Morning, everybody. My name's Todd Brooks, the restaurant analyst at Benchmark StoneX, and I'm pleased to be hosting today's fireside chat with the senior team from Kura Sushi, which is a buy-rated stock at Benchmark. Joining us today from management are CEO Jimmy Uba, CFO Jeff Uttz, and Senior Vice President of IR and Business Development Ben Porten. The team at Kura Sushi is building really the first nationally scaled sushi brand in the U.S. at 83 units across 22 states in the District of Columbia. The scale advantages that the brand has created through building out the chain to that size are meaningful. The model is highly automated and differentiated with a conveyor belt system for servicing customers in the restaurant, and really is starting to provide meaningful scale advantages that allow Kura to be an even stronger competitor with largely a local mom-and-pop type of competitive set. These advantages are positioning Kura to be ready to grow into a 300, we'll say 300-plus unit opportunity here in the U.S., and they're growing units at a 20% clip each year. Gentlemen, thank you all for joining us. Appreciate it. Thank you. I want to start off. We got some news last week with the quarterly results being reported, and you talked about improvement across the course of the quarter, a very strong November to end the quarter that's continued quarter to date being both traffic and ticket-driven, so high-quality growth. What drove that acceleration in November and December at a period where much of the industry saw kind of a downturn going into the end of the year? Thanks for your first question. I'll answer this question, but please allow me to speak in Japanese. He's going to translate. まず11月以降変わったのは他のレストランでもそうなんですけど、景況が多分改善したってこともあるんですけど、その上でやっぱり我々で言うとLTOですとかIPOキャンペーン11月以降のこれが非常に貢献したというふうに思ってます。まずツクモにお願いします。 As it relates to November, we certainly benefited from the better macro setup that was widely reported by our peers in the industry, but as it relates to Kura Sushi specifically, November benefited from the outperformance of an IPO, or I'm sorry, of an LTO and an IP campaign. もし我々11月からワンピースのセカンド、2回目のキャンペーン、あとはカービーのキャンペーンありましたけど、これによってやはりプライス&ミックス改善されたり、あとはトラフィックの改善につながったと思ってますけど、それともう一つ加えてですね、ちょっとまだ言うのは早いかも分からないですけど、これ我々の比較的モデストなプライシングっていうのも効果が出てきたかもしれないと思ってます。これちょっとお願いします。 The second giveaway that we had for the One Piece campaign was an accelerant for the November results and one of the reasons that our comps came in better than expected. Another pretty meaningful part was the guest response to the pricing that we'd taken. We're running 4.5% effective price as of November 1st. We were seeing meaningfully better flow-through than expected. Price mix and traffic improved subsequently in November and actually accelerated even more in December. It might be a little bit early for us to be reading this much into it, but our interpretation of this traffic growth really comes down to price fatigue among guests who are going to other sushi restaurants, and so if you think about the 4.5% in the context of our average check, it works out to about $1. But if you think about mom-and-pop sushi restaurants, they're just not going to be able to keep their doors open by charging guests an extra $1. It's more likely on the scale of five, 10, maybe more. And since the tariffs in April, that's probably reached a breaking point six months later, and guests are rediscovering the value that we offer. この傾向っていうのはタリフスがリリースされようがされまいがこれからもずっと続いていくと思うんで、中長期的にはテールウィンドになると思ってます。 And so we believe this dynamic will continue regardless of whether or not tariffs remain in place. And so for mid to long term, this should be a tailwind for us. Okay, great. Why don't we pivot into tariffs because it's a hot-button question for everybody. You've all provided really good detail on what the tariff impact has been, how your suppliers have shared some of the burden on the cost of goods line, kind of in that 50/50 bucket, and then the little bit of incremental pressure on other operating expense for the marketing-related merchandise tied to the IP partnerships. I think if we bucket it, it's kind of in a 250-plus type of range as far as pressure on the restaurant-level margins. You've guided to an 18% restaurant-level margin this year. Talk to me about visibility into hitting that number and then kind of self-help improvement that the company will be undertaking and where you can get margins to even if a tariff reality lasts into the medium term from this level? Yeah, I'll address the tariff question and then turn it over to Jimmy to talk about some of the margin stuff. So when the tariffs were first announced, it was pretty significant for us. We buy about 45% of our market basket comes from Japan, primarily Japan, Vietnam, and Korea, but most of it's from Japan. So when the tariffs were first announced, this could have been a 300-400 basis- point impact to our COGS line. So because of our scale and our size, we were able to go back to our suppliers and say, "We have to share in this. Please don't pass everything along to us because we can't take enough price to offset that." So the suppliers were very happy to work with us and ended up, as you said, about a 50/50 split. They take about 50%, we take about 50%. We're partners. It turns out to be about 150-200 basis- point impact to our cost of goods sold line for the year. The guidance that I've given for the year is that we expect the COGS to be about 30% for the year. That contemplates not only the tariffs where they are now, but also the 3.5% price increase that we took on the 1st of November. あと18%からのところなんですけど、今期はあくまで18%ということなんですけども、27からはタリフスのリリーフがなくても20%に近づけているというふうに思ってます。今からちょっとその理由説明します。 As it relates to the 18% margin level guidance for fiscal 2026, we believe that that 18% is going to be limited to fiscal 2026 and believe that for fiscal 2027, we can get it meaningfully closer to that 20% mark that remains our goal. というのも、今回の18%というのは11月からのプライシングがまずということで含んでますから、27からはこのプライシングのところのフォローする、今先ほどベンが説明したように非常にいい形で来てるんですけど、フルベネフィットを受けます。あとはロボティックディシボッシャですね。これもQ3、Q4ぐらいから導入されますけど、27からフルベネフィットになるんで、これも50ベーシスポイントインプルムになります。あとはワーカーズコンプの構造もすごくうまくできてますんで。これら含めてですね、もう19%以上超えてきますんで。そこからリアルエステートのところで言うと、ニューレストランとエグジッシングのところ50-50に分かれてますんで。あとは基本的にはニューマーケットのレストランのパフォーマンスがいいと。それら全て用意した時に限りなく20に近づけてい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。 Beginning with that 18% baseline for fiscal 2026, the workers' comp insurance improvements, about 30-40 basis points, will carry over into fiscal 2027. The better flow-through that we're seeing on pricing, we also expect to carry through. For fiscal 2027, there are a number of reasons that we're very excited about it. A lot of it comes down to pipeline management. Historically, we've experienced about a 300-400 basis point headwind from cannibalization. We're doubling the proportion of new markets next year, which we believe should cut the cannibalization in half, functionally making a tailwind for next year, as well as getting us better sales leverage. The 50% new market split also should be a restaurant-level operating profit margin tailwind as all things equal, new markets tend to outperform, and as we know, fiscal 2025 openings have been incredible. Fiscal 2026 has been very strong to date, getting the full- year benefit of those in fiscal 2027. That plus the robotic dishwashers, you can see how all these things add up to get pretty close to that 20%. I can just add on the COGS comment as well. Even though I'm not happy that COGS, 28.5% last year and we're forecasting 30% this year, I am quite pleased with where it ended up, kind of vis-à-vis where it could have been. So the negotiations did go well. Gotcha. Understood. Ben, you just introduced it. Let's dig in on the class of 2025. You guys have talked about it being a real step up in productivity, best class of new openings ever. What's unlocking that? Is it partnerships with developers and better real estate? Is it opening processes that you're using for new units? What's the unlock that's driving this step up in productivity? And I don't know if you can quantify it for us, but even qualitatively, how much better is this class relative to class of 2023, 2024? まず25、26が23と比べて、だいたい少なくとも10%以上はベターだと思います。あともう一つ、その差が出てるっていうのは単純に過去事例のサンプルが増えたってこと、2倍、3倍になってるってことが一番大きいと思ってます。これちょっとお願いします。 Class of 2025, 2026 is at least 10% outperforming classes of 2023, 2024. When you think about the lead times from lease execution to openings, when we were opening the 2023, 2024 stores, we were signing those leases in 2021. The comp base at that point was probably a third of where it is now. And so we've got three times as many examples of success to draw on, and we've been that much better at identifying great sites. And to your point earlier, the landlord relationships just continue to deepen, and they're just bringing us better and better sites. 我々のアナリティクスのソフトウェアはAIを含んでいるんで、成功事例がたくさん増えるとより正確なセールスエクスペリションを出しやすいというところがあるのと、あとチーム全体も我々スタディしますし、私もできる限りほとんどのレストランビジットしてるんで、インターナルのチームもそうですし、ソフトウェアも並んでいると。その二つによって非常に精度が高くなっていってるんで、これからさらに改善される期待が高いというふうに思ってます。これちょっとお願いします。 We've switched our data analytics platforms for site selection, which has improved our process. Having that AI with the larger data set of our comp base has definitely made its predictions that much more accurate. Our development team has gotten more accurate with our predictions, and Jimmy is constantly traveling from site to site to corroborate their expectations. Okay, great. If we can touch on the scale of the business, the 81 units, 22-state and D.C. footprint, I think you've proven the portability of the brand. This just isn't a coastal brand. You've got performance across a wide enough swath of markets. And you touched on this earlier when we were kind of talking tariffs and the pricing delta to independent competitors. But as you're leaning into the scale of what the Kura brand is becoming, what are the unlocks that you can use to further drive the business going forward, whether it's around advertising, loyalty, some new tactics to bring customers in to try Kura for the first time? まず他のところと比べて違うところが、まずダイニングエクスペリエンスが大きく違うと思います。やっぱりインディビジュアルレストランになると、寿司を知ってないとちょっとなかなか入りにくい雰囲気ありますけども、我々のところで言うと寿司初心者の人から、極端な話、寿司全く食べれない人まで気軽に食べれるし、あとはスモールピースですので気軽にトライして、ダメだったらもうちょっと置いてということもできるんで、そういったところが一番大きなアドバンテージかなと思います。それで最初に来てもらった上で、実は他の寿司レストランと比べてクオリティが高いとかバリューの部分が認められたりですとか、それでファンになってずっと継続的に来てもらうパターンが多いので、そういったことがすごく大きな差別化になってると思ってます。これちょっとお願いします。 So one way that our scale advantage is underappreciated is how it translates to the guest experience and how it makes it much more welcoming for a less sophisticated sushi customer. The way that we've set our experience, it's welcoming to people that have never tried sushi before, and I would imagine that we are sort of the gateway for a lot of people to try sushi for the first time, just given our price point, the experientiality of the concept. One other part is just with our sales volumes, we're able to offer small plates and 140 different menu items, which you get to try all these different things, but is also pretty much unthinkable at a typical sushi restaurant, and so even the most basic parts of the experience are defined by our scale. Okay, great. And thinking about scale advantages as well, and we talked about the performance of the new opening class. But the reality is you're still building units for $2.5 million in what's a very inflationary environment. Talk about the relationship with the landlords. As you're looking now, Jimmy, it sites out in 2020, y ou're probably out to 2028 at this point. What's the quality of kind of property and that economics around building units that you're seeing with the landlord discussions? まず新しいプロジェクトに招待されることが多くなったんで、それがすごくクオリティ高いところで招待されてますんで、我々がやっぱりプレゼントが大きくなってるってことをすごく感じてますね。 It's becoming more and more frequent that we're being invited into new developments, often with the implication that other tenants will be following our example, and so that's been a really encouraging development. A distinction on that. So it costs about $2.5 million to build a Kura. And in the past, the landlords weren't giving us as much TI. We're getting a lot more TI allowance now as we get the better sites. The landlords want us in there. So even though our gross cost to build has gone up because we do buy some things from overseas, so that's gone up about $300,000. We're getting more TI allowance from the landlords to keep the net at $2.5 million. And it's been at $2.5 million now. This is a third year. It hasn't gone up. Impressive. Jeff, in late December, the company filed a shelf registration, $100- million shelf. The balance sheet is still robust, I think $76 million+ in cash and investments. I know we're on a path to be self-funding. Just can you walk through and share some of the thoughts on the shelf filing and why we put it in place now? Yep. So the last time we raised capital was in November of 2024. And at that time, we were looking at it and we thought, you know, this could be the last capital raise that we need to do. That was at margins that were about 20% or a little over 20%. And now our guidance is for 18% primarily because of the tariffs. And when I kind of relook at the model, I think we still have $75 million on the balance sheet. We're quite liquid. We have a $45- million revolver with Kura Japan that we have not tapped at all. So we have optionality. And the reason to get the shelf out there now was just so that when market conditions and our share price is in a favorable place, we can flip the switch and move quickly if we want to. Okay. Understood. Everybody loves to hear about the IP partnerships and the impact on the business. I'm seeing over time with partners like Nintendo, you're earning your way up to more known properties, maybe more highly impactful properties. I'd love to understand how those relationships and discussions are going, how you feel about the pipeline of IP partnerships for this year, and maybe reiterate for people the always-on nature of these IP partnerships in fiscal 2026 versus what the status was in fiscal 2025 where there were some dark windows. Sure, so fiscal 2025, there was a five-month stretch from December through the end of April where we didn't have IP collaborations, and so we just entered that period, and that's one of the reasons that we expect very meaningful comp outperformance in the current quarter. As it relates to the IP pipeline, the licensors and the properties that are being brought to us just improve every year. Without telegraphing what we have in the pipeline, I could not be happier, and I expect to hopefully be seeing that every year. Also, just to be clear for those that aren't aware, our fiscal year is August 31st. We're almost five months into fiscal 2026 for us. Okay, great. On the call, you gave some data around your Kura Rewards program and what those members are worth to the brand. A million members in the base, I think two to three times the frequency, $6 higher check when they visit. Can we talk about forward plans for that base? How are we going to grow the base? Is there a way to kind of accelerate the program growth and then maybe tie it in with a discussion of the reservation system functionality that you've put in place at the store level and what you see that iterating into over the course of this year? Yeah. So the reservation system we put into place in April, now about half of our transactions made with rewards members are done through the reservation system. And so it's clearly been a very big hit with them. Over the end of December, we decoupled it from the rewards program so that now you can go to kuraushi.com, you can go to Google Maps, soon you'll be able to go to Yelp and directly place a reservation. We know that it's a very, very convenient way to dine with us. And once somebody uses it, they typically just continue to use it. And so we want to get it in front of as large an audience as possible. We know that there's an opportunity to convert those people back to the rewards program afterwards. In terms of growing the rewards program membership and growing engagement, the thing that we're most excited about would be the introduction of tiered statuses, which would be a very meaningful step up in terms of what our rewards program offers. It's been very effective in driving traffic, but it's a pretty simplistic program to date where it's really mostly just discount-driven. But we're looking into all these other things, experience-driven things that should really be needle- movers for the super fans as well as for people that have yet to join the program. That's great. And you've talked in the past about the marketing budget being about 2% of sales. About 3/4 of that is in support of the different IP collaborations and about 50 basis points is to support the other marketing efforts. Can you talk to us about the need or maybe the potential return for any change in the marketing investments for the non-IP collaborations and maybe some tactical things that you're doing to draw new people to the brand? Because it's hard to convey the value of Kura until you get somebody into the restaurant and they realize, "I'm getting great quality sushi for half the price of what I pay elsewhere." You're exactly right, and it's a tricky message to deliver because "cheapest sushi in town" is not a great slogan. That's not what we want to be known for. We're fortunate enough to have a very experiential brand, so one thing that we've been doing recently, one of the potential reasons for the November, December outperformance, we've been specifically going after guests who have been searching for other sushi restaurants, and we've been showing them paid videos, and so without commenting on the value, we show them a very interesting experience. They come and they try it. They realize it's a great experience and their check is half what it typically is, and so that's been working out very well for us. Our average check's about $29 a head. That's for 6.2 plates? About six plates. That's the average of six plates of sushi each. そのターゲットマーケティングに使うスペンディングというのは10ベーシスポイントぐらいなんで、ほとんど2%のミックスは変わらないですね。 And then in terms of the incremental spend for the target marketing, that would be about 10 basis points as a percentage of sales. And so no real needle- mover, but in terms of cost, the returns are great. Okay. And for those that haven't had the opportunity to go to a Kura, it's an amazing experience. And if you look at it, the amount of technology that underlies the whole operation as a whole. Jimmy, can you talk about the forward path? I know we've got the robotic dishwashers coming later in this fiscal year, but I think people would be surprised for the volumes that the restaurants do, how non-labor intense you might be able to get these, especially once you can take a couple of bodies out with the robotic dishwashers. Sure, so we're very excited about the robotic dishwashers. They're actively on the ocean, on their way, and we will start installing them on a rolling basis in the back half of the year. Cumulatively, we expect about a 50 basis- point improvement. One thing that might be, for people that are new to the story, this is a proprietary piece of equipment that was designed by Kura Japan. We have a very friendly relationship with our majority shareholder, and we have access to all their technologies. They've spent multiple millions of dollars developing this. We get to just buy them at cost. They're $15,000 each, and they last for 10 years, and so for us, a negligible cost that translates to headcount reduction. We're able to really act like a truly mature brand, even though we're only 80 units. And for us to have invested multiple millions of dollars on a Moonshot robot at 80 units would be irresponsible. But if we were to wait until 300, where that kind of spend might be justified, to go back and retrofit it would be prohibitive. And so we're in this. I'm very happy to be at Kura. We have a lot of opportunities. Our agreement with Kura Japan allows us to, for 50 basis points of revenue, we can access all their trademarks, patents, all of their research that they do in terms of new technology and pick and choose the ones that we like and bring it to the U.S. 今回のディッシュウォッシャーのポーションですけども、今現在彼らがやっているのはアームのところですね。ロボットのアームが自動的にお皿をラックするというところまで行ってますんで、これらも近い将来また認証が取れたということをお知らせするのを楽しみにしています。 We're in the process of installing the core component of the robotic dishwashers. Japan is working on the Dishwasher 2.0, which includes two robotic arms, or one robotic arm and one sort of lane. But basically what it means is that 70% of our sales are done on these sushi plates. And once we have 2.0, none of our employees will ever need to touch one of those plates again for the purposes of washing them. It'll be a completely closed loop. And so we're really excited about that. Post 2.0, how many employees will take to staff a unit? わからないですけどね。完全ゼロはできないですけど、今現在2人いるところが0.5とかね、そういったことができると思います。 0.5? Half a person? That's just the dishwasher side. Right. Okay, we're running low on time. Management will be hosting a breakout session at 11:00 and T he Mediterranean at 7:00, and I want to thank everybody for joining and the management team from Kura for participating in the conference. Great. Thanks for having us. Appreciate it. Thank you, everyone.