Sushi chain Kura records unexpected profit in Q3, driving up shares
Kura Sushi USA, the popular fast-casual dining chain, announced its Q3 2025 financial results, showcasing positive earnings and revenue growth despite a decline in comparable restaurant sales.
The company's shares on NASDAQ (KRUS) gained 4.4% in postmarket action, reflecting investor optimism about the company's performance. Kura Sushi's revenue for Q3 2025 reached $73.96 million, beating expectations by $2.14 million, and its Non-GAAP EPS of $0.05 beat by $0.06.
The growth can be attributed to the opening of 13 new restaurants since Q3 2024, with three new locations added during Q3 2025. The company plans to open 15 new restaurants by the end of FY2025.
Despite these new additions, Kura Sushi managed to maintain operational efficiency and cost management. The restaurant-level operating profit was 18.2% of sales, compared to 20.0% a year ago, and Adjusted EBITDA increased to $5.4 million.
However, comparable restaurant sales decreased 2.1% year-over-year during Q3, with negative traffic of 2.9% and positive price/mix of 0.8%. Labor and related costs as a percentage of sales increased from 32.6% to 33.1%, primarily due to wage rate increases, partially offset by menu price increases and operational efficiencies. Other costs as a percentage of sales increased to 14.7%, mainly due to utilities, repairs, and maintenance.
Notably, food and beverage costs as a percentage of sales decreased from 29.2% to 28.3%, primarily due to menu price increases, supply chain initiatives, and food cost inflation. The operating loss narrowed to $0.2 million from a loss of $1.2 million a year ago.
CEO Hajime Uba described Q3 as a busy period, involving new reservation system rollout, market opportunity investigation, and IP pipeline development. This strategic approach positions Kura Sushi for long-term growth in the fast-casual dining sector.
The short interest on the restaurant stock stands at 15.2% of the total float, indicating a significant level of bearish sentiment among investors. The Q3 outlook for Kura Sushi USA was not explicitly stated as rosy in this paragraph.
In conclusion, Kura Sushi USA's ability to balance expansion with operational efficiency and cost management has allowed it to achieve positive earnings and revenue growth despite same-store sales challenges. Investors will be closely watching the company's progress as it continues to expand and navigate the fast-casual dining market.
The growth in Kura Sushi USA's financial results can be linked to both its strategic expansion, with 13 new restaurants since Q3 2024 and plans to open 15 more by the end of FY2025, and its focus on maintaining operational efficiency and cost management, as demonstrated by its revenue increase and improved operational profit. This development in the company's business, thus, presents a potential opportunity for investors who are interested in the finance and investing sector within the fast-casual dining industry.
