of the cadence of performance, March was strong. April was a little bit weaker, which I think is what everybody saw in the restaurant industry, and then May was stronger. June is actually, you know, we couldn't be more pleased with June, with the 14.7% that we saw. you know, very strong traffic. It's been a nice June for us. I think, Josh, too, what's important to note is, and we've mentioned this in conferences as well, that, you know, our three best units are in Washington State and Texas and in New Jersey. While certain regions, Texas may be better than California some quarters and vice versa, we're very pleased and very happy to see that our three best restaurants are very geographically dispersed and we continue to do well pretty much in every region throughout the country. That's super helpful. I appreciate those two points. When you think about trends, I think in the past couple of quarters, we've talked about pretty consistent per-plate consumption. We also have been trying to think about this from a marketing perspective in terms of you mentioned the We Bare Bears being the first American or, you know, most widely known here in America, and then going into thinking about the DC Comics. Are you pulling in a new guest? Are you pulling in your kind of more frequent guests or your current guests more frequently? How do you think about that, and how does, you know, how has per-plate consumption trended through 3Q? [Foreign language] Looking at, you know, consumer sentiment, we've per-plate consumption and check, it has been flat. Check management has been pretty much, you know, minimal, negligible. In terms of the impact for We Bare Bears, one of the ways that we're thinking about it is that over the last quarter, we regained about 120,000 rewards members, and for all of Q4, we'll be working with American Properties, We Bare Bears for the first two months and then DC Comics for the latter month, for the last month of August. If, you know, our ability to attract rewards members materially, you know, is a much larger number than what we've seen in past quarters, then certainly this would be, you know, something that we put into our strategic toolbox. One. We see a pretty strong correlation between the effectiveness of a brand collaboration with sign-ups, because to get the better prizes, the giveaways, the T-shirts, the canvas bags, et cetera, you need to register as a member. A strong collaboration certainly can fuel membership growth, and that'll be one of the ways that we're, you know, determining the effectiveness of these brand collaborations. Great. That's very helpful. One last quick one for me, then I'll hop back in the queue. When we think about kind of the marketing efforts, I think, Ben, in prior calls, you've talked about the opportunity to optimize your awareness, to drive accessibility, and it's been more about managing the current spend and again, optimizing versus adding dollars to the marketing pipeline. Can you square that up with some of the commentary you had in terms of the 3Q numbers that just you just reported in terms of marketing kind of stepping up, it sounds like? Is that kind of a one-time, you know, 3Q dynamic? How should we think about marketing and spend and then the overall kind of progress of, against your initiatives of driving awareness and optimizing the brand visibility? [Foreign language] Josh, I think what you're referring to is the comment in the other cost line, where we mentioned marketing costs being one of the drivers. Really, the marketing cost is maybe incremental by 10, 20 basis points. It really wasn't meaningful. As we mentioned in past earnings calls, the new marketing strategies, particularly the targeted advertising for, you know, Google's many channels, that's really just been a reallocation of marketing dollars. As we've seen with, you know, the traffic performance, particularly in the last, you know, two quarters, we've been exceptionally pleased. We think our marketing dollars are moving very effectively. Yeah, we don't expect a big step up or anything like that in terms of marketing spend in future, you know, anytime in the near future. We're very pleased with the performance. Understood. Thank you so much for the time. Thanks, Josh. Thank you. Our next question comes from Sharon Zackfia with William Blair. Please proceed with your question. Hi, good afternoon. I wanted to touch on development because it's still a pretty wide range implied for the fourth quarter, anywhere between three to five new openings, and I know you've opened one so far. I guess, are you more comfortable at the lower end or higher end? I I mean, where's the status of that construction? I know everyone's been battling, kind of, permitting and delays and so on. I'm just curious kind of where your comfort level is on hitting, you know, maybe the higher end of that. [Foreign language The nine-11 number that we shared, we're extremely comfortable with. Of the seven units under construction that we mentioned, most of them are pretty far along construction. They're in the back half, and so hitting that higher end is certainly not outside of the realm of possibility. But for us to hit the lower end, I think is a lot unlikelier. It would really have to take sort of unprecedented delays. We. Yeah, I'd say we're very confident about the remainder of the quarter. That nine-11, we're very confident in the number of units, but, you know, we're already in the first week of July, the impact that the subsequent units can have in terms of, you know, the impact of fiscal 2023 revenue is, you know, it's going to be on the order of a month or less. That's not going to be super substantial. That being said, our revenue guidance has, you know, bakes that in. Both in terms of revenue guidance and the unit count, unit pipeline, we're extremely comfortable with the numbers that we've shared with the street. Thanks for that. I know for June, you talked about kind of the changes to the waitlist algorithm being a positive. I'm curious if there's any way to quantify that, as you've had this and tested some locations longer, is that a benefit that kind of builds over time, or is it something where you kind of manifest that improvement and kind of the lunch, and/or late night day parts pretty quickly? Yeah. In terms of quantifying it, We just finished the rollout in Q3, and there's a six-week learning period for the algorithm, where it sort of takes in. You know, it uses that to build its traffic expectations. We're a little bit low to build, you know, provide, you know, numbers or numerical expectations. In terms of what, your second question, I think, is really interesting about, does the impact build over time? One thing that we've been discussing with the marketing department is that we rolled out these updates, these improvements to the waitlist app, without really communicating that necessarily to our guests. The accuracy's improved, and I imagine the guest experience has improved, but I don't think that guest behavior will change until there's a concerted marketing effort to let guests know that there actually has been a material improvement in our waitlist app and that they can build, you know, their schedule around it. Now that we've finished the rollout of the waitlist app, we're working on the update to our new rewards program, which is going to have a new skin. It's going to look completely different from the existing one. The idea is that we're really going to bundle that communication with the rollout of the new apps. Maybe and just say, "The app wasn't this great. The app is really great now. Come to launch. Also, Sharon, while we don't have the data yet to be able to quantify, you know, what it means in terms of sales or comps, you know, the new waitlist app, what we do know and the information we do have is that wait times are more accurate. We do know that the overquoting or the underquoting of people by half an hour or more has decreased substantially to where Some restaurants could have been in the 20%-25% range of people being misquoted by half an hour or more on their wait times. We know now that in most of our restaurants, that's down into the single digits. Okay, great. Thank you. Thank you. Our next question comes from Todd Brooks with Benchmark Company. Please proceed with your question. Hey, thanks for taking my question. Jeff, I wanted to ask about the G&A performance in the quarter. Obviously, very strong improvement, provided guidance for the full year range, but where are you, and I know this is one of your priorities coming in as far as attacking this opportunity, and as we're starting to look at forward years, have you completed most of the efficiency efforts that you went after, or is there more opportunity for efficiency as we look out to fiscal 2024? There are more opportunities for efficiencies. One of the things I talked about in the past was being able to leverage some more technology in the support center on some of our daily things that we do. We actually recently, one of the first things we did is in our Financial Planning and Analysis department, we're launching a new software for FP&A that will improve substantially not only our forecasting and our budgeting, but also the research tools that we have in the support center for the restaurants to determine what's going on with their P&Ls. It's going to give our operators a tool to be able to dig deep into their financials on their own, as well as having us in the support center help them. That's just one technological step that we've taken. I've asked other departments to really think about: How can IT help you? What can we do? We saw a really good leverage in the last two quarters, 120 bits in Q2 and 130 this quarter. Very, very happy with that, and quite honestly, exceeded my expectations a little bit, and I'm very pleased and very happy with how the team has stepped up in the company in order to make that happen, because this is not a single person effort, it's an effort of the entire company. What we did this year for the past nine months, is slow down our hires a little bit in the support center, continuing to hire in the areas where we need to in order to support our growth, such as construction, development, recruiting, training. We're going to continue to do that. We've asked people to really kind of, you know, do what they can to keep the hires at a minimum. That's why we saw such good leverage. We are going to continue to see leverage going forward. I haven't provided any guidance on Wednesday. We'll be in single-digit percentages. We will get there someday, but that's not necessarily in the next 12 or 24 months. We are very happy with the leverage that we've seen over the last two quarters. That's great. A follow-up question, if I may. Actually, a quick question on the pricing side. I think the way that I heard you guys talking about the waterfall was 13%, and during the quarter, we lapped 6% at the start of July, but at the same time, we took another 3%. Kind of the back two months of the quarter, is it right to think about running maybe 10% effective price? Is my math right there? Go ahead. Well, I was going to say, what you'll see is there's a 6% and a 7% that were in there for June. In Q3, you'll see the 6% and 7%. As we mentioned, we rolled off 6% on July 1st, but we took 2%. The pricing for July and August will be 8% for each of those months. 13% June, 8% July and August. Perfect, thanks. My final one is. Sorry. I'm sorry. Moving back, sorry, not July and August. 13% June, 9% July and August. Okay, perfect. Thanks. It's a 7% for December and a 2% that we just took. Fair enough. The final one, $70 million in cash on the balance sheet after the offering. I know the teams talked about, "Listen, we're building to grow. We'll make the hires that we need to grow." I guess between the brand's performance, landlord's appetite to get Kura into projects and now, the magnitude of cash on the balance sheet, do you see any uptick in the opportunities to open or accelerate the unit openings? I think you talked about 11 leases signed already for the coming year, but just would like to know if the incremental capital and the readiness for the organization as you're thinking of growing any faster into the opportunity that the brand has in the U.S.? Thanks. [Foreign language] This is very similar to what we've said in past earnings calls, but the way that we think about our unit growth pace is really in terms of three gaining factors. The first would be our liquidity, the second would be the availability of high-quality sites, and the third would be our management pipeline. As you mentioned, you know, with the April raise, we're in, you know, the best cash position we've ever been in, and the sites are great. For the last several years, the focus has really been on making sure the quality and breadth of the management pipeline can really keep up with our growth goals. What we've said historically is that, you know, 20% is what we think is what we promised the street when we went public. We tended to outperform that. Last year, we did 25%, the year before, 28%. Midpoint of our guidance is for this year, is 25%. You know, that's the, that's the neighborhood that we're comfortable in, and that's the neighborhood that, you know, we think we can continue to deliver. One other thing that we've mentioned in past earnings calls is that just the sheer number of new markets that we're in, we're going through additional growing pains on a, you know, in terms of building up regional management teams, not in terms of a regional manager, but managers by region. Once, you know, these single-unit markets become infilled, become two, three, four-unit markets, then you get that sort of ability to self-sustain. That's another opportunity. Regardless, you know, just with the number, if you look at the number of units we've been putting out over the last five years, even if our growth as a percentage doesn't change, that number grows materially every year. We're very pleased with our growth. To keep that growth trajectory going, Todd, it kind of ties back full circle to the G&A question you just asked. That's why we're going to be continuing to invest money into recruiting, because it's all about eliminating potential bottlenecks. As you mentioned, with the $70 million in cash on the balance sheet, we've eliminated a potential bottleneck for cash. We're set with cash for a while. As we continue to invest in the recruiting side, we want to make sure that we eliminate any potential bottlenecks as it relates to hiring managers. We're very well shored up in terms of development going forward to keep that pace. Perfect. Thank you all. Thanks, Todd. Thanks, Todd. Thank you. Our next question comes from Mark Smith with Lake Street Capital. Please proceed with your question. Hi, guys. I want to follow up on that development question just a little bit. Any additional insights on what you're seeing on deals these days? You know, any change in TI dollars and kind of availability of real estate deals that you're looking at? [Foreign language] The biggest shift would really just be going from, you know, smaller developers to really national developers. National developers, especially if they're, you know, whatever mall they have is quite large. Their TI dollars tend to be a lot bigger than a, you know, a mom-and-pop strip mall developer. You know, we've seen that change, but that's more of a structural change. I don't think that's necessarily reflective of, you know, economic trends or anything like that. It's just a different position that we're in our growth cycle. Okay. Then just wanted to look kind of further out. You guys did a good job driving margin here. You know, you've got some initiatives that you talked about a little bit, like some back-of-the-house dishwashing technology, things like that could maybe be margin drivers down the road. Any updates on that or any other initiatives that you have that maybe can help improve some restaurant margin as we look forward? Yeah, absolutely, that's always the case. In terms of the dishwasher, that is the single most exciting thing that we have in our pipeline. I'm very pleased to say that I'm actually now in charge of these initiatives, if, you know, you've got only one neck to strangle, yeah, no, I've been extremely hands-on. Right now, we're beginning the testing in a physical restaurant in Japan. Pending that, actually, we're actually trying to get approval in the United States in parallel. You know, it's unfortunately, it's impossible for me to give a timeline on when we can roll this out, but the impact from the dishwasher alone would be greater than the three initiatives that we rolled out last year. The upside is tremendous. Keeping in mind that, you know, with such a material change, this is the impact would probably be limited more to new restaurants, but it is something that I'm extremely focused on. The other part about margin is, you know, we're a growth concept. As Jeff mentioned in his opening remarks, our G&A grew by 18% against revenue growing by 30%. I'm going to do my best to deliver incremental restaurant margin improvements, but really, the meat of the story is in levering G&A. Okay. Maybe I'll squeeze one more in. You've talked quite a bit about labor. Are you guys seeing any difference in retention rates here over the last couple of months? [Foreign language] It's always been a point of pride for us that we outperform industry turnover averages, you know, for pretty much the entire time we've been in the United States. We think it's because we provide a really great place to work and, you know, our take-home compensation is probably, you know, the highest among casual dining restaurants. I think it'd be really hard to compare with the tips that you can get with our efficiencies. Just being a relatively new concept to the United States, most people aren't familiar with revolving sushi, being in a lot of new markets. For instance, if we're training a management candidate outside of their home state, you know, there's greater attrition associated with that. That's really just a growing pain for us, given our current position where we are in the United States. We know that as we infill, this is only going to get easier for us. As I mentioned earlier, we're already beating the industry average, and so we're very happy with where retention is. Excellent. Thank you, guys. Thank you. Thanks, Mark. Thank you. Our next question comes from George Kelly with ROTH MKM. Please proceed with your question. Hey, everybody, thanks for taking my questions. First one for you on the back of the dishwasher. Ben, you were just going through your excitement around that. Curious, you said that that alone should have a bigger impact than the three initiatives from last year. Can you just quantify and remind us those three initiatives and how much savings they drove? Yeah. Those three initiatives, and as a reminder to the other people on the call, those, we're referring to the robot servers, the tableside payment, and the touchscreen drink orders. Our expectation is about 50 to 60 basis points in labor improvement from those three initiatives, and the dishwasher, we are confident, would be more meaningful than that. Okay, that's great. And- Then Sorry, I interrupted. Keeping in mind that the impact will cascade from when we put it in, just because. You know, the robot servers, we can put into all of our existing restaurants. The robotic dishwashers will probably be on a go-forward basis, you're not gonna see, like, a light switch. It'll be, you know, a steady improvement. The dishwashers, as we've mentioned before, they're actually the highest paid position in the back of the house or among the highest paid positions because they're not eligible for tips. It's the one, you know, position that the DOL has not given us approval for. Our other kitchen employees are technically serving guests through the conveyor belt, they're eligible for tips. It's a physically grueling job, so it's an expensive position with high turnover. Being able to automate this and make it easier for the remaining person, you know, their workload, the remaining workload, even for them, will be materially less than what they're dealing with now. The benefit, it won't just be, you know, the restaurant level, it'll be at the G&A level, where we don't have to focus on recruiting and constantly replacing people and stuff like that. Yeah, I'm really excited for it. Okay, that's great. Second question from me. If I look historically at your restaurant level margin, just the seasonality of that line, there's been a really nice step up, between 3Q and 4Q historically. You know, you just reported such a strong number. I'm just curious if there's anything I should be aware of that would make it harder for you to achieve that kind of step up again this year? Well, I think the biggest thing, George, when you look at last year from Q3 to Q4, as Jimmy already touched on this, was, we got such a big jump in labor from last year because of the initiatives that we put in place. It was the first quarter where everything was fully in place last year between Q3 and Q4, we got a lot of benefit between those two quarters. In addition, we took an incentive compensation adjustment last year in Q4, both of which we're not gonna have those benefits in this year. If you look specifically at last year, be very careful that, you know, to assume that kind of a jump from Q3 to Q4 in terms of the labor line. What you've seen historically in the other lines, I think is probably pretty consistent with where I would keep your eye on. Okay, that's helpful. Great. Last question for me. I don't believe you've talked about this recently, but, I remember as part of the IPO process, there was a TAM study that you guys did just about the number of units that you thought was a realistic goal. There was discussion about maybe updating that. Is that something you're still working on? It's certainly not... We don't have a new one, is the short of it. You know, we're still very, you know, we've got about 50 units against that initial white space estimate of 300, we're not necessarily in a rush to update it. One of the trickier things that we've seen when exploring this is that I, you know, I think, you know, for us, in our estimation, the biggest opportunity, it, you know, since we've gone public is really the, and it's unfortunate, but it's the mass closures of Japanese restaurants. White space studies tend to focus more on demographics as opposed to competitive factors. That's the tricky part, is figuring out how to bake in just how meaningfully the landscape has changed. The demographics haven't changed that much, but the competitive landscape has changed completely. That's where we are. We do know, too, that when we did the TAM study at the IPO, that the parameters that were used were very conservative. We do know that we make very good money at sales levels that are below what we used in the last, white space study. When we redo that, if we just lower some of the parameters, I think everybody on this call, and we all know, and we've even said at conferences, that we believe that number is going to be much higher than 300. We will, at some point, update that study, as most companies do, about five years or so from their IPO, which for us, would be, next summer. Fortunately for us, it seems like analysts provide their own white space numbers for us, and so we haven't had to give a new one. Thank you. I'll keep guessing. Thanks, George. Thank you. Our next question comes from Jeremy Hamblin with Craig-Hallum Capital Group. Please proceed with your question. Thanks, guys. This is Jack Cole, for Jeremy. Congrats on the great quarter. You mentioned that wages are still up year-over-year. Could you just clarify the magnitude of wage pressure in Q3? Is that still up high single digits? Just how do we think about wage pressure heading into FY 2024? [Foreign language] I think in the last quarter, we mentioned that year-over-year labor inflation was about 10%. That's, you know, what we've seen largely be the case for our Q3. We've seen a little bit of easing, I think that's reflected in the pricing that we took, being a lot lower than what we historically take or than what we've taken over the last year and a half. I'd say it's a lot closer to what we've historically taken, which really speaks to our confidence in terms of where we expect our labor and our costs to land for, you know, whatever period of pricing this is going to cover. Yeah, low single digits, mid single digits of labor. Yeah, we're very happy with where things are going. Got it. That's helpful. Related to the unit development again, what does the pipeline look like in terms of executed leases versus active units under construction? I think you mentioned 7 under construction, so could you just clarify that and then provide us the number of executed leases? [Foreign language] We've got seven units under construction, most of them, you know, being in the back half of their construction phases. We've got 11 leases under 11 leases that have been executed and a number that are, you know, we expect to be executed any day now. You know, double, triple, quadruple the number of LOIs. The pipeline's great. We're very happy with the pipeline. Got it. Thank you. That's all for me. Thanks, Jack. Thank you, Jack. Nothing different. Thank you. Our next question comes from Joshua Long with Stephens. Please proceed with your question. Great. Thanks for taking the follow-up. Wanted to see if we could dig into the inflationary environment, specifically on the food basket. You talked about how that is coming back in line like we had hoped and sort of expected here in the back half of the year. I think in prior quarters, we had talked about an opportunity, or you all had talked about an opportunity in terms of sourcing, maybe with some contracting around shrimp and salmon or some of the other key proteins. Curious if you could give us an update there. Jeff, I know one of the other initiatives that was on the plate for, at some point, maybe a longer-term one, was the ability to shift to a broad line distribution, partner. Just curious if you have any sort of update there, if any, in terms of just how you're thinking about that or maybe the timing and potential. I do have an update. The broadline distribution project really goes hand in hand with talked about signing contracts for six months or a year or whatever. We'll be able to be in a much better position to do that once we get our consolidation underway. The update on that consolidation piece is that in the past, we had talked about moving to a U.S. broadliner, such as Sysco or US Foods. What we've done, what we've decided to do, is consolidate some of our Japanese broadline distributors, which we already use. What we found is that it was very difficult for the U.S. broadliner to get a hold of some of the very specialized Japanese ingredients that we use in our products, in our food. Since the Japanese broadliners that we use already have those, it's easier for them than to go get the mainstream type stuff. What we're doing is we're consolidating down into two suppliers that we already use, and they are Japanese companies that have U.S. operations. By doing that, we're gonna have the entire country covered, but more importantly, we'll make sure that the very hard-to-get specialty items that are used in Asian cooking, we'll be able to get. That's a process that we're doing. It's in progress. We've already done many of our SKUs are already consolidated, and I expect that in the next several months, that will be done. In terms of the inflationary environment that we've seen, we have seen that continue to ease. We saw about a 2% quarter-over-quarter decline from Q2 to Q3 in our cost of goods sold inflation. That line continues to move in a positive direction. With all the work that we're putting into the supply chain and the consolidation with the distributors, as well as the, you know, general economy seems to be smoothing out a little bit, all of those factors are working in our favor, and we're very happy going forward is what we're seeing on the COGS line. That's super helpful commentary. In terms of just thinking about the 3Q inflation, understand that 2% was quarter-over-quarter. Right. How would we kind of frame that up on a year-over-year basis? It's about what we talked about last quarter. It's, you know, in about the same range as we talked about last quarter, but what's most important to us is it's easing. Understood. That's super helpful. One of the key pieces in one of your questions earlier, that came through was that it's not really about. You're not capital constrained. You've got a great concept, lots of growth opportunities. You mentioned the importance on the human capital side. Just curious if you could, you know, quantify or talk about that manager pipeline and, you know, where the biggest opportunities are to either develop talent, funnel talent into that, or just, how you're approaching that, because that seems like that is the bigger piece of the overall growth story going, you know, over time. [Foreign language] Yeah, what. This sort of goes back to what we mentioned earlier, but, yeah, we have a unique concept, and we're in a unique partner growth where the majority of our units are single unit markets. Naturally, we're gonna have growing pains associated with recruiting and training and, you know, HR. That's also why that's really been the theme of our earnings calls for the last two years, is we know that that's gonna be the single most important gating factor, and we don't wanna compromise on our growth. That's what we've really focused our efforts on. When we're discussing this is really an effort to be, you know, transparent about our priorities. What we don't want you to think is, you know, this is gonna be, like, this is a serious enough concern that it's gonna compromise our ability to grow. That's not the case at all. What we're saying is that this is simply, you know, the top priority for where we are. The other thing is that, you know, with America, with our American operations working so well and, you know, everybody's seeing tremendous opportunities for growth, there are a lot of Japanese expats that want to join the American group. We've got a dual pipeline of internal or really, a triple pipeline of internal promotions from, you know, American store employees, Japanese employees that are banging down our doors because they wanna be the next, you know. There's just countless examples of people that have grown tremendously over the last several years. Then, you know, the external hires as well. Yeah. So to summarize, this is I wouldn't call it an easy position that we're in, but I certainly wouldn't call it a concerning position that we're in. Totally understand. To be clear, there's no concern on my part from that side. Just knowing it's, restaurants are, you know, an easy business. Easy is hard to do, especially when you're trying to scale your culture. I appreciate that perspective and the information there on the dual and triple pipelines. That's certainly encouraging. Appreciate the color. Of course. Thank you. There are no further questions at this time. This concludes today's teleconference. 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