Kura Sushi USA Inc’s COGS Guidance and Q2 Comp Sales Outlook Clash in 2026 Earnings Calls

Date of Call: Apr 7, 2026

Financials Results

• Revenue: $80 million, up from $64.9 million prior year period
• EPS: -$0.014 per share (negative 14 cents), improved from -0.31 dollars per share prior year quarter
• Gross Margin: Not explicitly provided (COGS as % of sales 30.4% vs 28.7% prior year)
• Operating Margin: Operating loss of $2.2 million, improved from operating loss of $4.6 million prior year quarter; restaurant-level operating profit margin 18.2% vs 17.3% prior year

Guidance:

• Total sales for fiscal 2026 expected between $333 million-$335 million.
• Expect to open 16 new units, maintaining annual unit growth rate above 20%.
• Average net capital expenditures per unit approximately $2.5 million.
• G&A expenses as a percentage of sales expected approximately 12%, excluding litigation expense.
• Full year restaurant level operating profit margins expected between 18%-18.5%.

Business Commentary:

Revenue and Comparable Sales Growth:

• Kura Sushi USA, Inc. reported total sales of $80 million for the fiscal second quarter, representing comparable sales growth of 8.6%, with 4.3% from positive traffic and 4.3% from price and mix.
• The growth was driven by successful IP collaborations and operational efficiencies.

Labor Cost Improvement:

• Labor as a percentage of sales improved by 410 basis points from last year's 34.8% to 30.7%.
• This improvement was driven by operational initiatives, better sales leverage, and strategic labor initiatives scaling with seasonal leverage.

Technology and Operational Enhancements:

• The company made significant progress with technology investments, including the introduction of a reservation system and robotic dishwashers.
• These technologies addressed key guest pain points such as wait times and improved operational efficiency, contributing to higher visitation rates and labor savings.

IP Collaborations and Marketing Strategy:

• The success of IP collaborations like Kirby, Nintendo, and Sanrio contributed to strong sales performance, particularly in February.
• The strategy of re-emphasizing IP collaborations is expected to continue with upcoming partnerships like Jujutsu Kaisen, Tamagotchi, and Honkai: Star Rail.

Guidance and Future Outlook:

• The company updated its fiscal year 2026 guidance, expecting total sales between $333 million-$335 million, with a focus on maintaining an annual unit growth rate above 20%.
• The guidance reflects prudent planning amidst geopolitical uncertainties and incorporates the strong performance seen in the first half of the fiscal year.

Sentiment Analysis:

Overall Tone: Positive

• Management described Q2 as 'quite strong' and 'record-breaking' with 'better-than-expected comparable sales' and 'remarkable' 410 basis point labor leverage. CEO stated 'We have a lot of good news to share today.' Guidance was raised for total sales, and forward outlook expressed confidence in achieving targets, noting 'We now expect modestly positive full-year comps.'

Q&A:

• Question from Andrew Charles (TD Cowen): Following the big Q2 same-store sales beat, revenue guidance was inched up. Does that reflect conservatism in the back half? Comment on new store productivity.
  Response: Guidance incorporates Q2 outperformance but is prudent given geopolitical uncertainty, not reflective of pessimism or conservatism.

• Question from Andrew Charles (TD Cowen): What drove the improvement in mix to roughly flat? Attachments or beverages?
  Response: Driven by guests eating more plates per person, attributed to success of IP collaborations incentivizing higher spending.

• Question from Todd Brooks (Benchmark StoneX): Where are we in the journey to get back to 20% restaurant level operating margin without tariff relief? When?
  Response: Expect to get back to 20% margin in the near future, with incremental 50 bps benefit from dish robots in fiscal 2027; tariff impacts offset by negotiations.

• Question from Todd Brooks (Benchmark StoneX): Review upcoming IP partnerships and qualitative sense of strength versus prior year.
  Response: Upcoming collaborations: Tamagotchi (30th anniversary) and Honkai: Star Rail; Q2 was easiest comp period, do not model 8% comps go-forward.

• Question from Jeremy Hamblin (Craig-Hallum): Timing of potential tariff benefit given forward contracts?
  Response: No meaningful shift expected; tariff relief minor and offset by fuel and protein inflation.

• Question from Jeremy Hamblin (Craig-Hallum): Other labor tools/AI opportunities to refine business model?
  Response: Exploring AI for food quality consistency, guest-facing tech for fun/traffic, and using AI to improve IP collaboration batting average.

• Question from Jeffrey Bernstein (Barclays): What capabilities are most important for new CFO?
  Response: Looking for qualified public company CFO with high qualifications, not in a rush to fill spot.

• Question from Jeffrey Bernstein (Barclays): Confidence in 20% unit growth sustainability into fiscal 2027? Key guardrails?
  Response: Confident due to built pipeline; guardrails include new unit performance meeting system average economics.

• Question from Sharon Zackfia (William Blair): Can you maintain positive comps for rest of year given any business signals?
  Response: Guidance reflects prudence due to geopolitical uncertainty, pleased with quarter to date.

• Question from Sharon Zackfia (William Blair): Will G&A leverage continue post-CFO departure?
  Response: Yes, G&A reduction is ingrained; next CFO expected to continue leveraging G&A as part of mandate.

• Question from Mark Smith (Lake Street Capital Markets): Impact of rising gas prices on consumer behavior?
  Response: Gas prices impact consumer, but pleased with performance; Q2 comps half driven by traffic showing value resilience.

• Question from Mark Smith (Lake Street Capital Markets): Cadence of openings back half of year?
  Response: Safe to assume back half weighting, Q3 relative to Q4.

• Question from Jim Sanderson (Northcoast Research): Concern about fuel surcharges on food costs?
  Response: Possibility exists but haven't seen much; confident in 30% COGS guidance despite volatility.

• Question from Jim Sanderson (Northcoast Research): Weather impact on comps and back half performance?
  Response: Winter weather provided ~200 bps tailwind; don't give quarterly guidance, but Q3 has been happy to date.

• Question from George Kelly (ROTH Capital Partners): Tech enhancements for food quality/consistency opportunities?
  Response: Focusing on dashi dispenser for consistency and automated sear station for uniformity/labor savings.

• Question from George Kelly (ROTH Capital Partners): Litigation expense expectations? Updated labor guide?
  Response: Litigation expected to be minimal due to strong employment practices; labor guide expects ~150 bps improvement in Q3/Q4, not 400 bps.

• Question from Matt Curtis (D.A. Davidson): Sales lift from reservation system? Prior statement of no explicit sales upside still valid?
  Response: Internal estimate reservation system contributed ~1% to sales, pleased with headcount reduction benefit.

• Question from Matt Curtis (D.A. Davidson): Detail on IP collaboration gap in March due to inspection issues?
  Response: One-off event, not expected to recur; pushed back first two weeks but not a meaningful headwind.

• Question from Jon Tower (Citi): Response to sushi lunch combo and impact on mix/traffic?
  Response: Combo is annual winter promotion, not a big needle mover; will do similar in summer.

• Question from Jon Tower (Citi): Competitive set passing along price increases, consumer pushback or risk of closures?
  Response: Yes, seeing price increases; traffic boon to Kura as guests recognize value, will use targeted marketing and LTOs for comparison.

Contradiction Point 1

Full-Year COGS Guidance and Tariff Impact

Guidance on full-year COGS appears inconsistent regarding tariff benefits.

Jeremy Hamblin (Craig-Hallum) - Jeremy Hamblin (Craig-Hallum)

2026Q2: Forward contracts for proteins overlap, so there is no single meaningful shift date expected. The minor relief from tariff changes was offset by fuel costs and protein inflation. - Hajime "Jimmy" Uba(CEO), Benjamin Porten(SVP)

What is the timing for potential benefits from recent tariff changes, and what other technology investments beyond reservations and dish robots offer future labor or operational efficiency opportunities? - Jeremy Hamblin (Craig-Hallum)

20260108-2026 Q1: The full-year COGS target is ~30%, a significant achievement given initial 300-400 bps headwind estimates. - Jeff Uttz(CFO)

Contradiction Point 2

Expectations for Q2 Comparable Sales

Statements about Q2 comp expectations were notably different between calls.

Sharon Zackfia (William Blair) - Sharon Zackfia (William Blair)

2026Q2: The company is pleased with how Q3 is performing to date but is being responsible given the unpredictable environment. - Benjamin Porten(SVP), Jeff Uttz(CFO)

Given the "slightly positive" comps guidance, can you maintain positive comps for the rest of the year, and is the discipline around G&A leverage now ingrained in the company? - Sharon Zackfia (William Blair)

20260108-2026 Q1: For Q2 comps, the company absolutely expects positive comparable sales. - Benjamin Porten(SVP)

Contradiction Point 3

Dish Robot Implementation Benefit and Timing

Contradiction on when the labor benefit from robots will be most pronounced.

Todd Brooks (Benchmark StoneX) - Todd Brooks (Benchmark StoneX)

2026Q2: The biggest tailwind for margin is expected in Fiscal 2027 from dish robots (50 bps benefit). - Benjamin Porten(SVP, IR & System Development)

What is the progress on achieving a 20% restaurant-level operating margin without tariff relief, and how do the upcoming IP partnerships compare in strength to last year? - Alex Sturnieks (Lake Street Capital Markets, on for Mark Smith)

20251107-2025 Q4: A more pronounced labor benefit of ~50 bps is expected in FY27. The anticipated benefit is already factored into the FY26 restaurant-level operating profit margin (RLOPM) guidance. - Hajime Uba(CEO)

Contradiction Point 4

Guidance Reliance on IP Collaborations

Contradiction on whether new initiatives are critical to or merely supportive of financial guidance.

Andrew Charles (TD Cowen) - Andrew Charles (TD Cowen)

2026Q2: The biggest factor was guests eating more plates per person, attributed to the success of IP collaborations. - Hajime "Jimmy" Uba(CEO), Jeff Uttz(CFO)

Following the Q2 same-store sales beat, why was revenue guidance only slightly raised, and what factors drove the improvement in mix to roughly flat? - John-Paul Wollam (ROTH Capital Partners)

20251107-2025 Q4: The comp guidance does not hinge on these new initiatives. They are considered 'gravy' upside opportunities. - Hajime Uba(CEO)

Contradiction Point 5

Outlook on Restaurant-Level Operating Margin

Confidence in returning to >20% margin appears to shift from near-term target to a future milestone.

Todd Brooks (Benchmark StoneX) - Todd Brooks (Benchmark StoneX)

2026Q2: The biggest tailwind for margin is expected in Fiscal 2027 from dish robots (50 bps benefit) and a favorable shift in new vs. existing market openings (55/45 split). The team is confident in returning to 20% margins in the near future. - Benjamin Porten(SVP, IR & System Development), Hajime "Jimmy" Uba(CEO)

Where are we in the journey to achieve a 20% restaurant-level operating margin without tariff relief, and can you provide an update on upcoming IP partnerships and their strength compared to last year? - Jeffrey Andrew Bernstein (Barclays Bank PLC)

2025Q3: It is difficult to bridge to a >20% margin for fiscal 2025 given the year-to-date performance... The target for fiscal 2026 is a >20% margin. - Benjamin Porten(SVP, IR & System Development)