Customers are coming to Kura Sushi in greater numbers than a year ago, despite higher prices at the conveyor-belt sushi chain.
The company said Wednesday that traffic began to improve in November, the final month of its fiscal first quarter, and has continued to accelerate into the current quarter.
This followed a 3.5% price hike on Nov. 1, which was more aggressive than the chain’s typical 1%-2% increase.
The results were cause for “exceptional encouragement” at the 83-unit chain, which has struggled to generate traffic growth over the past year. Last quarter was no exception, as same-store sales declined 2.5% year over year. But Kura is forecasting flat to positive same-store sales for the full year, and executives indicated that results are trending in that direction so far this quarter.
They credited some recent marketing efforts for the improvement. The chain is known for its rotating tie-ins with popular anime and video game franchises, and in November, its “One Piece” promotion performed slightly better than expected. December’s “Kirby” promotion was also well-received.
It also scored a hit in November with a limited-time menu item, sakura bacon, available on the chain’s premium Kura Reserve menu.
“We weren't sure how big of a hit bacon sushi would be, but in hindsight, of course, bacon sushi is going to be a slam dunk, and so that really was a big hit for us,” said Benjamin Porten, SVP of investor relations and system development, during an earnings call Wednesday, according to a transcript from financial services site Sentieo.
The fact that customers opted to come in and order more expensive items indicated to the chain that consumers may be starting to feel a little better after months of angst over the rising cost of living.
Casual sit-down chains like Kura have generally fared better over the past year as consumers gravitate towards value and experiential dining. And executives said Kura’s size and scale give it pricing power relative to mom-and-pop sushi chains that may be less equipped to manage the impacts of inflation and tariffs.
“We don't want to read too much into it, but one possible interpretation [for the traffic growth] is that the 3.5% price that we've taken pales in comparison to the pricing that our competitors are taking,” Porten said.
The chain has had to raise prices to offset rising costs, which have been driven up by the Trump administration’s tariffs on goods from dozens of countries. Kura has been especially impacted by the taxes: Most of its promotional materials, such as toys and other giveaway items, come from China, and it is expecting tariffs to have a 200 basis-point impact on its food costs for 2026. It has been able to negotiate with suppliers to limit some of the damage and is optimistic that tariffs could be rolled back, pending a Supreme Court decision.
Overall, Kura reported an operating loss of $3.7 million last quarter, up from a $1.5 million loss a year ago, and its restaurant-level margins fell to 15.1%, from 18.2%.
The Irvine, California-based company continues to target 20% annual unit growth, with four new restaurant openings last quarter and a maximum of 16 expected for the full year, 10 of which are already under construction.
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