Kura Sushi USA, the 21-unit chain of revolving sushi bars, plans to raise $58 million in an initial public offering, the company revealed in federal securities filings last week.
It would be the first traditional IPO in the restaurant industry since 2015 and would also be one of its smallest: The company generated $52 million in sales in its last full fiscal year, when its adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, was $4.5 million.
But the company has the backing of its Japanese parent and believes that its unique, technology-infused offering will resonate with consumers to help it grow quickly.
Kura Japan is a 35-year-old chain with more than 400 units worldwide. It established its U.S. subsidiary in 2008 and then opened its first location in Irvine, Calif., the next year. The chain has grown steadily since.
Kura Sushi operates locations in California, Texas, Georgia and Illinois, and the company believes it has the ability to operate more than 290 locations in the U.S., according to a filing.
Kura expects to grow unit count by 20% per year over the next five years. The chain was included in the Restaurant Business Future 50 list last year.
The company uses technology throughout to increase efficiency and lower costs, according to a Securities and Exchange Commission filing. It uses conveyor belts to serve sushi to customers. In the kitchens, it has automated equipment, sushi robots, robotic arms, RFID readers and food replenishment algorithms to reduce labor and food costs.
Kura boasts average unit volumes of about $3.5 million and says that its same-store sales have risen 10 of the past 11 quarters. The company’s menu features 140 dishes, the majority of which are priced below $3.
Average check was $19.14 in the first nine months of Kura’s 2019 fiscal year.
Revenues in the first nine months of the company’s current fiscal year ended May 31 were up 23%, to $45.5 million. Operating income and net income were both down, however.
Same-store sales were up 4.9% in the first nine months, while restaurant-level profit margin increased slightly, to 19.2% of sales, according to SEC filings.
A restaurant company has not had a traditional IPO since Wingstop and Fogo de Chao both went public in June 2015.
A few companies, however, have gone public using other means, including small-scale mini IPOs, as Fat Brands did in late 2017, or reverse mergers, a mechanism Chuck E. Cheese’s parent CEC Entertainment is currently using.