Executive Summary

Fiscal Q3 2024 total sales rose 28.1% year over year to $63.1M, but GAAP EPS turned negative at $(0.05) as comps decelerated to +0.6% and operating loss was $(1.2)M; restaurant-level operating margin held at 20.0% on cost discipline .
Management cut FY24 sales guidance to $235–$237M (from $243–$246M in April), kept new unit openings at 14 and tightened average net capex per unit to ~$2.4M; G&A guidance maintained at 14.0%–14.5% excluding litigation accruals .
The quarter’s softness was attributed to macro headwinds (especially California) and infill cannibalization; pricing actions of ~1% in May and ~1.7% in July bring effective pricing to ~4% near term .
Near-term catalyst risk: management flagged Q4 comp expectations of negative mid- to high-single digits due to tougher promotions lap and additional infill openings; technology/reservation rollouts and IP promotions (One Piece, Aug 1) are key offset levers .

What Went Well and What Went Wrong

What Went Well

Supply chain and price initiatives reduced food and beverage costs to 29.2% of sales (−80 bps YoY) .
Despite sales deleverage, restaurant-level operating profit margin was sustained at 20.0%; adjusted EBITDA of $4.5M and G&A leverage improved to 14.0% of sales (includes $0.6M litigation accrual) .
Technology pipeline advanced: full smartphone ordering rollout, testing for prize-earning on side menu, and push to implement a reservations system and automated seating to reduce FOH workload; “massive upgrade” described by management .

What Went Wrong

Sudden comp slowdown mid-April led to operating loss of $(1.2)M and net loss of $(0.6)M; comparable sales growth slowed to +0.6% and traffic growth was only +0.3% .
Labor as a percent of sales rose to 32.3% on wage increases, pre-opening costs, and sales deleverage; other costs rose to 14.4% with inflation and heavier pre-opening activity .
California deceleration (unexpected) and infill cannibalization pressured comps; regional comps: West Coast +7.3% vs +8.7% prior quarter, Southwest −3.9% vs flat prior quarter .

Financial Results

Notes: Q2 2024 sales cited by CFO were $57.3M; a higher $67.3M figure appeared elsewhere in remarks but CFO’s figure is used below .

Metric	Q3 2023	Q2 2024	Q3 2024
Revenue ($USD Millions)	$49.238	$57.3	$63.082
Operating Income ($USD Millions)	$1.308	$(1.7)	$(1.169)
Net Income ($USD Millions)	$1.680	$(1.0)	$(0.558)
Diluted EPS ($USD)	$0.16	$(0.09)	$(0.05)
Restaurant-level Operating Profit ($USD Millions)	$11.576	—	$12.604
Restaurant-level Operating Margin (%)	23.5%	19.6%	20.0%
Adjusted EBITDA ($USD Millions)	$5.118	$2.9	$4.451
Adjusted EBITDA Margin (%)	10.4%	—	7.1%
Food & Beverage (% of sales)	30.0%	29.6%	29.2%
Labor (% of sales)	29.2%	32.8%	32.3%
Other Costs (% of sales)	12.5%	14.6%	14.4%

Regional comps breakdown:

Region	Q2 2024 Comps	Q3 2024 Comps
West Coast	+8.7%	+7.3%
Southwest	~0%	−3.9%

KPIs and mix:

KPI	Q2 2024	Q3 2024
Comparable Restaurant Sales (%)	+3.0%	+0.6%
Traffic Growth (%)	+5.9%	+0.3%
Price/Mix (%)	Price ~3%, Mix −6%	Price ~3.4%, Mix −3.7%, Total −0.3%
Restaurants End of Period (units)	—	63

Non-GAAP adjustments:

Litigation accrual of $0.6M in Q3; adjusted net income was ~$0.004M vs GAAP net loss $(0.558)M; adjusted EPS $0.00 vs GAAP $(0.05) .
Adjusted EBITDA adds stock comp, non-cash lease, and litigation accrual; reconciliations provided .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Total Sales ($USD Millions)	FY 2024	$243–$246 (Apr 4)	$235–$237 (Jul 9)	Lowered
New Unit Openings (units)	FY 2024	13–14	14	At high end
Avg Net Capex per Unit ($USD Millions)	FY 2024	~$2.5	~$2.4	Lowered
G&A as % of Sales	FY 2024	14.0%–14.5%	14.0%–14.5% (excl. litigation accruals)	Maintained
Comparable Sales (run-rate)	Q4 2024	—	Negative mid- to high-single digits (narrative)	New disclosure (cautionary)

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 2024)	Previous Mentions (Q2 2024)	Current Period (Q3 2024)	Trend
Tech initiatives	Rewards relaunched; smartphone ordering pilots; robotic dishwasher testing planned; Sushi Slider certification path	Smartphone ordering rollout in progress; Sushi Slider expected summer tests; robotic dishwasher test positive; DoorDash exclusive terms	Smartphone ordering completed; side-menu prize feature testing; reservations + automated seating prioritized; Sushi Slider certification ongoing; dishwasher improvements	Accelerating deployment; near-term operational benefits
Supply chain & COGS	COGS 29.8% with deflation; aim to keep high-20s to ~30% while reinvesting in quality	COGS 29.6%; supply chain initiatives contributing	COGS 29.2%; 80 bps YoY improvement on pricing/supply chain	Improving
Pricing & value	Effective pricing ~3% after Dec/Jan changes; emphasis on value vs QSR amid FAST Act	Pricing ~3% with mix pressure; value proposition maintained	1% in May + 1.7% in July; effective ~4% while preserving value	Slightly higher pricing; value focus intact
Promotions/IP	Peanuts; Spy x Family pipeline strong	Dragon Ball announced; DoorDash launch; mix tailwinds anticipated	One Piece collaboration confirmed for Aug 1	Ongoing; large IP laps in Q4
Macro & comps	Traffic +3.3%, comps +3.8%; weather impacts noted	Traffic +5.9%, comps +3.0%; weather/pre-opening elevated costs	Comps +0.6%, traffic +0.3%; April/May deceleration; Q4 comps expected negative mid-high single digits	Deteriorated
Cannibalization	Not highlighted	Pre-opening cadence heavy; operational strain discussed	Cannibalization explicitly cited; learning 45-min drive buffers; infill mix managed	More explicit; managed strategically
Loyalty program	Registration tripled vs prior; frequent 1.3x/month visits	Driving traffic; targeted promotions; positive momentum	Frequency stimulation and segmentation planned; “big news” upcoming	Building capabilities
G&A leverage	16.7% in Q1; litigation accrual $205k; SOX 404(b) headwinds	14.3% in Q2; continued leverage	14.0% in Q3 (includes $0.6M litigation accrual)	Sustained leverage

Management Commentary

“We believe the current headwinds are macro-driven and transitory… position ourselves to continue to deliver strong financial results and uninterrupted progress on… at least 20% annual unit growth, G&A leverage, and operational excellence…” .
“Comp deterioration… driven by the overall macro environment… particularly in California as well as a degree of cannibalization… we expect financial benefit from infilling synergies.” .
“We have completed the rollout of our smartphone mobile ordering… working… to implement a reservation feature… accompanied by an automated seating system, reducing the workload of our front of house employees.” .
CFO: “We now expect total sales to be between $235 million and $237 million… 14 units… G&A… between 14% and 14.5%, excluding litigation accruals… cash and cash equivalents $59.4 million and no debt.” .
Cost actions: streamline BOH stations from 4 to 3 to reduce headcount; pre-opening savings via infill staffing; further tech efficiencies .

Q&A Highlights

Comps cadence and outlook: March strong, April/May deceleration; Q4 comps expected negative mid- to high-single digits due to tough laps and infill comp headwinds .
California softness vs macro: management sees pressure broad-based, not KRUS-specific; guest survey scores and value perception remain strong .
Pricing: ~1% in May and ~1.7% in July; blended effective pricing ~4%; system-wide with slight extra California wage offsets; maintain value positioning .
Mix: improved sequentially; Q3 price/mix −0.3% (price ~3.4%, mix −3.7%) vs Q2 price ~3%, mix −6%; plate consumption stable .
Unit growth: FY25 plan ≥20% unit growth; mix ~40% new markets / 60% existing; pipeline strong with 6 under construction; infill cannibalization managed with site selection learnings .

Estimates Context

Wall Street consensus (S&P Global/Capital IQ) for Q3 2024 EPS, revenue, and EBITDA was unavailable at time of analysis due to data access limits; therefore, we cannot determine beat/miss versus consensus for this quarter. Values retrieved from S&P Global.*

Where estimates may need to adjust:

FY24 revenue guidance cut to $235–$237M likely requires downward revisions; Q4 negative comp run-rate could drive near-term EPS estimate pressure and margin expectations reset .

Key Takeaways for Investors

Guidance reset and disclosed Q4 negative comp run-rate introduce near-term estimate and sentiment risk; watch promotions laps (Dragon Ball/One Piece) and reservation rollout to stabilize traffic .
Cost discipline credible: COGS improvement, BOH labor efficiencies, and G&A leverage (despite litigation accrual and 404(b) costs) support unit-level economics through macro softness .
Infill strategy brings short-term comp headwinds but longer-term staffing and pre-opening cost benefits; site-selection learnings (45-min buffers) being incorporated .
Value proposition intact with prudent pricing (~4% effective) versus sector-wide increases; management prioritizes sustainable traffic/mix levers over heavy discounting .
Tech stack enhancements (smartphone ordering, reservations, automated seating, Sushi Slider, dishwasher) are tangible throughput and labor-saving initiatives that can drive mix and capacity over 12–24 months .
Liquidity solid ($59.4M cash, no debt) to fund 14 FY24 openings and sustain ≥20% unit growth into FY25; average net capex per unit trending lower .
Monitor California macro normalization and Southwest cannibalization effects; regional comps divergence highlights where recovery and infill benefits should first appear .

Additional Relevant Press Releases

Appointment of Treasa Bowers to Board (Audit/Compensation Committees) adds scaling expertise; governance update alongside earnings .

Appendix: Full Financial Statements (select excerpts)

Consolidated Statement of Operations, Selected Operating Data, and Non-GAAP reconciliations included in the July 9 press release and 8-K exhibits .

KURA SUSHI USA, INC. (KRUS)·Q3 2024 Earnings Summary