Kura Sushi USA, Inc. Price & Performance (KRUS)

Thank you, operator.

Good afternoon, everyone, and thank you all for joining.

By now, everyone should have access to our fiscal second quarter twenty twenty five earnings release. It can be found at www.kuraissu.com in the Investor Relations section. A copy of the earnings release has also been included in the eight ks resubmitted 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 defined under the Private Securities Litigation Reform Act of 1995. These forward looking statements are not guarantees of future performance, and therefore, you should not be under a reliance on them. These statements are also subject to numerous risks and uncertainties could cause actual results to differ materially from what we expect. 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 condition. Also during today's call, we will discuss certain non GAAP financial measures, which 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 the reconciliations to comparable GAAP measures are available in our earnings release. With that out of the way, would like to turn the call over to Jenny.

Thanks, Ben, and thank you to everyone for joining us today. We had a very productive second quarter. Making headway on the new market opportunities. Represented by our success in Bakersfield. Building out our IP pipeline and beginning testing or rollout of several system projects that have long been in development. New restaurant openings are going exceptionally smoothly with 11 units opened to date, and another six under construction. [indiscernible] was an unexpected sales pressure We are pleased overall with the quarter. Due to the great progress we made across our initiatives. Total sales for the fiscal second quarter was $64,900,000 representing comparable sales growth of negative 5.3%. With price and mix of 3.2%. Offset by negative traffic of 8.5%. We knew coming into the quarter that Q2 will be the most difficult comparison of the year, to the lapping of last year's successful Peanuts IB campaign without an IB collaboration during the current Q2. But this was compounded by the unexpected weather impact. We experienced in January and February with wildfires followed by flooding in Southern California and cold waves across many of our other markets. Cumulatively, we estimate that Q2 weather represented a comp headwind of 400 to 500 basis points.

Cost of goods sold as a percentage of sales improved by 90 basis points over the prior year quarter, due to pricing and supply chain initiatives. Labor as a percentage of sales increased by 180 basis points to sales deleverage caused by weather and year over year labor inflation. ETH level operating profit margin was 17.3% as compared to 19.6%. In the prior year, to the previously mentioned sales deleverage.

Restaurant openings are proceeding smoothly with three new unit openings during the second quarter. Berkeley, California Fort Worth, Texas, and Parramas, New Jersey.

Subsequent to quarter end, we opened the units in Scottsdale, Arizona, [indiscernible] We are very pleased with the performance of this year's openings and believe fiscal twenty twenty five has the potential to be one of our strongest classes. In our last call, we had mentioned the success we've seen with our Bakersfield California restaurant opening [indiscernible] put it to report that Bakerfield is performing just as well as when we just spoke. As a reminder, up until beta feed we are only open to reference in the top 40 or 50 DNAs. [indiscernible] is significant for us because it represents one hundred and twentieth largest GMA. The United States, causing us to de evaluate our previous considerations for what we constitute a viable market. Decent visits to markets like Birmingham, Tulsa, Boise, and Oklahoma City have all supported our early enthusiasm. Along with the greater further space potential, these markets are especially exciting to us. As new markets have no impact on cannibalization, which we estimate to be approximately 4% comp headwind. For the current and prior fiscal years. With the progress that our development team is making, we believe that we will be able to return to a fiftyfifty split of new and existing markets [indiscernible] which we believe will serve as a comp tailwind.

While the lack of IT collaboration in the prior quarter made for we believe to be the most difficult year over year comparison in fiscal twenty twenty five, [indiscernible] allowed us to focus our efforts on building a great pipeline and I'm extremely pleased to say that in fiscal 'twenty six, we will not have any gaps between IV collaboration campaigns and expect to have seven or eight collaborations which will be a record for us. We've also been developing our [indiscernible] over the course of this fiscal year, [indiscernible] are very much looking forward to seeing the combined impact of these campaigns and IP collaborations beginning in May.

Lastly, I would like to touch on the progress we've made in system development. The rollout of our new order panel software is proceeding smoothly and we expect pre roll out within the fiscal year. This new order panel software is supplemented by a redesigned push to trigger Mr. Fleischtorm, which is much more intuitive than the current model. This redesign is meaningful as our servers spend several minutes explaining how the old missile fresh model works when we're seeking first time guest. The new touch panel software includes an optional introduction video [indiscernible] which in conjunction with the updated Mr. Fred Stones, eliminates the need for our servers to go through their inter explanation which we expect will reduce front of house work loss. To coincide with our upcoming collaborations, we are rolling out improvements to our BigRepone system as well. Guest soon be able to arm their second prize capsule after eating 25 plates instead of the current 30 plates.

Considering our average party sizes, [indiscernible] We believe that 25 plates is a more realistic reach than 30 plates and that this has the potential to drive ticket growth while also improving guest satisfaction. Especially families with two children.

Finally, I would like to share our progress on what we are most excited about. The reservation system. We began testing in February and have since expanded it to three reference including stress testing at one of our highest volume restaurants. The reservation feature has been very well received by guests, and it's system wide rollout is now one of our top priorities due to its potential as a traffic driver. With the old waitlist program, if you have fixed plans like going to see a movie, Kura is off the table. Because you can't predict how long the line will be or when your actual sitting will be. By giving guest control, through reservation slots, our hope is to open up new occasions for guests to visit Kura.

Additionally, historical attrition rates for Kura Kura guests in Dine are between 20% to 25%. And so the ability to capture these guests represents a meaningful combo opportunity.

While it's too early for us to provide any quantitative commentary, shoulder period sales did increase with the implementation of the reservation system in Kura Japan's restaurants. Lastly, reservations are accessed through the ReWAS program, [indiscernible] are excited to see what the rollout does for membership business relations.

As you can see, we've been very hard at work. Many of these efforts have been long in development and it's been great to see so many projects be approved one one after another. I'm deeply grateful for the combined efforts of all of our team members for making this possible. Thank you everyone. I'll hand it over to you to discuss our financial results and liquidity.

Thank you, Jimmy.

For the second quarter, total sales were $64,900,000 as compared to $57,300,000 in the prior year period. Comparable restaurant sales performance compared to the prior year period was negative 5.3% with regional comps of negative 1.5% in our West Coast market negative 8% in our Southwest market. Turning now to costs. Food and beverage costs as a percentage of sales 28.7% compared to 29.6% in the prior year quarter largely due to pricing and supply chain initiatives. Labor and related costs as a percentage of sales were 34.8% as compared to 33% in the prior year quarter. This increase was largely due to wage increases and sales deleverage. Occupancy and related expenses as a percentage of sales were 7.9% compared to the prior year quarter's 6.9%. Due to sales deleverage Depreciation and amortization expenses as an percentage of sales were 5.1% as compared to the prior year quarters 4.7%. Other costs as a percentage of sales were 13.5% as compared to the prior year quarter's 14.3%. Largely due to lower marketing, travel, and recruiting costs.

General and administrative expenses as a percentage of sales were 16.9% compared to 14.3% on the prior year quarter due to a $2,100,000 litigation settlement expense. Operating loss was $4,600,000 compared to an operating loss of $1,700,000 in the prior year quarter due to sales deleverage, and litigation costs.

Income tax expense was $38,000 compared to $50,000 in the prior year quarter. Net loss was $3,800,000 or a negative $0.31 per share compared to a net loss of $1,000,000 or a negative $09 per share in the prior year quarter. Adjusted net loss was $1,700,000 or negative $0.14 per share compared to adjusted net loss of $1,000,000 or negative $09 per share in the prior year quarter. Restaurant level operating profit has a percentage of sales was 17.3% compared to 19.6% the prior year quarter largely due to sales deleverage. Adjusted EBITDA was $2,700,000 as compared to $2,900,000 in the prior year quarter. Turning now to our cash and our liquidity. At the end of the fiscal second quarter, we had 85,200,000.0 in cash and cash equivalents and no debt. And then lastly, I'd like to reiterate our guidance for fiscal year twenty twenty five. We expect total sales to be between $275,000,000 and $279,000,000 We expect to open 14 units maintaining an annual unit growth rate above 20%, with average net capital expenditures per unit of approximately $2,500,000 And we expect general and administrative expenses as a percentage of sales to be approximately 13.5%. And with all that, I'll now turn it back over to Jimmy.

Thanks, Jeff.

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 and A session, I may answer in Japanese before my response is translated into English.

Thank you. We will now be conducting a and answer session. If you'd like to ask a question, You may press star 2 to remove yourself from the queue. All participants using speaker equipment it may be necessary to pick up your handset before pressing the star keys. First question is from Andrew Charles from TD Cowen. Please go ahead.

Great. Thank you. Wanted to ask just about the performance through quarter. I think you talked about 400 to 500 basis points of inclement weather and the LA wildfire impact. I mean, did you see that improve from the trend improve from January through February? And if you're able to speak about kind of if that trend has further improved kind of the March and quarter to date frame, timeframe as well?

Thanks.

Thank you, Andrew, for your first question. Please allow me to answer in Japanese. Spain is not to answer it. Matsu Anno, thank you. [indiscernible] speaking to post weather. So, starting in March, performance has been very smooth. We were very pleased with it.

Things have are a little uncertain now with the tariff announcements. But up until then, we had remarkably smooth performance. In terms of the monthly cadence, January we had the wildfires, but February we had flooding. And so we didn't see any easing from January to February. And then beyond California, both in January and February, there were a lot of cold waves that impacted Texas and our Northeast restaurants. And so there were there was pretty meaningful weather pressure across both January and February.

Okay. That's helpful. And then Jeff, I wanted to ask about the margins. In the last call, you talked about 20% restaurant level operating profit margin could be achievable in '25 as well as labor leverage. Is that still on the table?

In terms of the 20% margins, through March, we were very, very confident we'd be to maintain that 20% margin for the full year That being said, we are seeing a lot more uncertainty with the tariffs, and so we have less visibility into that 20%, but that that absolutely remains our goal.

We came into the year expecting lower labor inflation of REX than what we've actually seen. Our expectation was low to mid single digits. What we've seen to date is high single digits. If we see no impact from if the tariffs have no impact on consumer confidence, there's no change in behavior, then we remain confident that labor will largely be in line year over year Now now with the uncertainty levering year over year, it's a bigger hurdle. That being said, we do have a lot of levers that are unique to ourselves. Mainly through our tech initiatives, whether it would be our new Mr. Fresh, or touch panels or greater sales leverage to increase traffic from the reservation system.

Great. Thank you. I'll pass it off.

Thank you, Andy. The next question is from Jeffrey Bernstein from Barclays. Please go ahead.

Great.

Thank you very much. Question is just on the broader consumer. I know at ICR in mid January, you talked about consumer being in a much better place. I know you mentioned just now that weather was a 400 to 500 basis point headwind. Just wondering whether there's any concern that maybe what appears to be in part weather is the masking of maybe an underlying slowdown in consumer spending. Sounds like you don't believe that was the case through March, but maybe something's changed in April. So just trying to get a sense or how to gauge your confidence that you really up until most recently haven't seen any change in consumer behavior when others seem to be talking about perhaps slowing consumer spending environment. Just wondering what metrics you look at just to give you that level of confidence. And then I had one follow-up.

Looking to Q2, beyond the weather, we were also lapping peanuts without an IP without an IP campaign. And so we we knew that it was gonna be the toughest comparison, and we don't introvert it as a slowdown of the consumer or our consumer. Whatsoever, especially given performance that we saw in March. Now that we're in April, post the tariff announcements, I mean, people's retirement accounts are being impacted with the stock market taking a hit. And so if there's just generally more uncertainty, and that would be the biggest reason that we didn't raise guidance for this quarter.

But we don't think that specific to us.

Understood. And then just to follow-up, you mentioned the tariffs.

It seems like you're referring to it in regards to a consumer headwind seemingly having pressure on markets and consumer confidence. Just wondering as you think about it from a cost side of things, I know in the past when I asked you've talked about how you have somewhat supply chain geographical diversity. And your ability to pivot. I'm just wondering how you think about your specific supply chain Seemingly, some products could potentially be coming from overseas Just wondering how you think about the tariff implications on your actual cost side of the business. Thank you.

Yeah, Jeff.

Hey, Jeff. It's Jeff. So, you know, everybody's been doing we've been using the last several days kinda scrambling to figure out what the implementation of these tariffs are going to have and what impact it's going to have on our business. And the answer, really short answer right now is that we really don't know yet, as we haven't had a chance to meet with our main suppliers and really figure out or determine how much of these tariffs they're going to be passing along to us. And on a pretty encouraging note, though we haven't had in-depth conversations with them, a couple of our top suppliers have already given us preliminary indication that they would be willing to share the impact of these tariffs with us. To some extent. But like I said, it's sort of been about a week. So we haven't been able to sit down with them and determine what that looks like. In terms of our overseas purchases, we know that when we look at our top purchases, as it relates to overseas, Japan is one of the top countries of origin in our supply chain.

And something that's very encouraging to us is we also know that the Prime Minister of Japan has expressed his willingness to come over and meet with president Trump to negotiate these tariffs. And We're hopeful that that's going to happen sometime in the near future. Also, to a lesser extent, purchased from Vietnam and when the birds news came out, I think Vietnam was one of the very first countries come out and say that they were interested in negotiating. So a couple of countries that we do purchase from overseas seem very willing to come to the table. So negative news of the terrorists coming out we have received a few positive bits of information as it relates to our suppliers. That we hope that once we get these lined up, we'll mitigate the impact to our company in the future.

Understood. That's very helpful. And just to clarify, I think you mentioned if not for April, [indiscernible] the April uncertainty has led you to keep your sales guidance as is rather than raising it. Which is encouraging. I'm just wondering, does that therefore mean you still kind of reiterate your expectations for positive comps for full year 2025 barring any significant change in consumer behavior?

I think the keyword is in you kind of said it barring any major changes in consumer behavior. If there are no changes in consumer behavior, absolutely, we remain confident that we can post positive comps for the full year. We've got a lot to look forward to. We've got strong IPs lined up from March from May onwards through the end of the year. We have sales tailwinds coming online with the reservation system, And so there is no change to consumer behavior, then certainly. We we expect that to be able to maintain positive comp or to achieve positive comps for the year. But that is you know, far from a certain deepest point in terms of whether or not consumers are going to change their behavior. And so we are not upgrading guidance at this point.

Thank you.

Thank you, Nidave.

The next question is from Jeremy Hamblin from Craig Hallum. Please go ahead. Thanks. I wanted to come back to the clarify the food basket and sourcing. Of your total food basket, what portion is domestically sourced or kind of the range that's domestically sourced versus sourced overseas.

So we haven't given that stated those numbers yet, but I will tell you Jeremy that one of your colleagues sell side analysts on this call put out a report a couple days ago that estimated him, and I will say that he is in the ballpark if you take a look at that.

K. And then I wanted to come back to the comments on wage pressure. And just get an understanding of the commentary about high single digit wage pressure Is that being driven by California or other geographies, given that you're lapping FAST Act here, it's a bit of a surprise that the pressure is quite that high. Now, certainly the employment dynamic may change. There may be more labor supply here.

In coming months, but wanted to see if you could provide a bit more color. [indiscernible] Yes, this is not a California issue or anything related to the FAST Act. This is something that we're seeing across markets. Whether it's because of statutory minimum wages We're seeing some come online as of July 1 as well, which was not the case in past years. And then just being competitive for the market. So this is in a California We we think it's always important to invest in our team to make sure that we best of class people representing ourselves at the restaurants. At the same time, we push ourselves as much as possible to work on these system initiatives so that we can keep our man hours at a minimum.

Got it.

And then lastly, just wanna come back to the cadence of new new unit openings. So you've opened eleven year to date, think you have another six or seven maybe in the pipeline. I know not all of those will get completed in FY 2025, but do you expect any more to be opened in Q2? I'm sorry, in in fiscal q three?

And then just in terms of thinking about the timing of when things might open in your fourth quarter? I know that in Q2, all of the openings happened in February. So even though you got three open, I wanted to just understand what the revenue contribution was given that I think from an operating week perspective, you only had like five or six operating weeks in which you had new units opened in that quarter. [indiscernible] So we've got one more scheduled opening for Q3. If you go on our website, you can see that we already have the opening soon language up. So that should be opening [indiscernible] In terms of q four, we we haven't updated our four TB to guidance. We very comfortable with being able to open two units. Should we be able to open both of those prior to the July call? That would be an opportunity for us to provide an update to guidance on the unit front. Right now, it's just construction is happening in one of the one of the constructions in a mall. And so that there's a level of uncertainty in terms of construction duration. There.

It's specifically in the it's it's in a food court. We're sort of like the centerpiece of the food court, but we've never had to do construction under those constraints before. Obviously, they're not shutting down the food court to to let us build our restaurant.

It's all overnight construction in that restaurant, so it it takes a little bit longer.

Great. Thanks so much for the questions. Taking the questions and good luck. Thank you, gentlemen.

Next question is from Matt Curtis from William Blair. Please go ahead.

Thanks, Catherine. I wanted to get back to the revenue guidance for a minute. Could you tell us what second half comp expectations you have embedded to get to the full year revenue guide?

Given that we generally don't give comp guidance with the increased uncertainty, this is certainly not easier for us to give comp guidance, but the revenue guidance does reflect our assumptions, both in terms of the accelerated openings that we've seen A lot of the fiscal twenty five openings outperforming our expectations, reflecting Jimmy's comments about it having the potential to be one of our strongest classes ever. [indiscernible] I we think you could be able to back out or back into our top expectations from the revenue guidance that we presented conjunction with the commentary on the unit, some discret Okay, got Thanks.

And I guess switching to something else. You mentioned some of the IT collabs will be starting in May. Could you give us any details around exactly what you have planned on the IP front in the second half of year?

Yeah. So the IP pipeline that we've been building is really the main thing that we are trying to change was having unsuccessful IDs. And so what we built out is we have some of our best ever hits from the past. Coming up. So you've got, you know, demon slayer. We have one piece, the peanuts. And then we we've been developing our relationship with Nintendo. So we have Kirby, which is one of their their major mascot characters coming up in fiscal twenty six. I'm personally a big Kirby fan. I'm extremely excited. I can't share anything else in terms of the fiscal twenty six pipeline, but we're very excited as Jimmy shared in the opening remarks We have seven or eight planned for fiscal twenty six a big part of our strategy. [indiscernible] sounds good. Thanks.

Thank you, Matt.

Next question is from Mark Smith from Leaf Tree Capital. Please go ahead.

Hi, guys. First question, sorry if I missed it.

Does the G and A guidance include the litigation expense?

Yeah, the guidance, we haven't changed our guidance as it relates to the litigation expense being part of that number. It is part of.

Okay. Perfect. And then second one for me, just as we think about tariffs and kind of build out, any idea outside of operations, maybe incremental costs on build out of of new restaurants at this point, especially any special equipment that you may be importing?

Sure.

So we do bring in a certain amount of special equipment from overseas, largely Japan and China. Our initial estimate in terms of incremental costs as it relates to the tariffs, we think in a worst case scenario is would be about $400,000 That being said, even with the potential increase in build out costs, this doesn't change our thinking at all in terms of our desire to maintain a 20% plus unit growth rate So as a refresher, 've AUVs of $4,000,000 our restaurant level operating profit margins of 20% against build out costs of $2,500,000 get us to cash on cash returns of 33%. We just mentioned the worst case scenario, would be a $400,000 increase. We think a $300,000 increase is [indiscernible] That only changes the unit economics equation by half a year in terms of payback period. And so it really doesn't change our appetite at all. We have $100,000,000 in cash and long term investments. We just renewed our revolver with the parent company with Kura Japan for $45,000,000 And so we're we're in a very strong capital position, and we're excited to able to make decisions based off of what are in the long term best interest of the company.

Great. Thank you, guys.

Thank you.

As a reminder, you would like to ask a Next question here is from JP Wellem from ROTH Capital Partners. Please go ahead.

Maybe if we could start sort of on the leverage on your side, understanding that the consumer environment is uncertain and certainly rapidly changing.

But was just hoping we could talk One on the reservation system. Did you give a timeline of when you would expect that to be fully rolled out? Then two, can you just talk about kind of the marketing and and maybe more also with the loyalty program? You know, what else can you kinda do there to help drive volume from your loyalty members? Yeah. So what we've shared publicly is that we expect to be able to roll out the reservation system system wide by the end of fiscal year. My or our goal is faster. We definitely want to be able to capture those the leverage of seasonality that we see in Q4. And so is one of our top priorities to achieve a full system online. In terms of the reward system, or the rewards program, we've got there are a couple things that we're really excited about. The first is that the the reservation system is accessed through the reward system, and so we know that's gonna be a pretty meaningful catalyst in terms of registrations. And as we've discussed on past calls, rewards members, are very valuable, both in terms of frequency and spend.

And so on that note, with the IPs that we have coming up, we know that we can do a lot of different things. You know, we've got giveaways and stuff like that, like done in the past and those are very meaningful levers for us.

Okay.

Understood. And then the second one would just be maybe more on a competitive note. You know, I I don't know how much kind of visibility you guys have, but any high level thoughts about some of your competitors and maybe how the tariffs might impact their business and more specifically kind of their pricing structure and and what it means kind of for the value delta that Kura provides relative to some of your competitors out there? We appreciate you bringing us up. As shocked as we were by the magnitude of the tariffs, We're certain that every other mom and pop sushi restaurant was just as shocked, if not more shocked. And as you probably guessed, we're we're in a much, much better position than them, and we believe that we can turn this into a competitive advantage and further widen the delta in terms of value between ourselves the typical sushi restaurant. So the first would be that we're in a very strong cash position. We just mentioned, we've got $100,000,000 on the balance sheet access to another $45,000,000 revolver. And so we're not in the same position as a mom and pop where they need to be making decisions about keeping the lights on and operational stuff like that.

We can really make what is decisions that are in terms of the best long term strategy. As Jeff had spoken to earlier, our vendors are already coming to the table indicating that they wanna work with us.

Our buying power is orders of magnitude larger than the typical sushi restaurant. They're probably we're probably one of the biggest fish buyers in the country And so that is something that is very different for us versus any of our competitors. And the last would just be all of the things that are unique to us, whether new initiatives that we're talking about, the IT collaboration, the experientiality, all those continue to work in our favor.

Or restaurant of operating profit margins, generally speaking, are above 20% or amazing. We're really happy with them. And so if there's some short term pressure on that that's something that we can tolerate. [indiscernible] were able to make decisions that are you know, not at the short term, but really the long term. And we're very grateful to be to have that strategic flexibility. To return to your initial question, absolutely, we this is going be a catalyst for widening of the value delta between ourselves and competitors, and we'll you know, [indiscernible] value proposition will be stronger than ever. Understood. Thank you for the detail. Best of luck going forward.

Thanks, JP.

Next question is from Todd Brooks from Benchmark Company.

Please go ahead.

Hey, thanks for taking my questions. Only a couple left here. If we can talk IP partnership, I I think you said the timing for the next one starts in May. And at one point, I think you were talking about one in Q3 and one to two in Q4, Does that imply when we get to May, we're running under IP partnerships for the balance of the fiscal year?

Yes. Okay.

Great.

And then I know when you talked about the pivot off of the kind of the six scheduled IP partnership, cadence, there was a desire to really focus on the more impactful partnerships A little surprised and encouraged to hear about seven to eight collaborations next year.

Is threshold and the hurdle of impactful still in place where we're very, very happy with the work that the marketing team has been doing. Q2 was a difficult comparison, but that bumped them the time to be able to put together this amazing IP pipeline. And so we think it was absolutely the right investment to make.

Okay. And then it kind of six week durations, are we pretty much always on then? We think about fiscal twenty six from an IP partnership?

My guess at this point is that it'll probably we'll probably have a couple one months collaborations, and that's how we get beyond the the six collaborations per year that we've done historically.

Okay.

Perfect. Thanks. And then the other one was just a follow-up on the system. I think you said you're in test now.

In three units.

And at least one of the ones in test is one of the really higher volume units. Just wondering and not looking for quantification, but the consistency of the lifts that you're seeing from the system, either relative to your expectation or relative to what Kura Japan saw when they implemented it The consistency of lifts that you're seeing and how that's fueling the desire to get this rolled out even more quickly than the end of the fiscal year? And is the bandwidth there to really like, I don't know how fast you can roll these out now that you've tested in three. Is this still iterative process where you go to another five stores and then but 's the unlock to kind of hit the year end goal for the for the reservation system?

Yeah.

So to start in terms of guest response, so the the high volume restaurant that we referred to was Austin. I was there for the first week we launched it in Austin. The only because this isn't system wide yet, the only marketing that we've been able to do is through the rewards program. If you set your favorite restaurant as, say, Austin, then you would have gotten an email saying, we now have reservations. And I I was watching all the guests coming in, and it seemed like the first day it was a quarter to a third of people were coming in holding up their phones with their reservation numbers. [indiscernible] was genuinely blown away by that weekend. It was really like every other party had a reservation. And so for these restaurants that are super busy that have long lines, the value is immediately obvious to our guests. And so that got us that much more excited, made it really clear to us that there's a concrete upside that we could expect and that's one of the other reasons that we putting everything that we can into accelerating rollout. In terms of the unlocks, I'd say that the biggest parts are behind us.

It was really just getting text stability and making sure that we're we're able to figure out an operational flow that made sense. And that's largely been hammered down. And so now it's breaking up into teams and we're gonna be having simultaneous rollouts across the country. Okay, great. Thanks, Ben. Appreciate it.

Of course.

The next question is from Jim Sanderson from Northcoast Research. Please go ahead.

Thanks for the questions. I wanted to go back to the quarterly performance. Did you break down same store sales between traffic price and mix? Or could you?

Yes. We can. So total comp was minus 5.3. And that was minus 8.5% traffic. And 3.2% price and mix.

All right. And again, any March was meaningful improvement over that trend on the traffic line. Is that the right way to look at In terms of performance and looking at it on an absolute basis, we're very pleased with March performance. That being said, if we're talking about comps, last year's March was strong enough that was so strong that that's really what prompted our revenue guide raise last year. And so March is really a tough month to compare ourselves against. But ex that, we were very, very happy with March.

All right. And then a question on unit development. Can you provide a little bit more insight on what your development pipeline is looking like in The United States beyond fiscal twenty five, maybe indications of lease signing or sites you've identified, anything that would give us a sense of commitment you've got beyond current fiscal year?

So generally speaking, you could assume that the foreseeable future, we're going to maintain that 20% plus unit growth rate For fiscal 'twenty seven, expect to be able to get back to that fifty-fifty split between existing and new markets [indiscernible] the confidence behind that statement comes with the number of LOIs that we have under negotiation negotiation and the number of leases that we already have executed.

All right. And just one last question on tariffs Is it possible for you to move to a U. S. Only supply chain to source input costs? Over the next year, let's say.

It would probably be difficult to shift entirely to domestic. I mean, you can't catch tuna in Lake Erie. So there's just geographic biological limitations there. But what we can do is we can adjust between different sort different buyer countries. And so we're gonna be keeping a very close eye over how the tariffs shake out over coming months. And if there are countries that we're currently working with that are less advantageous, And there are options for ingredients of comparable quality better tariff rates, then certainly that's something that we pursue. One thing that we've been working over the last couple of years that is going to become critically important now is our relationships, not with just our broad line suppliers, but with the direct vendors. We we we supply chain team goes to, you know, they're traveling across the world negotiating directly with the providers And so it's a very different situation from a mom and pop where they have their options are limited to what the Broadliner is offering. We bring what we want to the Broadliner. And so again, it's just a completely different story in terms of economies of scale. And as unfortunate as this is, [indiscernible] this is gonna hurt our competitors a lot more than it's gonna hurt us.

Understood. Understood. Thank you very much.

This concludes the question and answer session, as well as today's teleconference. Thank you for your participation. May disconnect your lines at this time.