Kura Sushi USA Inc (KRUS) 2025 Q4 法說會逐字稿

Good afternoon ladies and gentlemen, and thank you for standing by. Welcome to the Kura Sushi USA 4th quarter 2025 earnings call. At this time, all participants have been placed in a listen-only mode, and the lines will be open for your questions following the presentation. Please note that this call is being recorded.

On the call today, we have Hajime, Jimmy Uba, President and Chief Executive Officer, Jeff Yo, Chief Financial Officer, and Benjamin, senior Vice President, Investor Relations and System Development.

And now, I would like to turn the call over to Mr. Porkin. Please go ahead.

Thank you, operator. Good afternoon, everyone, and thank you all for joining. By now, everyone should have access to our fiscal fourth quarter 2025 earnings release. It can be found at www.ursoi.com in the investor relations section. A copy of the earnings release has also been included in the AK we submitted to the SEC. Before we begin our formal remarks, I need to remind everyone that part of our discussions today will include forward-looking statements as defined under the Private Securities Litigation Reform Act of 1,995. These forward-looking statements are not guarantees of future performance, and therefore you should not put undue reliance on them.

These statements are also subject to numerous risks and uncertainties that 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, I would like to turn the call over to Jimmy.

Thank you, Ben, and thank you to everyone for joining us today.

I'm incredibly proud of what our team achieved during fiscal 2025 as we delivered our strongest class of restaurant openings in recent memory, adding a record of 15 new locations.

We also successfully managed our corporate year and expenses, resulting in an annual audacity with a growth of over 30%.

These accomplishments are particularly significant given the volatile consumer environment and the tariff pressures we navigated throughout the year, which have negatively impacted our top-line results and the restaurant level margins.

Nevertheless, our team remains resilient, and we continue to believe that our focus on execution has positioned as well for continued growth in fiscal 2026.

Total sales for the fiscal fourth quarter was $1779.4 million representing comparable sales growth of 0.2%, led by traffic growth of 0.5% and partially offset by plus and mix of negative 0.3%. Cost of goods sold as a percentage of sales was 28.4% as compared to the prior year quarters, 2028.5%. I am exceptionally proud of our purchasing team who negotiate tirelessly to mitigate higher ingredient cost so we can continue to provide the best value possible for our guests.

Labor as a percentage of sales improved by 30 basis points to 31.1% as compared to the prior year period of 31.4%. Meeting the expectations for year over year improvements for labor in Q4 that we had shared in the previous earning scores.

In spite of ongoing labor inflation, we have been able to offset these cost increases through aggressive operational initiatives and system implementations.

I have some exciting news on this front that I will discuss shortly.

Turning to real estate, we closed the fiscal 2025 with three store openings in the fourth quarter.

The Woodlands, Texas, Salt Lake City, Utah, and Boulder, Colorado.

Salt Lake City and the Boulder are the first units in their respective markets, and as with every new market we've entered to date, have been a very strong performance.

Subsequent to quarter end, we opened 3 units, Acadia and Modesto in California and Freefold, New Jersey.

With another 6 units under construction, the new fiscal year is off to a great start.

We expect to open 5 to 6 units in the first half of the fiscal year and open the remaining units in the back half of the year.

I'm excited to announce we are in the process of introducing status tiers to our reverse program.

We're currently performing exploratory research to determine what kind of incentives resonate most strongly with our guests.

This marks the first major update to our rewards program since we introduced the punch.

We are very excited to take our rewards program to the next level and look forward to keeping you updated on its progress.

On system development, we have largely completed the revisions we have been working on for the reservation system.

With these updates completed, we expect to begin marketing the reservation system to non-reward members beginning in the fiscal second quarter.

As you may have guessed when I mentioned this earlier, I'm extremely pleased to announce that we have secured commercial use certification for our robotic dishwasher and are currently in the process of installing these machines in eligible restaurants.

As a reminder, our initial expectation was that the robotic dishwasher opportunity would be largely limited to new openings, with only 5 to 10 restaurants eligible for retrofitting.

But now we expect to be able to retrofit approximately 50 restaurants of our existing 82.

We expect to have the majority of the retrofit rollout during this fiscal year and to see labor improvements of approximately 50 basis points for restaurants that receive the retrofits.

Fiscal 2025 was defined by incredible cross-departmental efforts to do everything that we could to mitigate an unfriendly environment.

Our commitment to growing corporate profitability remains unabated as demonstrated by the strides we've made in other city EBITA and other settlement income.

We have made great strides in honing our unit expansion strategies and have built a pipeline that allows us to capitalize on the opportunities represented by previously unexplored smaller DMAs.

The efforts by the operations team and their implementation of new systems have created lasting efficiency gains.

I am very grateful for all of our team members who generated the good news we get to share at each earnings goal. I don't see that changing.

Yes, I'll hand it over to you to discuss our financial results and the liquidity.

Thanks Jimmy.

For the fourth quarter, total sales were $79.4 million as compared to $66 million in the prior year period.

Comparable restaurant sales performance compared to the prior year period was 0.2%, with traffic growth of 0.5% and price and mix of 0.3%. Comparable sales in our West Coast market were 0.6%, and comparable sales in our southwest market were positive 1.6%. Effective pricing for the quarter was 3.5%. On November 1st, we took a 3.5% menu price increase, and after lapping prior year increases, our effective price for the first quarter will be 4.5%. Beginning in the first quarter of fiscal 2027, we will no longer be providing regional breakdowns for comparable sales, as regional comps are largely determined by the timing of infills, and we don't believe that they are indicative of overall company trends.

Turning now to our costs, food and beverage costs as a percentage of sales were 28.4% compared to 28.5% in the prior year quarter.

During the quarter, we begin to see the impact of tariffs and our cost of goods sold of approximately 70 basis points.

Labor and related costs as a percentage of sales were 31.1% as compared to 31.4% in the prior year quarter due to operational efficiencies and pricing, partially offset by wage inflation.

Occupancy and related expenses as a percentage of sales were 7.1% compared to the prior year quarters, 7%.

Depreciation and amortization expense as a percentage of sales was 4.7% as compared to the prior year quarters, 4.6%. Other costs as a percentage of sales were 15% compared to the prior year quarter's 14.4% due to sales deleverage and higher marketing costs.

General and administrative expenses as a percentage of sales were 11.7% as compared to 20.3% in the prior year quarter, due to the lapping of litigation costs incurred during the prior fiscal year, partially offset by higher compensation related expenses.

On a full year basis, general and administrative expenses as a percentage of sales were 13.3%, representing a 300 basis point improvement over the prior years, 16.4%. G&A expenses as a percentage of sales, excluding litigation costs for the fourth quarter, were 11.4%, as compared to the prior year quarters, 13.2%. G&A expenses as a percentage of sales, excluding litigation costs for the full year, were 12.5% as compared to the prior years, 14.1%. And we did not have any impairment charges in the fourth quarter of fiscal '25 as compared to 2.4% in the prior year quarter.

Operating income was $1.5 million compared to an operating loss of $5.8 million in the prior year quarter, mainly due to the lower G&A and the impairment expenses just discussed.

Income tax expense was $43,000 compared to $19,000 in the prior year quarter.

Net income was $2.3 million or $0.18 per share compared to a net loss of $5.2 million or 46 cents per share in the prior year quarter.

Adjusted net income was $2.5 million or $0.20 per share as compared to adjusted net income of $1 million or $0.09 per share in the prior year quarter.

Restaurant level operating profit as a percentage of sales was 19.8% compared to 20.9% in the prior year quarter.

And adjusted Ebaov was $7.4 million as compared to $5.5 million in the prior year quarter.

Turning to our cash and investments, at the end of the fiscal 4th quarter, we had $92 million in cash equivalents and investments, and no debt.

And lastly, I'd like to provide the following guidance for fiscal year 2026.

We expect total sales to be between $330 and $334 million.

We expect to open 16 new units, maintaining an annual unit growth rate above 20%, with average net capital expenditures per unit continuing to approximate $2.5 million.

We expect general and administrative expenses as a percentage of sales to be between 12 and 12.5%. And lastly, we expect full year restaurant level operating profit margins to be approximately 18%.

And with that, I'll turn it back over to Jimmy.

Thanks, Jeff. This 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&A session, I may answer in Japanese before my response is translated into English.

Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your one is in the question queue. You may press 2 to remove yourself from the queue. For participants using see-through equipment, it may be necessary to pick up the handset before pressing the key.

One moment please while we pose the questions.

First question comes from Jeremy Hamblin with Craig Howe, please go ahead.

Thanks and congrats on the strong profitability here.

I wanted to just dive into what you saw over the course of the last several months. I think you were, on the July call, very pleased with how quarter to date, com trends were.

Maybe things softened a little bit in the August period but I I wanted to see if you know you could give us a kind of a sense of where quarter to date trends were and then you you've had a bunch of IP collabs and just to understand you know how effective those been I know you've had kind of shorter periods than you previously had on the collabs but. You know some color on on on what you're seeing out there, especially in context that the number of restaurants have seen some softening in September and October.

Sure, thank you, Jeremy, for your first question. Please allow me to speak in Japanese. He's going to, then he's going to pronounce it.

(spoken in foreign language)

So, hi Jeremy, this is Ben. Over the last several months, we, we've certainly been seeing the same macro pressures that our peers have been reporting, and we, we're not immune to them either.

Our, we're very pleased with the work that the marketing team has done. They, they've done a phenomenal job. They're really.

Doing everything in their power to to drive comps and the the quarter would have been, a much more difficult without all their efforts and so the IT collabs that you had mentioned is certainly the quarter would have been worse without them. It's hard to assess. Impact on a numerical basis, but they definitely made a difference in the quarter. The upside from the reservation system, the light rice and the 25 plates, cumulatively had a little bit of a contribution, but that's what got us to positive comps between all those different factors, all those.

Efforts were largely offset with the backboard pressures that you'd mentioned, but we were pleased to come in with, positive costs for the quarter.

And then in terms of, quarter to date we've seen the same operating environment as we've entered, our first quarter.

Yeah, so I don't see.

(spoken in foreign language)

Well this isn't this is.

Not going to be a usual practice going forward. We just felt, given that we're already 2 quarter or 2 months into the quarter that it made sense for us to share our expectations, based off of the results to date and, our internal expectations. Unfortunately, our expectation for Q1 is to come in. Negative mid-single-digits. This is not a reflection in terms of worsening performance or a worsening environment, but really just a reflection of the quarter of the year over year comparisons for Q4 and Q1, and the delta is pretty cleanly about 500 basis points between those two quarters.

Well. (spoken in foreign language)

Like, to, just to remind you, the numbers that we're lapping, Q4, was lapping a negative 3% comp and so a relatively easy comparison, whereas, Q1 we're lapping a 2% or a positive 2%. And so just given that we came out about flat in Q4 over while lapping that 3, our expectation is that, well, that same delta which would get us to that mid-single negative mid-single-digit number for our Q1 comp expectation.

That being said, we remain, our goal remains to deliver positive comps for the year. We think we can get, flat to slightly positive. Q1 remains the most difficult comparison as we enter Q2 and Q3, we'll be lapping a negative 5% comp and a negative 2% comp. Those will also coincide, with the, with some of our stronger IP collaborations will have benefited from pricing that we took in November and we'll also, hopefully benefit from.

Greater adoption from the reservation for the reservation system as we start to market it to non-rewards members.

I appreciate the color on that. And then just a follow-up here on the unit development, make sure I understood.

So 16 new units for the year, I think you said 5 to 6 in the first half of fiscal '26 and 3 quarter to date. Do you anticipate it opening up any more in Q1?

And then just confirming that you're 5 to 6 in the first half of the year and then roughly 10 in the back half of the year.

So, I'm sorry I don't go to the.

Yeah, we're expecting to open one more in Q1 and then we would open, 1 or 2 in Q2.

In the prepared remarks we mentioned that 6 units were under construction, but the majority of them we, we've just broken ground. And so, while we do have a lot of units under construction, our Expectation for the first half of the year is to open 5 or 6 units total.

Thanks for the color. I'll hop out of the queue.

Thanks Chairman. You can hear.

Me.

Next question. Mark Smith with Lake Street Capital Markets. Please proceed.

Yeah, hi guys, you got Alexterning on the line for Mark Smith today. Thanks for taking my questions.

In the prepared remarks, you highlighted around 50 basis points of labor improvement from the robotic dishwasher rollout, and that you said you'd be retrofitting about 50 restaurants. How quickly do you expect that to be, kind of implemented, and then when will we see the full impact on the P&L?

Hi y certification implementation.

Right.

So, as it relates to the robotic dishwashers, we placed our order to the manufacturer after we got certification, and so they're in the process of, developing. Thing for just manufacturing them now it's a proprietary piece of equipment so we can't get it, just off the rack or whatever and so really that that's the biggest bottleneck for us just getting them made and then shipped over from Japan to the United States. Our expectation is that the implementation in earnest will really start in Q3 and while we do expect to get. The majority of the eligible restaurants retrofitted during fiscal '26. The impact, from a labor perspective, would be much more pronounced in fiscal '27 than fiscal '26. Our expectations for the benefit from.

The robotic dishwashers and fiscal '26 are reflected in the RLOPM guidance that we shared earlier.

That being said, as Jimmy is as impatient as I am, he's going to Japan, to knock on the doors of the factory and, speak with the President and ask for them to expedite things as much as they can. And so hopefully we'll be able to get these in a little bit sooner than we're expecting right now.

That that's great color there. Last one for me, you mentioned tariffs a little bit impacting you in the quarter, given the ongoing back and forth for tariffs on, Japan and Vietnam, can you give an update on supplier negotiations? What level of cost sharing you're seeing, have you taken or do you anticipate taking any additional pricing to offset those costs?

Hey, it's Jeff. So the, we took 3.5% on November 1st, as we mentioned in the preferred remarks, and that was after the negotiations we had with the suppliers and as we also said in the prepared remarks we saw about a 70 basis point impact in Q4 and going forward after we took the, menu price increase and these negotiations are still ongoing but they're much more progressed than they were in the past but currently where we stand. Is that we expect our COGS for fiscal '26 to be at least 30%, around the 30% range, so you know we thought.

Interested transparency that it would just be useful to everybody to just kind of tell you what we thought COGS is going to end up at. So call it about 30%, and that's also why we gave the restaurant level operating profit margin guidance as well. That was a new piece of guidance for us that we gave this time that we've never given in the past and just given the volatility of what's going on, we just thought in the interest of transparency that it was just a good thing to help the street and help everybody out of what we expect going forward.

That's great color. Thank.

You guys.

Thank you.

Next question. Jeff Bernstein with Barclays, please go ahead.

Hi, great, this is product on for Jeff. How are you guys? .

Jimmy, hey.

Hi. A.

Big picture question, about 26, what kind of strategic changes do you guys, foresee, with the brand? Obviously we've heard all sorts of commentary from restaurants, about how the consumer is challenged. And people are looking for value, what are you, what steps are you taking to kind of address that current environment and, more excitingly, what new markets have you the most excited, for 26? And I have a follow-up. Thanks.

Hi.

Just keeping in mind that, we're in an environment right now where guests are extremely price sensitive and are managing their frequency being that much more thoughtful about where they're spending their restaurant dollars. We were, very diligent in our processes as, we approached the November pricing. We added a value question to the end of meal survey.

Which validated our beliefs that our guests continued to believe that we provide really an unbeatable value. We also conducted a consumer insight study. We actually, we got granular to the point where we were doing separate studies by geography to see the elasticity by market. And so we feel that the pricing that we took really sort of threaded the needle in terms of, what was, what's appropriate. In terms of the efforts that we're making, it's really they're, we're not betting the farm on any one big thing, it's really just.

The diligent small things all coming together from every department it's it's really the approach that we've always taken it's just. Lots and lots of small incremental improvements which cumulatively give us that massive value advantage. We didn't want to force a 20% margin in fiscal 26%, that we really, we didn't want to basically trade the future potential traffic for one year of better margins. We really want our guests to continue to see us as providing an unbeatable value and, yeah, we.

Didn't want to be short-sighted as it relates to fiscal.

26.

I collaboration. (spoken in foreign language)

In terms of the things that we're working on, this is, a very fundamental thing for any sort of restaurant business, but we're very focused on improving our products both from the menu development perspective and, a sourcing perspective. They've really been doing a phenomenal team. There's a reason we call them out every call. They, they're just tireless in their efforts, and it's really kind of staggering how consistently they've been able to improve our.

Or proteins in particular and so we've got a number of high, you know.

Japan sourced LTOs that we're looking forward to, which we expect will be a big hit from our guests. We know that the IP campaigns are a very big opportunity for us. We're pretty happy with the pipeline that we've built, but we know that there's more opportunities to be wrung from each campaign. And so we really want to use each one as a learning opportunity and build on that so that we can. Really, yeah, maximize the opportunity that we see there. A couple other things that we're working on is, as we mentioned in the prepared remarks, we're, working on introducing the tiered statuses to our rewards program, and we're also going to begin marketing the reservation system to non-rewards members and so all those things together would be, some of the things that we have on the docket.

Got it. That's super helpful color. And then my follow-up, was for Jeff. Looks like the company ended fiscal '25 at, exactly 12.5% of sales when it comes to G&A, and I know you mentioned in your prepared remarks that you expect fiscal '26 to be at 12% to 12.5%, so at the midpoint you're assuming about 25 basis points of leverage, and I can certainly.

Appreciate what's happening in today's environment, but that's just.

Not as much leverage as we're used to seeing in the past, and I know Jeff, it's longer-term. I know you want to get the company to that sub 10% level. Just what's changed in fiscal 26? Is there just a deliberate strategy to allow for less leverage, or is there another round of investment in certain areas? Just, anything you can kind of help us unlock what's going on with G&A. Thanks.

Yeah, so really look at it on a kind of an average year basis. We got 160 basis points of leverage this year, compared to last year. I was expecting under 100, so we were able to pull some savings from fiscal '26 forward into the fiscal 25, so when you look at it on a two year basis, even if we did hit that midpoint, that's still almost 100 basis points of leverage per year when you look at it that way and it, we can't really. Parse it out year by year by year we take the savings when we can get them and we were fortunate to get the savings earlier on, than we thought. So I'm looking at on a year by year basis and because we expect, we got much more than we expected I didn't want to overshoot next year. I'm hoping we can beat that at the beginning of the year. That's our starting guidance and we'll do our very best to, bump that guidance up in one of our future calls but right now I think that that's a proved number between 12% to 12.5%.

Makes perfect sense.

Thank you so much for the color.

You bet thanks.

Thank you.

Next question. Andrew Charles with CD Twent, please go ahead.

Great, thank you. This is Zach Ogden on for Andrew. So it looks like new store productivity did improve from 2024 to 2025. So you are you able to quantify what new store AVs are relative to the system average of roughly $4 million? Or maybe if you could qualitatively speak to what's driving that improvement, and if it's one or two units driving that strong new store productivity, or if you're seeing more of a broad-based improvement.

Thanks.

So if I need yonks.

So I just like the caveat this, by. (spoken in foreign language)

Starting, by mentioning that we don't have an AUV target, we have a cash on cash return target. That being said, Zach, you basically got it right. The Pressure on the AUVs that we saw, that we reported today versus a year ago was largely due to the new entrance to the AUV comp base, but also to your earlier point, the fiscal '25 stores are spectacular. They, they've been one of the strongest, classes in recent memory. It's not limited to one or two units, and, we're very excited to see those join the AUV comp base, and we expect that number to improve with, their entry.

I thought about it and. (spoken in foreign language)

To come up and, on the note of AUV just as I mentioned before, it's not a target for us, and there are a lot of things that can, impact AUVs. Just something as simple as store size doesn't necessarily reflect performance, but we did want to, internally corroborate the things are as strong as we felt and.

They are, the sales per square foot for fiscal '24 and 25 are unchanged, and that's, I think, a more meaningful metric of, our productivities.

Great, thanks. And then my follow-up question is Jeff, the guidance for new store bill costs stayed at $2.5 million which is what it was in fiscal '25. So I mean that's pretty encouraging considering you previously talked about a $300,000 to $400,000 impact from tariffs. So is the impact from tariffs not as bad as you thought, or are they just offsets to it?

Let me first clear, it's the same as it was in 25 and 24, so for a couple of years, which we're very proud of. That's a net number. It, the cost to build did go up a little bit because of tariffs, but be, we're now getting better TI allowances from our landlord. So when you offset the TI allowance against the higher build, it comes out to a net about 2.5%. So our cash out of pocket remained the same.

Got it thanks guys.

Thanks.

Thank you.

Next question. Brian Mullen with Piper Sandler, please go ahead.

Hi, this is Alison Armstrom on for Brian Mullen.

Thank you for taking the question. Just a quick one on the reservation system. Sounds like it's off to a strong start. At this point, are you able to quantify the impact? And if not, just anything new that you've learned, with a few more months underway?

Thank you.

Yeah, it's hard to tease out the impact of any one initiative, and that's always been the case for us. The roll out of the reservation system coincided with the resuming of our IP collaborations, and so there's just a lot going on. We're really happy to see positive traffic, but as you can see with the numbers, our comps were sort of were more or less flat and so it's. The reservation system wasn't a massive traffic driver. It's, I think it supported the quarter from being weaker, but it wasn't, a massive thing.

But that also doesn't surprise us given that we haven't got, we really haven't meaningfully advertised it. It's basically just organic discovery from our existing rewards members, and I, I'm really excited to see what numbers, we can see from it once we, advertise it to the broader audience in terms of learnings, we've. I, I've, we've been able to identify some things that just make it easier to use both for our servers, and for the guests and so this should actually.

Allow us By reducing all front of house savings, incremental front of house savings as we introduce these improvements.

Thank you.

Thank you.

Next question. JP Wong with Rock Capital Partners. Please go ahead.

Hey guys and thank you for taking the questions here maybe just to sort of focused around the guidance but one if I think about kind of the comp expectations that you guys just mentioned for the upcoming year. Can you give us a sense of how much maybe the upgraded reward system and the broader marketing of reservation are are baked into that, expectation, is there any risk that those underperforming would, harm comp expectations or is that really just upside to what you guys have underwritten right now?

I, so in terms of the revenue guidance, really all the guidance that we shared, it does not hinge on the IP campaigns or the reservation system. Those would be gravy opportunities for upside, but, we know that it's really hard to proactively, quantify the impact of new initiatives and so we don't make that into full, our revenue estimates just, for the sake of.

Yeah, just to be prudent and.

On the note of guidance. (spoken in foreign language)

.

We think maybe you know you might have raised an eyebrow when you saw our revenue range, combined with our commentary that we expect to be able to hit flat or slightly positive comps for the full year. This is really a reflection of the opening cadence we touched on this a little bit in prayer of remarks, but that is really, the bridge there.

I'm sorry.

Oh, right, so if, it's typically you were to use a mid-year convention for revenue, at 50%, we would recommend 40% or even less just looking at the.

The cadence of openings.

Great thank you and then just switching over to kind of the four wall guide, just kind of curious obviously the environment hasn't gotten any better since July but just curious if you could kind of just give us a sense of what's changed since we talked in July when it sounded like maybe there was some some optimism about really ramping back towards that 20%.

That.

You, with the 20% you're referring to the RLOM.

Yeah, the restaurant.

Level.

Okay, I know I know.

That's 1 k cost you. (spoken in foreign language)

Like, so JP, to answer your question first, really the major difference between, when we last met in July and the discussion today. It would be just the expectations for our cognitive change, as Jeff had mentioned in the prepared remarks, the impact to tariffs in Q4 were 70 basis points and so on a four year basis that impact was Not very much.

We had 18.4%, but Looking to this year, we have the full impact, all quarters instead of just Q4. We're, we know that we took price and will benefit from that, but you typically only get about half of flow through. And then as we look to other costs we've seen meaningfully elevated utility costs and tariffs impacting non-cog items as well. And so with all those in mind and all of those pressures in mind, we felt that 18% was the appropriate number for us.

To expect for fiscal '26.

But I'll get everything in Monday. That being said, emphasis for fiscal '26, 20% remains the overall goal, and we hope to get back to that as soon as possible.

And also keep in mind that you know with COGS of 28.6% this year and an expectation of 30% next year that's 140 basis points but our restaurant level operating profit margin guidance is only 40 basis points lower than what we ran this year.

So we're.

Yeah, but we're able to control the rest of the P&L.

Okay, so I'll call you, okay.

Thank you guys for the color. Best of luck.

Oh, never mind.

Sorry.

Next question. Tanya Anderson with William Blair, please proceed.

Hi, most of my questions have been answered, but just, to follow-up, you mentioned that there were some things that you noticed with the reservation system that you could do to improve it, and I was wondering if you can give a little bit more detail on that. And second, on the IT collaboration, I mean, given that you're kind of building out this portfolio and you have a mix of the known collaborations and. Maybe some new or more experimental new collaborations, maybe experimental ways of doing the collaborations I think you mentioned last quarter that might have more risk. How much control do you have about the over the exact timing and flow of all these collaborations per year, like during the year and throughout the, I'm curious about that. Thanks.

Yeah, so in terms of the collaboration timing this, we're generally at the mercy of the licensers they TRY to they they typically have their own marketing schedule, which generally speaking works in our favor because they want to partner with us when they're advertising something, but in terms of just, having control over the timing, that, that's not really something that we can do. In terms of the reservation system, this is going to get pretty inside baseball, but, in terms of guest facing improvements, I think the most obvious one, and the most meaningful one would be for guests to be able to pull their own reservation information. Right now you get it in a text. If you've made a reservation a week ago, it's, you're not going to be able to find that text, and that's a pretty big headache, not just for the guests, but for the servers as well. And I know because I.

Was desperately trying to find people's reservation numbers when I was testing out the program and it's just not fun. And so that, that's really one of the big things that I meant, when I was talking about labor savings for front of house. The other is, we're changing the way that we, that servers can seat parties and it doesn't really make a big difference from an operations perspective, but basically the way that we're, the way that it was set up before, we needed, we.

We're working it in a way that made it impossible to collect correct data and this shift it will allow us to for the first time really get accurate data and then we can make adjustments and.

Decisions based off of that. And so I, I'm really excited for that. It's not very flashy, but it will make a big difference in terms of our planning for what we can do with the reservation system.

Next question. Todd Brooks with benchmarks StoneX. Please go ahead.

Hey, thanks for taking my questions.

Jeff, can we talk about.

I think you said M was down 30 basis points last quarter. Obviously the consumer weakened across the course of the quarter, I guess. Did Mix weaken as well as far as side menu attach or beverage attached?

And within that down mid single-digit cop expectation for Q1, is there a deeper kind of drag on price mix versus what we saw in fiscal 4Q?

I know Cuba. (spoken in foreign language)

Todd, just to clarify, are you asking about what we're seeing differently between Q4 and Q1, or is this just a general question about mix?

I was just trying to tie it to what people are seeing with the consumer. Did mix slow during the course of Q4 to end up at down 30 basis points, but the consumer maybe tightened their wallets a little bit more and didn't attach the same way as the quarter went on.

And what's the price mix assumption within the down mid single-digit guidance for the first quarteram store sales.

No, can you 4 to 1 you've got 4 Q3 to to go to I know I know to call to the I know I collaboration I know. (spoken in foreign language)

We certainly have seen, tech management. We, in Q4 we had a number of initiatives that were intended to drive.

Improvement in mix such as the light rice, the 25th plate, experimentation with the spending thresholds associated with giveaways, but just with this overall environment, and the consumer not feeling as strong as they might have six months ago, those efforts.

The timing is not right in terms of, trying to drive mix and so really our focus is on traffic. This is how we've approached every economic downturn in the past. We know that people are going to control check and so what we do want is just to make sure that they come in the door. We're working a lot on menu development. We touched on this a little bit earlier, but we want people to be coming in because we have new great items that they want to TRY and and then come back because they liked it so much. And so that's one of the things that we're excited for. We expect to start seeing.

The results of those efforts starting in Q3.

Okay, great, second question, I don't know if you guys have ever talked about.

Your customer profile, but if you look at performance across the quarter, did you see?

Any big disparities by income cohort or age cohort or geographically that would be instructive to share with us?

There have really been no meaningful changes in demographic patterns or behavior that we've seen and so nothing to call out.

That being said. (spoken in foreign language)

We, we've, we're seeing a lot of reports about a weaker Gen Z consumer, and, some of our best performing restaurants rely on, university or college traffic, and so we're keeping a very close eye on those units, but we're not seeing anything that would, cause.

Concern for us at this point.

Great and then then I'll give you a chance for the commercial here. I know.

Typically you'll give us a forward look and and a and a tease for the some upcoming IP partnerships that you might want to share. I didn't know if.

Other than Kirby, if there was anything else you wanted to highlight coming in the next 2 or 3 partnerships.

Yeah, the next one that we have is Sanrio. We're working with a couple characters from that Sanrio universe that we've deliberately chosen. I'll, I won't spoil it for the marketing team. I'll let them unwrap that present, but I'm really excited about that, not just because, I think those characters are probably the strongest properties we could pick among the Sanrio stable, but also. This is going to be a shorter period, a one month campaign instead of a two month campaign and so it's another opportunity for us to explore how these differences can.

Affect the response that we see from our guests.

Okay, and then Kirby following that, was that the cadence of the 1st 3 that you talked about last quarter?

Kirby is actually the next one.

And so, we entered the year, Demon Slayer, we did, we're in one piece now, we'll have Kirby coming up in December, January, and then February we'll be Sanria.

Okay perfect thanks.

Thank you, do.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time and thank you for your participation.