Q3 2024 Kura Sushi USA Inc Earnings Call

Operator: Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Kura USA Fiscal Third Quarter 2024 Earnings Conference Call. At this time, all participants have been placed in a listen-only mode, and the lines will be open for your questions following the presentation. Please note that this call is being recorded. On the call today, we have Hajime Jimmy Uba, President and Chief Executive Officer, Jeff, Chief Financial Officer, and Benjamin Porten, SVP, Investor Relations and Systems Development. Now, I would like to turn the call over to Mr. Thank you, Operator. Good afternoon, everyone.

Good afternoon, ladies and gentlemen, and thank you for standing by and welcome to the correct Sushi USA fiscal third quarter 'twenty 'twenty four earnings conference call. At this time, all participants have been placed in a listen only mode and the lines will be open for your questions. Following the.

Speaker Change: Presentation. Please note that this call is being recorded on the call today, we have hot humid Jimmy Ubah, President and Chief Executive Officer, Jeff <unk>, Chief Financial Officer, and Benjamin ported SVP Investor Relations and system development and now I would like to turn the call over to Ms.

Speaker Change: Portland.

Benjamin Porten: Thank you all for joining us. By now, everyone should have access to our fiscal third quarter 2024 earnings release. It can be found at www.kurosushi.com in the Investor Relations section.

Unknown Executive: Thank you operator, good afternoon, everyone and thank you all for joining by now everyone should have access to our fiscal third quarter 2020 full earnings release can be found at www dot for sushi Dark comedy relations section the.

Benjamin Porten: The copy of the earnings release has also been included in the 8K we submitted to the SEC. Before we begin our formal remarks, I need to remind everyone that part of our discussion today will include forward-looking statements as defined under the Private Security Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance, and therefore, you should not put undue reliance on them. These statements are also subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect.

<unk>: A copy of the earnings of weakness has also been included in the 8-K, we submitted to <unk>.

Benjamin Porten: We refer all of you to our SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial conditions. Also, during today's call, we will discuss certain non-GAAP financial measures that we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation nor as a substitute for results prepared in accordance with GAAP, and reconciliations to comparable GAAP measures are available in our earnings release. With that out of the way, I would like to turn the call over to Jenny.

Speaker Change: Before we begin our formal remarks I need to remind everyone that part of our discussion today will include forward looking statements as defined under the private Securities Litigation Reform Act of 1995. These.

Speaker Change: These forward looking statements are not guarantees of future performance and therefore, you should not put undue reliance on them.

Speaker Change: These statements are also subject to numerous risks and uncertainties that could cause actual results to differ materially.

Speaker Change: We refer all of you for a SEC filings for more detailed discussion of the risks that could impact our future operating results and financial condition.

Speaker Change: Also during today's call, we will discuss certain non-GAAP financial measures, which we can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation, nor as a substitute for results prepared in accordance with GAAP reconciliations.

Speaker Change: The Asian to comparable GAAP measures are available in our earnings release.

Speaker Change: That is the way I would like to turn the call over to Jenny.

Jenny: Thanks, Ben, and thank you to everyone for joining us today. As we mentioned in our pre-release announcement, sales in the fiscal third quarter did not meet our expectations. This sales decline, which began mid-April, was sudden and unexpected, and I'm proud of the efforts that our team members have made, allowing us to maintain a restaurant-level profit margin of just 20% despite the sales delivered. We believe the current heroines are macro-driven and transitory, but with difficulty in predicting the duration of macroeconomic shifts.

Jenny: Pennsylvania, and thank you to everyone for joining us today.

Jenny: I believe you mentioned that you know a pretty decent on cement.

Jenny: It seems our fiscal third quarter eating out to meet all our expectations.

Speaker Change: He says the speaker line, which began April it was sudden and unexpected and I'm proud of the Haynesville well.

Speaker Change: Well my team members have made.

Speaker Change: I don't think that's the main thing I, just wanted to dig a broker to market, 20% East Texas.

Speaker Change: They can watch.

Speaker Change: We believe the kinds of Italy, a market or to meet them constantly.

And he said he's got a team in predicting situation macro economics.

Jenny: We believe the most prudent course of action is to position ourselves to be able to continue to deliver strong financial results and uninterrupted progress on our core strategic goals of at least 20% annual unit growth, year-on-year leverage, and operational excellence, regardless of the broader economic environment. While the third-quarter results were unexpected, nothing has changed about Kura Sushi's tremendous potential. Total sales for the fiscal third quarter were $63.1 million, representing comparable sales growth of 0.6% and traffic growth of 0.3%.

Even the most prudent alcohol suboxone is a political and level of service to be able to continue to deliver strong financial results.

Speaker Change: And update the progress of our classroom teaching cost.

Speaker Change: At least 20%.

Speaker Change: Do you need to be honest.

Speaker Change: Their name on it and the old British exit and you had what was it blow down economic environment.

Speaker Change: The South Dakota results, well I expected nothing has changed how much quicker because she's a tremendous potential.

Speaker Change: Total sales for the fiscal third quarter was 63 point of $1 million representing.

Speaker Change: Presenting comparable to say, that's a little sort of a general 0.6 buffet.

Speaker Change: Traffic, but also all the data points to be Boston.

Jenny: We believe the competition over the prior quarter was driven by the overall macro environment and consumer sentiment, particularly in California, as well as a degree of cannibalization as we execute our planned strategy of infilling existing markets. The impact of caramelization we have seen was not unexpected and is a necessary result of infilling, and we expect financial benefits from infilling synergies. At the same time, we continue to take a thoughtful approach with infields for the purpose of managing their impact on comparable sales as we exit the current macro environment.

Speaker Change: He believes the confidence it is Sean.

Speaker Change: Yeah right good quarter.

Speaker Change: And by the overall macro environment and the consumer sentiment that's going on in California.

Speaker Change: Is that degree of anybody's any Sean as we execute telecom's front that you're all in feeding the market.

Speaker Change: The impact I'm talking about.

Speaker Change: So you haven't seen that's not unexpected.

Speaker Change: Is that and this is how you decided to all including <unk>.

Speaker Change: And we expect to find out that opinion.

Speaker Change: Including synergies.

Speaker Change: That's the same thing we continued to take a thoughtful launch in theaters for the past several months because their impact on comparable sales.

Speaker Change: I think the agency to the client the macro environment.

Jenny: We expect to return to delivering positive comparable sales through the ongoing incorporation of new learnings into our site selection process in combination with the balancing of in-fill ratios for our pipeline.

Speaker Change: We expect to return to anybody in particular competency status.

Speaker Change: Incorporation of new Ronnie.

All effects that some thought.

Speaker Change: In combination when we sit down and think Oh easy for.

Speaker Change: For our pipeline.

Speaker Change: As context for the softness in California.

Jenny: In past earnings calls, we have mentioned our expectations that the first act would be a tailwind for us as wedge pressures would prompt more aggressive pricing among competitors and highlight the value that Kura Sushi offers. However, what we have seen instead is a general perception that restaurants as a category have become expensive, introducing industry-wide pressures, regardless of a given restaurant's relative value. Despite this shift in consumer behavior, I'm pleased that we were able to maintain both positive comparable sales and profit for the quarter.

Speaker Change: In past earnings calls.

Speaker Change: How to manage on their life.

Speaker Change: Well first off it would be at 10 lean to fall off pretty.

Speaker Change: Rachel pump more aggressive pricing among competitors.

Speaker Change: Hey that cause the body.

Speaker Change: Chris as you all of us.

Speaker Change: Well, we haven't seen instead is like any other pass exxon's up next Saddam category becomes expensive instead of a good thing it just seemed like a pretty sharp.

Speaker Change: It's all about keeping them disgruntled employee.

Unknown Executive: Despite this issue in consumer behavior, I am pleased with that we were able to maintain both political component of the sales and the profit for the quarter. Turning to less than a regular extent is, our cost of goods sold improved by 80-bit points to 29.2% as a result of ongoing supply chain efforts. However, other percentage of sales increased from the prior year quarters, 29.2% to 32.3%.

Speaker Change: You start to dissipate and consumer behavior.

Speaker Change: I'm pleased that you are able to maintain both plenty of getting complement assays on the coffee for the quarter.

Jenny: Turning to restaurant regular expenses, our cost of goods sold improved by 80 basis points to 29.2% as a result of ongoing supply chain efforts. Labor as a percentage of sales increased from the prior year quarters 29.2% to 32.3%, largely due to sales delivery, increase the pre-opening labor cost, and wage increases. Other costs rose by 190 basis points to 14.4% due to sales delivery.

Speaker Change: Turning to students on David.

Speaker Change: Yes.

Cost of goods sold included with them by 80 basis points.

Speaker Change: 29 point to 2% is that decided the ongoing something that changed their phones.

Speaker Change: Hey, Bob Authentically service increased films without yeah, Yeah, Cool top 29 point of 2% to 32 point to 3% that did he did you say that anybody.

Unknown Executive: Largerly due to sales delivery, increased the production cost and rich increases. Other costs rose by 190-bit points to 14.4% due to sales delivery, general inflation under an increase in production expenses. To offset increased cost, we took 1% pricing in May, and 1.7% in July for current effective pricing of approximately 4%. Largely, we believe we have opportunities for better cost management in the near future, with incremental operational efficiencies in our era.

Speaker Change: Could he used to pre opening cost me about cost and wage increases.

Other costs rose by 190 basis points to 14, 4% can you just say to anybody.

Jenny: General inflation and an increase in pre-opening expenses. To offset increased costs, we took 1% pricing in May and 1.7% in July for current effective pricing of approximately 4%.

Speaker Change: And out of international.

Speaker Change: Increase in Preopening expenses.

To offset the increased cost.

He took lump offense, but I think in may and the one 7% in July.

Speaker Change: Keep in pricing of approximately 4%.

Jenny: Additionally, we believe we have opportunities for better cost management in the near future through incremental operational efficiencies in hourly labor. We also expect to achieve meaningful reductions in pre-opening expenses, primarily labor and travel costs associated with management trainees, by taking advantage of the opportunities created by infilling existing markets. I'm very proud that we were able to continue to leverage our G&A year-over-year in spite of lower-than-expected sales. Third quarter GMB as a percentage of sales was 14%, which is a 20 basis point improvement year over year. As I mentioned earlier, continued G&A leverage, regardless of macro pressures, is a major priority.

Speaker Change: Additionally, we believe we have opportunities for better cost management in the near future.

Speaker Change: Incremental operational efficiencies or are you de la.

Speaker Change: We also expect to achieve meaningful reductions in Preopening expenses.

Unknown Executive: We also expected to achieve meaningful reductions in pre-opening expenses, primarily the labor and the tropical cost associated with management trainees, by taking other advantages of opportunities created by inferring existing markets. I'm very proud that we were able to continue to leverage our GMDE year over year, in spite of over time expected to sales. Third quarter GMDE as a percentage of sales was 14%, which is a 20-basis point improvement year over year. As I mentioned earlier, continued GMDE leverage leverage of macro pressure pressure is a major priority.

Speaker Change: He came up on the topic of cost.

Speaker Change: She hated to lose money as you mentioned claims by taking advantage of all the synergies created by including the existing market.

Speaker Change: I'm very proud that we were able to continue to live by nature. A lot you can do it you know all about yeah insightful Noel Watson executive briefings.

Speaker Change: Third quarter G&A as a percent than it was say this plus 14%.

Speaker Change: It is a 20 basis point improvement you know about yet.

Speaker Change: As I mentioned on the audio continues like he doesn't do anybody any thought there.

Speaker Change: Macro temperature Michelle is a major priority.

Unknown Executive: We believe regional leverage opportunities in inferring market will play a very meaningful role in our cost management and GMDE reduction strategy. In Fiskart 25, we print a continue of a unit growth rate of 30%, but also expect a fact, we will be able to monetize a new reference, is our existing area management team. Additionally, as we print open several new restaurants in existing markets in Fiskart 25, this will allow us to draw on the planet pool, develop the pilot's reference and meaning to give us our third party recruiting agency fees. Moving on to the development, we opened four units in the Fiskart 304.

Speaker Change: He believe diligently manage opportunities in feeding the market, you're putting up very evening, because we're all in our cost of money that you met him, but he did he got strong strategies.

Speaker Change: And he's got a 25.

Speaker Change: He put on to continue or do you need the little snake or at least a 20% plus.

Also expect atop lead me to be able to manage he's in units is our existing video management the cheap.

Speaker Change: Additionally, I'm gonna be prompt opened 17, new lessons existing market in fiscal 'twenty five.

Speaker Change: I don't know that Statoil onto kind of Dakota divvied up the pie to look underneath.

Speaker Change: On the meaning did you sell a phantom part D recruiting agency fees.

Jenny: We believe regional leverage opportunities in infield markets will play a very meaningful role in our cost management and zero end reduction strategies. In Fiscal 25, we plan to continue our unit growth rate of at least 20% but also expect that we will be able to manage these new restaurants with our existing area management team. Additionally, as we plan to open several new restaurants in existing markets in Fiscal 25, this will allow us to draw on the talent pool developed by local restaurants and meaningfully reduce our third-party recruiting agency fees. Moving on to development, we opened four units in the fiscal third quarter. Waterford Lakes, Florida; Atlanta, Georgia; Scottsdale, New York; and Roseville, California.

Speaker Change: Moving onto development, we opened four units if he's going to have a cortisol blocker.

Unknown Executive: Waterford Lake, Florida; Atlanta, Georgia; Saturday; New York; and Roswell, California.

Speaker Change: Oh, Yeah, Yeah got it.

Speaker Change: And in New York on the roles will be in California.

Jenny: Subsequent to quarter end, we opened a restaurant in Lake Grove, New York, marking the 14th unit of our fiscal year and the high end of our new unit guidance range for FY24. We currently have six units under construction, positioning us for a strong start to fiscal 25. Turning to tech initiatives, I'm pleased to announce that we have completed the rollout of our smartphone mobile ordering system, and the in-store testing for the additional feature that allows guests to earn Biklopon prizes with side menu items is on track to begin shortly. The sushi slider is undergoing U.S. certification, and we are making improvements to the robotic dishwasher in preparation for the final mass production model.

Speaker Change: Subsequent to quarter end, we opened our lesson and they can put out like New York, marking the 14th you need like she's got a year under the.

Unknown Executive: That's it going to the quarter end, we opened a restaurant in Lake Grove, New York, marking the fourth things unit of our Fiskart here, and the high end of our unit unit guidance range for a flight 24. We currently have six units on the construction, positioning us for a strong Saturday to Fiskart 25.

Speaker Change: Hi, and you need you need the guidance again should fall in FY 'twenty four.

Speaker Change: He claimed 36 units under construction or signing up for a strong start to fiscal 'twenty five.

Speaker Change: Turning it to take the initiative.

Unknown Executive: Turning it to the tech initiatives, I'm pleased to announce that we have completed several of our smartphone mobile ordering system under the installed testing towards the original feature that others guessed to arm big propon prices to decide on many items is on product building shortly. The first year's rider is undergoing U.S. certification, and we are making improvements to the robotic dishwasher in preparation for the final mass production model.

Speaker Change: I'm pleased to announce that we have a company. That's got no no I'll talk a lot about smartphone mobile ordering system onto the install 15th towards at least another feature that allows guests to pick it up on crises.

Speaker Change: I mean your items.

Speaker Change: On productivity being totally.

Speaker Change: Especially stronger is undergoing you is suski is strong and we are making improvements loyalty kedushah pretty punishing forced to find out a multiple of extra money.

Unknown Executive: I'm expressed exceptionally pleased to be able to announce some new technologies today. We are currently working with Japan to implement a reservation feature for a hold of our time. This is a massive upgrade from our current remote-checking system, giving guests more control over their dining experience. Our long-term long-awaited times are harder for our guests when they decided to dining this up, and we believe this removal will stop harder. We set system, yes, can identify so these are the times and avoid them by making reservations outside of big demand, which we believe is a traffic opportunity, particularly on weekends.

Jenny: I'm exceptionally pleased to be able to announce some new technologies today. We are currently working with Japan to implement a reservation feature for the first time. This is a massive upgrade from our current remote check-in system, giving guests far more control over their dining experience. Our long wait times are a hurdle for our guests when they decide to dine with us, and we believe this removes that hurdle. With this system, guests can identify the busiest times and avoid them by making reservations outside of periods of high demand, which we believe is a traffic opportunity, particularly on weekends. This technology is accompanied by an automated seating system, reducing the workload of our front of house employees.

Speaker Change: I'm exceptionally pleased to be able to announce how many it takes one or two six days.

Speaker Change: You put anybody walking based upon implemented is that they've shown feature of our stock.

Speaker Change: This is a Muslim upper great drama about client demand, particularly system, giving them against a more comfortable all bunch of dining experience.

Speaker Change: I'm a long time building the wait times are hard floor against when they decided to dine with us.

Speaker Change: Deep is even though the stock even if it's ocado.

Speaker Change: He said, yes. It can identify so if he gets the times.

Speaker Change: Other than by making these have any chance outside of peak demand.

Speaker Change: We believe he's a terrific opportunity.

Speaker Change: One weekend.

Unknown Executive: This technology is a company by an automated seeking system, using the workload over our front of our front of the house employees. These new features are top priority, and we are pushing to roll them out as quickly as possible. It is unfortunate that macro environment are weakened, but consumer confidence always bounced back. We continue to regularly set new get-to-serve vehicles, and so we know that our guests got cooler as much as they always have. As a result of the situation habits, normalize, we know that, yes, we will put us at the top of the list because of the exceptional value we have always offered.

This technology is that okay.

Speaker Change: I need to buy an automated teaching system you can it seems a luck with all the whole blah blah blah blah Blah Blah house employees.

Jenny: These new features are a top priority, and we are pushing to roll them out as quickly as possible. It is unfortunate that the macroeconomic environment has weakened, but consumer confidence always bounces back. We continue to regularly set new guest survey records, and so we know that our guests love Kura as much as they always have.

Speaker Change: He's in your feed cost.

Speaker Change: In Iot and we are pushing to do it only came out as quickly as possible.

It is unfortunate because off market environment, all the weekend.

Speaker Change: Fair enough confidence automated Banca Buck.

Speaker Change: We continue to dig it out he said, yes, there's hardly any calls on this call we know that.

Speaker Change: That's cool.

Speaker Change: Oh, the laser huh.

Jenny: As restaurant visitation habits normalize, we know that guests will put us at the top of their list because of the exceptional value we have always offered. In the meantime, we are focused on driving incremental operational efficiencies at our restaurants and reducing other costs so that we can continue to post strong unit-level economics and leverage Q&A regardless of the overall macro environment. These improvements will carry over as consumer strength returns, and we are tremendously excited to see the new heights we will be able to achieve as a result.

Speaker Change: Is it a colombian peso hobby phenomenon I.

Speaker Change: He knows that he has to lead to put us after he coupled with analyst calls over the eclipse on a lot of U b have always off.

Unknown Executive: In some meantime, we will focus on driving incremental opportunities, operational efficiencies, up to restaurants, and reducing other costs, so that we can continue to process so long-unit to the real economics, and we will keep on doing this, regardless of the overall macro environment. These improvements will carry over as consumers for anxiety counts, and we are tremendously excited to see the new heights will be able to achieve as a result.

Speaker Change: And so anytime you have.

Speaker Change: Focused on driving incremental operational efficiencies.

Speaker Change: And reducing other costs.

Beacon continues to post a strong unit economics and play, but it's beyond that.

Speaker Change: They got there it's all about the macro environment.

Speaker Change: He is the improvement.

Speaker Change: As consumer frankly com.

Speaker Change: We are tremendously excited to see the new height, it'll be able to achieve that.

Speaker Change: Yeah.

Jenny: I would like to close by expressing my gratitude to each of our team members for their tireless efforts at our restaurants and our support center. Thank you. Now, I'll turn it over to you to discuss our financial results and liquidity. Thanks, Jimmy.

Unknown Executive: I would like to close by expressing my gratitude to each of our team members for their tireless efforts at our reference on our support center. Thank you.

Speaker Change: Does that stay close by expressing my gratitude to each of our team members for their tireless and false.

Speaker Change: Hum our support center.

Unknown Executive: If I don't know what to hear to discuss all final results on the liquidity.

Tony over to you to discuss all of finance already touched on the liquidity.

Jeff Uttz: For the third quarter, total sales were $63.1 million as compared to $49.2 million in the prior year period. Comparable restaurant sales performance compared to the prior year period was positive 0.6%, with regional comps of positive 7.3% in our West Coast market, as compared to 8.7% in the prior quarter, and negative 3.9% in our Southwest market, as compared to flat in the prior quarter. Comp pressures in the Southwest were expected due to the openings of Webster and ULIS, while California's deceleration was completely unexpected.

Tony: Thanks, Jimmy.

Jeff Uttz: Thanks, Jimmy. For the third quarter, total sales were $63.1 million, as compared to $49.2 million in the prior year period. Profitable restaurant sales performance compared to the prior year period was positive 0.6%, with regional concepts of positive 7.3% in our West Coast markets, as compared to 8.7% in the prior quarter, and negative 3.9% in our Southwest market, as compared to flat in the prior quarter. Comfort pressures in the Southwest were expected due to the openings of Webster and Uless, while California's deceleration was completely unexpected. Turning to costs, food and beverage costs as a percentage of sales were 29.2% compared to 30% in the prior year quarter, largely due to pricing and supply chain initiatives.

Jeff Uttz: Turning to costs, food and beverage costs as a percentage of sales were 29.2% compared to 30% in the prior year quarter, largely due to pricing and supply chain initiatives. Labor and related costs as a percentage of sales were 32.3% as compared to 29.2% in the prior year quarter. This increase was largely due to sales-to-leverage, increased training costs associated with new store openings, and wage increases. Occupancy and related expenses as a percentage of sales were 6.8 percent as compared to the prior year quarters 7.2 percent.

Tony: For the third quarter total sales were $63 1 million as compared to $49 $2 million in the prior year period.

Tony: Although restaurant sales performance compared to the prior year period was positive 0.6% with regional comps of positive seven 3% and our west coast markets as compared to eight 7% in the prior quarter and negative three 9% and our southwest market as compared to flat in the prior quarter.

Tony: Comp pressures in the southwest were expected due to the openings of Webster and U S. While California's deceleration was completely unexpected.

Turning to costs food and beverage costs as a percentage of sales were 29, 2% compared to 30% in the prior year quarter, largely due to pricing and supply chain initiatives.

Jeff Uttz: Labor and related costs as a percentage of sales were 32.3% as compared to 29.2% in the prior year quarter. This increase was largely due to sales leverage, increased training costs associated with new store openings, and wage increases. occupancy and related expenses as a percentage of sales were 6.8% as compared to the prior year quarter's 7.2%. Depreciation and amortization expenses as a percentage of sales increased to 5%. Compared to the prior year, quarters 4%. Largely due to additional newly open units as well as the accelerated depreciation of assets being replaced due to planned remodels. Other costs as percentage of sales increased to 14.4% compared to 12.5% in the prior year quarter, due mainly to pre-opening costs associated with a greater number of store openings, as well as general cost inflation.

Tony: Labor and related costs as a percentage of sales were 32, 3% as compared to 29, 2% in the prior year quarter.

This increase was largely due to sales deleverage increased training costs associated with new store openings and wage increases.

Tony: Occupancy and related expenses as a percentage of sales were six 8% as compared to the prior year quarter's seven 2%.

Jeff Uttz: Depreciation and amortization expenses as a percentage of sales increased to 5% compared to the prior year quarters 4%, largely due to additional newly opened units, as well as the accelerated depreciation of assets being replaced due to planned remodels.

Tony: Depreciation and amortization expenses as a percentage of sales increased to five per cent compared to the prior year quarters, 4% largely due to additional newly opened units as well as the accelerated depreciation of assets being replaced in a planned remodels.

Jeff Uttz: Other costs as a percentage of sales increased to 14.4% compared to 12.5% in the prior year quarter due mainly to pre-opening costs associated with a greater number of store openings as well as general cost inflation. General and administrative expenses as a percentage of sales decreased to 14% compared to 14.2% in the prior year quarter due to sales leverage, which was partially offset by incremental public company costs associated with our first year of SOX 404B compliance and recruiting and travel costs associated with the new unit OPP.

Tony: Other costs as a percentage of sales increased to 14, 4%.

Tony: Compared to 12, 5% in the prior year quarter.

Tony: Mainly the preopening costs associated with a greater number of store openings as well as general cost inflation.

Tony: General and administrative expenses as a percentage of sales decreased by.

Jeff Uttz: General and administrative expenses as a percentage of sales decreased to 14%. Compared to 14.2% in the prior year quarter due to sales leverage, which is partially offset by incremental public company costs associated with our first year of Sox 404% compliance and recruiting and travel costs associated with new unit openings. Note also that the current quarter DNA expense includes a litigation accrual of 0.6 million dollars. Operating loss was $1.2 million and compared to operating income of $1.3 million in the prior year quarter. Income tax expense was $60,000 compared to $41,000 in the prior year quarter. Not loss was $0.6 million or five cents per share compared to an end-end income of $1.7 million or 16 cents per share in the prior year quarter.

Tony: 14% compared to 14, 2% in the prior year quarter due to sales leverage which was partially offset by incremental public company costs associated with our first year of Sox 404, B compliance and recruiting and travel costs associated with new unit openings.

Jeff Uttz: Note also that the current quarter G&A expense includes a litigation accrual of $0.6 million. Operating loss was $1.2 million compared to operating income of $1.3 million in the prior year quarter. Income tax expense was $60,000 compared to $41,000 in the prior year quarter.

Note also that the current quarter G&A expense includes a litigation accrual of zero point $6 million.

Tony: Operating loss was $1 $2 million compared to operating income of $1 $3 million in the prior year quarter.

Tony: Income tax expense was $60000 compared to $41000 in the prior year quarter.

Jeff Uttz: The net loss was $0.6 million, or $0.05 per share, compared to net income of $1.7 million, or $0.16 per share, in the prior year quarter. Adjusted net income was $4,000, or $0 per share, compared to adjusted net income of $1.7 million, or $0.16 per share, in the prior quarter. Restaurant level operating profit as a percentage of sales was 20% compared to 23.5% in the prior year quarter. Suggested EBITDA was $4.5 million compared to $5.1 million in the prior year quarter. Turning now to our cash and liquidity, at the end of the fiscal third quarter, we had $59.4 million in cash and cash equivalents and no debt.

Tony: Net loss was zero point $6 million or five cents per share compared to net income of $1 $7 million or 16 cents per share in the prior year quarter.

Jeff Uttz: Adjusted net income was $4,000 for zero cents per share compared to adjusted net income of $1.7 million or 16 cents per share in the prior year quarter. Our strong level operating process as a percentage of sales was 20%, compared to 23.5% in the prior year quarter.

Speaker Change: Adjusted net income was $4000 or zero cents per share compared to adjusted net income of $1 $7 million 16 per share in the prior year quarter.

Speaker Change: Restaurant level operating profit as a percentage of sales was 20% compared to 23, 5% in the prior year quarter.

Speaker Change: Adjusted EBITDA was $4 $5 million compared to $5 $1 million in the prior year quarter.

Jeff Uttz: The Jesse D. Ibadob was $4.5 million compared to $5.1 million in the prior year quarter. Turning out to our cash and liquidity at the end of the fiscal third quarter, we had $59.4 million in cash and cash equivalents and no debt.

Speaker Change: Turning now to our cash and liquidity at the end of the fiscal third quarter, we had $59 $4 million in cash and cash equivalents and no debt.

Jeff Uttz: And lastly, I'd like to update and reaffirm the following guidance for fiscal year 2024. We now expect total sales to be between $235 and $237 million. Our new unit opening guidance is 14 units, with average net capital expenditure for unit of approximately $2.4 million. And we can continue to expect general and administrative expenses as a percentage of sales to be between 14 and 14.5 per cent, excluding litigation across.

Jeff Uttz: And lastly, I'd like to update and reaffirm the following guidance for fiscal year 2024. We now expect total sales to be between $235 and $237 million. Our new unit opening guidance is 14 units with average net capital expenditures per unit of approximately $2.4 million, and we continue to expect general and administrative expenses as a percentage of sales to be between 14 and 14.5%, excluding litigation accruals. With that, I will turn it back over to Jeremy. Thanks, Jeff.

Speaker Change: And lastly.

Speaker Change: I've been reaffirmed the following guidance for fiscal year 2024.

Speaker Change: We now expect total sales to be between 235 and $237 million.

Speaker Change: Our new unit opening guidance is 14 units with average net capital expenditures per unit of approximately $2 $4 million.

Speaker Change: And we continue to expect general and administrative expenses as a percentage of sales to be between 14, and 14, 5% excluding litigation accruals.

Speaker Change: With that I will turn it back over to Jimmy.

Unknown Executive: Without our will, turn back over to Jimmy. Since this concludes our previous remarks, we are now happy to answer any questions you have.

Benjamin Porten: This concludes our prepared remarks. We are now happy to answer any questions you have. Operator, please open the line for questions. As a reminder, during the Q&A session, I may answer in Japanese before my response is translated into English. Thank you for your attention. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question area, and you may press star 2 if you would like to remove your question from the For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start button. One moment, please, while we pull for questions.

Hajime Uba: Thanks, Steve.

Hajime Uba: Congrats I'll forget the remarks, we are now happy to answer any questions that you have.

Unknown Executive: Operator, please open the line for questions. As I remind you, during the session, I may answer in Japanese if all my responses are translated into English. Thank you for your attention. Thank you.

Operator: Operator, please open the line for questions.

Speaker Change: As a reminder, due out in the Q&A session.

Speaker Change: I'm sorry in Japanese before my response is translated into English. Thank you for your attention.

Speaker Change: Thank you.

Unknown Executive: We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation to indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, while we pull for questions. Thank you.

Speaker Change: We will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue for.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.

Speaker Change: Thank you.

Operator: Thank you. Our first question comes from the line of Jeffrey Bernstein with Barkley. Please proceed with your question. Thank you very much.

Jeffrey Bernstein: Our first question comes from the line of Jeffrey Bernstein with Barclays. Please proceed with your question. Thank you very much. A couple of questions. The first one is from the conference. I believe last quarter, you guys have talked about strong momentum and you are happy with March. I think you mentioned you a very happy with the early days of April.

Speaker Change: Our first question comes from the line of Jeffrey Bernstein with Barclays. Please proceed with your question.

Jeffrey Andrew Bernstein: A couple of questions. The first one is just on the comp trends. I believe last quarter, you guys had talked about strong momentum, and you were happy with March, and I think you mentioned you were very happy with the early days of April. Yet, clearly, Jimmy, you mentioned that the full fiscal 3Q was disappointing.

Speaker Change: Thank you very much.

Jeffrey Andrew Bernstein: Couple of questions. The first one just on the comp trends.

Jeffrey Andrew Bernstein: I believe last quarter, you guys had talked about.

Jeffrey Andrew Bernstein: Strong momentum in you were happy with March I think you mentioned you were very happy with the early days of April.

Jeffrey Andrew Bernstein: Yeah, clearly Jimmy you mentioned at the full fiscal <unk> was disappointing.

Unknown Executive: Yet clearly, Jimmy, you mentioned that the full fiscal 3Q was disappointing. And I think you guys have talked about, at least in the pre-announcement that it was really California, which I think you said earlier, was totally unexpected. So I'm just wondering if you can maybe walk through the cadence of trends through the quarter. When you saw a, I guess, a severe change in trend. And you're, you're outlook on how you can perhaps turn that around if there's anything you can proactively pursue to reverse the California trend versus kind of just riding out. As you talked about the consumer settlement challenges and then had a follow-up.

Jeffrey Andrew Bernstein: And I think you guys have talked about at least in the pre announcement that it was really California, which I think you said earlier was totally unexpected. So I'm. Just wondering if you can maybe walk through the cadence of trends through the quarter. When you sorry, I guess the severe change in trend.

Jeffrey Andrew Bernstein: And I think you guys have talked about, at least in the pre-announcement, that it was really California, which I think you said earlier, was totally unexpected. So I'm just wondering if you can maybe walk through the cadence of trends through the quarter when you saw a, I guess, a severe change in trend, and your outlook on how you can perhaps turn that around if there's anything you can proactively pursue to reverse the California trend versus kind of just riding out as you talked about the consumer sentiment challenges and then how to follow up. Thank you for your first question. Please allow me to speak in Japanese. Jeff, this is Ben.

Jeffrey Andrew Bernstein: And your.

Jeffrey Andrew Bernstein: Your outlook on how are you can perhaps turn that around if there's anything you can proactively pursue to maybe reverse the california trend versus kind of just riding out as you talked about the consumer sentiment challenges and then I had a follow up.

Unknown Executive: Thank you.

Speaker Change: Thank you. So a quick question. Please I don't mean to speak in Germany.

Unknown Executive: Please allow me to speak in Japanese.

Speaker Change: Okay.

Unknown Executive: First of all, I'd like to ask you a question. I'd like to ask you a question. and Huckuppin.

Speaker Change: No that's pretty much. That's what are you what are they actually got Donnie Goldman spend it.

Speaker Change: Or if you got any comment.

Speaker Change: I'm going to Egypt.

Speaker Change: And if my phone Guy I know she doesn't look right now so I'll put it because it wasn't I guess, what he thought you would've gone up to meet that somebody says Oh I see.

Speaker Change: No you didn't.

Speaker Change: What are you doing.

Speaker Change: Okay. Okay.

Eagle Department working again.

Speaker Change: Okay.

Benjamin Porten: Great to speak with you. In terms of the April earnings poll, we have been very bullish in our projections as our sales results up until that point have been extremely strong. So I'm sure you've noticed that there's a pretty meaningful difference in the guidance that we provided in the pre-release in today's opening prepared remarks versus the prior quarter. So we'd like to provide some context for that.

Speaker Change: Yes, Sir.

Jeff: Jeff This has been a great to speak with you.

Jeff Uttz: The April earnings call, we had been.

Jeff: Or are you bullish in our projections as ourselves results up until that point had been extremely strong. So I'm sure you've noticed that there's a pretty meaningful difference in the guidance that we've provided and pre releasing today's.

Jeff: Our prepared remarks.

Jeff: Versus the prior quarter, so we'd like to.

Speaker Change #100: Provide some context for that okay.

Benjamin Porten: First of all, we usually don't provide a monthly report, but this time, because of the unexpected situation, I'd like to give you a summary of the March report. In fact, the March overall report was 7.4%. When the earnings goal for April changes to what it was in mid-April, we will be able to understand how strong we were at that time. We generally don't make a habit of providing monthly comps, just in order to illustrate the point that we're trying to make for, you know, we're providing some special context this time, but just to give you an idea of where we were coming from at the April Artist Call, which was in the first half of that month, our March comps system-wide had been 7.3%, and our California comps had been 14.1% at the time that we gave

Speaker Change #101: I don't know.

Speaker Change #101: Hum.

Speaker Change #102: It looks like that's not going to get them on my phone.

Speaker Change #102: That's all going to stay there.

Speaker Change #102: Okay great.

Speaker Change #102: Great.

Speaker Change #102: And if not then Panama.

Speaker Change #102: Yeah, So I'll start with Chicago.

Speaker Change #102: Do you want to go into.

Sure.

I think that's the non U.

Speaker Change #103: Yeah, Yeah to hook up that adult Marty I got some of the other day.

Matt: Thank you Matt.

Speaker Change #105: Well, we don't well, we generally don't make a habit of providing monthly comps in order to illustrate the point, we're trying to pay for providing.

Speaker Change #106: Providing some special context this time, but just to give you an idea of where we were coming from April or let's call. It. The first half of that month or March call system wide had been seven 3% at our California comps have been 14, 1% and so looking at that versus where you were.

Speaker Change #106: You can see how different our outlook for a bid.

Speaker Change #106: First early weeks of April versus.

The time, it became a pretty Louise.

Paul McCartney: Sure Paul Mccartney.

Speaker Change #108: He got equal coupling OCA have any type of seasonality you will collect it.

Speaker Change #108: So you've got quite a bit so not quite the cockpit.

Speaker Change #109: I have nothing lumpy.

Speaker Change #110: What I want them to go on site.

Speaker Change #110: Won't be better connected affect them.

Speaker Change #110: So what does it for me.

Speaker Change #110: If at all.

Speaker Change #110: And then you got to.

Speaker Change #110: I'll put it out well you don't know what that was.

Speaker Change #110: Okay.

Speaker Change #110: What about much at all.

Speaker Change #110: Okay.

Speaker Change #110: Got it.

Benjamin Porten: In terms of the overall where we were or how we arrived at the guidance for the prior quarter, We were looking at our March trends, we were looking at historical seasonality, we had opened new units, we were extremely excited about Dragon Ball at that point, and we were excited for the August promotion of Bumpees as well. So all those things put together made us very bullish about our annual revenue expectations. And as we enter the, you know, the latter half of April, once we saw the sales deceleration, that was sort of like a sucker punch for us.

Speaker Change #110: In terms of the overall.

Speaker Change #110: Or how we arrived at the guidance for the prior quarter.

Speaker Change #110: We were looking at our mortgage trends you were looking at historical seasonality.

Speaker Change #110: To open new units.

Speaker Change #111: Greenway excited for Dragon ball at that point and we are excited for the August congressional Barclays as well. So all of those things put together made us very bullish about our annual revenue expectations.

Speaker Change #112: As we enter it.

Speaker Change #112: It's the latter half of April once we saw the sales acceleration that was that was sort of like a sucker punched for us.

Benjamin Porten: Also, regarding the sales plan, we would like to make it clear that, based on our updated sales guidance, we expect Q4 to be at least at the negative mid-to-single-digit level. But this is going to continue for a while.

Speaker Change #112: Oh, okay.

Speaker Change #112: Okay, and just to get them all.

I'll put them on what other things because what I don't know.

Speaker Change #112: I forget the stock, but I don't know.

Mr. Monaco: Mr Monaco.

Mr. Monaco: What are you asking for Q4, what no one big thing as well.

Mr. Monaco: And the more money that cause me to think that they could go maybe not even possible.

Mike: Hello, Mike.

Speaker Change #118: So back to the book.

Benjamin Porten: 20% restaurant operating profit margin, and G&E leverage. We have been working on improving the cost reduction and efficiency of each restaurant level and high-quality level since April so that we can achieve them. We are confident that we can maintain our profitability in the future as well. After this, I would like to give you a bit of a behind-the-scenes story.

Speaker Change #115: I know, it's a button.

Speaker Change #116: But at the end of anybody.

Speaker Change #117: I'm sitting here and he got equal if they don't get they are quicker to perrigo today.

Speaker Change #119: And of course that will give you a couple of calls made a bet on a clinical more stable.

Speaker Change #119: Thank you so much.

Speaker Change #119: Okay.

Benjamin Porten: Q4 Before we get into our strategies for driving sales, I just wanted to sort of put a bow on this topic. But on the note of comps, as you might have guessed, based on our revenue guidance for the year, our key four comp expectations, and again, this isn't something that we'll be giving out on a four basis, it's really just given the unusual circumstances for this particular earnings call, but our expectations are negative mid-single digits or negative high-single-digit columns.

Speaker Change #119: With Q1.

Speaker Change #119: Right.

Speaker Change #120: Are we getting to you are our strategies for driving sales I just wanted to.

Speaker Change #121: Sort of put a bow on this topic, but on the noted comps as you might have guessed based off of our revenue guidance for the year, our Q4 comp expectation and again this isn't something that would be giving out a four basis. Its really just given the unusual circumstances for this particular earnings call, but our.

Speaker Change #121: Our expectations are negative mid single digits or.

Speaker Change #121: Negative high single digit comps that being said as Jimmy mentioned in the prepared remarks.

Benjamin Porten: That being said, as Timmy mentioned in the opening remarks, we are laser-focused on delivering our core goals, which would be continuing to leverage G&A, continuing to deliver restaurant-level operating profit margins above 20%, and continuing to maintain our integrated rate of 20%, of at least 20%. And so once we started to see the sales deceleration in April, we took on a litany of cost management measures.

Speaker Change #122: We are laser focused on delivering our core goals would be continuing to leverage G&A continuing to deliver restaurant level operating profit margins about 5% and continuing to maintain our unit growth rate of 20% or 40% and so.

Hajime Uba: Once we started to see the sales deceleration in April we took on.

Speaker Change #123: I have with me.

Speaker Change #123: Cost management efforts and that's one of the reasons that we were able to continue.

Benjamin Porten: And that's one of the reasons that we were able to continue to maintain the restaurant-level operating profit margin of 20% in Q3, in spite of the sales deceleration. And now that those efforts are really in full swing, we expect opportunities in Q4 and Q1 as well. Also, I would like to take some time to talk about sales management.

Speaker Change #124: Continued to maintain our restaurant level operating profit margin of 20% and decreased by two the trucker salaries and and.

Speaker Change #124: Now that those efforts are really in full swing, we expect opportunities in Q4 and Q1 as well.

Speaker Change #124: I don't know if he.

Speaker Change #124: He comes up with your call.

Benjamin Porten: Actually, we have adopted VTube Marketing since April. However, due to the current situation, we think it is a risk to spend a lot of money and to aim for aggressive discounts and returns. So, we are thinking of stacking FITs in a cost-effective way. Thank you very much. Yes. Get Home Grand Slams.

Speaker Change #124: Have you thought about it I don't see that.

Speaker Change #125: We bought it on a retail market.

Speaker Change #125: Okay.

Oh, My goodness I know, what that will do well Oakland coastal Oh, so yesterday excuse me they get comfortable they kept the homeland.

Speaker Change #125: Okay.

Speaker Change #125: Oh got it exactly.

Speaker Change #125: That's right.

Speaker Change #126: Oh on the note of driving sales, we actually hired workers.

Speaker Change #127: Your marketing in April.

Just happened to coincide.

Speaker Change #128: He has been very hard at work or approach right. Now is we don't think it makes sense to aggressively discount or massive.

Speaker Change #129: Massive investments in media buys and try to.

Speaker Change #130: That debt home Grand slams the approach is really to be hitting out to a consistent and cost effective basis.

Benjamin Porten: The approach is really... hitting out on a consistent cost-effective basis. I'm going to be talking about the promotion. I've been doing multi-grabs, but I changed this to a 100% Canada slow grab in August. In September, I changed the throw to 10g or 15g.

On the Marcellus.

Speaker Change #131: I know there are many.

Speaker Change #132: Most of them and put them on demand.

Speaker Change #133: What kind of I'm not sure I forgot that.

Speaker Change #134: Well that's a lot.

Benjamin Porten: I'd like to talk about the value of these changes. In terms of messaging, one of the main things that we're really pushing is showcasing the value that we offer. And so, we've always served real crab.

Speaker Change #134: Well first of all good stuff that goes on.

Speaker Change #134: In terms of.

Speaker Change #134: One of our in terms of the messaging what are the main things that we're really pushing us.

Speaker Change #135: Showcasing the value to be off and so we've always served real craft, our California rules have 100% real crap, but as of April we'll be serving 100% Canadian snow.

Benjamin Porten: Our California rolls have 100% real crab. But as of April, we'll be serving 100% Canadian snow crab. I'm sorry, as of August. And we're really excited about the meaningful step up in crab quality. We're also going to be serving larger portions of our Toro starting in fiscal 25. And so just showing the core value that we offer with the really high-quality ingredients that we serve. [inaudible] It's getting a little long, but it's an important part, so hang in there.

Speaker Change #135: I'm sorry as of August and so.

Speaker Change #135: No.

Speaker Change #135: We're really excited about that.

Speaker Change #136: The meaningful step up in credit quality, we're also gonna be forgetting larger portions of our four O starting to.

Speaker Change #137: Five and so just showing the core value that we offer.

Speaker Change #138: Really high quality ingredients that we serve.

Speaker Change #138: As a renewed focus for them and that's what I meant.

Speaker Change #138: No no go ahead.

Speaker Change #139: Well that's cool.

Speaker Change #139: Got it.

Speaker Change #139: Okay.

Speaker Change #139: One of them if you don't even looking up get up amongst the mccourt that for those who need it.

Speaker Change #139: It's on the minds of ago I thought he didn't say enough.

Speaker Change #139: It doesn't it doesn't.

Unknown Executive: So there's nothing else I'm thinking of, so I think I have a one on this kind of thing. And then, in terms of other self drivers, as we mentioned, we are very focused on the tech pipeline as well. We've completed a whole lot of smart phone ordering for all of our restaurants. We are currently, we're just about to start testing for the ability for guests to prototype through the site menu, which previously, and we're introducing the reservations to some of the first time. I've been told that we've only had a tech, a remote tech, and program.

Benjamin Porten: And then in terms of other sales drivers, as we mentioned, we are very focused on the tech pipeline as well. We've completed a rollout of smartphone ordering for all of our restaurants. We are currently... Just about to start testing for the ability for guests to earn prizes through the side menu, which previously only earned prizes for sushi plates, and we're introducing the reservation system for the first time. Up until now, we've only had a check-in program that didn't have any control over the actual time of dining.

Speaker Change #140: And then in terms of sales drivers.

Speaker Change #141: That said, we are very focused on the tech pipeline as well we've completed the rollout of <unk>.

Hartford.

Speaker Change #142: Ordering for all of our restaurants.

Speaker Change #142: We're currently.

Benjamin Porten: And so this is a massive step up in terms of, you know, just the guest experience. I mean, even for myself, when I think about going to Kura, I think about, do I want to wait in line?

Speaker Change #143: Just about to start testing for the ability for guests to earn price of crude side menu, which previously required for sushi place and we're introducing the reservation system for the first side up until now we've only had a check of remote check in program didn't have any control over the actual time of dining and so this is a massive step up in terms of.

Unknown Executive: Didn't have any control over the actual time of dining. So this is a massive step up in terms of, you know, just get the guest's experience. I mean, even for myself, what I think about, like the crew, I think about, do I want to make it in mind? And I, I don't think that's the problem at most of the time that I have to deal with, which, you know, being able to address the type of things are very meaningful, whatever, for us to pull. But the reason that we're going into such details is really, we're just sort of being as clear as we can that we are aggressively managing costs.

Speaker Change #142: Sure.

Benjamin Porten: And I don't think that's a problem that most other restaurants have to deal with, which you know, being able to address this is, I think, a very meaningful lever for us to pull. But the reason that we're going into such detail is that we really want to be as clear as we can that we are aggressively managing costs. And we're being very prudent in our approach to driving sales; we're not taking aggressive discounting or anything that's going to result in just short-term gains.

Speaker Change #142: Yes.

Speaker Change #142: Got it.

Speaker Change #144: The guest experience I mean, even for myself when I think about going to occur I think about do I want to wait in line and I.

Speaker Change #145: I don't think Thats a positive.

Speaker Change #145: Thanks.

Speaker Change #145: Being able to attract.

Speaker Change #145: Meaningful.

Speaker Change #145: <unk> for us to call, but the reason that we're going into such details it really clears.

Speaker Change #145: Appears we plan that we are aggressively managing costs.

Unknown Executive: And we're being very proven in our approach to driving sales. We're not to think of brushing this town and anything that's going to revolve in this short-term gains. The focus is to, you know, improve products or to add components, technologies, things that will continue to serve us well, regardless of the amount of environment. You know, things that will save us, things that will prove. I think it's just a little bit of a concern. I think it's a little bit of a concern.

Speaker Change #146: And we're being very prudent in our approach.

Speaker Change #147: Driving sales, we're not taking aggressive discounting or anything that's got everybody just short term gains the focus is too.

Benjamin Porten: The focus is to, you know, improve products or to add incremental technologies, things that will continue to serve us well, regardless of the macro environment, you know, things that will stay with us as things improve. As I said before, it's difficult to make good sushi for customers.

Speaker Change #147: Improved product or to add increments technologies things that will continue to serve us well.

Speaker Change #147: Regardless of the macro environment.

Speaker Change #147: Stay with us as they did quite well.

Speaker Change #148: What are they bigger.

Speaker Change #151: But I thought it would take a little less paper.

Speaker Change #149: We could go out and put them on a pre tax authority.

Unknown Executive: I think this is the problem that we're talking about. What I'm going to give you a little bit of a question. What are we going to talk about? And to close the message, as mentioned in the opening remarks, we can predict how long macro pressures will last. And so we think the most prudent is to prepare for the long term. And that's what we're doing. We know that by taking these steps that we've been doing, that's what's going to enable us to continue to leverage DNA, continue to deliver. Rest on a lot of it while the partners that are strong as ever.

Speaker Change #150: But when I'm a little confused.

Benjamin Porten: We can't control the tuna environment or customers' sentiment, but when we want to eat sushi, we want to be able to control it so that Kura can be chosen. And to close the message, as mentioned in the opening remarks, we can't predict how long macro pressures will last. And so we think the most prudent thing is to prepare for the long term, and that's what we're doing. We know that taking these steps, the steps that we've been doing, that's what's going to enable us to continue to leverage CNA, and continue to deliver restaurant level operating profit margins that are as strong as ever. And we know that, while we can't control the macro environment, we can't control our offering. We know that guests like sushi, and people just don't make sushi at home.

So what are you guys getting pushed out.

Speaker Change #152: And I think he could have that nobody doing what everybody given the government going to give us kind of what I see.

Speaker Change #152: And quite close to the message as mentioned in the opening remarks, we can't predict how long macro pressures will lessen so we think the most prudent to look after.

Speaker Change #152: Purple long term and that's what we're doing.

Speaker Change #153: Note that by taking.

Speaker Change #153: That's what we've been doing that's what's going to enable us to continue to leverage G&A continue to deliver restaurant level operating profit margins that are as strong as ever and we know that while we can't control the macro environment. We can control our offering we know that guests like sushi and people just don't make sushi at home and so eventually people would want to go out and eat sushi.

Unknown Executive: And we know that, you know, while we can't control the macro environment, we can't control our offer. We know that guests like sushi, and people just don't make sushi at home. And so eventually, people won't want to go out and eat sushi, and we just need to be the restaurant that they need to, you know. Immediately think that when they think about what, where do we want to go eat sushi?

Jeffrey Andrew Bernstein: And so eventually, people will want to go out, and we just need to be the restaurant that they eat at, you know, immediately think of when they think about what, where do we want to go? Understood. And just to clarify, I appreciate all the color.

Speaker Change #153: We just need to eat at restaurants.

Immediately.

Speaker Change #154: Do they think about what.

Speaker Change #155: Where do we want to go eat sushi.

Unknown Executive: I understood, and just to clarify, I appreciate all the color. And it sounds like in March, you were running a 7.3% cop for the full quarter; it was modestly positive. But seemingly, I guess, April and May were negative. And the fact that we're now in July, it seems like you're guiding for the full fiscal quarter, down mid to high single digit, despite what looks like easier comparison. So there's one. Can you share maybe what the April and May and June cop or any incremental color, just so we could see the directional trend that they come to took after that positive 7.3 in March?

Speaker Change #155: Understood and just to just to clarify I appreciate all the color I mean, it sounds like in March you were running at seven 3% comp for the full quarter. It was modestly positive.

Jeffrey Andrew Bernstein: And it sounds like in March, you were running a 7.3% cop for the full quarter. It was modestly positive. But seemingly, I guess, April and May were negative. And the fact that we're now in July, it seems like you're guiding for the full fiscal fourth quarter down mid to high single digits, despite what looks like an easier comparison. So this one, can you share maybe what the April and May and June Kopp or any incremental color just so we can see the directional trend that the comps took after that positive 7.3 in March? [inaudible] Yeah, we don't want to get into the habit of breaking out monthly comps.

Speaker Change #156: But seemingly I guess April and May were negative and the fact that we're now in July it seems like you're guiding for the full fiscal fourth quarter down mid to high single digit despite what looks like easier comparison. So this is what can you share maybe what the April and May and.

Speaker Change #156: In June comp or any incremental color just so we could see the directional trend that the comps took after that positive seven three in March.

Speaker Change #157: No no. So you have to build up enough that you can get the most imminent.

Unknown Executive: Well, it's been a long time. I don't want to say that. Yeah, but we don't want to get into the habit of breaking out monthly counts. But, you know, just as Jimmy mentioned earlier, we've given you the first month. You know, Mark, we've given you the full course; you can get an idea of just how meaningfully different the remaining quarters work, and we've provided our expectations for its equal counts.

Speaker Change #157: They are the ones that give them more carefully.

Speaker Change #158: Well when I separately.

Speaker Change #159: The first about kind of a win yep.

Speaker Change #160: Yeah, we don't Wanna get in the habit of <unk>.

Speaker Change #160: Taking out monthly comps.

Speaker Change #160: It just is.

Benjamin Porten: But, you know, As Jimmy mentioned earlier, we've given you the first month, you know, Mark, we've given you the full quarter so you can get an idea of just how meaningfully different the remaining quarters were, and we've provided our expectations for SQL.com. Okay.

Speaker Change #160: As Tony mentioned earlier.

Mark: The first one mark is giving you the full quarter. So you can get in.

Tony: Yes, a meaningfully different in the remaining quarters work and we provided our expectations for Q4 comps.

Unknown Executive: Understood. Okay.

Jeffrey Andrew Bernstein: And my follow-up question is just on the unit growth set of things. Can you, Are there any learnings perhaps, in terms of markets where you think you might have reached penetration, whether it's possible that in some of the California markets, there's a component of the softness that's due to Maybe they are reaching some level of penetration, and maybe you could just clarify what you said about fiscal 25. I think you said something about your mix of new versus existing markets. I didn't catch that fully.

Speaker Change #162: Understood. Okay, and then my follow up was just on the unit growth side of things.

Unknown Executive: And in my follow-up, I just saw in the Unicrow set of things, could you, are there any learnings perhaps in terms of markets where you think you might have reached penetration, whether it's possible that in some of the California markets, there's a component of the softness that's due to maybe reaching some level of penetration, and maybe you could just clarify what you said about fiscal 25. I think you said something about your mix of new versus existing markets. I didn't catch that fully, so it's open to just clarify the unit outlook and any thoughts around penetration.

Speaker Change #162: Are there any learnings perhaps in terms of markets, where you think you might have.

Speaker Change #162: Reached penetration, whether it's possible that in some of the California markets. There is a component of the softness that's due to <unk>.

Speaker Change #162: You may be reaching some level of penetration.

Speaker Change #162: Maybe if you could just clarify what you said about fiscal 'twenty five I think you said something about your mix of new versus existing markets I didn't catch that fully so I was hoping to just clarify the unit outlook and any thoughts around penetration. Thank you.

Unknown Executive: Thank you. So to give you some color, the reason we're talking about the mix of new and existing markets, obviously, we have a single unit market, and we open up the second unit in that market, that's going to be a con-pressure because it will categorize to some degree, the sales of that first restaurant much more than the impact of the ninth restaurant in a given market, well, the first eight. And so by being mindful of the split between new existing markets as well as the nature of existing markets, whether they're single unit markets or relatively more mature markets, those are just things that we need to keep in mind from a con perspective to balance things overall.

Benjamin Porten: So I was hoping to just clarify the, the unit outlook and any thoughts around penetration. Thank. The last question is about the new market and the existing market for 2025. The new market is 40% and the existing market is 60%. [inaudible] Hi, so to give you some color, the reason we're talking about the mix of new and existing markets, obviously, We have a single unit market, and we open up the second unit in that market, that's going to be a comp pressure, because it will catabolize to some degree, the sales of that first restaurant much more than the impact of, say, the ninth restaurant in a given market will to the first eight.

Speaker Change #162: Oh I lost sight on them on that just get them all right.

Speaker Change #162: And I'll.

Speaker Change #162: On the market.

Speaker Change #162: Wow.

Speaker Change #162: If you don't get up.

Speaker Change #163: The engineer existing bureaucracy millennium ethanol.

Speaker Change #163: Most of them in your pipeline.

Speaker Change #164: And it sounds like she might be to bubble up I'm curious how meaningful could it cause immediate oblique lumbar, especially.

Somebody else gets a little bit uncomfortable at all.

Speaker Change #165: I'll, just say that from a total spend money.

Speaker Change #166: I can speak about it.

Speaker Change #165: Okay.

Speaker Change #167: So to give you some color. The reason, we're talking about a mix of new and existing markets.

Obviously, if you.

Benjamin Porten: And so by being mindful of,,,,,,,,,,,,,,,,,,, You know, these things have a long lead time. So fiscal 26 will have even more ability to reflect things that we've learned in terms of penetration for any of these markets. I don't think we've reached penetration levels for any of these markets yet. It's just that we've learned certain things.

Speaker Change #167: We have a single unit market and we open up the second unit in that market, that's going to be a comp pressure because it will cannibalize to some degree the sales of that first restaurant much more than the impact of state the ninth restaurants in a given market will cause the first aid and so by being mindful of the split between new and existing markets as well.

Speaker Change #167: Is the nature of the existing markets, whether they're single unit markets are relatively more mature markets. Those are just things that we need to keep in mind from a comp perspective, the balance things overall for fiscal 'twenty five we've got a blend of about 40 60, new to existing which is higher in terms of new markets. Then we have this year.

Unknown Executive: From fiscal 25, we've got a blend of about 4060 new to existing, which is higher in terms of new markets than we have this year. That being said, it's, you know, these things have long lead time. So fiscal 26 will have even more ability to reflect if they didn't learn. In terms of penetration for any of these markets, I don't think we've reached penetration for any of these markets. It's just, we've learned certain things. So for instance, one would be, you know, our expectation before is that 30-minute precipitation in terms of minimizing cannibalization, but what we've learned is that for some of our restaurants, we've got to drive 45 minutes very consistently.

Speaker Change #167: That being said it's it's.

Speaker Change #167: These are long lead time, so fiscal 'twenty six will have even more ability to.

Speaker Change #167: <unk>.

Speaker Change #167: In terms of penetration for any of these markets.

Speaker Change #167: I don't think we reached penetration for any of these markets. It's just.

Benjamin Porten: So for instance, one would be, you know, our expectation before was that 30 minutes was sufficient in terms of minimizing cannibalization. But what we've learned is that for some of our restaurants, we've got them driving for 45 minutes very consistently. And so those are the kinds of things that we're learning that we're applying to our pipeline. It's really everything specific to each unit and specific to each market. But every time, I appreciate all the color.

Speaker Change #168: We've learned certain things. So for instance, one would be our expectation before they're pretty good at fixing in terms of.

Speaker Change #168: Minimizing cannibalization, but what we've learned is that for some of our restaurants that you've got for driving 45 minutes very consistently and so those are the kinds of things that we're learning that we're applying to our pipeline. It's really everything is specific to eat it and specific to each market.

Unknown Executive: And so those are the kinds of things that we're learning that we're applying to our pipeline. It's really, everything is specific to each unit and specific to each market, but every time we learn. Appreciate all the color.

Speaker Change #169: But every time we work.

Speaker Change #169: Okay.

Speaker Change #170: Appreciate all the color. Thank you very much.

Unknown Executive: Thank you very much. Thank you.

Speaker Change #170: Thank you.

Jeffrey Andrew Bernstein: Thank you very much. Thank you. Thank you. Our next question comes from the line of Jon Tower.

Speaker Change #170: Thank you. Our next question comes from the line of Jon Tower with Citi. Please proceed with your question.

John Power: Our next question comes from the line of John Power with City. Please proceed with your question. Great. Thanks for taking the questions. Maybe I'll go back to the commentary. I appreciate the color you provided in the West and in California, but can you speak to the rest of the country as well? Obviously, you've got a good amount of stores outside of California and in the Southwest. I'm just curious how those stores performed during the period. What do you think is the difference between the two?

Operator: Please proceed with your questions. Great, thanks for taking the questions. Maybe I'll get back to the commentary later.

Jon Michael Tower: I appreciate the color you provided in the West and California. But can you speak to the rest of the country as well? Obviously, you've got a good number of stores outside of California and the Southwest. I'm just curious how those stores will perform during the holiday period. First of all, when it comes to other countries, I think it's the same for any restaurant. There is no doubt that they are under macro pressure, but on top of that, as I explained earlier, we are under the influence of cannibalization. But apart from that, we are seeing very strong results. That's what we think.

Speaker Change #171: Great. Thanks for taking my questions.

Speaker Change #171: Maybe I'll get back to the comp commentary I. Appreciate the color you provided in the west and in California, but can you speak to the rest of the country as well obviously, you've got a good amount of stores outside of California, and in the southwest and I'm just curious how those stores performed during the period.

Speaker Change #172: No no no I don't see any calculable bulk ethical to do.

Speaker Change #173: A well known restaurant slowed up a little just get them all on a macro crystal who can do this without them.

Speaker Change #173: So that put us.

Speaker Change #173: Okay.

Speaker Change #173: I don't know if anybody guess on them.

Speaker Change #173: Okay, well I'll put it out and look at all I don't know if you don't.

Speaker Change #173: And I think we could see like elastic.

Speaker Change #173: Oh, what does it come back.

Benjamin Porten: So looking at our comp days, and again, considering how rapidly we've grown, the sheer number of markets we've been opening up in a lot of our units that are in non-California, non-Texas regions that are within the comp days, which is after they've been open for 18 months, they're now seeing, you know, the second unit in their market or the third unit in their market. And so obviously, they're going to be seeing headwinds from an infilling perspective. That's just not the case for California or Texas in terms of magnitude.

Speaker Change #173: And so looking at our coffees and.

Speaker Change #174: Looking at considering how rapidly we've grown the sheer number of markets.

Opening up in a lot of our water.

Unknown Executive: What are the units that are in non-California and non-Texas regions that are within the conference, which is after they've been open for 18 months, they're now seeing the second unit in their market or the third unit in their market and so obviously they're going to be seeing headwinds from an infilling perspective that's just not the case for California tech in Texas in terms of magnitude and so there's that the other is the macro environment is not limited to California and something that we're seeing across the system but exos factors, they're performing exactly as we expect it, we're really pleased with you know the copies as well as the new soror things okay maybe then go into the cannibalization point that you you talked about I can't recall it being brought up in previous calls so I'm just curious if you can give us some color on what what's the magnitude of cannibalization that you're seeing and you know how long does that traditionally last for your stores are we talking about something where it's a drag for six months, 12 months beyond that I'm just curious right some some color around that so the reason we're bringing this up to the first time we're you know really getting into really getting into it for the first time is well cannibalization has always been a factor and it's been roughly approximately the same in terms of magnitude as a content when we've always been able to offset that with our strong California performance and with California just not being or to support your overall comms in April and May will be you see the impact of the single unit pockets becoming second in third unit pockets which is you know completely within our expectations it's just just hasn't been a necessary topic of discussion because the strong overall system like cops.

Speaker Change #174: That are in California, non Texas region within the comp base, which is after they've been open for 18 months. They are now seeing the second or third unit in their market. So obviously, they're going to be seeing headwinds from.

Speaker Change #174: And infill a perspective, that's just not the case for California, and Texas in terms of magnitude and so there is that the other is the macro environment. It is not limited to California, and something that we're seeing across the system.

Jon Michael Tower: And so there's that macro environment, it's not limited to California, something that we're seeing across the system, but x those factors, they're performing exactly as we'd expect them to, we're really pleased with, you know, the copies as well as the neutral road. Okay, maybe then we can go into the cannibalization point that you talked about. I can't recall it being brought up in previous calls. So I'm just curious, can you give us some color on what the magnitude of cannibalization that you're seeing is? And, you know, how long does that traditionally last for your stores? Are we talking about something where it's a drag for six months, 12 months beyond that? I'm just curious, right? Some color around that.

Speaker Change #174: Excellent factors, they're performing exactly as we expected were really pleased with the.

Speaker Change #175: The companies as well as the news aerobics.

Okay. Maybe then go into the cannibalization point that you talked about I can't recall it being brought up in previous calls. So I'm. Just curious you can give us some color on what what's the magnitude of cannibalization that you're seeing.

Speaker Change #175: How long does that traditionally last for your stores are we talking about something.

Speaker Change #175: Where it's a drag for six months 12 months beyond that I'm just curious.

Speaker Change #175: Some color around that.

Benjamin Porten: First of all, I'd like to talk about the impact of calibration in the current stage of research. It is true that the overall image can be obtained at a fairly meaningful level. So far, we have received the same level of magnitude, but even so, there are places where the release was suspended, the factory was pulled back, and the overall trend was raised. This time, it is said that the release was reduced overall due to the reduction in the release.

Speaker Change #175: No no no.

Speaker Change #176: Hi, everybody. Thanks, so much.

Speaker Change #176: Okay fair enough.

Speaker Change #176: Okay.

Speaker Change #176: No.

Speaker Change #177: But among them all when I gave it in all the magnitude of it gets funded to get them started them all talking about how long I'd like to see.

Speaker Change #178: And I think in a hole.

Speaker Change #178: You're welcome.

Speaker Change #178: Okay.

Speaker Change #178: Those have all been against that.

Speaker Change #178: Yeah.

al: Hey al.

Benjamin Porten: I so the reason that we're bringing this up for the first time, or, you know, really getting into really getting into it for the first time, Well, catabolization has always been a factor and it's been roughly approximately the same in terms of magnitude as a comp head when we've always been able to offset that with our strong California performance and with California just not being there to support the overall comps in April and May, were you see the impact of the single unit markets becoming second and third unit markets, which is, you know, completely within our expectations, just hasn't been a necessary topic of discussion because of the strong overall system-wide comps. And then the other factor would be of the 14 units that we've opened this year, 10 of them are in existing markets.

Speaker Change #180: And so the reason we're bringing this up for the first time.

Speaker Change #180: Really getting into really getting into it for the first time as well.

Speaker Change #180: Cannibalization has always been a factor and it's been roughly approximately the same in terms of magnitude as comp headwind, we've always been able to offset that with a strong, California performance and with California, just now.

Speaker Change #181: Nothing to add.

Speaker Change #181: To support the overall comps in April and May.

Speaker Change #181: You see the impact of the segregated market to become our second and third buckets, which is completely within our expectations. It's just just hasn't been unnecessary topic of discussing because of the strong overall system wide comps.

Speaker Change #181: Let's see I'll go with.

Speaker Change #182: Where do you open up the phone lines.

Okay.

Speaker Change #183: I'm not so much a pimple on existing.

Speaker Change #183: The market.

Yes.

But what I'll do my best to look at our pinpoint ulcer.

That's what I'm doing.

Speaker Change #183: Right.

Unknown Executive: So and then the other factor would be you know of the 14 units that we've opened this year 10 of them are in existing markets and so that's many more units in existing market that we've had prior years. Even with that, you know we've tested all the crops in the first half a year so it's just it didn't bear mentioning. It's you know it's just part of any growing company but again with California it's not performing for our expectations. If you pre we thought it was not necessary to give it you know a more holistic look into the reasons for the compact cut under under performance for Patations.

Speaker Change #183: Great.

Speaker Change #183: Okay.

Speaker Change #184: How about you.

Yeah.

Speaker Change #184: And then the other factor would be.

Speaker Change #185: 14 years that we've opened this year 10 of the murder criticism buckets and so that's okay.

Benjamin Porten: And so that's many more units than existed in the market than we've had in prior years. Even with that, you know, we've posted positive results in the first half of the year. So it just didn't bear mentioning it.

Speaker Change #185: Many more units in existing markets, and then kind of prior years, even with that.

Speaker Change #185: Posted positive comps in the first half in Europe.

Speaker Change #186: It didn't bear mentioning it.

Jon Michael Tower: You know, it's just part of any growing company. But again, with California not performing to our expectations in Decree, we felt it was necessary to give it a more holistic look into the reasons for the underperformance relative to our expectations. Okay, so no color on the magnitude of the drag.

Speaker Change #186: Any growing company.

Speaker Change #187: But California is not performing to our expectations. If you agree we felt it was necessary to give it a more holistic and welcome to the reasons for the comment correct under under performance relative to our expectations.

Speaker Change #188: Okay. So no color on the magnitude of the drag.

Unknown Executive: Okay, so no color on the magnitude of the drag. Well, so the magnitude of the drag, it's really hard to just, because it's specific to every unit, right? The impact of what a single unit market going to do unit markets is to be different than, you know, another restaurant in California words, going to be the 20th unit. So just saying that there's like X impact per restaurant, the map, it just doesn't work like that.

Benjamin Porten: Well, so the magnitude of the threat is really hard to determine because it's specific to every unit, right? The impact of what a single unit market going to two unit markets is going to be different than, you know, another restaurant in California where it's going to be the 20th unit. So just saying that there's like x impact per restaurant, then that it just doesn't work like that. Okay. Then maybe just jump in to just what happened during the quarter itself.

Speaker Change #188: Well so the magnitude of the drag it it's really hard to just because it's specific every unit right.

Speaker Change #188: The impact of what a single unit market going into two unit markets is different than.

Speaker Change #188: Another restaurant in California words get them, either 20th unit, so just saying that theres like X impact per restaurant.

Speaker Change #188: It just doesn't work like that.

Unknown Executive: Okay, then maybe just jump in to just what happened during the quarter itself, you know, what are you using to determine that this is more of a macro issue rather than a category of company-specific issue. I mean, we can look at the same data. You're probably looking at when it comes to put out across more of the lowering come cohorts, but that's seeing like other brands that cater a little bit more to the wealthier consumer have been doing relatively well. At least in the high frequency data, we can look at some just curious, you know, how are you able to disaggregate the difference between macro versus micro or category.

Speaker Change #188: Okay.

Speaker Change #188: Maybe just jumping to just what happened during the quarter itself.

Jon Michael Tower: You know, what criteria are you using to determine that this is more of a macro issue rather than a category or a company-specific issue? I mean, we can look at the same data you're probably looking at when it comes to going down across more of the lower-income cohorts, but it does seem like other brands that cater a little bit more to the wealthier consumer have been doing relatively well, at least in the high-frequency data we can look at. So I'm just curious, you know, how are you able to disaggregate the difference between macro versus micro or category? What does the micro category mean?

Speaker Change #188: What are you using to determine that this is more of a macro issue rather than a category a company specific issue I mean, we can look at the same data you're probably looking at when it comes to go down across more of the lower income cohorts, but it does seem like other brands that cater a little bit more to the wealthier consumer have been doing relatively well.

Speaker Change #188: Well at.

Speaker Change #188: At least in the high frequency data, we can look at so I'm. Just curious how are you able to disaggregate the difference between macro versus micro or category.

Speaker Change #188: Michael.

Speaker Change #188: Cisco They song.

Benjamin Porten: Sushi or restaurant? [inaudible] All of these numbers don't have a negative effect on us. On the contrary, they tend to improve. Also, our marketing has not changed. So in terms of whether this is more of a restaurant industry-wide versus a, you know, subsector issue, I think we'll have greater clarity on that just as earnings calls continue to trickle out over the course of the, you know, remainder of the summer. We tend to be among the first, so there's limited context there.

Speaker Change #188: Thank God.

Oh hold on.

Speaker Change #189: What else do you see that.

Speaker Change #190: Guess hospitals go to disconnect.

Okay.

Speaker Change #191: Well, let me come back to you and you ask me well what do you like.

Speaker Change #190: Right.

Oh I'm sorry.

Speaker Change #190: Okay.

Speaker Change #190: We'll get some more ethanol.

Speaker Change #190: Okay.

Speaker Change #190: I'll take that.

Speaker Change #190: Hopefully in any more calls.

Speaker Change #190: Oh I forgot if it gets any kind of into the cake, one market or the market, England Henkel.

Speaker Change #190: I don't know that it will finish.

Speaker Change #192: So many of my own language, but I think I'm all signed up money.

Speaker Change #193: Welcome to shop their money well.

Speaker Change #194: And ideally nearly 900, yet not muzzling anybody.

Speaker Change #194: Okay, that's what I wanted to ask.

Speaker Change #194: Hello.

Speaker Change #194: You don't know what's going on with that.

Speaker Change #194: So you might be thinking about.

Speaker Change #194: So look we don't want to go.

Speaker Change #194: Okay.

Unknown Executive: So, in terms of whether this is more of a restaurant industry-wide versus a, you know, sub-sector issue. I think a little greater clarity on that, just as it's called, continue to trickle out over the course of the, you know, the reign or the summer. We kind of eat among the first. And so there's limited context there. You know, the reasons that we think that this is a macro factor versus something that is pera or strategic specific. We look at all of our gain of we have. Reams and reams of customer data, all the guest surveys for us are as strong as is ever, not stronger in some locations.

Speaker Change #194: So in terms of whether this is more of a restaurant industry wide versus.

Speaker Change #194: Sub sector issue I think a little greater clarity out not just this earnings calls continue to trickle out over the course of the.

Speaker Change #195: Later this summer we tend to be among the first and so theres limited contact therapy.

Benjamin Porten: But for, you know, the reasons that we think that this is a macro factor versus something that is Kura or sushi specific, we look at all of our data. Suddenly, people's appetite for Kura would change their...

Speaker Change #195: The reasons.

Speaker Change #196: We think that this is a macro factor versus something that is corona or species specific when you look at all of our data we have reams and reams of customer data all the guest survey scores or.

Speaker Change #196: As strongly as ever if not stronger in some locations.

Unknown Executive: So media mentions remain very, very robust, and guest value perception is very strong as well. The pricing of a taken as modest, you know, most single digits are through quality remains very high. Porting is exactly the same or, you know, the guest experience is the same. So nothing is changed. And so we've no reason to think that, you know, over a matter of weeks, suddenly people's appetite for pera, we change their sustainability sense.

Speaker Change #196: Social media mentions of remained very very robust and that's value perception is very strong as well the pricing that we've taken is modest.

Speaker Change #196: Low single digits are few quality remains very high portraying is exactly the same or if the guest experience is the same so nothing has changed.

Speaker Change #197: So we have no reason to think that you know.

Speaker Change #198: Over a matter of weeks suddenly people's appetite for Corona changed it just doesn't make any sense.

Jon Michael Tower: Okay, thank you. And then maybe the last one, in terms of the balance of the year, I know you're very much focused on, and in 2025, working on the cost side of the equation, trying to make sure that that's balanced with sales. Can you talk about the planned promotions that you have? Like, does that stunt any opportunity to kind of push some of the promos that you have lined up?

Speaker Change #199: Okay. Thank you and then just maybe the last one in terms of the.

Unknown Executive: Okay, thank you. And then just maybe the last one in terms of the balance of the year. I know you're very much focused on and in the to 25 working on the cost, I did equation, trying to make sure that that's balance with the sales. Can you talk about the plan promotions that you have, like, does that stunt any opportunity to kind of push some of the promos that you had lined up? I know there is one that was due to come out in this fiscal fourth quarter. Is that going to stay on, on, you know, as planned, or do you plan on shifting that?

Speaker Change #200: The balance of the year I know you're very much focused on and then the 25.

Speaker Change #200: Working on the cost side of the equation and trying to make sure that that's balanced with our sales can you talk about the planned promotions that you have like does that stunt any opportunity to kind of push some of the promos that you have lined up I know there was one that was due to come out in the fiscal fourth quarter is that going to stay on.

Speaker Change #200: Yeah as planned or do you plan on shifting that.

Unknown Executive: Giving the one-piece collaboration? Yes. Yeah, that's the one trying for that. That'll be rolling out our disperse. In terms of our comments earlier, the main point that we were trying to get across is that we weren't going to be trying something new and massive as a Hail Mary. We weren't going to be gambling, you know, millions of dollars on advertising. It's just not our approach. Our approach is really to focus on, you know, things that are as cost effective as possible, whether they're, you know, the bread and butter things we've done in the past or new opportunities that the VP of marketing has brought to us.

Jon Michael Tower: I know there was one that was due to come out in this fiscal fourth quarter. Is that going to stay on, you know, as planned? Or do you plan on shifting that? Do you mean the One Piece collaboration?

Speaker Change #200: You mean, the <unk> collaboration.

Jon Michael Tower: Yes. Yeah, no. That's still on track. That'll be rolling out August 1st. Yeah, in terms of our comments earlier, the main point that we were trying to get across is that we weren't going to be trying something new and massive like a Hail Mary. We weren't going to be gambling, you know, millions of dollars on advertising.

Speaker Change #200: Yes.

Speaker Change #200: Yeah, no that's still on track for that that'll be rolling out our dispersed.

I'm, sorry, I got it.

Speaker Change #201: Oh, he's comfortable running a school central Tonight.

Speaker Change #201: Oh no not at all.

Speaker Change #201: Sure.

Speaker Change #201: Okay.

Speaker Change #202: Thank you sounded like you don't know what else what can you tell us anything.

Speaker Change #203: Yeah in terms of her comments earlier.

Speaker Change #204: The main point that we were trying to get across is that we weren't going to be trying something new and massive as a hail Mary.

Speaker Change #204: We're gonna be gambling millions of dollars on advertising, it's just not our approach our approach is really to focus on.

Benjamin Porten: It's just not our approach. Our approach is really to focus on things that are as cost-effective as possible, whether they're, you know, the bread and butter things we've done in the past or new opportunities that the VP of marketing has brought to us. We think that we can deliver superior results without compromising.

Speaker Change #204: You know things that are as cost effective as possible whether there.

Speaker Change #204: The bread and butter things, we've done in the past or new opportunities that the BPA parking was brought to US we think that we can deliver superior results for the comparable set.

Unknown Executive: We think that we can deliver superior results with a comfortable spend. Got it.

Jon Michael Tower: Thank you very much for taking the questions. Thank you. Our next question comes from the line of Jeremy Hamblin with Craig Hallam. Please proceed with your question. Thank you for taking the questions.

Got it thank you very much for taking the questions.

Unknown Executive: Thank you very much for taking the questions. Thank you.

Speaker Change #204: Mhm.

Speaker Change #204: Thank you. Our next question comes from the line of Jeremy Hamblin with Craig Hallum. Please proceed with your question.

Jeremy Hamblin: Our next question comes from the line of Jeremy Hablin with Craig Hallam. Please proceed with your question. Thanks for taking the questions. I wanted to ask just another one on the same source sales just to get an appreciation for some of the regional performance. So I think you said in March, California was up 14.1. I don't think you gave us Southwest market performance for that month, but I think that would be helpful. And then just wanted to understand, you know, in terms of the guidance here for your fourth quarter of down mid single to down high single.

Speaker Change #204: Okay.

Jeremy Scott Hamblin: I wanted to ask just another question on same-store sales, just to get an appreciation for some of the regional performance. So I think you said in March that California was up 14.1. I don't think you gave us the Southwest market performance for that month, but I think that would be helpful.

Speaker Change #204: Thanks for taking the questions.

Speaker Change #205: I wanted to ask just another one on the same store sales just to get an appreciation for some of the regional performance.

So I think you said in March California was up 14.1, I don't think you gave us a southwest market performance.

Speaker Change #205: For that month, but I think that would be helpful. And then just wanted to understand you know in terms of the guidance here for.

Jeremy Scott Hamblin: And then just wanted to understand, you know, in terms of the guidance here for your fourth quarter, of down mid single to down high single. What's the magnitude of change in those regional markets? Because, you know, your call out really has been in California. And I don't know if that means that the primary changes are California and the Southwest markets kind of bumping along at a similar level, or if you've seen, you know, degradation kind of across regions. Matthew.

Speaker Change #205: Your fourth quarter.

Speaker Change #205: Of down mid single to down high single.

Unknown Executive: So, you know, what's the magnitude of change in those regional markets? Because, you know, your call out really has been in California. And I don't know if that means that the primary changes is California and the Southwest markets kind of bump it along at a similar level. Or if you've seen, you know, degradation kind of across regions. Yes, yes. So, the answer to your first question is the Southwest region comes for March for 1.8%.

Speaker Change #205: What's the magnitude of change in those regional markets. Because you know you call out really has been in California.

Speaker Change #205: And I don't know if that means that our that the primary changes is California and in the southwest markets kind of bumping along at a similar level or if you've seen degradation kind of across regions.

Speaker Change #206: Yes, Thank you and I'll Echo.

Speaker Change #206: Sounds great.

Speaker Change #207: Send us know compensate you kind of spoken so nothing to stop what isn't it.

Benjamin Porten: Yes. Thank you. [inaudible] So to answer your first question, the Southwest region comps for March were 1.8%. And then, in terms of our expectations for Q4 comps, it's not that we expect sales decelerations relative to what we've seen in Q3. It's that we have a relatively harder comparison that we're lapping with WeBearBears.

Speaker Change #208: Quite critical.

Speaker Change #209: Answering your first question the southwest region comps for March were one 8%.

Speaker Change #210: That's all on our coupon on our complement visitation levels aren't quite a lot and again Dino.

Speaker Change #211: Curiously excuse me in again.

Speaker Change #212: What's wrong with you shortly.

Speaker Change #212: Yeah.

Speaker Change #213: Yes, like I said a lot.

Speaker Change #213: Okay.

Speaker Change #214: Well, if I can I'm just kidding.

But suddenly you name it.

Speaker Change #214: Got it.

Unknown Executive: And then in terms of our expectations for Q4 comps, it's not that we expect sales decelerations; if relative to what we see in Q3, is that we have a relatively harder comparison that we're laughing with leader of areas, which is, if you recall, if you were to your previous earnings calls with a very big surprise hit for us, one of the more successful collaborations that we've had.

Speaker Change #214: To come back.

Speaker Change #214: And then in terms of our expectations for Q4 comps, it's not that we expect sales deceleration relative to what we've seen in Q3 is that we have a relatively harder comparison.

Speaker Change #214: That we're lapping with me very bearish fixes.

Benjamin Porten: If you recall, if you listen to our previous Ernst calls, it was a very big surprise hit for us and one of the more successful collaborations that we've had. [inaudible] And then the other thing would be that the three most recent restaurants that we've opened are in existing markets. And so they would also have an impact on cannibalization. But again, you know, in terms of giving guidance. Negative mid to high single digits.

Speaker Change #214: If you recall, if you listen to our previous earnings calls was a very big surprised it for us and one of the more successful collaborations that we've had.

Unknown Executive: For example, in the last few years, we've been working with the Southwest region, and we've been working with the Southwest region, and we've been working with the Southwest region, and we've been working with the Southwest region, and we've been working with the Southwest region, and we've been working with the Southwest region, and we've been working with the Southwest region, and we've been working with the Southwest region, and we've been working with the Southwest region, and we've been working with the Southwest region, and we've been working with the Southwest region, and we've been working with the Southwest region, and we've been working with the Southwest region, and we've been working with the Southwest region, and we've been working with the Southwest region, and we've been working with the Southwest region, and we've been working with the Southwest region, and we've been working with the Southwest region, and we've been working with the Southwest region, and we've been working with the Southwest region, and we've been working with the Southwest region, and we've And then, uh, the other would be that the three most recent restaurants that we've opened are in two main markets and so they would, uh, also have an impact on cannibalization, but, uh, again, you know, in terms of giving the guidance of negative mid to high single digits, it doesn't imply anything, any worsening.

Speaker Change #215: Well, if I can hope we start pinball up around that.

California market.

Paul McCartney: Paul I don't know, how anybody who doesn't make you already covered it well.

Paul McCartney: Great.

Speaker Change #216: Put out.

Speaker Change #216: The company itself.

Speaker Change #216: I think all in all but one would you be able to take care of them and then.

Speaker Change #217: It would be the three most recent restaurant to be both an art and clean markets. So they would.

Speaker Change #217: Also have an impact on cannibalization, but.

Speaker Change #218: Again in terms of what's giving the guidance.

Speaker Change #219: Negative mid to high single digits. It doesn't imply anything any worsening it's just.

Benjamin Porten: It doesn't imply anything, any worsening. It's just basically a run rate expectation of what we've seen to date, keeping in mind the comparisons and factors. Got it. And then just some of your restaurant peers have been a bit more aggressive in pricing, particularly in the California market, you know, with the change in wage laws on April 1. You know, just an understanding of how you're thinking about it. Do you feel like there's a lot more price sensitivity?

Unknown Executive: It's just, uh, basically your run rate expectation of what we've seen today, keeping in mind the comparisons and, you know, factors, the other, other contractors. Got it. And then, um, just some of the, uh, some of your, uh, restaurant peers have been a bit more aggressive, um, in pricing, particularly in the California market, um, you know, with the change in, in wage laws on April 1. Um, you know, just an understanding of how you're thinking about, do you feel like there's a lot more price sensitivity, um, you know, in terms of some companies, uh, that, uh, like you target higher education, uh, customer base, um, you know, that have been able to price, uh, you know, a bit more aggressively to help offset some of the, you know, the wage pressure, um, but you guys have also, you know, spoken to your value proposition and, in the fact that you guys are, you know, let's say somewhere in the 30 to 50 percent lower, um, you know, price point, uh, versus your, your sushi peers, you know, if that a consideration of being maybe a bit more aggressive, um, particularly in that market.

Speaker Change #219: Basically a run rate expectation of what we've seen to date keeping in mind the comparisons and bankers are the other factors.

Speaker Change #219: Got it and then just some of the some of your.

Speaker Change #220: Restaurant peers have been a bit more aggressive.

In pricing, particularly in the California market, you know with the change in in wage laws on on April one.

Speaker Change #221: You know just an understanding of how you're thinking about do you feel like there's a lot more price sensitivity.

Benjamin Porten: You know, in terms of some companies that, like you, target higher education, the customer base, you know, that have been able to price, you know, a bit more aggressively to help offset some of the, you know, wage pressure.

Speaker Change #222: In terms of of some companies that debt like you target higher education customer base you.

Speaker Change #222: You know that had been able to price.

Speaker Change #222: You know a bit more aggressively to help offset some of the you know the wage.

Speaker Change #222: Pressure, but you guys have also spoken to your value proposition and the fact that you guys are you know, let's say somewhere in the 30% to 50% lower.

Jeremy Scott Hamblin: But you guys have also, you know, spoken to your value proposition and the fact that you guys are, you know, let's say somewhere in the 30 to 50% lower price point versus your sushi peers. You know, is that a consideration of being maybe a bit more aggressive, particularly in that market? First of all, this is a very important topic that we discussed internally, and Jeremy just mentioned it. In the long run, we believe that maintaining the value proposition is beneficial in the long term.

Speaker Change #222: You know price point versus your your sushi peers, you know is that a consideration of being maybe a bit more aggressive particularly in that market.

Speaker Change #222: So most of it.

Quite a lot about it.

Speaker Change #223: These customers that might be the only geography.

Speaker Change #222: Okay.

Speaker Change #222: Okay.

Speaker Change #224: But honey so speaking of honey, we're bullish on easy to put on hold at home with them. When they know where there are no babies become one on ethanol buddies literally something a couple of isn't income that you guys get.

Benjamin Porten: We have built up this value proposition over the past 10 years. This time, Macrocluster is really unexpected, but it can maintain its profitability even with its modest current prices. For example, the tech pipeline is still coming, and we still have initiatives such as the integration of the Packard House station that we are working on now. Based on what will come in the future, we think that we can get strong results at the same level as in the past with the current pricing.

Unknown Executive: So, so, Pyramid, thanks for asking this question. This is obviously a massive topic of discussion, really, you know, ongoing discussion within the company, um, but at the end of the day, we do think that maintaining the value proposition of Kurosushi is extremely important, um, not just, you know, now when people are, they're going to just down worse, but really, for the long term halt of the company, and the competitive system. You mentioned that 30 to 50 percent, uh, plus being 30 to 50 percent cheaper than sushi peers, that didn't happen overnight. That was through 10 to 15 years of, you know, just constant effort to keep pricing down, while introducing additional, you know, efforts on all rents, you know, the drive at the same level of margin.

Speaker Change #224: To get them on a Monday.

Speaker Change #225: Contact them up a little bit of something.

Speaker Change #225: It was all of that and I'm wondering I'm just getting them up.

Speaker Change #225: The amount of production.

Speaker Change #225: What about them to the extent, we didn't get it all does that particular pipeline.

Speaker Change #226: Democracy human clinical data.

Speaker Change #227: A couple of the hottest amongst guests on the phone with my son kind of another one that went on he says about humble bundle.

Speaker Change #228: But I think that you would need.

Speaker Change #228: Couple of marketing with enough somebody that's cool.

When they come back and deal with it but.

Benjamin Porten: We think that the best thing to do with the current pricing is to anticipate what will come in the future. So Jeremy, thanks for asking this question. This is obviously a massive topic of discussion, really an ongoing discussion within the company. But at the end of the day, we do think that maintaining the value proposition of Kura Sushi is extremely important.

Speaker Change #228: Or there's something about what.

Speaker Change #228: But I think that as you go up and it goes up.

Speaker Change #228: Yeah.

Speaker Change #228: Okay.

Jeremy Scott Hamblin: Jeremy Thanks for asking the question. This is obviously.

Jeremy Scott Hamblin: That's a topic of discussion at really an ongoing discussion between the coverage.

Speaker Change #230: At the end of the day, we do think that maintaining the value proposition of courtesy of he is extremely important.

Jeremy Scott Hamblin: Not just, you know, now when people are going for discount wars, but really for the long-term health of the company. And the competitiveness that you mentioned, that 30 to 50 percent, [inaudible] Also, I have one more question. The price sensibility of customers is very high now. Of course. And then, what is the product that you are trying to sell?

Speaker Change #230: Not just now when people are starting to discount worst, but really for the long term health of the company and the competitiveness that you mentioned that 30% to 50%.

Speaker Change #230: Must be 30% to 50% cheaper than sushi peers that didn't happen overnight.

Speaker Change #230: True 10 15 years.

Speaker Change #230: Just constant effort to keep pricing downhaul introducing additional.

Speaker Change #231: Advertising Orient you have to drive the same level of margin. So the pricing that we've taken right now that we're running to be approximately 4%. We think that that is appropriate in terms of the pricing that we need to be able to maintain the same levels of profitability.

Unknown Executive: So, the pricing that we've taken, uh, right now that we're out into approximately 4 percent, we think that that is appropriate in terms of the pricing that we need to be able to maintain the same levels of profitability that we, uh, delivered in past years. So, would be that 4 percent pricing in combination with the operational pre-mining that we, uh, that is blowing out across our system as well as the tech pipeline that we have. That's a unique opportunity to corrode, and so we're trying to, what we're taking advantage of that as much as possible in terms of not needing to take as much price and continuing to be a very strong value.

Speaker Change #231: Delivered in past years, so it would be down 4% pricing in combination with your operational streamlining that.

Speaker Change #232: <unk> is rolling out across our system as well as protect pipeline to be half that.

Is it an unique opportunity to correct and so we're trying to what we're taking advantage of that as much as possible in terms of not needing to take as much price continues to be a very strong value and making sure that our brand identity remains intact, although most of them.

Benjamin Porten: So, I am going to ask the question to Kura. So, I am going to ask the question to Kura. And then, for your other question, I think everybody is more price sensitive. I mean, this is kind of a silly analogy, but Jimmy, Jeff, and I were all talking.

Unknown Executive: And, um, making sure there are brand identity remains intact. I don't know if that's not good or not good. We'll get some more price-sensitive. I mean, this is kind of a facility analogy, but Jimmy, Jeff, and I were all talking, and maybe, you know, we've changed our habits as well. So, at this point, understood.

Speaker Change #233: Okay somewhat meager.

Speaker Change #233: Since Q2.

Speaker Change #234: Okay, and then for you all.

Speaker Change #235: Other question I think everybody is more price sensitive I mean, this is kind of a silly analogy, but Jimmy and Jeff and I, We were all talking and we you know we've changed our habits as well.

Jeremy Scott Hamblin: And, you know, we have changed our habits as well. So, at this point, I think everybody is price sensitive. Okay. Last one quick for me.

Speaker Change #236: So at this point I think everybody.

Speaker Change #236: Okay.

Jeremy Scott Hamblin: Your unit, you know, the development pipeline is exceptional, and execution has been exceptional. I think six under construction puts you on a pretty strong pace as you get started here toward FY 25. Has, you know, any of the same store sales performance impacted all your unit development plans? You know, I think as we look at not only the six that you noted are under construction, but I think you have, you know, lease agreements and or site selection on a significantly larger batch, one that may suggest that your unit growth in absolute terms would be a bit higher in FY 25. But you know, any color you might be able to share on that would be greatly appreciated.

Speaker Change #237: Understood last one quick for me your unit development.

Unknown Executive: Last one quick for me. Your unit, you know, development pipeline has been exceptional; you know, in execution has been exceptional. I think six under construction puts you on a pretty strong pace as you get started here towards FY 25.

Speaker Change #238: Development pipeline has been exceptional you know and in execution has been exceptional I think six six under construction puts you on a pretty strong pace.

Speaker Change #238: As you get started here towards FY 'twenty five.

Unknown Executive: Has, you know, any of the same store sales performance impacted at all your unit development plans? You know, I think as we look at not only which is the six that you noted that have under construction, but I think you have, you know, lease agreements and or site selection on a significantly larger batch, you know, one that may suggest that your unit growth in absolute terms to be a bit higher in FY 25. But, you know, any color you might be able to share on that would be greatly appreciated. Hi, so, you know, high level in terms of current, you know, current sales or a safe for sales, that hasn't impacted our growth advertising at all.

Speaker Change #238: Has you know any of the same store sales performance impacted at all your your unit development plans you know I think as we look at our not only with the six that you noted that you have under construction, but I think you have you know a lease agreements and or site selection on a.

Speaker Change #239: A significantly larger batch one that may suggest that your unit growth in absolute terms would be a bit higher in FY 'twenty five but you know any color you might be able to share on that would be greatly appreciate it.

Jeremy Scott Hamblin: First of all, the results of the COVID-19 pandemic did not affect our pace of growth. [inaudible] Hi, so you know, high levels in terms of current, you know, current sales, or Safe Source Sales. But that hasn't impacted our growth appetite at all.

Speaker Change #240: No not in Oklahoma to say this is not one thing I'll kick off.

Pedro: Let me know Pedro.

Pedro: Got it.

Speaker Change #242: How about what do I do.

Speaker Change #242: Yeah, that's that's even though you don't go back.

Speaker Change #242: And probably about another cut on multiples.

Speaker Change #242: I don't know.

Speaker Change #242: Okay.

Speaker Change #242: That's like Honeywell.

Speaker Change #242: To give you some what I'll call excuse me.

Speaker Change #242: But that wasn't one of them.

So that is helpful.

Speaker Change #242: Okay.

Speaker Change #242: Thank you everyone.

Speaker Change #242: Are there any buckets at all.

Speaker Change #243: Oh, yes.

Speaker Change #243: Okay.

Speaker Change #243: So.

Speaker Change #243: High level in terms of.

Speaker Change #243: Kurt its current sales.

Benjamin Porten: We believe that the white space potential remains just as strong as ever and that our growth prospects are extremely strong. And so, nothing has changed in terms of our appetite. What has changed is that we're very grateful to have a very, very strong development team, and they have an extremely robust pipeline. And so we've been able to apply our learnings over the last year, especially the things that we've learned over the last quarters in terms of determining which units we'd like to include in our pipeline and which ones don't make the cut. And so this year, you know, the cannibalization impact is a greater focus than in the past.

Speaker Change #243: Same store sales, but that hasn't impacted our growth appetite at all we believe that white space potential remains just as strong as ever and that our growth prospects are extremely strong and so nothing has changed in terms of our appetite what has changed is.

Unknown Executive: We believe that the white space potential remains just as strong as ever and that our growth prospects are extremely strong. So nothing has changed in terms of our appetite. What has changed is we're very grateful to have a very, very strong development team, and they have an extremely robust pipeline. So we've been able to apply our learnings over the last year, this, but, you know, especially the thing that we've learned over the last quarters, in terms of determining which units we'd like to include in our pipeline and which ones don't make the cut. And so, this year, you know, the cannibalization impact is a greater focus than in past years.

Speaker Change #244: We're very grateful to have a very very strong development team and they have an extremely robust pipeline and so we've been able to apply our learnings over the last year.

Speaker Change #244: Especially the things that we've learned over the last quarters.

Speaker Change #244: In terms of determining which units we would like to include in our pipeline and which ones don't make the cut and so this year.

Speaker Change #245: Cannibalization impact is greater focus over the past years.

Benjamin Porten: On the other hand, we are now expecting to be able to sell more than 20% of the restaurant's level and G&A's level at this Macro Environment 2.0. If this situation does not improve further, we may decide to slow down to maintain the brand. At this stage, we will not be able to do that. As we mentioned before, given the difficulty in predicting how long the macro environment will continue, obviously, we're going to be doing everything in our power to continue to produce strong results, but if, you know, things were worsened dramatically, that might put a hiccup in the growth plan. Right now, there's nothing that would indicate that.

Speaker Change #244: Okay.

What I would put on it I don't know I'm not going to England.

Speaker Change #244: At this time.

Speaker Change #244: On a Sunday.

Speaker Change #244: Goodbye.

Speaker Change #244: Well I'll put it out.

Speaker Change #244: Those are the kind of your question.

Speaker Change #244: Okay.

Speaker Change #244: And Philadelphia, because don't forget.

Speaker Change #244: Thank you.

Speaker Change #244: Okay.

Speaker Change #244: As we mentioned before given the difficult to predict how long the macro environment continues obviously, we're going to be doing everything in our power to continue to produce strong results.

Unknown Executive: We've been able to continue to have pretty strong results, but if, you know, things were worsened dramatically, that might put a hiccup in the growth plant. But right now, there's nothing that would indicate that.

Speaker Change #244: Things were to worsen dramatically that that might put a hiccup in the growth plans, but.

Benjamin Porten: We remain very, very excited about the fiscal 25 pipeline, which we will give you an update on in our Q4 call when we give our formal guidance, as we've done every year. And Jeremy, Jeff, I just wanted to add that what's really important to us is keeping with the promises that we've made to our shareholder base. And one of those, as you know, is to maintain a 20% unit level growth per year.

Speaker Change #244: Right now there is nothing that would indicate that we remain very very <unk>.

Unknown Executive: We were very, very excited about the fiscal 25 pipeline, which we will give you, you know, an update in our Q4 call when we give our formal guidance, as we've done every year. And Jeremy's chapter is one of the add to that which really important to us is keeping with the promises that we've made to our shareholder base. And one of those, as you know, is to maintain a 20% unit level growth per year. And that's what we continue to plan to do. We don't really just 20% unit level growth, but the other promises that we've made to maintain a 20% restaurant level operating profit and have significant G and A leverage.

Speaker Change #246: Sighted about their physical quite by pipeline, which we will give you.

Speaker Change #246: An update and our Q1 or Q4 call when we give our formal guidance as we've done every year.

Jeff: Jeremy It's Jeff I, just wanted to add to that what's really important to us is keeping the promises that we've made to our shareholder base and one of those as you know is to maintain a 20% unit level growth per year and that's what we continue to plan to do.

Benjamin Porten: And that's what we continue to plan to do. Not only just 20% unit level growth, but the other promises that we've made to maintain a 20% restaurant level operating profit and have significant G&A leverage. And that's very important to us as a management team, to make certain that we keep those promises that we've made, certainly since I've been with the company. So that's what we're going to continue to do. Great. Thanks for all the color.

Speaker Change #247: We don't.

Jeff: So really just 20% unit level growth, but the other promises that we've made to maintain a 20% restaurant level operating profit and have significant G&A leverage and that's very important to us as a management team to make certain that we keep those promises that we've made certainly since I've been with the company. So that's what we're going to continue to do.

Unknown Executive: And that's very important to us as a management team to make certain that we keep those promises that we've made, certainly since I've been with the company. So that's what we're going to continue to do.

Unknown Executive: Great. Thanks for all the color. Appreciate it, and best wishes. Thank you.

Jeremy Scott Hamblin: Appreciate it and best wishes. Thank you. Thank you. Thank you. As a reminder, please press star one to ask a question at this time.

Speaker Change #248: Alright, thanks for all the color appreciate it and best wishes.

Speaker Change #248: Okay. Thank you. Thank you.

Thank you as a reminder, please press star one to ask a question at this time.

Todd Brooks: As a reminder, please press star one to ask a question at this time. Our next question comes from the mind of Todd Brooks with the Benchmark Company. Please proceed with your question. Hey, thanks for, thanks for taking my questions here. Just wondering, you talked about the price increase that you took in July 1.7%. Was that across all regions or because the consumer largely didn't kind of differentiate between concepts that took price and didn't take price, but they started voting with their feet in California and stopped going out altogether. Is the pricing more loaded in the California markets since you did not take any earlier in the year?

Operator: Our next question comes from the line of Todd Brooks with the Benchmark Company. Please proceed with your question. Hey, thanks for taking my questions here.

Speaker Change #248: Our next question comes from the line of Todd Brooks with the Benchmark Company. Please proceed with your question.

Todd Morrison Brooks: Just wondering if the price increase that you took in July 1.7% was that across all regions or because the consumer largely didn't kind of differentiate between concepts that took prices and didn't take prices, but they started voting with their feet in California and stopped going out altogether. Is the pricing more loaded in the California market since you did not take any earlier in the Speaking in Japanese Generally speaking, it was system-wide. Adjustments we would make for California would have to do the minimum wage increases that happen on July 1, which is something that we've done every year.

Todd Morrison Brooks: Hey, Thanks for thanks for taking my questions here just wondering.

Todd Morrison Brooks: You talked about the price increase that you took in July one 7% was that across all regions or because the.

Todd Morrison Brooks: The consumer largely didn't kind of.

Differentiate between concepts it took price and didn't take price, but they they started voting with their feet in California and stopped going out altogether.

Is the pricing more loaded in the California market since you did not take any earlier in the year.

Todd Morrison Brooks: Okay.

Speaker Change #251: Anybody that can help get those wells and then I forgot.

Speaker Change #250: Yeah, well somebody else you see what do I E.

Unknown Executive: Speaking to the system wide, there are the adjustments we would make for California. We have to do the minimum wage increases. They happen on July 1, which is something that we've done every year. So there may be a little bit more in California, but it wouldn't be related to what you just mentioned. It would just be the same as always in terms of offsetting minimum wage. So just a recap of the historical pricing approach has always been very, very consistently. We'll take pricing on in January and July because there are stats for wage increases in January and July.

Speaker Change #250: Once if that's okay.

Speaker Change #250: Generally speaking the it system wide.

Speaker Change #250: The adjustments, we would make for California would have to do the minimum wage increases that happened on July one which is something that we've done every year.

Todd Morrison Brooks: So, you know, maybe there's a little bit more in California, but it wouldn't be related to what you just mentioned; it would just be, you know, the same as always, studying the minimum wage. And so just to recap our historical pricing approach, it's always been very, very consistent. We'll take prices on in January and July because there are statutory wage increases in January and July; we'll take just enough to offset that.

Speaker Change #250: So there maybe there's a little bit more in California, but it wouldn't be related to what you just mentioned it would just be the same as always in terms of offsetting the minimum wage.

Speaker Change #250: Okay.

Speaker Change #250: So let me see.

Speaker Change #250: Okay.

Okay.

Speaker Change #250: Goodbye.

Speaker Change #250: What about I know you don't have a whole different airlines.

Speaker Change #250: Some.

Chris: Thank you Chris.

Chris: Each bucket.

Do you guys feel about that.

Just a recap of our historical pricing approach has always been very very consistently will take pricing on in January and July because the statutory wage increases in January and July we'll take just enough to offset that this year.

Todd Morrison Brooks: This year, for the May pricing event, there was just, you know, labor inflation beyond our expectations, and there was inflation relating to other costs. And so we took that 1% to offset those incremental inflationary costs. And Todd, both of the price increases we took, the one in May and the one in July, were a blended number across the whole system based on our existing menu mix. So it doesn't necessarily mean it's 1.7% across the board.

Unknown Executive: We'll take just enough offset that this year for the main pricing event, there's just there's labor inflation beyond our expectations and there was inflationally to other costs, and so we took that 1% offset those incremental inflationary costs. And Todd, both of the price increases we took, the one in May and the one in July, were, it's a blended number across the whole system based on our existing minimum wage. So it doesn't necessarily mean it's 1.7% across the board.

Speaker Change #253: For the name pricing event.

Speaker Change #253: Oh, yes, there is labor inflation beyond our expectations and there was inflation related to other costs and so we took that 1% to offset those incremental.

Speaker Change #253: Place already to us.

Speaker Change #253: And tie both of the price increases we took the one in May and one in July where it's a blended number across the whole system based on our existing menu mix. So it doesn't necessarily mean, it's one 7% across the board.

Todd Morrison Brooks: Okay, fair enough. Thanks. Secondly, I wonder if we can talk about average check trends or what mixed trends were in the quarter. I know mix has been a challenge, but we thought maybe with some strength in Dragon Ball that might help mix pull up.

Unknown Executive: Okay, fair enough. Thanks, Jeff.

Speaker Change #253: Okay fair enough. Thanks, Jeff.

Unknown Executive: Secondly, wonder if we can talk about average check trends or what mixed trends were in the quarter? I know mix has been a challenge. We thought maybe with some strength and Dragon Ball that might help mix pull up. Can we talk about what price mix rain in the quarter? Yeah, so price mix actually is improved quarter of a quarter. Price mix total in total, it was a negative 0.3 with pricing of about 3.4% and mix of negative 3.7%. But that is a meaningful improvement over the prior quarter when price mix was negative 3%, where we had price of 3% and mix of negative 6%.

Speaker Change #254: Secondly, wonder if we can talk about average check trends are what mix trends were in the quarter I know mix has been a challenge we thought maybe with.

Speaker Change #255: Some strength and Dragon ball it might help mix pull up can we talk about what price mix rain in the quarter.

Benjamin Porten: Can we talk about what price mix ran in the quarter? Yeah, so price mix actually is an improved quarter over quarter. Overall, the price mix was negative 0.3, with pricing of about 3.4%, and mix of negative 3.7%. But that is a meaningful improvement over the prior quarter, when price mix was negative 3%, where we had a price of 3% and a mix of negative 6%. And so, you know, that we are not seeing mixed pressures. We're actually seeing mixed tailwinds.

Yeah. So.

Speaker Change #255: This mix actually.

Improved quarter over quarter price makes total in total it was negative 0.3 with pricing of about three 4% and mixture of negative three 7%, but that is a meaningful improvement over the prior quarter when price mix was negative, 3%, where we had price of 3% and mix a negative 6% and so.

Unknown Executive: And so that we are not seeing mixed pressures. We're actually seeing mixed tailwinds. And if we look at a year ago, our mix was down almost 10%. Right, so it's a very meaningful. for good. Okay, and is that if we look across and then over but is trying to parse the quarter and trends there did did mix stay relatively steady to consumers the ones that were coming out where they're still spending largely in the same way as far as number play out but also the side menu and attachment there. Yeah, there were many major changes worth calling out in April and May.

Speaker Change #256: That debt.

Speaker Change #256: We're not seeing a mixed pressures, we're actually seeing mix tailwind anybody to look at a year ago, our mix was down almost 10% right. So it's a very meaningful improvement.

Todd Morrison Brooks: And if you look at a year ago, our mix was down almost 10%. Right, so it's very meaningful. Okay, and is that... If we look across, and I know everybody's trying to parse the quarter and trends there did, did mix stay relatively steady?

Speaker Change #256: Okay and is that.

Speaker Change #256: If we look across and I know everybody is trying to parse the quarter and trends there did.

Speaker Change #256: Mix stay relatively steady to consumers the ones that were coming out where they're still spending largely in the same way as far as number of players, but also the side menu was attachment there.

Benjamin Porten: Did consumers, the ones that were coming out, were they still spending largely the same way as far as the number of plates, but also the side menu and attachments? Yeah, there were many major, major changes worth calling out in April and May. Yeah, the thing that we've seen is not so much spending management, just more frequency management, unfortunately. Okay, and then the final one for me, I know.

Speaker Change #257: Yeah. There were many major major changes worth calling out in April and May my spending with enough money to do three things.

Speaker Change #257: Okay.

Unknown Executive: Yeah, the thing that we've seen is not so much spending management, just for frequency management.

Speaker Change #258: Yes, I think it was.

Scene is up not so much spending management, just more frequency management. Unfortunately.

Unknown Executive: Okay, and then the final one for me. I know we're a little ways up; we're starting to get over half a year of experience with the new loyalty program under our belts here. In past discussions, it's iterative. You've got to build the data set before you can really start to lever it. As you're looking towards what you can do with the tool to stimulate frequency, what you can better do maybe in specific markets with segmentation if you need to attack weakness in a market like California and then maybe using the tool to better tie in or and send people again some of the IP partnerships.

Speaker Change #258: Perfect.

Speaker Change #258: Okay.

Speaker Change #258: Yeah.

Speaker Change #259: Okay, and then a final one for me I know.

Todd Morrison Brooks: We're a little ways out, but we're starting to get over half a year of experience with the new loyalty program under our belts here. In past discussions, it's been iterative. You've got to build the data set before you can really start to leverage it. As you're looking towards what you can do with the tool to stimulate frequency, what you can better do maybe in specific markets with segmentation if you need to attack weakness in a market like California, and then maybe using the tool to better tie in or incentivize people against some of the IP partnerships. Where are we in that journey where we start to look at loyalty as being a frequency driver? Thanks.

Speaker Change #259: We're a little ways out, but we're starting to get.

Speaker Change #259: Over half a year of experience with the new loyalty program under our belts here.

Speaker Change #259: In past discussions, it's it's iterative you've got to build the data set before you can really start to lever it.

Speaker Change #259: As youre looking towards what you can do with the tools to stimulate frequency what you can better do maybe in specific markets with segmentation. If you need to attack weakness in a market like California, and then maybe using the tool to.

Speaker Change #259: Better tie in or Incent people against some of the IP partnerships, where are we in that journey that we start to look at.

Unknown Executive: Where are we in that journey that we start to look at loyalty as being a frequency driver going forward? Thanks. Yeah, so it's just exactly as you mentioned. We see it as a massive opportunity. So in the last call, I've mentioned that rewards members visit about 1.3 times a month; you know, very, very frequent. And so, as an example, a very simple opportunity to just get a segment are rewards members. Do which ones haven't been visiting in 90 days and try to convert them back into active rewards members and get that 1.3 times monthly visit.

Speaker Change #260: Loyalty is being a frequency driver going forward. Thanks.

Benjamin Porten: Yeah. So, it's just exactly as you mentioned. We see it as a massive opportunity. So, on the last call, I mentioned that rewards members visit about 1.3 times a month, you know, very, very frequent. And so, as an example, a very simple opportunity to just get a segment of rewards members, see which ones haven't been visiting in 90 days, and try to convert them back into active rewards members and get that 1.3 times monthly visit.

Speaker Change #261: So it's just exactly as you mentioned, we see it as a massive opportunity. So in the last call I mentioned that our.

Speaker Change #261: Rewards members visit about one three times a month very very frequent and so as an example, a very similar opportunity to just get a segment our rewards members see which ones haven't been visiting and try to in <unk>.

90 days and try to convert them back into active rewards members and get that one three times monthly visits.

Unknown Executive: That's a pretty simple idea. The execution is a little bit trickier, and most of the times I think they're working out right now. I don't envy our VQ marketing, who has a lot on his plate. He's very busy, but we work closely together, and leveraging the opportunity to work's program is very much the point of focus. I don't want to premature our announcements, but we do have babies coming about the rewards program. Okay, fair enough. Thanks, Ben. Thank you.

Benjamin Porten: That's a pretty simple idea. The execution is a little bit trickier, and those are the kinds of things that we're working on right now. I don't envy our VP of Marketing, who has a lot on his plate.

Speaker Change #261: Pretty simple.

Speaker Change #261: The execution is a little bit trickier in most of the kinds of things that we're working out right now.

Todd Morrison Brooks: He's very busy, but we work closely together, and leveraging the opportunity of the rewards program is key. Very much a point of focus. I don't want to be premature in our announcements, but we do have big news about the rewards program. Okay, fair enough, thanks. Thank you. Our next question comes from the line of Matt Curtis with William Blair. Please proceed with your question.

Speaker Change #262: I don't N D or do you keep marketing who has a lot on his plate. He is very busy but we work closely together and leveraging the opportunity to reward program is.

Speaker Change #263: Very much a point of focus I don't want to pretty much be premature to our announcements, but we do have big news coming about the rewards program.

Speaker Change #263: Okay fair enough. Thanks Pam.

Speaker Change #263: Thank you. Our next question comes from the line of Matt Curtis with William Blair. Please proceed with your question.

Matthew Curtis: Our next question comes from the line of Matt Curtis with William Blair. Please proceed with your question. Hi, good evening.

Matthew James Curtis: So with regard to the mid single-digit to high single-digit negative comp run rate so far in the fourth quarter, just to be clear, have you seen trends actually stabilized in this range or not? And then when you look back at the comp slowdown in April, is there anything in terms of day parts, demographics, or days of the week that stick out to you as having been important drivers?

Speaker Change #264: Hi, good evening.

Unknown Executive: So, with regard to the mid single digit to high single digit negative compound rate so far in the fourth quarter, just to be clear, have you seen trends actually already stabilized in this range or not? And then when you look back at the comp slowdown in April, is there anything in terms of day parts, demographics, or days for the week that stick out to you as having been important drivers? We haven't seen too much change in day part, and in terms of what we've seen to date, in terms of sales trends, we haven't seen any major changes.

Speaker Change #264: So with regard to the mid single digit to high single digit negative comp run rate so far in the fourth quarter.

Speaker Change #264: Just to be clear have you seen trends actually already stabilized in this range or not and then when you look back at the comp slowdown in April.

Speaker Change #264: Or anything in terms of our day parts demographics or days per week.

Speaker Change #264: Stick out to us have having been important drivers.

Matthew James Curtis: First of all, there haven't been any major changes to the state parts as you have seen so far. I'm not sure if you can hear me. I'm not sure if you can hear me.

Speaker Change #264: Thanks Pablo.

Uh huh.

Speaker Change #265: The only thing.

Speaker Change #264: Absolutely.

Speaker Change #264: That's a question that I don't want to I don't know if you.

Let people know.

Speaker Change #264: Thanks, so much.

Benjamin Porten: Yeah, we haven't seen too much change in the daily part. And in terms of what we've seen to date, in terms of sales trends, we haven't seen any major changes. And just in terms of the comp headwinds for Q4, we've opened four units since April, and all four are in existing markets. And so those are obviously comps. And also, Matt, thinking about the first part of your question about days. We have, Friday lunch seems to be a little bit challenging.

Speaker Change #264: Yeah, we haven't seen too much change in day part.

Speaker Change #264: In terms of what we've seen to date.

Speaker Change #264: In terms of sales trends, we havent seen any major changes I don't know if I can really get.

Speaker Change #264: Okay, and then what do I see that.

Speaker Change #266: Equally important thing like my own Chicago market.

Speaker Change #266: But kind of in the middle.

Hey.

Speaker Change #266: Okay.

Speaker Change #267: Wonder if I could talk in a moment.

Speaker Change #267: And just in terms of the comp headwinds for Q4 support reopening we've opened four units since April in all four are in existing markets and so those are obviously comp headwinds.

Speaker Change #267: And also now thinking about on the first part of your question about days.

Speaker Change #268: We have Friday lunch seems to be a little a little bit challenging if you had to pick out any day of the week, but that's consistent with many articles that I've been reading that the industry is seeing.

Benjamin Porten: If you had to pick out any day of the week, but that's consistent with many articles that I've been reading that the industry is seeing a lot of people not go out for lunch on Friday, and Thursday has become more of a bigger day to go out.

Unknown Executive: We've seen a lot of people not going out to lunch on Friday, and Thursdays become more of a bigger day to go out, but that's really the only thing that I can think of that we've seen in terms of a particular day. We've seen a lot of people not going out to lunch on Friday, and Thursdays become more of a bigger day to go out. Okay, got it. Thanks for that.

Speaker Change #268: A lot of people not going out to lunch on Friday, and Thursday has become more of a bigger day to go out, but that's really the only thing that I can think of that we've seen in terms of a particular day.

Matthew James Curtis: But that's really the only thing that I can think of that we've seen in terms of a particular day. Okay, I got it. Thanks for that. And then, you know, despite the comp slowdown, it seems like new units are still performing well. Maybe you can just give us an update on how the class of 2022 and 2023 has been doing recently in terms of new unit product. First of all, regarding the performance of the 24 new restaurants, it's basically the same as before.

Speaker Change #268: Okay got it thanks for that and then despite the comp slowdown it seems like new units are still performing well maybe you can just give us an update on how the class of 2022 and 2023 has been doing recently.

Unknown Executive: And then, you know, despite the console down, it seems like new units are still performing well. Maybe it can just give us an update on how the class of 2022 and 2023 has been doing recently in terms of new unit productivity. Thank you. Sorry, the graph is inside the game. I don't know why it's a home on the scene, but this is kind of a selection of the Monday, the next thing market that I should think of. Looking at, I guess the momentum out of the eight for each vintage, we're overall performance for fiscal 24 cost fiscal 24.

Speaker Change #268: In terms of new unit productivity.

Speaker Change #268: Joe.

Speaker Change #268: You don't know on the newness on a whole month of any consequence, bastian digging you put them on it.

Matthew James Curtis: It's the same strength, but the important thing is that when we open up to the new market, the performance will be higher. In the case of the existing market, there is a tendency to be relatively weak compared to that, and that has continued. However, this time, there were 10 out of 14 stores, so there were many new markets on the 22nd and 23rd. Compared to that, the overall performance was not a problem of site selection, but there were many exports to the existing market. That's the reason why.

Speaker Change #270: How do you feel that they can get them all.

Speaker Change #269: What about what Atlanta sort of a new market.

Okay.

Speaker Change #271: Single market opens a very well thought out whatever you want in a gigawatt.

Speaker Change #271: Understood.

Speaker Change #271: Well do you think what you're saying.

Speaker Change #272: I know you just put up.

Speaker Change #272: About noon east.

Speaker Change #272: So it doesn't I think ila.

Speaker Change #272: Oh, that's quite a lot quite a prediction on the Monday is there any single market.

Speaker Change #272: Okay.

Speaker Change #272: We're looking at.

Benjamin Porten: Looking at, I guess, the momentum out of the gate for each vintage, overall, the performance for Fiscal 24, and the cost of Fiscal 24, we're very pleased with, and we think it's largely in line with what we've seen with Fiscal 22 and 23, the major factor being that the first unit in a given market is always meaningfully more successful than the subsequent restaurants. I mean, it's just, you get that massive hype, you get very crazy lines, big honeymoons, which you just don't get with, you know, as you penetrate that market.

Speaker Change #272: I guess the momentum out of the eight per each vintage.

Speaker Change #272: Overall, the performance for fiscal 'twenty for fiscal 'twenty.

Unknown Executive: We're very pleased with, and we think it's largely in line with what we've seen with fiscal 22 and 23, the major factor being that. The first unit in a given market is always going to be meaningfully more successful than the subsequent last one. It's just, you get that massive height that very long or a very, you know, crazy line, big honeymoon, which you just don't get with, you know, as you infill that market. And so this year we had 10 until versus four, sort of the four new markets, you know, versus past years where the majority of the units were new markets.

Speaker Change #272: Very pleased with it and we think it's largely in line with what we've seen with fiscal 'twenty two 'twenty three the major factor being that the.

Speaker Change #273: The first unit in a given market is always going to be.

Speaker Change #274: Meaningfully more successful than the subsequent restaurants I mean is it just you get that massive height.

Speaker Change #275: Very crazy lines, Big honeymoon, which is just over <unk>.

Speaker Change #275: Until that market and so this year, we had 10 infill versus four sort of four new markets.

Benjamin Porten: And so this year we had 10 infills versus four new markets, you know, versus past years, where the majority of the units were new markets. And so just in terms of the first year out of the gate spring, we don't have the honeymoon tailwinds as much this year, but overall, they're performing exactly to expectations. Fiscal 2022 and 2023 remain very strong. The variance in performance would again depend on the infill. It really just depends on if there's an infill. I think that's what's going to happen.

Speaker Change #275: Versus past years, where the majority of the units were in new markets and so just in terms of the first year out of the gate strength.

Unknown Executive: And so, just in terms of the first year out of the gate string. We don't have the honey and pill, and just like this year, but overall, they're performing exactly the expectations. Fiscal 22 and 23 remain very strong. They're in form together with the pandemic, and so if there's, but you know, it is a really just fantastic person.

Speaker Change #275: We don't have the honeymoon tailwind this year, but overall.

Speaker Change #275: Exactly the expectation fiscal 'twenty, two and remained very strong.

Speaker Change #275: The variance in performance again, it would depend on the infill if there is.

Speaker Change #276: Is it really just depends on a Thursday, so talking about one thing.

Speaker Change #277: Yeah. He doesn't you know most conductivity gets the Columbus, Ohio market.

Speaker Change #278: Market, because I think was unlucky Johnny let it let me know cologuard on a new market for them all on all that.

Speaker Change #279: Thank you.

Speaker Change #280: Pilots of adult even you don't know what's going on in a moment.

Speaker Change #280: Yeah.

Benjamin Porten: As you know, the rent is relatively low, the labor cost is low, and the labor pressure is low. This is a very strong result. So, based on that, the pipeline from 2025 is also very strong. [inaudible] So, I think if we, you know, we look back in the future this year, the two stores that are probably the most important in terms of our overall story would be Kansas City and Columbus, Ohio.

Speaker Change #281: That's what they keep yoki and let's look at that he gave me my stupidity, but able to put us on a street corner.

Speaker Change #281: You don't need to do it.

Speaker Change #282: So you have some funny when you get all kind of on a particular end market.

Speaker Change #282: I know you don't know what to do that.

Speaker Change #283: Oh no excuses.

Speaker Change #284: What about at all.

Speaker Change #284: So let me if I could.

Speaker Change #285: So I think a pretty we look back in the future this year.

Unknown Executive: I think I'm pretty, you know. We look back in the future this year, the two stores that are probably the best important in terms of our overall story, that would be Kansas City and Columbus, Ohio. They're, they're, you know, of course, the new markets, but they're not; they're also not immediately obvious sushi markets, but they're not. But they're fantastic. We love them. The rents lower, the cost of doing businesses lower, so they not only are they very popular, they're very profitable. And again, because they're not obvious sushi market, the success there's really it's not just demonstrated our portability, which every single one of our openings is done, but it's really given us that much more flexibility in terms of what we can, what we think of this being a extremely productive restaurant, and that learning is already, you know, incorporated it's part of our pipeline for fiscal 25 and it gives us, but that, that is the reason we confidence in terms of being able to manage the mix in pipeline between new and existing to make sure that we can continue consistently having positive costs.

Speaker Change #286: The two stores that are probably the most important in terms of our overall story that'd be Kansas City, and Columbus, Ohio. They are.

Benjamin Porten: They're, you know, of course, they're new markets, but they're not, they're also not immediately obvious sushi markets, but they're fantastic. We love them. The rent is lower, the cost of doing business is lower. So not only are they very popular, they're very profitable. And again, because they're not obvious sushi markets.

Speaker Change #287: Corporate new markets, but they're not they're also not immediately obvious sushi markets, but they are fantastic we love them.

Speaker Change #287: The rent lower the cost of doing business is lower and so not only are they very popular there, they're very profitable and again, because they're not obvious.

Speaker Change #288: Hershey market.

Benjamin Porten: The success there has really demonstrated our portability, which every single one of our openings has done, but it's really given us that much more flexibility in terms of what we can, what we think of as being an, you know, an extremely productive restaurant, and that learning is already, you know, been incorporated. It's part of our pipeline for fiscal 25, and it gives us that. That is the reason we have confidence in terms of being able to manage the mix in the pipeline between new and existing to make sure that we can continue consistently having positive confidence. Okay, great. Thanks very much.

The success there is really it's not just demonstrated our affordability every single one of our openings is done, but it's really given us.

Speaker Change #289: <unk> got much more flexibility in terms of what we can what we think of as being up.

Speaker Change #290: Extremely productive restaurant and that learning is already.

Speaker Change #290: Been incorporated as part of our pipeline for fiscal 2005 and it gives us.

Speaker Change #290: That that is the reason we have confidence in terms of being able to manage the mix.

Speaker Change #290: Pipeline between new and existing to make sure that we can.

Speaker Change #290: Consistently having positive comps.

Unknown Executive: Okay, great. Thanks very much. Thank you.

Speaker Change #291: Okay, great. Thank you very much.

Speaker Change #291: Thank you.

Matthew James Curtis: Thank you. Our next question comes from the line of George Kelly with Roth Capital Partners. Please proceed with your question. Hey everyone, thanks for taking the time to answer the question. So first, I wanted to start on the cost side. I was hoping you could be a little more specific just about where you found savings. I think you gave a few examples in your prepared remarks, but if you could just expand on that, both with respect to GNA and on a four-wall basis.

Speaker Change #291: Thank you. Our next question comes from the line of George Kelly with Roth Capital Partners. Please proceed with your question.

George Kelly: Our next question comes from the line of George Kelly with Ross Capital Partners. Please proceed with your question. Hello, everyone. Thanks for taking taking the questions. So first I wanted to start on the cost side. I was hoping you could be a little more specific just about where you found savings. I think you gave a few examples on that in your prepared remarks, but if you could just expand on that both with respect to GNA and on a for a while basis.

George Arthur Kelly: [inaudible] I am managing both of them, but of course, I think that Q3 is a little bit higher in terms of human resources alone, but the continuation of FY22 is 60.3%. 23% is 60.4%, FY24's year-to-date is 61.7%, and considering Q4 is strong, it will probably continue to be around 61.3% of FY22. So, basically, when it comes to cost management, considering that there are a lot of stores open at 14 stores this time and there is a pre-opening labor cost, it is not a big problem compared to FY23.

Speaker Change #292: Hey, everyone. Thanks for taking the taking the questions.

So first I wanted to start on the cost side.

Speaker Change #292: I was hoping you could be a little more specific just about where you show the savings I think you gave a few examples on the in your prepared remarks, but if.

Speaker Change #292: If you could just expand on that both on.

Speaker Change #292: With respect to G&A and on a four wall basis.

Speaker Change #292: Sure.

Speaker Change #292: Okay.

Speaker Change #293: Am I still thinking about book, So I don't know if you can get him on the order until the money state and there's nothing wrong in thinking about the company.

Speaker Change #292: Okay.

Speaker Change #294: I wanted to get a more oh.

Speaker Change #295: I need you know thinking about what would you say some of our Haynesville eagle from lithium button.

Speaker Change #295: Do you have to get to it or would you get them in a bucket there is twofold.

Speaker Change #295: It at all.

Speaker Change #295: So thank you all.

Speaker Change #295: And at some point my point about that.

Speaker Change #295: We're supposed to get them.

And of course, the management in Castilla <unk> on him, but he's doing you're woken up and find out what are they put opening today are of course are adequate to come down at all.

Speaker Change #295: Sounds good.

Speaker Change #295: Dave about the Cogs and the movement in Castilla and working on Monday, the 19th.

George Arthur Kelly: I will put this part on the same page. Before we go into the specifics of, you know, the cost management efforts that we've been making, we just wanted to sort of, provide a level of understanding of labor. One thing is that we've always seen labor and COGS as a combined line item.

Speaker Change #296: Well the portals in front of us.

Speaker Change #297: St Pacings for cycling, Switzerland, before we go into the specifics.

Unknown Executive: Before we go into the specifics of the cost management, we've been making it's worth it to sort of provide. We've always seen labor and cost as a combined line item. We don't, we don't see necessarily labor going up or down into new performance of our performance, just because that can shift materially based off of the geography. So, for the last few years, we've gone from just two to three units, and he's going to have many more units, which are obviously a more expensive market than Texas. And so labor cost going up is not a crime.

Speaker Change #297: The cost management efforts.

Speaker Change #297: Been making just wanted to sort of.

Speaker Change #298: Provide level it makes it a roll on the same page in terms of the understanding of labor.

Speaker Change #299: One thing is we've always seen waiver and Cogs as a combined line item. We don't we don't see necessarily waiver going up or down is indicative of the performance of our performance just because.

Speaker Change #300: That two shifts materially based off are based off of the geographies.

Benjamin Porten: We don't necessarily see labor going up or down as indicative of performance just because that shifts materially based on the geographies that we've been opening in. So over the last few years, we've gone from just two, two, three units on the East Coast to having many more units on the East Coast, which is obviously a more expensive market than, say, Texas. And so labor costs going up is not a surprise.

Speaker Change #300: Last few years, we've gone from just two two per unit for the east coast to having many more units on the east coast, which are obviously are more expensive market and pay taxes, and so labor costs going up or not surprise you.

Unknown Executive: The other factor is that the physical point for you know, we are surprised that the year-to-date is elevated labor relative to fiscal 23, just given the shirt-on pre-opening, the shirt-on pre-opening from the associated pre-opening labor costs. And then, George, on the G&A side, we're continuing to execute really well there as we have in the last couple of years, continuing to have to think strategically about hires, thinking about contracts that we have. It's really the basics of what we've been doing, and we haven't changed anything on the G&A side, and I think that you can see that significant leverage that we had.

Speaker Change #300: The other factor would just be for fiscal 'twenty four.

Benjamin Porten: The other factor we just need for fiscal point four. You know, we aren't surprised that the year to date has elevated labor relative to fiscal 23, just given the sheer number of store openings and the associated pre-opening labor costs.

Speaker Change #300: We aren't surprised that the year to date is elevated labor relative to fiscal 'twenty three just given the sheer number of preopening.

Speaker Change #300: The sheer number of store openings and the associated Preopening labor costs.

Benjamin Porten: And then, George, on the G&A side, we're continuing to execute really well there, as we have in the last couple of years, continuing to have people think strategically about hires, and think about the contracts that we have. It's really the basics of what we've been doing, and we haven't changed anything on the G&A side. And I think that you can see the significant leverage that we have. I did mention there was a $600,000 litigation accrual in there as well, but still leverage.

Speaker Change #300: And then.

Speaker Change #300: George on the G&A side, we're continuing to execute really well there as we go as we have in the last couple of years.

Speaker Change #301: Can you and are happy to think strategically about hires thinking about contracts that we have.

Speaker Change #301: The basics of what we've been doing and we havent changed anything on the G&A side I think that you.

Speaker Change #301: You can see that significant leverage.

Benjamin Porten: So we're hitting on a lot of cylinders when it comes to the G&A side, and we're just going to continue to do that. [inaudible] This is different from the previous tech initiatives. It's not something you have to wait for; it's something you can do right away. I'm really looking forward to it.

Unknown Executive: I did mention there was a $600,000 litigation accool in there as well, being able to still leverage. So, we're hitting on a lot of cylinders when it comes to the G&A side, which can continue to do that.

Speaker Change #301: I did mention there was a $600000 litigation accrual in there as well the number still leverage so well.

Speaker Change #301: We're hitting on a lot of cylinders when it comes to the G&A side, where it's going to continue to do that.

Speaker Change #301: So that's what I think are going to get it financed.

Speaker Change #301: Youre welcome.

I think that.

Speaker Change #301: What's your thoughts on again to look at it. So it seems to go on living can jump in I think it can help thinks another option of course, because I didn't.

Speaker Change #301: So I don't know if it's controllable okay that begins to recover for the Jay project Okay.

Unknown Executive: I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, We have all of the technical issues that we've just seen about what we've recently implemented, as well as the ones that are coming up.

Speaker Change #301: Jenny.

Okay.

Speaker Change #301: Well quite a lot.

But what I'm wondering.

Speaker Change #302: Medical, but then I think in Ecuador.

Speaker Change #302: I'm not putting it to work with respect to sort.

Speaker Change #303: To put up with my prepared remarks.

Speaker Change #303: Even with it I think that's fair.

Let me give a lot excuse limited for a firm the nineties, Oklahoma in Boston.

Speaker Change #304: Pre opening today about Brooklyn, Uzi Volvo harmony.

Speaker Change #306: My feeling is like I think when you Jessica.

Speaker Change #305: I am a bit and what else you have to book or anything like that.

Benjamin Porten: In terms of the restaurant level opportunities, just to give a couple that we're the most excited about, since we saw the deceleration in April, this has really been a core effort among the executive team. So, one thing that we've been able to do is streamline the back-of-house operation. So, right now, we've historically used four NAIC stations. We were able to streamline that into three, which gets you a HICAP reduction. And what's really great about this operational streamlining is, unlike our tech pipelines, it isn't reliant on hardware. It isn't reliant on software.

Speaker Change #305: Right.

Speaker Change #307: Yes, sorry in terms of the restaurant level opportunities.

Speaker Change #307: Dave.

Speaker Change #308: A couple that we're the most excited about that.

Speaker Change #309: Since we saw the acceleration in April weakness has really been a key.

Speaker Change #309: Or.

Speaker Change #310: Among the executive team.

Speaker Change #310: One thing that we've been able to do is streamline the back of house operations. So right now we've been.

Speaker Change #310: Historically 48 stations, we are able to streamline that REIT, which gets you a head count reduction and what's really what's really so great about this operational streamlining is unlike our tech pipeline.

Speaker Change #310: Is it relied on hardware it isn't relying on software and it's not relying on certification and so there is nothing that we have to wait until we had to figure out the process between half and so we're rolling it out system why didn't expect it to be.

Speaker Change #310: A standard part of our operational approach.

Benjamin Porten: And it's not reliant on certification. And so, there's nothing that we have to wait for. We just have to figure out the process, which we have. And so, we're rolling this out system-wide, and expect it to be successful. A standard part of our operational. We're really excited about that. Looking to Fiscal 25, as Jimmy mentioned in the opening remarks, we've had a catalytic effect from infill. We also have compensatory benefits. One example would be for infill markets; you don't need to bring people in; you can use internal promotions from the existing restaurant to staff, and leadership of the new restaurant. And so the pre-opening costs associated with an infill are meaningfully lower than the pre-opening costs associated with a new market.

Speaker Change #310: Hi.

Speaker Change #310: In Q4, and so we're really excited about that looking to fiscal 'twenty five as Jimmy mentioned in the opening remarks.

Benjamin Porten: And so that will be a very meaningful tailwind in terms of pre-opening labor costs, which obviously falls into the overall labor cost. And on top of that, we have all of the tech initiatives that we've just mentioned, both of what we've recently implemented, as well as the ones that are coming up. And so, both in terms of the CNAs that Jeff just discussed and the rationale of the market, we're very, very committed to that and our ability to continue leveraging and continuing to maintain 20% restaurant level operating top quality. Okay, understood. And then just one last quick one. Ben, I think you mentioned putting in place a reservation system. Yeah, you test it at like, what does it look like if you've tested it?

Speaker Change #311: We have well we've had a kind of like agent for dental. We also benefit. We also have compensatory benefits. So one example would be per infill markets you don't.

Speaker Change #312: You can bring in.

Speaker Change #313: Don't need to bring people would use internal promotions from existing restaurants to staff the leadership of the new restaurant and so the preopening costs associated with an indoor meaningfully lower pre opening costs associated with the new market and so that will be a very meaningful tailwind in terms of pre opening labor cost, which obviously falls into the overall labor wise.

Speaker Change #314: My friends like.

Speaker Change #315: Whatever happens locally so that they can know honeywell.

Speaker Change #316: I don't even know.

Speaker Change #316: That's number one.

Speaker Change #317: On top of that we have all of the tech initiatives.

We just spoke about.

Speaker Change #317: We've recently implemented as well as the ones that are coming up.

Unknown Executive: And so both interested in the justice process and the rest of the market. We're very, very confident in our ability to continue leveraging and continue to maintain 20% of our national operating top margins. Okay, understood.

Speaker Change #317: So both.

Speaker Change #317: The justice discussed and the relevant.

Speaker Change #317: The markets were very very confident in our ability to continue leveraging it and continuing to maintain a 20% restaurant level operating profit margins.

Speaker Change #318: Okay understood and then just one last quick one then I think you mentioned a.

Unknown Executive: And then just one last quick one. Ben, I think you mentioned putting in place a reservation system. Yeah, you test at like what? What does it look like if you've tested it, and how much inventory do you plan to make available to reservations? So yeah, this is going to be really tricky and going to eat occupied most of my, my, you know, thinking hours for the next couple of months. But this is a system that's already in place in Japan. And so it's, you know, rigorously tested from a tech perspective. That being said, you know, working out the inventory of available seats, you know, just the overall operations.

Speaker Change #319: Putting in place your reservation system.

Speaker Change #319: Yeah.

Speaker Change #319: What does it look like if you've tested it and how much inventory do you plan to make available to reservations.

Benjamin Porten: And how much inventory do you plan to make available to reservations? So yeah, this is going to be really tricky and is going to occupy most of my, you know, thinking hours for the next couple months. But this is a system that's already in place in Japan, and so it's, You know, rigorously tested from a tech perspective. That being said, working out the inventory of available seats, you know, just the overall operations that that's going to be the harder part. We have to.

Speaker Change #319: So yeah.

Speaker Change #319: This is going to be really tricky and Aki.

Speaker Change #319: Occupied most of my my thinking hours for the next couple of months, but this is a system that's already in place in Japan and so it's.

Speaker Change #319: Rigorously tested from a tech perspective that being said he working out the inventory of available seats.

Speaker Change #319: The overall operations.

Unknown Executive: That's, that's going to be the harder part. We have members in the current Japan, IT team actually coming next week, specifically to work on this. It's a really, really high priority. And I, you know, it is my personal responsibility to be able to give you a meaningful update on the next call. So please don't worry about that. Yeah, the other, one of the other reasons that we're so excited about the reservation system, besides, you know, it can be a feature that I personally would love to get. Like the operational streamlining, this is something that requires, you know, big hardware changes where certain restaurants can't do it.

Speaker Change #319: That's going to be the harder part.

Speaker Change #319: <unk>.

Benjamin Porten: Members of the Cura Japan IT team are actually coming next week, specifically to work on this. It's a really, really high priority. And, you know, it is my personal responsibility to be able to give you a meaningful update on the next call, so please look forward to that. First of all, if you fix the U.S. operation, it will be adjusted, but you don't need a certificate or anything like that, so we're really looking forward to you being able to do it as soon as possible.

Speaker Change #320: Members of encourage Japan, ITK actually cutting net.

Next week, specifically to work on this it's a really really high priority.

And it's.

Speaker Change #321: It is my personal responsibility to be able to give you a meaningful update on the next call. So appreciate that.

Speaker Change #322: Does that bother you with a little different Alastair.

So I think that could look like.

So.

Speaker Change #323: Hi, good evening.

Benjamin Porten: Yeah, one of the other reasons that we're so excited about the reservation system, besides it being a feature that I personally would love as a guest, like the operational streamlining, this isn't something that requires, you know, big hardware changes where certain restaurants can't do it. It doesn't require a certification process where we can't put a firm timeline on something because it's out of our control.

Speaker Change #323: Yes.

Speaker Change #324: One of the other reasons that we're so excited about the reservation system besides that.

Speaker Change #324: I personally love as a guest.

Speaker Change #324: Like like the operational streamlining this isn't something that requires.

Speaker Change #324: Big hardware changes where at certain restaurants.

Unknown Executive: It doesn't require certification process where we don't, we can't put a firm timeline on something because it's out of our control. So this is really something that is within our power with something that we're working on actively. And we see as a meaningful letter. And so that is, that's for me. That's the part of my focus, and I will be fighting updates on that. Understood. Thank you.

Speaker Change #324: It doesn't require a certification process, where we don't we can't quite a firm timeline on something because it's out of our control. This is really something that is within our power. So that's something that we're working on actively and we see as a meaningful lever and so that is.

Benjamin Porten: This is really something that is within our power, something that we're working on actively, and we see as a meaningful lever. For me, that's a huge part of my focus, and I will be providing updates on that. Thank you. Thank you. There are no further questions at this time. I would like to conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation. [inaudible]

Speaker Change #324: For me that's a key part of my focus and I will be providing updates on that.

Speaker Change #324: Understood. Thank you.

Speaker Change #324: Thank you.

Sure.

Speaker Change #324: Yeah.

Speaker Change #324: Thank you there are no further questions at this time I would like to conclude today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.

Unknown Executive: There are no further questions at this time.

Unknown Executive: I would like to conclude today's teleconference. You may disconnect your lines at this time.

Unknown Executive: Thank you for your participation. Kura Sturnieks, Kura Sushi, Kura Sturnieks

Speaker Change #324:

Speaker Change #324: [music].

Speaker Change #324: Hum.

Speaker Change #324: Okay.

Speaker Change #324:

Speaker Change #324: Hum.

Speaker Change #324: [music].

Speaker Change #324: Mhm.

Speaker Change #324: [music].

Speaker Change #324: Hmm mm.

Speaker Change #324: [music].

Speaker Change #324: Hum.