When you think of Japanese cuisine, you probably think of sushi. But for a long time, the elegant dish of raw fish and vinegared rice was a luxury in the country.
That began to change in the 1970s, thanks to a piece of equipment that had transformed the American auto industry decades earlier: the conveyor belt.
Conveyor-belt sushi restaurants, in which customers select their sushi from a moving track, originated in Japan in the late 1950s. The efficiencies provided by the machines helped lower operating costs, making the pricey dish more affordable. These days, there are about 3,000 "sushi train" restaurants in the country.
Here in the U.S., conveyor-belt sushi is still a novelty. Kura Sushi USA wants to change that. The 46-unit chain arrived here from Japan in 2009 and has ridden its conveyor belts (and a host of other technology) to eye-popping growth over the past few years. It’s all part of Kura’s plan to make sushi an everyday option for average Americans.
The strategy has resonated with consumers, who have been drawn in by the unique dining experience, as well as investors, who have rewarded the chain for its strong sales growth and robust margins.
Benjamin Porten, Kura USA’s SVP of investor relations and system development, witnessed this dynamic firsthand several years ago, when he brought a group of investment bankers to the opening of the chain’s newest California restaurant. There was an eight-hour wait, and Porten was pressed into action. He spent the rest of the day in the kitchen, frying shrimp in a suit and tie.
The bankers enjoyed the shrimp, and the concept. “They joined our syndicate,” Porten said.
The first thing you notice when you walk into Kura is the conveyor belt.
It’s the organizing principle of the entire restaurant and makes Kura unlike any other establishment you are likely to visit—even other revolving sushi bars. While most sushi conveyor belts travel in a circle, Kura figured out long ago that it could fit more tables by routing the track in an “E” shape. It has used that layout ever since.
The belt itself has two levels. The top level is for special orders, like sides, soups and noodles, which customers can enter on a touchscreen pad at their seat. The belt will then deliver it to their spot. The bottom is a smorgasbord, an endless parade of nigiri and rolls on dome-lidded plates that customers can grab at their leisure. Each plate is priced the same, from $3.20 to $3.90, depending on the market.
When a customer has cleared a plate, they deposit it in a slot at their table. The plate drops into an aqueduct that carries the dirty dishes to the kitchen, where they’re washed and put back into circulation.
RFID codes on the lid of each plate allow the restaurant to track how long an item has been on the belt. After a plate has circled for two hours, a robotic arm in the kitchen reaches out and removes it. Not only does this allow Kura to keep its food fresh, but it also provides a record of what’s selling and what isn’t so it can adjust its selection accordingly. Thus, sushi rarely sits on the belt for long. The chain’s disposal rate is just 3%, Porten said.
All aboard the sushi train.
After a customer has finished five plates, a monitor at their table plays a cartoon. After 15 plates, they get a small toy from a dispenser. The cartoons and prizes—called Bikkura Pon, or “surprise”—are tied to a different movie or TV property every two months, an arrangement similar to McDonald’s Happy Meals. The current Bikkura Pon collab is with the Cartoon Network animated series “We Bare Bears.”
The average Kura customer clears six plates for an average check of about $28, Porten said, and they typically spend about 45 or 50 minutes in the restaurant. The 15-plate prize threshold is a nice nudge for people to spend more, especially if they have kids, he said.
These bells and whistles have proven to be significant traffic drivers. After Kura fully rolled out the system, in 2017, same-store sales rose 30%, Porten said.
“It gets people in the door,” he said. Once they’re there, it’s typically the food, and the value, that keep them coming back.
While the conveyor belt is Kura’s most prominent feature, it’s just the tip of the chain’s technological iceberg. Kura’s Japanese parent holds more than 50 patents, including the domed, ventilated lids that cover each plate, called “Mr. Fresh,” and the robotic arm that helps enforce food safety. Virtually all of these tools are aimed at the same goal: to ease the notoriously fussy process of running a sushi restaurant.
For instance, it takes two years just to learn to wash the rice used in sushi, Porten said. It takes another five to become an expert at forming the cooked rice into balls and beds. Kura erases that learning curve by outsourcing the work to machines, like a device that "prints" beds of rice used in sushi rolls.
Unlike most sushi restaurants, Kura does not have an executive chef on staff. The only “skilled” position in the kitchen is fish cutter, which can take up to a month to learn because of the precision required. Otherwise, someone with no sushi experience can learn to work in Kura’s kitchen in a day.
“Making sushi at Kura is simpler than making a sandwich at Subway,” Porten said.
In the front of house, meanwhile, Kura has already largely done away with traditional servers. Just about any item a customer wants that’s not on the belt can be ordered via touchpad. Non-alcoholic beverages are delivered by singing robots. There are still waitstaff in the restaurant, but their job is mainly to answer questions and “make sure you’re having a good time,” Porten said.
All told, he estimated that about 50% of Kura’s operations are automated, which allows it to run with about half the staff of a typical sushi restaurant. That translates to lower prices for customers and better margins for the restaurant. In its most recent quarter, Kura USA’s restaurant-level operating profit was 20.3%, a 2.5-point increase from the year before.
And it’s not done automating. The next position it wants to mechanize is dishwasher, historically the hardest restaurant job to fill. Kura’s looking into a robot that can gather dirty dishes, clean them and return them to the back-of-house belt, where kitchen staff can load them up with sushi and send them out into the dining room.
Kura’s top line has been just as impressive as the bottom. Since 2017, its total sales have increased by 279%, and that’s including a decline of 30% in 2020.
A significant portion of that growth came last year, when system sales rose 117%, according to data from Restaurant Business sister company Technomic. That made Kura the third fastest-growing restaurant chain in the U.S. in 2022.
Porten credited much of the jump to new restaurant development. Kura’s annual target is 20% unit growth, but it has surpassed that goal in each of the past seven years besides 2020. This year, it expects to open from nine to 11 new restaurants at a cost of about $2.5 million per store.
And even 2020 was far from a lost year for Kura, which was flush with capital coming off its 2019 IPO and had just hired its first chief development officer, Panera and Panda Express veteran Robert Kluger. It continued to fill its development pipeline while other chains were pulling back.
“We had a ton of dry powder to really aggressively sign leases at the beginning of the pandemic when everyone else was canceling leases,” Porten said. “We were definitely zagging when everyone else was zigging.”
Those efforts began to bear fruit last year, when Kura opened eight new restaurants, its most ever for a single year.
Adding topspin to the brand’s 2022 performance is the fact that about half of its locations are in California, where COVID-19 restrictions lasted into the summer of 2021. Once those stores were able to operate at full capacity again, year-over-year sales began to pop. That's evident in Kura's average unit volumes last year, which increased by more than $1.6 million, to $3.8 million.
The pandemic created another tailwind for Kura: It wiped out a lot of its competition. According to the chain, more than 200 Japanese restaurants near its stores closed in the aftermath of COVID-19.
“It was practically an extinction event for individual Japanese operators,” Porten said.
That has left even more ground to be gained in the already fragmented sushi category, where the top two chains—the upscale Nobu and Kura—make up just 1% of the overall market.
“The TAM [total addressable market] is absolutely massive,” Porten said. And he believes Kura is in a position to seize more of it.
For one thing, it happens to serve sushi, a dish few people make at home. Its main competition is other sushi restaurants, which tend to be mom-and-pops that are less-equipped than Kura to weather rising costs.
Combine that with the unique experience it offers, and you can see why Kura has already begun to win a bigger share of consumers’ dining dollars. While industry traffic has generally slowed over the past two years, it has only increased at Kura. “People are trading down to us,” Porten said.
Indeed, the chain’s 2022 momentum does not seem to have been a fluke. Same-store sales in its most recent quarter rose more than 17%. The average wait on weekends is two hours. It will likely pass Nobu as the No. 1 sushi chain in the country this year.
With all that going for it, “there’s no reason for us to decelerate,” Porten said.