Kura Sushi USA (NASDAQ:KRUS) reported fiscal second-quarter 2026 sales of $80.0 million and said stronger-than-expected comparable restaurant sales and significant labor leverage helped narrow losses, as the company reiterated its store growth plans and modestly raised full-year revenue expectations.
Quarterly sales growth driven by traffic and price
President and CEO Hajime “Jimmy” Uba called the quarter “quite strong,” pointing to “better-than-expected comparable sales and record-breaking labor leverage.” Comparable restaurant sales increased 8.6% versus the prior-year period, comprised of 4.3% from positive traffic and 4.3% from price and mix. Chief Financial Officer Jeff Uttz said effective pricing in the quarter was 4.5%.
Uttz added that comparable sales grew 7.2% in the West Coast market and 9.7% in the Southwest market. He also noted that beginning in the first quarter of fiscal 2027, Kura Sushi will no longer provide regional comparable sales breakdowns, saying regional trends are “largely determined by the timing of infills” and are not indicative of companywide trends.
Margins: labor improves sharply while food costs rise
Food and beverage costs rose to 30.4% of sales from 28.7% a year earlier. Uba said the company’s tariff situation was “largely unchanged,” adding that minor relief from changes in tariff types had been offset by commodity inflation. Both Uba and Uttz said the company continues to expect full-year cost of goods sold to be around 30%.
Labor was the standout, with labor and related costs falling to 30.7% of sales from 34.8% in the prior-year quarter, an improvement of 410 basis points. Uba attributed the performance to operational initiatives and sales leverage, calling it “unusual to see this level of impact in the first half of the fiscal year.” Uttz said the labor benefit was driven by operational efficiencies, pricing, and leverage, partially offset by low single-digit wage inflation.
In response to analyst questions, management cautioned against expecting the same level of labor leverage in the second half. Uba said the company is not expecting another 400-basis-point improvement in coming quarters, but he expects the company can improve labor year-over-year by about 150 basis points in the third and fourth quarters.
Other cost items included:
- Occupancy and related expenses were 8.1% of sales, compared with 7.9% a year ago.
- Depreciation and amortization was 5.2% of sales, compared with 5.1% a year ago.
- Other costs were 14.5% of sales, compared with 13.5% a year ago, driven by higher promotional and utility costs.
- G&A expenses improved to 13.7% of sales from 16.9% in the prior-year quarter; the quarter included $1.2 million of litigation expense versus $2.1 million a year ago.
Losses narrow; EBITDA improves; balance sheet remains debt-free
Kura Sushi posted an operating loss of $2.2 million, improving from an operating loss of $4.6 million in the prior-year quarter. Net loss was $1.7 million, or $0.14 per share, compared with a net loss of $3.8 million, or $0.31 per share, a year earlier.
On an adjusted basis excluding litigation expense, adjusted net loss was $502,000, or $0.04 per share, compared with an adjusted net loss of $1.7 million, or $0.14 per share, in the prior-year quarter.
Restaurant-level operating profit margin was 18.2% versus 17.3% a year ago. Adjusted EBITDA was $5.5 million, up from $2.7 million in the prior-year quarter. Uttz said the company ended the quarter with $69.7 million in cash, cash equivalents, and investments, and no debt.
Unit growth and development pipeline
Uba said Kura Sushi opened one restaurant during the second quarter in Frisco, Texas, and subsequently opened four more locations after quarter-end: Orange and Union City, California; Goodyear, Arizona; and Wellington, Florida. He said the fiscal 2026 openings are “shaping up to be just as strong as fiscal 2025,” which he described as the company’s strongest vintage in recent memory.
Uba said the company has 80 units under construction, and management reiterated its expectation for 16 openings in fiscal 2026. When asked about the cadence of openings, management said there are “a number of stores” the company hopes to open in the third quarter but suggested modeling a back-half weighting with the third quarter relative to the fourth quarter.
On longer-term growth, management said it believes a roughly 20% unit growth rate is achievable in fiscal 2027 based on an existing pipeline, while emphasizing that performance and unit economics remain key guardrails. Ben Porten, Senior Vice President of Investor Relations and System Development, said the company would reconsider growth if new units came in below expectations or below system-average economics, adding the company does not want unit growth targets to become “the tail that wags the dog.”
Marketing, reservations, and technology initiatives
Management pointed to renewed emphasis on intellectual property (IP) collaborations as a contributor to performance. Uba said the company’s Kirby collaboration was “just as successful as we had hoped,” and he credited Sanrio’s popularity as a driver of strong performance in February. The company’s current collaboration is with Jujutsu Kaisen, and upcoming partnerships include Tamagotchi and Honkai: Star Rail.
Porten told analysts that improved mix during the quarter was driven by guests eating more plates per person, which management interpreted as a reflection of successful IP promotions that encourage guests to reach giveaway thresholds.
Uba also discussed progress with Kura Sushi’s reservation system and rewards program initiatives. He said reward members using reservations have “much higher visitation rates” than those who do not, and he called wait times and wait time accuracy two of the company’s “top complaints” that the reservation system has helped address. After opening reservations to non-reward members, the company increased the number of reservations placed by more than 30%.
In the Q&A, management said its internal estimate is that the reservation system has contributed about 1% to sales and noted it has already delivered a headcount reduction.
On automation, Uba reiterated expectations to retrofit the majority of the roughly 50 restaurants that have space to accommodate dish robots by the end of fiscal 2026. He said the company’s fiscal 2026 labor-improvement goal did not assume benefits from dish robots, and he expects robots to deliver an incremental 50-basis-point labor benefit in fiscal 2027 versus fiscal 2026’s ending level.
Management also provided updates on other technology initiatives, including progress on “robotic dishwashers,” expectations to complete the first tranche of 10 installations by the end of the month, and U.S. approval for a “Sushi Slider” technology for new stores. Porten said the Sushi Slider is expected to be a margin opportunity for higher-volume restaurants on weekends, though not necessarily through direct headcount reduction.
Additionally, management described efforts to use technology to improve food consistency, including exploring a broth-management solution used in Japan and automation around searing items to improve consistency. Porten said the company is also exploring more guest-facing technology focused on “fun” as a way to drive traffic. On AI, Porten said he is chairing a new AI committee and referenced tools including a social media listening tool and a customer feedback aggregation tool called Tattle.
For fiscal 2026, Uttz reiterated guidance that now calls for total sales of $333 million to $335 million, 16 new unit openings, G&A at approximately 12% of sales excluding litigation expense, and restaurant-level operating profit margins of 18% to 18.5%.
Management also addressed why revenue guidance increased only modestly despite second-quarter results. Porten said guidance reflects the upside achieved in the quarter but does not extrapolate further, calling the approach “prudence” given uncertainty around geopolitical events.
Finally, Uba and several analysts noted Uttz’s departure from the CFO role. Uba thanked Uttz for his contributions, and Porten said the company is not rushing to fill the position, emphasizing the importance of the role and the intention to give the search “the appropriate attention.”
About Kura Sushi USA (NASDAQ:KRUS)
Kura Sushi USA, Inc operates Japanese‐style revolving sushi restaurants across the United States. The company’s concept centers on delivering a modern sushi dining experience by combining fresh ingredients with automated conveyer belt and plate‐return systems. Guests can choose from a broad menu that includes nigiri, sashimi, maki rolls, tempura, udon noodles and chef‐inspired seasonal dishes, all served directly from the conveyor belt or ordered on tabletop touchscreens.
Each restaurant integrates patented technology to ensure food quality and operational efficiency.
