luchezar/E+ via Getty Images Unique dining concepts have the potential to generate significant growth that, in turn, can create real value for long-term investors. One such restaurant chain that has started to expand at a rapid pace is a small firm called Kura Sushi USA (NASDAQ: KRUS ). This particular entity combines both technology and Japanese cuisine to create a unique experience for its customers. And after the business saw tremendous success across Japan in recent decades, management ended up taking the firm here to the US. Although the growth prospects for the company are definitely appealing, shares are priced at levels at, today, are very difficult to justify. So while the business may ultimately prove to be a good growth story, only investors who don’t mind paying a hefty premium for this growth should consider taking a bite of it. An interesting play on Japanese cuisine
Over a span of more than 35 years, Kura Sushi grew from a single concept in Japan to roughly 480 locations. Then, in 2008, the management team at the company established a subsidiary that eventually opened its first location in California. The company’s current operations involve the sale of what management describes as authentic Japanese cuisine. This includes various types of sushi items that the firm claims are made from high-quality fish and 100% organic rice. Even the company’s vinegar is sourced from Japan. This care extends to their other food products, such as their broths which are made in-house each day, as well as to the various side dishes and desserts the company offers. In all, the company’s menu allows guests to sample a variety of dishes, with over 130 different items available.
When it comes to servicing customers, the company uses what it cause a revolving sushi concept where the food is placed on a conveyor belt that causes food items to zip by customers’ tables. The company prides itself on playing the sound of anime videos on tableside touchscreens and it provides various milestones for diners, such as the dispensing of a Bikkura-Pon toy for every 15 plates that are placed into the plate slot. Though that may sound like much, these plates have small portions on them, with the majority of its menu priced at around $3 per serving. Author – SEC EDGAR Data Due to the COVID-19 pandemic, it is difficult to understand the true growth prospects of the business over the past few years. But what data we do have does look encouraging. Between 2017 and 2019, for instance, the company saw the number of locations it operates rise from 14 to 23 and comparable restaurant sales grew by an aggregate of 47.3%, taking sales at the company up from $37.3 million to $64.2 million. Then, in 2020, the COVID-19 pandemic struck, pushing sales down to $45.2 million even as the restaurant count for the business expanded by 2 to 25. A big contributor to this decline was a 37.8% drop in comparable restaurant sales. As the economy began opening up again, the company saw something of a rebound for its top line. Revenue grew in 2021 to $64.9 million. This came as the number of restaurants increased to 32 and as comparable restaurant sales expanded by 16.2%. But even this is rather complicated by the timing of the reopening of the economy. Author – SEC EDGAR Data What’s better is to look at how the company is expected to fare in the current fiscal year. With management anticipating the opening of between 8 and 10 new restaurants, each one costing about $2.1 million and coming in at about 3,400 square feet, the firm expects revenue to total between $130 million and $140 million in 2022. Though this may seem like a stretch compared to what the company generated last year, we can already see performance for the first three months of its 2022 fiscal year . Revenue for that time frame came in at $29.8 million. This is up from me $9.4 million generated one year earlier. This growth was attributable to a 154.3% increase in comparable restaurant sales and thanks to the company’s location count growing from 28 to 33. Author – SEC EDGAR Data Like many fast-growing enterprises, Kura Sushi USA is struggling some on its bottom line. Between 2017 and 2019, net profits for the company remained in a fairly narrow range of between $0.7 million and $1.7 million. The firm then lost $17.4 million in 2020 with a further loss of $10.3 […]
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