Kura Sushi USA, Inc. (NASDAQ:KRUS) Q3 2023 Earnings Call Transcript

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Joshua Long: Great. That’s very helpful. One last quick one for me and then I’ll hop back in the queue. When we think about kind of the marketing efforts. I think then in prior calls, you’ve talked about the opportunity to optimize your awareness to drive accessibility and it’s been more about managing the current spend and again, optimizing versus adding dollars to the marketing pipeline. Can you square that off with some of the commentary you had in terms of the 3Q numbers that you just reported in terms of marketing kind of stepping up, it sounds like, is that kind of a one-time 3Q dynamic or how should we think about marketing and spend and then the overall kind of progress against our initiatives that driving awareness and optimizing the brand visibility?

Jimmy Uba: [Foreign Language] [Interpreted] So Josh, I think what you’re referring to is the comment in the other cost line, where we mentioned marketing costs being what are the drivers. But really, the marketing costs may be incremental by 10 basis points, 20 basis points, it really wasn’t meaningful. As you mentioned in the past earnings calls, the new marketing strategies, particularly the targeted advertising [Technical Difficulty] Google’s many channels, that’s really just been a reallocation of marketing dollars. And as we’ve seen with the traffic performance, particularly in the last two quarters, we’ve been exceptionally pleased. We think our marketing dollars are moving very effectively. And so yeah, we don’t expect a big step-up or anything like that in terms of marketing spend in future – in any time in the near future. We’re very pleased with the performance.

Joshua Long: Understood. Thanks very much for the time.

Jimmy Uba: Thanks, Josh.

Operator: Thank you. Our next question comes from Sharon Zackfia with William Blair. Please proceed with your question.

Sharon Zackfia: Hi. Good afternoon. I wanted to touch on development because it’s still a pretty wide range implied for the fourth quarter, anywhere between three to five new openings. And I know you’ve opened one so far. I guess, are you more comfortable at the lower end or higher end? I mean where is the status of that construction? I know everyone’s been battling kind of permitting and delays and so on. So I’m just curious kind of where your comfort level is on hitting maybe the higher end of that?

Jimmy Uba: [Foreign Language] [Interpreted] So the nine and 11 number that we shared, we’re extremely comfortable with. Of the seven units under construction that we mentioned, most of them are pretty far along construction they’re in the back half. And so hitting that higher end and certainly not outside of the moment possibility. For us to hit the lower end, I think, is a lot unlikely. It would really have to take sort of unprecedented delays — and so yeah, I’d say we’re very confident about the quality of our pipeline for the remainder of the quarter. And so that nine to 11, we’re very confident in the number of units that we’re already in the first week of July. And so the impact that the subsequent units can have in terms of the impact of fiscal ’23 revenue, it’s kind of beyond order of a month or less.

And so that’s not going to be super substantial. But that being said, our revenue guidance had baked that in. And so both in terms of revenue guidance and the unit pipeline, we’re extremely comfortable with the numbers that we shared with discreet (ph).

Sharon Zackfia: Thanks for that. And then I know, for June, you talked about kind of the changes to the Waitlist algorithm, being a positive. I’m curious if there’s any way to quantify that. And as you’ve had this in test with some locations longer, is that a benefit that kind of builds over time or is this something where you kind of manifest that improvement and kind of the lunch and/or a late-night day parts pretty quickly?

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