Kura Sushi entered its fiscal third quarter facing softer guest traffic and higher costs from tariffs on imported ingredients.
Yet the revolving sushi chain delivered one of its strongest margin performances in recent years thanks to operational efficiency instead of price hikes
The company reported Q3 restaurant-level operating margins of 19.1 percent, up 90 basis points from a year ago despite food costs climbing roughly 200 basis points because of tariffs. Adjusted EBITDA increased more than 20 percent to $6.6 million, while adjusted EBITDA margin improved 40 basis points to 7.7 percent. Same-store sales slipped 0.4 percent as a 5.1 percent decline in traffic was largely offset by a 4.7 percent increase from price and mix. “Our ability to improve profitability in a challenging environment speaks to what we do best—responding rapidly to control what we can control,” CEO Jimmy Uba said during Kura Sushi’s Q3 earnings call.
William Blair analyst Sharon Zackfia wrote that the company still has a path toward roughly 300 restaurants generating approximately $1.3 billion in sales over time, supported by healthy restaurant-level margins and continued expansion. Revenue rose to $85.9 million from $74 million a year earlier as the company continued an aggressive expansion strategy, opening seven restaurants during the quarter and bringing its total to 91 by quarter end. Three more locations have opened since then, leaving Kura Sushi on pace to reach its target of 16 new restaurants this fiscal year and maintain unit growth above 20 percent.