Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Kura Sushi Fiscal Q2 2025 earnings conference call. At this time, all participants have been placed in a listen-only mode, and lines will be open for your questions following the presentation. Please note that this call is being recorded. On the call today, we have Hajime Jimmy Uba, President and Chief Executive Officer; Jeff Uttz, Chief Financial Officer; and Benjamin Porten, Senior Vice President of Investor Relations and System Development. Now I'd like to turn the call over to Mr. Porten. Thank you. You may begin. Thank you, Operator. Good afternoon, everyone, and thank you all for joining. By now, everyone should have access to our Fiscal Q2 2025 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 is 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. We had a very productive Q2, making headway on the new market opportunities represented by our success in Bakersf ield, building out our IP pipeline and beginning testing or rollout of several system projects that have long been in development. New restaurant openings are going exceptionally smoothly, with 11 units opened to date and another 6 under construction. While the inclement weather was an unexpected sales pressure, we are pleased overall with the quarter due to the great progress we made across our initiatives. Total sales for the fiscal Q2 was $64.9 million, representing comparable sales growth of negative 5.3%, with price and mix of 3.2% offset by negative traffic of 8.5%. We knew coming into the quarter that Q2 would be the most difficult comparison of the year due to the wrapping of last year's successful Peanuts IP campaign without an IP collaboration during the current Q2, but this was compounded by the unexpected weather impact we experienced in January and February, with wildfires followed by flooding in Southern California and cold waves across many of our other markets. Cumulatively, we estimate that Q2 weather represented a comp headwind of 400 to 500 basis points. Cost of goods sold as a percentage of sales improved by 90 basis points over the prior year quarter due to pricing and supply chain initiatives. Labor as a percentage of sales increased by 180 basis points due to sales deleverage caused by weather and year-over-year labor inflation. Restaurant-level operating profit margin was 17.3% as compared to 19.6% in the prior year due to the previously mentioned sales deleverage. Restaurant openings are proceeding smoothly, with three new unit openings during the Q2: Berkeley, California, Fort Worth, Texas, and Paramus, New Jersey. Subsequent to quarter end, we opened units in Scottsdale, Arizona, and Lynnwood, Washington State. We are very pleased with the performance of this year's openings and believe fiscal 25 has the potential to be one of our strongest classes. In our last call, we had mentioned the success we've seen with our Bakersfield California restaurant opening and am pleased to report that Bakersfield is performing just as well as when we last spoke. As a reminder, up until Bakersfield, we had only opened restaurants in the top 40 or 50 DMAs. Bakersfield is significant for us because it represents the 120th largest DMA in the United States, causing us to reevaluate our previous considerations for what we constitute a viable market. Recent visits to markets like Birmingham, Tulsa, Boise, and Oklahoma City have all supported our early enthusiasm. Along with the greater white space potential, these markets are especially exciting to us as new markets have no impact on cannibalization, which we estimate to be an approximately 4% comp headwind for the current and prior fiscal years. With the progress that our development team is making, we believe that we'll be able to return to a 50-50 split of new and existing markets by fiscal 27, which we believe will serve as a comp tailwind. While the lack of an IP collaboration in the prior quarter made for what we believe to be the most difficult year-over-year comparison in fiscal 25, this pause allowed us to focus our efforts on building a great pipeline, and I'm extremely pleased to say that in fiscal 26, we will not have any gaps between IP collaboration campaigns and expect to have seven or eight collaborations, which will be a record for us. We've also been developing our food-focused marketing muscles over the course of this fiscal year, and we are very much looking forward to seeing the combined impact of these campaigns and IP collaborations beginning in May. Lastly, I would like to touch on the progress we've made in system development. The rollout of our new order panel software is proceeding smoothly, and we expect full rollout within the fiscal year. This new order panel software is supplemented by a redesigned Bikkura-Pon, which is much more intuitive than the current model. This redesign is meaningful as our servers spent several minutes explaining how the old Bikkura-Pon model works when we're seating first-time guests. The new touch panel software includes an optional introduction video for first-time guests, which, in conjunction with the updated Bikkura-Pon, eliminates the need for our servers to go through their intro explanation, which we expect will reduce front-of-house workloads. To coincide with our upcoming IP collaborations, we are rolling out improvements to our Bikkura-Pon system as well. Guests will soon be able to earn their second prize capsule after eating 25 plates instead of the current 30 plates. Considering our average party sizes and per-person plate averages, we believe that 25 plates is a more realistic reach than 30 plates and that this has the potential to drive ticket growth while also improving guest satisfaction, especially families with two children. Finally, I would like to share our progress on what we are most excited about: the reservation system. We began testing in February and have since expanded it to three restaurants, including stress testing at one of our highest-volume restaurants. The reservation feature has been very well received by guests, and its system-wide rollout is now one of our top priorities due to its potential as a traffic driver. With the old waitlist program, if you have fixed plans like going to see a movie, Kura is off the table because you can't predict how long the line will be or when your actual seating will be. By giving guest control through reservation slots, our hope is to open up new occasions for guests to visit Kura. Additionally, historical attrition rates for Kura guests in line are between 20% to 25%, and the ability to capture these guests represents a meaningful comp opportunity. While it's too early for us to provide any quantitative commentary, shoulder period sales did increase with the implementation of the reservation system in Kura Japan's restaurants. Lastly, reservations are accessed through the rewards program, and we are excited to see what the rollout does for membership registrations. As you can see, we've been very hard at work. Many of these efforts have been long in development, and it's been great to see so many projects be approved one after another. I'm deeply grateful for the combined efforts of all of our team members for making this possible. Thank you, everyone. Jeff, I'll hand it over to you to discuss our financial results and liquidity. Thank you, Jimmy. For the Q2, total sales were $64.9 million as compared to $57.3 million in the prior year period. Comparable restaurant sales performance compared to the prior year period was negative 5.3%, with regional comps of negative 1.5% in our West Coast market and negative 8% in our Southwest market. Turning now to costs. Food and beverage costs as a percentage of sales were 28.7% compared to 29.6% in the prior year quarter, largely due to pricing and supply chain initiatives. Labor and related costs as a percentage of sales were 34.8% as compared to 33% in the prior year quarter. This increase was largely due to wage increases and sales deleverage. Occupancy and related expenses as a percentage of sales were 7.9% compared to the prior year quarter's 6.9% due to sales deleverage. Depreciation and amortization expenses as a percentage of sales were 5.1% as compared to the prior year quarter's 4.7%. Other costs as a percentage of sales were 13.5% as compared to the prior year quarter's 14.3%, largely due to lower marketing, travel, and recruiting costs. General and administrative expenses as a percentage of sales were 16.9% as compared to 14.3% in the prior year quarter due to a $2.1 million litigation settlement expense. Operating loss was $4.6 million compared to an operating loss of $1.7 million in the prior year quarter due to sales deleverage and litigation costs. Income tax expense was $38,000 compared to $50,000 in the prior year quarter. Net loss was $3.8 million or a negative $0.31 per share compared to a net loss of $1 million or a negative $0.09 per share in the prior year quarter. Adjusted net loss was $1.7 million or negative $0.14 per share compared to adjusted net loss of $1 million or negative $0.09 per share in the prior year quarter. Restaurant-level operating profit as a percentage of sales was 17.3% compared to 19.6% in the prior year quarter, largely due to sales deleverage. Adjusted EBITDA was $2.7 million as compared to $2.9 million in the prior year quarter. Turning now to our cash and our liquidity. At the end of the fiscal Q2, we had $85.2 million in cash and cash equivalents and no debt. Lastly, I'd like to reiterate our guidance for fiscal year 2025. We expect total sales to be between $275 and $279 million. We expect to open 14 units, maintaining an annual unit growth rate above 20%, with average net capital expenditures per unit of approximately $2.5 million. We expect general and administrative expenses as a percentage of sales to be approximately 13.5%. With all that, I'll now turn it back over to Jimmy. Thanks, Jeff. This concludes our prepared remarks. We are now happy to answer any questions you 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. We will now be conducting a question-and-answer session. If you'd like to ask a question, please press Star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star 2 to remove yourself 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 poll for questions. First question is from Andrew Charles from TD Cowen. Please go ahead. Great. Thank you. I wanted to ask just about the performance through the quarter. I think you talked about 400 to 500 basis points of inclement weather and the LA wildfire impact. I mean, did you see that improve from the trend, improve from January through February? And if you're able to speak about kind of if that trend has further improved in the March and quarter-to-date time frame as well. Thanks. Thank you, Andrew, for your first question. Please allow me to answer in Japanese then if I translate. [Foreign language] まず、天気が回復してから以降のパフォーマンスに関しては、こういったタイプのニュースがあるまでは非常に順調になって、我々はすごくパフォーマンス、喜んで満足してました。 はい。 Speaking to post-weather, so starting in March, performance has been very smooth. We were very pleased with it. Things are a little uncertain now with the tariff announcements, but up until then, we had remarkably smooth performance. In terms of the monthly cadence, January we had the wildfires, but February we had flooding, and so we didn't see any easing from January to February. [Foreign language] あとは2月、1月、2月、両方ともコールドウェーブで、特にテキサスとかイーストコースト中心にダメージを受けたので、非常に1月、2月、結構大きなダメージ、インパクトを受けたと思っています。 Beyond California, both in January and February, there were a lot of cold waves that impacted Texas and our northeast restaurants, so there was pretty meaningful weather pressure across both January and February. Okay. That's helpful. And then, Jeff, I wanted to ask about the margins. In the last call, you talked about 20% restaurant-level operating profit margin could be achievable in '25, as well as labor leverage. Is that still on the table? [Foreign Language] まず、令和に関してちょっと私の方からお答えさせてもらいます。令和に関して、我々一番最初の20%のところ、まず今回のタリフのニュースがなければ、この20%っていうのはきちんと今のQ2の状況を受けても達成できるというふうに思ってたんですけど、今現在非常に不安定な状態になってますんで、引き続き20%を目指すことは変わりませんけども、不透明さが増したということだけお伝えしておきたいと思います。まずちょっと令和のことはちょっとその後で答えます。 In terms of the 20% margins, through March, we were very, very confident that we'd be able to maintain that 20% margin for the full year. That being said, we're seeing a lot more uncertainty with the tariffs, and so we have less visibility onto that 20%, but that absolutely remains our goal. [Foreign language] 令和に関しては、基本的に我々が最初、クォーターの初めで、クォーターというか、フィスカルの初めで言ったのは、ローシングルデジットのレバリインフレーションを考えたんですけど、今現在はハイシングルデジットになってしまっているので、Q3以降も、そのダメージを受けなければ昨年と同じレベルまで回復できると思うんですけど、昨年と比べてベターっていうところまで難しいかなと思っています。一方で、いろいろタッチパネルとかミスターフレッシュの改良があるので、できる限りしっかり改良していきたいなと思っています。 We came into the year expecting lower labor inflation than what we've actually seen. Our expectation was low to mid-single digits. What we've seen to date is high single digits. If we see no impact, if the tariffs have no impact on consumer confidence and there's no change in behavior, then we remain confident that labor would largely be in line year over year. Now, with uncertainty levering year over years, it's a bigger hurdle. まず、月経でもタッチパネルのアップデートとかミスターフレッシュとかでしっかり改善していきたいと思ってます。 That being said, we do have a lot of levers that are unique to ourselves, mainly through our tech initiatives, whether it would be our new Mr. Fresh, our touch panels, or greater sales leverage through increased traffic from the reservation system. Great. Thank you. I'll pass it off. Thank you, Andrew. Thank you, Andrew. Our next question is from Jeffrey Bernstein from Barclays. Please go ahead. Great. Thank you very much. First question is just on the broader consumer. I know at ICR in mid-January, you talked about the consumer being in a much better place. I know you mentioned just now that the weather was a 400 to 500 basis point headwind. I'm just wondering whether there's any concern that maybe what appears to be in part weather is actually the masking of maybe an underlying slowdown in consumer spending. Sounds like you don't believe that was the case through March, but maybe something's changed in April. Just trying to get a sense or how to gauge your confidence that you really, up until most recently, haven't seen any change in consumer behavior when others seem to be talking about perhaps a slowing consumer spending environment. Just wondering what metrics you look at just to give you that level of confidence. I had one follow-up. [Foreign language] 一度、ウェラーのアリが終わった後というのは、我々すごく3月特に満足したんですけども、この1週間のところでいくと、やはりこの2月のニュースとか市場のストックマーケットの影響とかがあって、やっぱりちょっとコンシューマーセンチメントの影響を受けるかなということを思ってます。なんで今回のガイダンス、我々レベルにアップデートしてないんですけど、そういった影響があることを予想した上で我々ガイダンスをアップグレードするのに引き継いだ、なんていうか、そのままだっていうふうに経緯があります。 Looking to Q2, beyond the weather, we were also lapping Peanuts without an IP campaign. We knew that it was going to be the toughest comparison, and we don't interpret it as a slowdown of the consumer or our consumer whatsoever, especially given the performance that we saw in March. Now that we're in April, post the tariff announcements, people's retirement accounts are being impacted with the stock market taking a hit. There's just generally more uncertainty. That would be the biggest reason that we didn't raise guidance for this quarter. But we don't think that's a big deal. Understood. And then just to follow up, you mentioned the tariffs, and it seems like you're referring to it in regards to a consumer headwind seemingly having pressure on markets and consumer confidence. Just wondering, as you think about it from a cost side of things, I know in the past when I asked you to talk about how you have somewhat supply chain geographical diversity and your ability to pivot, I'm just wondering how you think about your specific supply chain. Seemingly, some products could potentially be coming from overseas. So just wondering how you think about the tariff implications on your actual cost side of the business. Thank you. Yeah, Jeff. Hey, Jeff. It's Jeff. Everybody's been doing it. We've been using the last several days kind of scrambling to figure out what the implementation of these tariffs are going to have and what impact it's going to have on our business. The answer, really the short answer right now is that we really don't know yet as we haven't had a chance to meet with our main suppliers and really figure out or determine how much of these tariffs they're going to be passing along to us. On a pretty encouraging note, even though we haven't had in-depth conversations with them, a couple of our top suppliers have already given us preliminary indication that they would be willing to share the impact of these tariffs with us to some extent. But like I said, it's only been about a week, so we haven't been able to sit down with them and determine what that looks like. In terms of our overseas purchases, we know that when we look at our top purchases as it relates to overseas, Japan is one of the top countries of origin in our supply chain. Something that's very encouraging to us is we also know that the Prime Minister of Japan has expressed his willingness to come over and meet with President Trump to negotiate these tariffs. We're hopeful that that's going to happen sometime in the near future. Also, to a lesser extent, we purchased from Vietnam. When the first news came out, I think Vietnam was one of the very first countries to come out and say that they were interested in negotiating. A couple of the countries that we do purchase from overseas seem very willing to come to the table. The negative news of the tariffs coming out, we have received a few positive bits of information as it relates to our suppliers that we hope that once we get these lined up, we'll mitigate the impact to our company in the future. Understood. That's very helpful. Just to clarify, I think you mentioned if not for April or the April uncertainty has led you to keep your sales guidance as is rather than raising it, which is encouraging. I'm just wondering, does that therefore mean you still kind of reiterate your expectation for positive comps for full year '25, barring any significant change in consumer behavior? [Foreign language] もちろん、今回のニュースがある前は我々ポルテのコンポ、フルイヤリーということですごく自信が上がりました。IPOも5月以降ありますから自信があったんですけど、今非常にアンサーテンに回してるんで、今のところはそこは確約ってことはコミットはできないですけども、それを目指してしっかり頑張っていきたいと思ってます。特に5月以降IPOありますし、リザベーション売上の効果とかもありますし、25年サラリーメイトもありますんで、いくつか我々レバーありますから、未だにゴールであることは変わりないです。 Jeff, I think the key word is, and you kind of said it, barring any major changes in consumer behavior. If there are no changes in consumer behavior, absolutely remain confident that we can post positive comps for the full year. We've got a lot to look forward to. We've got strong IPs lined up from May onwards through the end of the year. We have sales tailwinds coming online with the reservation system. If there is no change to consumer behavior, then certainly we expect to be able to maintain positive comps or to achieve positive comps for the year. But that is far from a certainty at this point in terms of whether or not consumers are going to change their behavior. We are not upgrading guidance at this point. Thank you. Thank you, Jeff. Next question is from Jeremy Hamblin from Craig- Hallum. Please go ahead. Thanks. I wanted to come back to clarify the food basket and sourcing. Of your total food basket, what portion is domestically sourced or kind of the range that's domestically sourced versus sourced overseas? We haven't given the state of those numbers yet, but I will tell you, Jeremy, that one of your colleagues, sell-side analysts on this call, put out a report a couple of days ago that estimated them. And I will say that he is in the ballpark if you take a look at that. Okay. And then I wanted to come back to the comments on wage pressure and just get an understanding of the commentary about high single-digit wage pressure. Is that being driven by California or other geographies? Given that you're lapping FAST Act here, it's a bit of a surprise that the pressure is quite that high. Now, certainly the employment dynamic may change. There may be more labor supply here in coming months, but wanted to see if you could provide a bit more color. [Foreign Language] まず、全域でこう上がっているということです。これは法律によって見よう見まねで上がったっていうのもありますし、そうではなくて、やはり従業員さんを確保するために自発的に上げているというところもあって、全域でそういったことが起こっているということです。 This is not a California issue or anything related to the FAST Act. This is something that we're seeing across markets, whether it's because of statutory minimum wages. We're seeing some come online as of July 1st as well, which was not the case in past years. And then just being competitive for the market. So this isn't a California issue. [Foreign language] しっかりと事業を上げてでも従業員さんを確保して、今水面下でいくつかのテックのイニシアチブでやって、人的削減できる将来に向けての改革がありますから、それをしっかりできることで将来的に抑えていくことを狙っています。 We think it's always important to invest in our team and make sure that we have best of class people representing ourselves at the restaurants. At the same time, we push ourselves as much as possible to work on these system initiatives so that we can keep our man-hours at a minimum. Got it. And then lastly, just want to come back to the cadence of new unit openings. So you've opened 11 year to date. I think you have another six or seven maybe in the pipeline. I know not all of those will get completed in FY25, but do you expect any more to be opened in Q3? And then just in terms of thinking about the timing of when things might open in your Q4, I know that in Q2, all of the openings happened in February. So even though you got three open, I wanted to just understand what the revenue contribution was, given that I think from an operating week perspective, you only had like five or six operating weeks in which you had new units opened in that quarter. [Foreign language] まずQ3に関しては1店舗オープンできるというふうに思ってます。これはもうすでにオープニングスーンが出てますので、近い将来にオープンできると思ってます。Q3はその1店舗だけです。Q4に関しては今現在まだ14店舗のガイダンスを出してますから、2店舗のオープンが停止してますけども、もし次の月までに、次のアーニングスコールまでに開けれるようなことがあったらアップデートすると。今現在ではやっぱりちょっともう少しモールの中での工事とかもあって、まだ2店舗、Q4の2店舗しか今のところはちょっと確約できないです。 Absolutely. I've got one more scheduled opening for Q3. If you go on our website, you can see that we already have the opening soon language up. That should be opening soon. In terms of Q4, we haven't updated our 14-unit guidance. We're very comfortable with being able to open two units. Should we be able to open both of those prior to the July call, that would be an opportunity for us to provide an update to guidance on the unit front. Right now, it's just construction is happening in one of the constructions in a mall, so there's a level of uncertainty in terms of construction duration there. [Foreign language] あの、どうもすみません。 It's specifically in the, it's in a food court. We're sort of like the centerpiece of the food court, but we've never had to do construction under those constraints before. Obviously, they're not shutting down the food court to let us build a restaurant. Yeah, it's all overnight construction in that restaurant, so it takes a little bit longer. Great. Thanks so much for the questions, taking the questions, and good luck. Thank you, Jeremy. Next question is from Matt Curtis from William Blair. Please go ahead. Thanks, Jeff. I wanted to get back to the revenue guidance for a minute. Could you tell us what second-half comp expectations you have embedded to get to the full-year revenue guide? [Foreign language] まず、今現在非常にアンサンブルに回しているところで、コンポの我々のところでコンポガイドになっている中で、今現在ちょっとコンポを入れるのは非常に難しいと思っています。ただし、レベリングガイダンスに全て我々オープニング早めにオープンに行っていますし、あとここ最近のオープンが調子いいけれども、アンサンブルTOを含めて今ガイダンスを据え置きしているということで、大体のところをさせていただければと思います。今、多分どのレストランもちょっとコンポガイドするのは非常に難しいと思います。 Given that we generally don't give comp guidance with the increased uncertainty, this is certainly not easier for us to give comp guidance. But the revenue guidance does reflect our assumptions, both in terms of the accelerated openings that we've seen. A lot of the fiscal '25 openings outperforming our expectations, reflecting Jimmy's comments about it having the potential to be one of our strongest classes ever. But yeah, we think you could be able to back out or back into our comp expectations from the revenue guidance that we presented in conjunction with the commentary on the unit openings we just did. Okay. Got it. Thanks. I guess switching to something else, you mentioned some of the IP collabs will be starting in May. Could you give us any details around exactly what you have planned on the IP front in the H2 of the year? So the IP pipeline that we've been building is really the main thing that we were trying to change was having unsuccessful IPs. What we've built out is we have some of our best-ever hits from the past coming up. We've got Demon Slayer, we have One Piece, we have Peanuts. We've been developing our relationship with Nintendo. We have Kirby, which is one of their major mascot characters, coming up in fiscal '26. I'm personally a big Kirby fan. I'm extremely excited. I can't share anything else in terms of the fiscal '26 pipeline, but we're very excited. As Jimmy shared in the opening remarks, we have seven or eight planned for fiscal '26. It's a big part of our strategy. Okay. Sounds good. Thanks. Thank you, Matt. Next question is from Mark Smith from Lake Street Capital. Please go ahead. Hi, guys. First question, sorry if I missed it. Does the G&A guidance include the litigation expense? Yeah. We haven't changed our guidance as it relates to the litigation expense being part of that number. [It is part of it. Perfect. The second one for me, just as we think about tariffs and kind of build-out, any idea outside of operations, maybe incremental costs on build-out of new restaurants at this point, especially any special equipment that you may be importing? [Foreign language] もちろん、我々は日本から中国からエクイップメントを輸入してるものがあるので、ビルドアウトコストの影響を受けます。我々のイニシャルスタディによると、最大で¥400万ぐらい影響を受けると思ってますけど、現実的にもし仮に、まずそこまで出てくるかな。 We do bring in a certain amount of special equipment from overseas, largely Japan and China. Our initial estimate in terms of incremental costs as it relates to the tariffs, we think in a worst-case scenario would be about $400,000. [Foreign language] ですけど、結論としてはですね、今現在、現時点ではこのコンストラクションのコストのインクリースを想定しても、20%のユニットグロスっていうのはしっかり維持していきたいなと思ってます。 That being said, even with the potential increase in build-out costs, this doesn't change our thinking at all in terms of our desire to maintain a 20%+ unit growth rate. [Foreign language] 今現在、我々のAUVが¥4 millionで、レストランレベルが20%で、ビルドアウトが2.5で、それで3年ペイバックですけども、先ほどの400まで行かなくても、もしいろいろなイニシアチブをやって300系の上昇になったとしても、もしユニットレベルのモデルが変わらなければ、3年半でいけますから、我々今¥100 millionキャッシュがある状態で、この前リボルバーの45をエクステンドしたばっかりですので、十分20%維持できるというふうに考えてます。非常にファイナンシャル的には全く問題ないと思います。 As a refresher, our AUVs of $4 million, our restaurant-level operating profit margins of 20% against build-out costs of $2.5 million get us to cash-on-cash returns of 33%. We just mentioned the worst-case scenario would be a $400,000 increase. We think a $300,000 increase is more realistic. That only changes the unit economics equation by half a year in terms of payback period. It really doesn't change our appetite at all. We have $100 million in cash and long-term investments. We just renewed our revolver with Kura Japan for $45 million. We're in a very strong capital position, and we're excited to be able to make decisions based off of what are in the long-term best interests of the company. Great. Thank you, guys. Thank you. As a reminder, if you'd like to ask a question, it is star one. Next question here is from JP Wollam from Roth Capital Partners. Please go ahead. Great. Thanks for taking my questions, guys. Maybe if we could start sort of on the leverage on your side, understanding that the consumer environment is uncertain and certainly rapidly changing. But I was just hoping we could talk, one, on the reservation system. Did you give a timeline of when you would expect that to be fully rolled out? And then two, can you just talk about kind of the marketing and maybe more also with the loyalty program? What else can you kind of do there to help drive volume from your loyalty members? So what we've shared publicly is that we expect to be able to roll out the reservation system system-wide by the end of the fiscal year. Our goal is faster. We definitely want to be able to capture the leverage of seasonality that we've seen Q4. That is one of our top priorities to achieve a full system online. In terms of the reward system or the rewards program, there are a couple of things that we're really excited about. The first is that the reservation system is accessed through the reward system. We know that's going to be a pretty meaningful catalyst in terms of registrations. As we've discussed on past calls, rewards members are very valuable, both in terms of frequency and spend. On that note, with the IPs that we have coming up, we know that we can do a lot of different things. We've got giveaways and stuff like that like we've done in the past, and those are very meaningful levers for us. Okay. Understood. And then the second one would just be maybe more on a competitive note. I don't know how much kind of visibility you guys have, but any high-level thoughts about some of your competitors and maybe how the tariffs might impact their business and more specifically kind of their pricing structure and what it means kind of for the value delta that Kura provides relative to some of your competitors out there? [Foreign language] 今回、我々が一番強調したのはそこなんですけども、今回の関税って本当に衝撃的で我々は驚いたんですけども、アメリカのお寿司のみ、お寿司店、全部同じ状況を受けてた。その中で我々は中長期的にはすごくベネフィットを受けるように持っていけるんじゃないかなと思ってます。これからちょっと理由を説明します。 We appreciate you bringing this up. As shocked as we were by the magnitude of the tariffs, we're certain that every other mom-and-pop sushi restaurant was just as shocked, if not more shocked. And as you probably guessed, we're in a much, much better position than them, and we believe that we can turn this into a competitive advantage and further widen the delta in terms of value between ourselves and the typical sushi restaurant. [Foreign language] まず我々は100ミリオンあって、45ミリオンのリボルバーやったばかりで、財政的に非常に有利なところにあります。それプラス、フードベンダーとの交渉もバイイングパワーがあってすごく強い位置で立てます。ジェフが先ほど言ったみたいに、もうすでに彼らある程度カバーしてくれるというインディケーターをしてきたところがあるので、その辺比べると本当に彼らと比べて有利なポジションがあると思います。それプラス、いろいろ先ほどベンガル行ったみたいなリザベーションとかタッチパネルとかミスタープレスとか、いろんなテックイニシアチブがあって、まだまだ改善の余地があると。その辺ですごく全然違うと思います。 The first would be that we're in a very strong cash position. We just mentioned we've got $100 million on the balance sheet, access to another $45 million revolver. We're not in the same position as a mom-and-pop where they need to be making decisions about keeping the lights on and operational stuff like that. We can really make decisions that are in terms of the best long-term strategy. As Jeff had spoken to earlier, our vendors are already coming to the table indicating that they want to work with us. Our buying power is orders of magnitude larger than the typical sushi restaurant. We're probably one of the biggest fish buyers in the country. That is something that is very different for us versus any of our competitors. The last would just be all of the things that are unique to us, whether it's the new initiatives that we're talking about, the IP collaborations, the experientiality, all of those will continue to work in our favor. [Foreign language] あとはレストランオブリティンプロフィットマージンもこれも20%以上維持してますから、もし仮に短期的に少し下がっても全然致命的じゃないということがありますんで、総合的に短期的な業績ではなくて中長期的な視点でクライアントにとって正しい選択できるような十分な時間を使うことができるというのは非常に有利だと思ってます。 はい。 Our restaurant-level operating profit margins, generally speaking, are above 20%, are amazing. We're really happy with them. If there's some short-term pressure on it, that's something that we can tolerate. We're able to make decisions that are not looking at the short term, but really the long term. We're very grateful to have that strategic flexibility. [Foreign language] あのですね、そう。そう。あの寿司店との価格優位性は広げていけるというふうに思ってるんですよ。この環境が終わった後に広げていける、乗り切った後に広げていけると思ってるということです。 To return to your initial question, absolutely. We think this is going to be a catalyst for a widening of the value delta between ourselves and competitors. And the value proposition will be stronger than ever. Understood. Thank you for the detail. Best of luck going forward. Thank you, JP. Next question is from Todd Brooks from Benchmark Company. Please go ahead. Hey, thanks for taking my questions. Only a couple left here. If we can talk IP partnership, I think you said the timing for the next one starts in May. At one point, I think you were talking about one in Q3 and one to two in Q4. Does that imply when we get to May, we're running under IP partnerships for the balance of the fiscal year? Yes. Great. And then I know when you talked about the pivot off of kind of the six-scheduled IP partnership cadence, there was a desire to really focus on the more impactful partnerships. A little surprised and encouraged to hear about seven to eight collaborations next year. Is the threshold and the hurdle of impactful still in place? Absolutely. Go ahead. We're very, very happy with the work that the marketing team has been doing. Q2 was a difficult comparison, but that bought them the time to be able to put together this amazing IP pipeline. So we think it was absolutely the right investment to make. Okay. And then at kind of six-week durations, are we pretty much always on then as we think about fiscal 26 for an IP partnership? My guess at this point is that we'll probably have a couple of one-month collaborations, and that's how we would get beyond the six collaborations per year that we've done historically. Perfect. Thanks. The other one was just a follow-up on the reservation system. I think you said you're in test now in three units, and at least one of the ones in test is one of the really higher volume units. Just wondering, and not looking for quantification, but the consistency of the lifts that you're seeing from the system, either relative to your expectation or relative to what Kura Japan saw when they implemented it, the consistency of lifts that you're seeing and how that's fueling the desire to get this rolled out even more quickly than the end of the fiscal year. Is the bandwidth there to really—I don't know how fast you can roll these out now that you've tested in three—is this still an iterative process where you go to another five stores and then—what's the unlock to kind of hit the year-end goal for the reservation system? So to start in terms of guest response, the high-volume restaurant that we refer to is Austin. I was there for the first week that we launched it in Austin. Because this isn't system-wide yet, the only marketing that we've been able to do is through the rewards program. If you set your favorite restaurant as, say, Austin, then you would have gotten an email saying, "We now have reservations." I was watching all the guests coming in, and it seemed like the first day it was a quarter to a third of people were coming in, holding up their phones with their reservation numbers. I was genuinely blown away. By that weekend, it was really like every other party had a reservation. For these restaurants that are super busy, that have long lines, the value is immediately obvious to our guests. That got us that much more excited, made it really clear to us that there's a concrete upside that we could expect. That's one of the other reasons that we're putting everything that we can into accelerating roll-out. In terms of the unlocks, I'd say that the biggest parts are behind us. It was really just getting tech stability and making sure that we're able to figure out an operational flow that made sense. That's largely been hammered down. Now we're breaking up into teams, and we're going to be having simultaneous rollouts across the country. Okay. Great. Thanks, Ben. Appreciate it. Of course. Next question is from Jim Sanderson from Northc oast Research. Please go ahead. Hey, thanks for the questions. I wanted to go back to the quarterly performance. Did you break down same-store sales between traffic, price, and mix, or could you? Yeah, we can. So total comp was -5.3%, and that was -8.5% traffic and 3.2% price and mix. All right. March was a meaningful improvement over that turned on the traffic line. Is that the right way to look at it? [Foreign language]もちろん先ほど言ったみたいに天気の回復後、客足は回復してるんですけど、実はマーチは我々すごくコンプが昨年強かったところがあるんで、多分なコンプにもなることは変わりないんで。ただ、客足は回復しているということだけは満足しているところだけお伝えできます。 In terms of performance and looking at it on an absolute basis, we're very pleased with March performance. That being said, if we're talking about comps, last year's March was strong enough that it was so strong that that's really what prompted our revenue guide raise last year. So March is really a tough month to compare ourselves against, but excluding that, we were very, very happy with March. All right. And then a question on unit development. Can you provide a little bit more insight on what your development pipeline is looking like in the United States beyond fiscal 25? Maybe indications of lease signings or sites you've identified, anything that would give us a sense of commitment you've got beyond the current fiscal year 20 26? [Foreign language] 年以降も先ほど言ったみたいに20%以上維持していくということと、27年以降はできれば50/50 new exitingも目指していくというのが我々の大きな方向性です。それに今回のことがあっても変わりがありません。ニュースがあっても変わりがありません。 Generally speaking, you could assume that the foreseeable future, we're going to maintain that 20% plus unit growth rate. For fiscal 27, we expect to be able to get back to that 50/50 split between existing and new markets. And the confidence behind that statement comes with the number of LOIs that we have under negotiation and the number of leases that we already have executed. All right. And just one last question on tariffs. Is it possible for you to move to a US-only supply chain to source input costs over the next year, let's say? [Foreign language] 残念ながらちょっと全部を米国製っていうのはちょっと現実的ではないと思うんですけども、ただこれから何ヶ月間か、先ほどジェフが言ったみたいに各政府のネゴシエーションの様子を見ながら、関税が下がっていたところに移していくってことは可能だと思います。ただ、やっぱり我々もある程度数ヶ月間まとめてオーダーするんで、そういったシフトっていうのも一気にじゃなくて徐々にシフトしていくだろうと思ってます。 It would probably be difficult to shift entirely to domestic. I mean, you can't catch tuna in Lake Erie. So there's just geographic biological limitations there. But what we can do is we can adjust between different buyer countries. We're going to be keeping a very close eye over how the tariffs shake out over the coming months. If there are countries that we're currently working with that are less advantageous and there are options for ingredients of comparable quality, better tariff rates, then certainly that's something that we pursue. [Foreign language] 我々が個人戦で比べて言うならば、我々がメーカーのところと交渉して、例えば関税らしいところの交渉して、これをベンダーに持っていってくれということを交渉ができるけれども、個人のところはベンダーが持っているところのチョイスからしか選べない。そこが我々のこれから中長期でベネフィットを発揮できるところだと思っています。 One thing that we've been working over the last couple of years that is going to become critically important now is our relationships, not with just our broadline suppliers, but with the direct vendors. Our supply chain team goes to—they're traveling across the world negotiating directly with the providers. It's a very different situation from a mom-and-pop where their options are limited to what the broadliner is offering. We bring what we want to the broadliner. Again, it's just a completely different story in terms of economies of scale. As unfortunate as this is, this is going to hurt our competitors a lot more than it's going to hurt us. Understood. Understood. Thank you very much. Thank you. This concludes the question and answer session as well as today's teleconference. Thank you for your participation. You may disconnect your lines at this time.