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Gas Prices Squeeze Kura Sushi: Traffic Dips, Profits Rise
10 Jul
Summary
- High gas prices reduced customer traffic by 5% in the recent quarter.
- Construction delays will cause a loss of approximately six revenue months.
- Restaurant-level operating profit increased by 90 basis points despite higher costs.
This past spring, Kura Sushi saw a 5% decrease in customer traffic, resulting in a 0.4% dip in same-store sales, largely attributed to elevated gas prices. These prices peaked nationally in May, impacting Kura's California locations significantly. While traffic has begun to recover as gas prices eased, recent construction delays on four new restaurants are projected to cause a loss of about six revenue months.
These operational challenges led Kura to revise its fiscal year revenue forecast downwards. Nevertheless, the company achieved a 90 basis point increase in restaurant-level operating profit, reaching 19.1%. This improvement stemmed from more efficient operations and labor management, which offset a 200 basis point rise in the cost of goods.
Kura opened seven new restaurants during the quarter and expects to add 16 new locations by fiscal year-end, bringing its total to 91. For the quarter, total sales reached $85.9 million, up from $74 million year-over-year. The company now anticipates restaurant-level profits at the high end of its previous range.
