Executive Summary

KRUS delivered strong top-line growth in fiscal Q2 2024: total sales were $57.3M vs. $43.9M a year ago, comps +3.0%, and diluted EPS of $(0.09); restaurant-level operating margin was 19.6% and Adjusted EBITDA $2.9M .
Management raised FY24 guidance on the print: revenue to $243–$246M (from $239–$244M in Q1), unit openings to 13–14, and G&A as % sales to 14.0–14.5% (from ~14.5%)—citing confidence in traffic, operating leverage, and development cadence .
Call highlights: exclusive DoorDash partnership (expected margin neutral to accretive), loyalty program now ~1/3 of sales, and a robust tech pipeline (robotic dishwasher, smartphone/table-side ordering, “sushi driver”) to drive mix and labor leverage over time .
Headwinds: labor 32.8% of sales (pre-opening and weather pressure), other costs 14.6% of sales, and Southwest comps flat; analysts noted labor/other costs were above Street expectations on the call .
Post-period update: KRUS preannounced Q3 softness (California) and cut FY24 sales outlook to $235–$237M, signaling a likely reset to expectations despite Q2’s raise .

What Went Well and What Went Wrong

What Went Well

Traffic and share gains: KRUS cited significant traffic outperformance vs. the industry (Black Box index −3.5%), helped by brand momentum and promotions (e.g., Dragon Ball), with West Coast comps +8.7% in Q2 .
Operating leverage and profit growth: G&A leveraged by 190 bps y/y in Q2; Adjusted EBITDA up to $2.9M; restaurant-level operating profit of $11.2M (19.6% margin) .
Structural growth enablers: Rewards now ~1/3 of sales; smartphone ordering and DoorDash (exclusive) expected to be margin neutral or accretive; early success in automation testing (robotic dishwasher) and development of “sushi driver” .

Selected quotes:

“We leveraged G&A year-over-year as a percentage of sales by 190 basis points, and grew Adjusted EBITDA by 23%.”
“U.S. [rewards] members are now responsible for approximately 1/3 of our sales...”
“Our expectation is that [DoorDash] will be margin neutral to margin accretive... it was really a no-brainer for us.”

What Went Wrong

Margin pressure in labor and other costs: Labor 32.8% of sales (vs. 31.5% LY) amid higher wage rates, pre-opening costs, and severe weather; other costs rose to 14.6% of sales .
Regional dispersion and weather: Southwest comps were flat; ~8 heavily impacted operating days (Jan/Feb) increased fixed labor drag .
Street expectation gap: Analysts flagged labor and “other” lines above expectations, pressuring restaurant margins vs. the Street’s model .

Financial Results

Metric	Q4 2023	Q1 2024	Q2 2024
Revenue ($USD Millions)	$54.9	$51.5	$57.3
Diluted EPS ($)	$0.25	$(0.18)	$(0.09)
Comparable Sales (%)	6.5%	3.8%	3.0%
Restaurant-level Operating Profit Margin (%)	24.4%	19.5%	19.6%
Adjusted EBITDA ($USD Millions)	$6.3	$1.8	$2.9
G&A as % of Sales	13.2%	16.7%	14.3%
Food & Beverage as % of Sales	29.5%	29.8%	29.6%
Labor as % of Sales	28.8%	31.6%	32.8%
Other Costs as % of Sales	13.8%	14.7%	14.6%
Restaurants at End of Period (count)	50	54	59

Notes: Q2 y/y sales up versus $43.9M in Q2’23; restaurant-level operating profit $11.2M (19.6% of sales) vs. $8.9M (20.3%) in Q2’23; Adjusted EBITDA $2.9M vs. $2.3M in Q2’23 .

KPIs (select)

KPI	Q4 2023	Q1 2024	Q2 2024
Rewards contribution to Sales	—	—	~33%
Plate Consumption per Person	—	Flat y/y (no figure disclosed)	6.3 plates; flat y/y
Regional Comp Highlights	CA +12.1%, TX +3.3% (Q4 regional comps)	West Coast +9.0%; Southwest +1.3%	West Coast +8.7%; Southwest flat
Units Opened in Quarter	4	4	5

Segment breakdown: KRUS reports as a single restaurant concept; no segment revenue disclosure in filings .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Total Sales ($USD)	FY 2024	$239–$244M (Q1 call/8-K)	$243–$246M (Q2 call/8-K)	Raised
New Unit Openings (count)	FY 2024	12–14 (Q1)	13–14 (Q2)	Raised low end
G&A as % of Sales	FY 2024	~14.5% (Q1)	14.0–14.5% (Q2)	Tightened lower
Avg. Net Capex per Unit	FY 2024	~$2.5M (Q1)	~$2.5M (Q2)	Maintained
Post-Q2 Update (prelim)	FY 2024	—	$235–$237M (6/27 preannounce)	Lowered (post Q2)

Earnings Call Themes & Trends

Topic	Q4 2023 (Q-2)	Q1 2024 (Q-1)	Q2 2024 (Current)	Trend
Traffic vs. Industry	Positive traffic; 6.5% comps with 5.6% traffic; cited outperformance	Traffic +3.3%; comps +3.8%	Outperformed Black Box by 940 bps; industry −3.5% traffic	Sustained traffic outperformance
Pricing/Mix	Effective price ~10.7% in Q4; lap 7% in Dec planned	9% price in Q1; lapped 7% in Dec; now ~3% price	Mix pressure mainly from beverages; plates flat at 6.3; 3% price	Price normalization; managing mix via tech/loyalty
Tech/Automation	Robotic dishwasher pilot in spring ’24; long-term labor leverage	Rollout plans; ROI framework, impact in new builds	First in-restaurant test in Japan; developing “sushi driver”; smartphone ordering rollout	Execution moving from plans to tests/rollout
Loyalty/Rewards	New app launched; registrations doubled	Registrations tripled vs prior; coupon campaigns driving visits	~1/3 of sales from rewards; members spend more, visit 1.3x/month	Increasing contribution and engagement
Delivery/Off-Premise	—	—	Exclusive DoorDash; margin neutral to accretive; on DashPass	New channel; controlled throttling to protect dine-in
Supply Chain/COGS	Stabilization; slight deflation; COGS 29.5%	Deflation ~4% y/y; aiming high-20% COGS	COGS 29.6%; pricing and initiatives cited	COGS tailwind sustained
Regulatory (CA FAST Act)	Not directly impacted; potential value tailwind	Similar stance; view as market share opportunity	Minimal direct impact; value vs QSR emphasized	Positioning as a tailwind
Development	10 openings in FY23; 4 in Q4	4 Q1 openings; 7 under construction; permitting easing	5 Q2 openings; 5 under construction; ~5-month build time	Accelerated cadence; pipeline robust

Management Commentary

Strategic priorities: “We’ve opened 10 restaurants to date… giving us the confidence to upgrade our revenue guidance.”
Operating leverage: “We were able to bring G&A costs down to 14.3%... we now expect to achieve even greater G&A leverage for the year.”
Tech/ops catalysts: “Our table-side mobile ordering… is going smoothly… guests will be able to earn prizes by ordering side menu items.”
Delivery: “Our expectation is that [DoorDash] is going to be margin neutral to margin accretive… on DashPass you can now get delivery for free.”
Brand/IP: “Our next IP partner is Dragon Ball… the most exciting partnership we’ve ever had.”

Q&A Highlights

Margin composition: Pre-opening costs were ~$700K above prior year (~1.2% of sales); majority labor; ~8 days of severe weather drove inefficiency; confidence in H2 restaurant-level margins as pre-opening burden abates and seasonality helps .
Mix and check: Plate consumption flat at 6.3; mix pressure mainly from non-sushi (e.g., beverages); smartphone ordering expected to lift side-menu attachment .
DoorDash integration: Expected margin neutral to accretive; throttling used to prioritize in-restaurant guests .
Development cadence: 5 units under construction; ~5 months from groundbreaking to open (tightening to ~4 months recently) .
Street lens: An analyst flagged labor and “other costs” running above Street expectations, pressuring modeled margins .

Estimates Context

Wall Street consensus from S&P Global (revenue/EPS) was unavailable at time of analysis due to data limits, so we cannot provide a formal beat/miss comparison for Q2 2024 (S&P Global data unavailable).
On the Q2 call, an analyst noted margin lines (labor and other) were above expectations, implying Street models had lower assumptions for those lines .
Post-period preliminary Q3 update reduced FY24 sales outlook to $235–$237M, which likely necessitated downward estimate revisions after the initial Q2 guidance raise .

Key Takeaways for Investors

Traffic-led share gains continue; despite macro/weather, KRUS outperformed industry traffic and maintained ~20% restaurant-level margins with notable G&A leverage—supportive of the long-term unit growth algorithm .
Mix headwinds are manageable; tech (smartphone ordering) and loyalty features aim to lift side-menu attachment and stabilize check while preserving KRUS’s value proposition (3% pricing) .
DoorDash provides an incremental channel without pricing premiums vs. dine-in and is expected to be margin neutral to accretive; disciplined throttling protects the in-store experience during peaks .
Development remains a core driver; build cycles ~5 months, pipeline robust, and unit guidance increased to 13–14; these bolster multi-year revenue visibility and regional G&A efficiency .
Near-term watch items: labor/other costs normalization post-pre-opening surge and weather; Southwest comps; and the efficacy of upcoming IP collaborations (e.g., Dragon Ball) on traffic/mix .
Guidance trajectory: Q2 raise (to $243–$246M) signaled confidence, but the June preannouncement lowered FY24 sales to $235–$237M on California softness—expect models to recalibrate around a more conservative base until trends re-accelerate .
Medium-term thesis: KRUS’s technology/automation roadmap (robotic dishwasher, “sushi driver”) and loyalty ecosystem are designed to structurally improve labor efficiency and mix, reinforcing the path to scalable profitability as the footprint expands .

KURA SUSHI USA, INC. (KRUS)·Q2 2024 Earnings Summary