Consumers were apparently eager for more sushi the past two months.
Kura Sushi USA, the chain of restaurants that serve sushi via conveyor belts, on Thursday said that same-store sales rose 22% over 2019 levels over the past two months, the first two in the company's fiscal first quarter. That was a rapid acceleration over the quarter ended Aug. 31, when two-year same-store sales rose 4.9%.
Investors poured money into the stock as a result. Kura’s shares skyrocketed more than 25% through early afternoon trading on Friday, blowing past their all-time high.
Much of that came through pricing. Hajime Uba, Kura’s CEO, told investors that the company took pricing in the “high single digits” in September to offset rising costs for food and labor.
That price hike was “the single operating event in our corporate history,” he said.
Consumers, he said, gave little pushback.
“In fact, we’ve seen guests saying that even after this pricing, Kura remains an excellent value,” Uba said, according to a transcript on the financial services site Sentieo. He noted that its prices “remain substantially below” many of its peers ,and the company is working to make its operations more efficient.
Kura is the U.S. operations of the Japanese-based Kura Sushi. The company went public in 2019, and its stock increase on Friday means its shares have increased 400% since the IPO.
One issue that held Kura back over the summer was California. The market was restricted to half capacity in the first half of June, the early part of the quarter.
As customers have returned to dining in the chain’s locations, executives said that it is maintaining most of the off-premises sales they’d gained during the pandemic. Uba said the company expects its off-premises mix to be in the mid-single digits of sales doing forward.
Executives said they are reevaluating its training programs to provide employees more paths to advance through the company to improve retention. But they also said that the labor shortage hasn’t been as serious a problem for Kura as it has for other concepts.
“We have virtually full operational capabilities in our restaurants right now,” CFO Steven Benrubi said. Yet the company has a lot of new employees in the system who need to be brought up to speed.
The strong sales Kura has generated have improved operating margins at the restaurant, now over 16% and close to pre-pandemic levels.
Uba believes the company can improve on that further through technology. Kura is planning table-side payment and drink ordering that can improve efficiency.
“This is our largest opportunity,” he said through a translator. “The margin growth we’ve seen in the last quarter was driven by sales leverage. As we turn tables more rapidly and serve more guests per day, we think this is going to be a meaningful comp driver, especially in our mature stores.”
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