It has been an eventful stretch over the past couple of years for Kura Sushi, from tariff challenges to value perceptions affecting the entire state of California trailing the FAST Act, which took wages at large QSR brands up to $20 per hour, but also seemed to lift the price tide, at least in consumers’ minds, throughout the entire region.
However, trends have settled somewhat and Kura Sushi continued, amid instability, to work on its leverage, layer automation and tech into the picture, and strike collaborations to drive guests behavior. And those efforts materialized in Q2.
The brand’s revenue lifted 23 percent as same-store sales gained 8.6 percent (3.3 percent on a two-year stack after last year’s decline of 5.3 percent). Notably, traffic accounted for 4.3 percent of growth (4.3 percent owed to price). Kura Sushi’s 8.6 percent result was well ahead of Wall Street’s consensus target of 3.5 percent. One- and two-year comp trends improved sequentially and the traffic jump marked Kura Sushi’s best in two years. Same-store sales grew 7.2 percent in the West Coast and 9.7 percent in the Southwest.
Thanks to the outperformance, adjusted EBITDA of $5.5 million more than doubled and beat projections by 44 percent. Kura Sushi also appreciated restaurant-level margin expansion for the first time in more than two calendars despite dealing with tariff-related concerns, as the brand imports roughly 60 percent of its basket. Restaurant-level operating profit in the period was $14.6 million and store-level margin 18.2 percent. That was 17.3 percent in Q2 2025 and sits at 16.7 percent over the past six months.
Unit-level margin expanded 80 basis points and the adjusted figure 90 basis points.
In either measure, it was a mix of sales leverage, pricing, and operational efficiencies for the brand pushing performance in the right direction, even with low-single-digit wage inflation and tariffs tossed in.
Total sales for Kura Sushi were $80 million, up year-over-year from $64.9 million. Year-to-date same-store sales have climbed 3 percent, and the brand expects “moderately positive” full-year figures.
As for what’s propelling growth, there are a few levers. Firstly, Kura Sushi set an initial goal to improve labor as a percentage of sales by 100 basis points. That proved to be conservative.
G&A declined 150 basis points to 12.2 percent and adjusted EBITDA margin lifted 270 basis points to 6.8 percent.
Cost of goods as a percentage of sales were 30.4 percent and Kura Sushi believes full-year COGS will run at 30 percent (it was 34.8 percent a year ago).
Kura Sushi, as noted, was investing behind a host of upgrades while it navigated volatility. One was a reservation system that rolled systemwide last June. The company started marketing it during toward the end of December and eventually split from its loyalty program. The idea being, Kura Sushi wanted to inspire usage by not requiring customers to sign up for its app and loyalty. Rewards members tapping the system are showing up more often, the company said. But to the other angle, reservations overall are up north of 30 percent following the call to offer it to non-loyalty guests.
Kura Sushi estimated the system drove about a point of sales in the quarter while also helping the labor line. From a larger view, though, it’s succeeded in addressing the conveyor-style brand’s No. 1 pain point among diners—waiting without any ability to plan.
Yet a key, ongoing change was the brand’s decision to reemphasize IP collaborations. It partnered with Nintendo on a Kirby winter experience that centered on Kura Sushi’s Bikkura Pon prize system, complete with themed capsule prizes including a cable band, microfiber cloth, and acrylic charm with pedestal. Customers who spent $85 or more unlocked exclusive giveaways (Kirby three-piece cup set in December followed by a blanket in January). That incentivized guests to return and spend again. Additionally, Kura Sushi had two Kirby-inspired menu items and transformed restaurants into a “dreamy wonderland” with unique decor, like a Mr. Fresh cover with Kirby’s face, noren curtains, and wall art. Digitally, there were Instagram giveaways.
CEO Jimmy Uba said the promotion was “just as successful as we had hoped” and Nintendo’s evergreen popularity was one of the reasons Kura Sushi performed so well in February.
Kura Sushi’s mix improved to roughly flat, too. The biggest factor, Uba said, was guests ate more plates per person thanks to the IPs. “People are that much more incentivized to go for that 15th plate or to hit the spending threshold for our giveaways,” he said.
Coming next will be a collaboration with virtual pet company Tamagotchi for its 30th anniversary. After, the video game “Honkai: Star Rail.” Some offers will lap a strong “Peanuts” run that extended from April through June.
Uba hinted the “most meaningful evolution in Kura Sushi’s rewards program since its introduction” was on deck as well.
Value and growth ahead
Effective price for Kura Sushi is expected to sit below 4 percent for the full year as it rolls off about 1 percent in May. No further hikes are expected in fiscal 2026. The 4.5 percent it’s held as of November, Uba said, translated to about $1 per person. “And we know that our direct competitors, the individually owned sushi restaurants, there’s just no way that they’re able to keep the doors open by charging just $1 extra per person. And that value delta has become clearer and clear to our guest. And so, this dynamic isn’t fun, but it works in our favor. As incremental pressures arise, again, it won’t be fun, but it will work in our favor.”
Kura Sushi uses targeted marketing when it sees competitors take hefty price. “We can spend incremental advertising dollars there just to get eyeballs,” he said. “That’s worked pretty well.”
Uba wants Kura Sushi to expand buzz to LTOs and go above its core reserve so it’s not entirely reliant on IPs. In March, it unveiled a “Wagyu of the Seas” campaign that featured high-quality Toro. At $4, it served a dual purpose of inspiring visits and reinforcing value versus peers.
Kura Sushi continues to work through kitchen innovations as well. One is robotic dishwashers, which are on track to enter new units in Q3 and will retrofit into 50 sites by the end of the year. The brand believes they’ll deliver an incremental 50 basis points of labor efficiency in 2027.
Kura Sushi also recently received approval for American use of a technology it’s mentioned in past calls, what it terms “the Sushi Slider.”
Uba said while the robotic dishwashers result in straight headcount reduction, the Slider is more of a margin opportunity, especially for higher-volume stores on weekends.
Concerning what the company is circling going forward, Uba added, Kura Sushi will focus on technology that improves food quality and consistency and has begun to explore more guest-facing solutions that improve efficiency and are “focused on fun.”
With AI, Kura Sushi today deploys a social media listening tool. But Uba said he’s been assigned “AI broadly” and is the chair of the company’s new “AI committee.”
“It’s eating most of my time,” he said, promising future updates.
Additionally, Kura Sushi is looking to bring over a device from Japan that keeps broth fresh all day long (currently, if stores make it in the morning, it evaporates as it stays warm and get progressively more concentrated and bitter).
It’s developing a sear station as well to move away from doing that by hand. Both are consistency and quality plays, Uba said, as well as labor ones.
The brand opened a restaurant in Q2 in Austin, Texas, to reach 84, up 15 percent. Four locations have debuted thus far in Q3 (Orange and Union City California; Goodyear, Arizona; and Wellington, Florida), and another eight are in construction, which would give Kura Sushi its previously guided 16 new restaurants and 20 percent growth pace (nine are open already).
Uba said these are shaping up as strong as fiscal 2025, which was the top-performing crop of new openings “in recent memory.’
Even with the upbeat quarter, Kura Sushi was relatively modest on its overall full-year outlook given higher gas prices and global conflicts. The brand could hit its outline of slightly positive comps for the year without any growth for the rest of 2026.
But a couple of years ago, Kura Sushi raised guidance only to have it lower back (California challenges). Uba said the company’s erred on the side of caution since, especially given the macro uncertainties.
“It doesn’t reflect conservatism or pessimism. It’s just prudence,” Uba said.
