good afternoon ladies and gentlemen thank you for standing by welcome to the kura sushi usa incorporated fiscal first quarter 2026 earnings conference call at this time all participants have been placed in a listen only mode and lines will open for your questions following the presentation please note that this call is being recorded on the call today we have hajime jimmy uba president and chief executive officer jeff yutes chief financial officer and benjamin Gordon, Senior Vice President of Investor Relations and System Development. And now, I'd like to turn the call over to Mr. Gordon.

Thank you, Operator. Good afternoon, everyone, and thank you all for joining. By now, everyone should have access to our Fiscal First Quarter 2026 earnings release. It can be found at www.kurosushi.com in the Investor Relations section. A copy of the earnings release has also been included in the 8K we submitted to the SEC. Before we begin our formal remarks, I need to remind everyone that part of our discussions today will include forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance, and therefore you should not put under reliance on them. These statements are also subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. We refer all of you to our SEC filings for a more detailed discussion of the risks that impact our future operating results in financial condition. Also during today's call, we will discuss certain non-GAAP financial measures which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation nor as a substitute for results prepared in accordance with GAAP, and the reconciliations to comparable GAAP measures are available in our earnings release.

With that out of the way, I'd like to turn the call over to Jimmy.

Thanks, Ben, and happy New Year to everyone for joining you guys want to call today. We are making great progress towards the goals we laid out in our annual guidance and towards achieving competitive comparable sales on a free-year basis. Regarding our goal of 16 new restaurant openings, we have 10 units under construction on top of the four restaurants opened to date. Our commitment to aggressive cost management has reduced G&A as a percentage of sales by 80 basis points on an adjusted basis. We are also able to lever labor as a percentage of sales, renewing our confidence in our ability to improve labor costs by 100 basis points in fiscal 2026. The first quarter has created a strong foundation for us to build on as we enter the easier comparisons of Q2 and Q3. Total sales for the fiscal first quarter was $73.5 million, representing comparable sales growth of negative 2.5%, outperforming the complex expectations we have shared during our last earnings call. We were very pleased to see the sequential improvement at the end of the quarter and for this momentum to have continued past November. Most of its other percentage of sales were 29.9% as compared to the prior year quarter's 29%. As a reminder, we took 3.5% price on November 1st, so Q1 did not see the true quarter benefit. Also, as we have previously discussed, we expect full-year coax to be around 30% after considering the impact of tariffs and achieving the full benefit of our menu price adjustment. Labor as a percentage of sales was 32.5% as compared to the prior year period of 32.9% due to a number of initiatives relating to operating costs. Shifting to real estate, we opened four restaurants in the first quarter, Arcadia and Modesto in California, and Freefold and Lawrenceville in New Jersey. We currently have 10 restaurants under construction, including one in Tulsa and one in Charlotte, both of which are new market for us. As we have mentioned in the last earnings call, Fiscal 25 was the strongest class in recent memory, and the restaurants we've opened to date are continuing this trend. We expect to open one more unit in the fiscal second quarter, and for the remainder to open in the back half of the year. Turning to marketing, we are currently engaged in our campaign with Curvy, coinciding with release of Kirby Air Riders for Switch 2. As part of our efforts to maximize the impact of each collaboration, we have introduced IP-themed Insta3 stones and touch panels, which have been well received by our guests. As we mentioned in our last one in the call, research is ongoing for the introduction of reverse program status tiers. We also began advertising our reservation system for the first time during the holidays. In preparation for the Reservation Systems marketing campaign, we have also decoupled the Reservation Systems from our revert program with the hopes of encouraging production by removing the user friction created by a required web download and allowing guests to place reservations directly through the Kula website or our Google Maps pages. In other system development news, the manufacturing of our robotic resources is proceeding on schedule, and we continue to expect to begin installation in Q3 and to have the majority of the 50 eligible existing residents better fitted by the end of the fiscal year. To conclude, we are pleased with the progress we made towards the goals we shared with our annual guidance, we believe we are on the right path to achieving positive comp sales for the year. I would like to express my thanks to everyone of our team members at our restaurants and support centers for their partnership in achieving these goals. Jeff, now I'll hand it over to you to discuss our financial results on the liquidity.

Thanks, Jimmy. For the first quarter, total sales were $73.5 million as compared to $64.5 million in the prior year period. Comparable restaurant sales performance compared to the prior year period was negative 2.5% with a negative traffic of 2.5% and flat price and mix. Comparable sales in our West Coast market were negative 2.8% and comparable sales in our Southwest market were negative 2.7%. Effective pricing for the quarter was 3.5%. On November 1st, we took a 3.5% menu price increase, and after lapping prior year increases, our effective price for the second quarter will be 4.5%. As a reminder, beginning in the first quarter of fiscal 2027, we will no longer provide regional breakdowns for comparable sales, as regional comps are largely determined by the timing of infills, and we do not believe that they are indicative of overall company trends. Turning to costs. Food and beverage costs as a percentage of sales were 29.9% compared to 29% in the prior year quarter due to tariffs on imported ingredients. Labor and related costs as a percentage of sales were 32.5% as compared to 32.9% in the prior year quarter due to pricing and initiatives related operations offset by sales, de-leverage and labor inflation. Occupancy and related expenses as a percentage of sales were 7.9% compared to the prior year quarter's 7.4% due to sales de-leverage. Depreciation and amortization expenses as a percentage of sales were 5.4% as compared to the prior year quarter's 4.8% due to sales de-leverage and remodel costs. Other costs as a percentage of sales were 16.1% as compared to the prior year quarter's 14.5% due to sales due leverage and higher marketing costs. This line is also impacted by tariffs, as some of the expenses in this category come from overseas purchases. General and administrative expenses as a percentage of sales were 13%, which includes 30 basis points in litigation accruals as compared to 13.5% in the prior year quarter. Operating loss was $3.7 million compared to an operating loss of $1.5 million in the prior year quarter, largely due to tariff pressures on our food and beverage costs and other cost line items. Income tax expense was $36,000 as compared to $39,000 in the prior year quarter. Net loss was $3.1 million or negative 25 cents per share compared to a net loss of $1 million or negative $0.08 per share in the prior year quarter. Adjusted net loss, which excludes the litigation accrual, was $2.8 million or negative $0.23 per share as compared to an adjusted net loss of $1 million or negative $0.08 per share in the prior year quarter. Restaurant-level operating profit as a percentage of sales was 15.1% compared to 18.2% in the prior year quarter. The adjusted EBITDA was $2.4 million as compared to $3.6 million in the prior year quarter. And at the end of the fiscal first quarter, we have $78.5 million of cash, cash equivalents, and investments, and no debt. And lastly, I'd like to reiterate our following guidance for fiscal year 2026. We expect total sales to be between $330 and $334 million. We expect to open 16 new units, maintaining an annual unit growth rate above 20%, with average net capital expenditures per unit continuing to approximate $2.5 million. We expect G&A expenses as a percentage of sales to be between 12% and 12.5%, and we expect full-year restaurant-level operating profit margins to be approximately 18%. With that, I will turn things back over to Jimmy.

Thanks, Seth. This concludes our prepared remarks. We are now happy to answer any questions you have. Operator, please open the line for questions. As a reminder, during the Q&A session, I may answer in Japanese before my response is translated into English.

Thank you. And we will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. The confirmation tone will indicate that your line is in the question queue. You may press star 2 if you'd like to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment while we poll for questions. Our first question comes from the line of Sharon Zexia with William Blair. Please proceed with your question.

Hi, thanks for taking the question. Happy New Year. I wanted to talk about the decision to decouple the reservation system from loyalty. Can you talk about kind of what led to that decision? Were you not seeing loyalty members kind of react as you had hoped? And then as you started to market it, what has the early read been potentially bolstering in those shoulder periods, which is what I think kind of was the hoped for scenario with the reservation system?

Hi, Sharon. This is Ben. So in terms of reward member uptake on the reservation system, we're actually extremely pleased more than half of visits by rewards members are being done for the reservation system and so update is frankly better than expected and so that's been very encouraging we really just wanted to open it up to a bigger audience it's a it's a big ask to have somebody install an app just for one function and so we felt let them you know experience how useful it is and then maybe they'll we'll be able to convert them into rewards members after the fact as, you know, obviously we want as many people to join the rewards program as possible as they tend to visit more and spend more per visit. And so that's been very encouraging. We started marketing the reservation system more post-decoupling in the last week of December. And so there's pretty limited data in terms of, you know, what we've seen in that one week of advertising. But what is really encouraging is that for the people that have tried it, it, they basically use it forever. And so, I think it's just a matter of awareness, and there remains upside to be unlocked through the reservation system.

Thanks for that, and then it sounded like trends ended more strongly as you went throughout the quarter, and it sounds like that continued through December. And I know you reiterated, I think, plans for slightly positive comps for the year. Jeff, just given comparisons do get so easy here in the February quarter, do you expect comps to be positive as well in the February quarter? Sure.

Thank you for your question, Sharon. Please answer your question in Japanese. When you're going to translate. So if the expected expected to be a Q2 is a good one, the Q2 is a good one. And I think that the full year of the Q2 is a good one. I'll just go ahead and ask you a question.

Sure. So in terms of our expectations regarding Q2 COPs, we absolutely expect positive COPs. In the November call, we mentioned our negative mid-single digit expectations for Q1 COPs. They came in at negative 2.5%, which, you know, obviously indicates that November ended up being a very strong month. One particular item that's been of exceptional encouragement for us is that following the November – we took pricing on November 1st, but November traffic and price mix improved over the prior month. And that trend has also continued into Q2. And so, standing where we are today, you know, a month and change into the quarter, We feel very good about QQ COMPs.

Great.

Thanks, Ryan.

Thank you. And our next question comes from the line of Jeremy Hamblin with Craig Hamblin. Please proceed with your question.

Thanks for taking the questions. And I wanted to hit on a couple of the kind of cost line items here. You know, so first question regarding food costs is, you know, we don't know what's going to happen with tariffs. Clearly, it's been a significant headwind. I think, Jeff, you'd called out maybe about 200 basis points for FY26. But if there were a change as we started to see some relief on tariffs impacting food costs. How long would it take for that to flow into your financials? Would it be 60 days, 90 days, if that change were to happen? And then also wanted to just ask about other operating expense category, which I think includes utilities, repairs and maintenance, insurance, credit card fees, et cetera, you know, just to get a sense for, you know, let's say the expected impact that you might have on that category with, let's say, a positive two and a half comp versus a down two and a half comp that you had in Q1. What type of, you know, leverage, deleverage would you see under that hypothetical?

Yeah. Hey, Jeremy.

I'll answer the question on food costs and then I'll turn it over to Jimmy to give some color on the other cost line item. But as it relates to food costs, we mentioned in the past, generally we buy four to six months worth of product. So it'll take a little bit of time to get through the product that we have on hand in order to see, you know, a benefit and a reduction in tariffs. That being said, where food cost is ending up for the year and our 30% estimate, I'm quite pleased with that number. When we first started looking at this, it could have been a 300, you know, somewhere between 300 and 400% impact. But because of the great negotiations that were done with suppliers, as well as negotiating just the prices of things, you know, tariffs aside, I'm very pleased with that 30% number. If the tariffs are reduced or do go away, that number could get back into the 28th again, where it was. And that's really the only headwind that we've really seen as far as COGS is uncontrollable inputs such as tariffs. So we're optimistic. We'll see what happens over the next few months as it relates to tariffs. But ending up with a 30% number is still something that we as a company are pretty proud of, given the headwinds that the tariffs pose to us.

うりの多いですので、まぁこれ30%くらいですね簡単価格 要っていうのが非常に大きくなっています あとはですねあのジキルでもエンションしたようにあの上げの出歴ですねあのまあ başka とは言えままでと5%ですので名古屋 でレバレッジによってこといじゃあのこの他型ルーム中の固定内でそれも上昇してます ではとまああの裾崇熱もですねまあここ最近ずっと上がっているとこれら複合的な要因で

In terms of the other cost line item, the biggest impact, unfortunately, for other costs as well was tariffs. Most of our promotional materials come from China. So our Bikra Pond toys, our giveaway items, those come from China and they've been experiencing pretty heavy tariffs. And so that's been a meaningful pressure on the other cost buying item. And Jeremy, as you mentioned, the sales deal leverage that we had, while the comps came in better than expected, they were still negative. And so we saw, you know, sales deal leverage on fixed and semi-fixed costs. Utilities were up just on an absolute basis. We've seen that broadly across our restaurant base. And then lastly, the pricing that we took, we took in November. And so we did not receive that benefit in September or October. And in terms of... Please. That being said, with the pricing that we took in November, in spite of the pricing that we took on November 1st, We saw traffic improve in November and December. We also saw price mix improve in November and December. And we expect to, you know, for that to flow through and give us better leverage on our other costs, which we're actually, we're already starting to see. And so that's really encouraging for where we'll land at the end of the quarter.

Got it. Thanks for taking the questions and good luck. Thanks, Jeremy.

Thank you. And our next question comes from the line of Andrew Charles with T.D. Cowan. We'll proceed with your question.

Thank you, guys. Jeff, I want to check with the shelf registration that you guys saw last week. You know, what are you monitoring for as you think about when you would potentially tap into it?

You know, I haven't really given a timeline on that. You know, when we did the capital raise a year ago, Andrew, in November of 2024, you know, my thought was, you know, potentially that could be the last one. Right now, where we're looking at where, you know, restaurant-level margins at 18% versus 20% just for good corporate housekeeping and to be ready when the time comes, if it does. Just wanted to have that shelf registrate to save it out there and be ready, but we still have $75 million worth of cash and investments on our balance sheet. So we're pretty liquid, pretty strong on that side, but it's just something I wanted to have out there in case the time comes. Certainly want to keep an eye on where the share price is and if the share price becomes attractive And there was a reason we wanted to go empty capital.

It's just being ready. Okay. That's helpful context. And then within the reiterated 18% rational margins, you know, here you're on the 30% COGS target, here you're on about 32% labor. But I'm just curious, does the margin target embed any additional price in 2026?

I'm just trying to better understand the opportunities to improve the other operating costs amid the tariffs. 先ほどお話した通り、プラッティングによって、あるいはコストの中のフィクトコストが刺さってくると思いますし、あとプラッティングによって特にレーバーコスト、原価全てのフィクトコストが改善されるので、基本的には18%というのはQ1の結果をもってしても問題ないと思っています。 And the results of the Q1, we have 18% of the results. We have a number of 12% of the results that we have seen in the last year. Can you give us a comment about the 15% of the annual guidance?

Relating to the 18% annual guidance that we provided in the November call, that already contemplated the 15% restaurant level operating profit margin we had for Q1, And so there's, you know, we're fully on track and relative to our own expectations. In terms of the pricing, we feel that our, as it stands today, we have no further expectations to take price in fiscal 26. We think the pricing that we took on November is adequate. The flow through that we're seeing is actually better than expected. And so that's really encouraging there. And, yeah, between those two things, we remain extremely confident about that 18% full-year target. And on another note, So following the November pricing, we're actually – we're already seeing leverage on our labor cost line. Earlier than expected, it's really encouraging making it – making us that much more confident in terms of hitting that 100 basis point labor leverage number and opening up the possibility for, you know, maybe even better than 100 basis points.

Very good. Thank you, guys.

Thanks, Andrew.

Thank you. And our next question comes from the line of Jeffrey Bernstein with Barclays. please proceed with your question.

Thank you very much. First question is just on the comp trends. You talked about the improvement to close the quarter and seemingly sustaining into the second quarter and very confident in that positive for the second quarter. I'm just trying to unpack how much you think is due to your own company specific efforts versus the macro. I know there's lots of near-term benefits from lapping inclement weather and lapping the tariff headwinds and maybe benefits from tax refunds and stimulus. So just trying to get your sense for how much you attribute to your own internal initiatives versus maybe your confidence of the broader industry that will accelerate from here with those factors or if you don't believe that to be the case, perhaps why not. And then I had one follow-up.

Looking to Q1, we outperformed the industry on a number of metrics, which we're very encouraged by. That was really par for the course for us historically. It hasn't been the case necessarily for the last year, and so to return to that position has been very encouraging. We think the promotions that we had in November played a big part. And really, to Denny's earlier comment about the biggest element of surprise in terms of November, that was the pricing flow through and the traffic growth that we saw post-price. And so your commentary about macro, I mean, it's still just a couple months, but that we interpret as an improvement in the consumer and so that that's very encouraging there in terms of other company specific you know comps that comp benefit starts in december and so uh november would not have benefited from that And when we were speaking about the industry comparisons, I meant to say November onwards, not Q1. Gotcha.

And just to clarify about a two-year stack, and if you held that first quarter trend, it would imply maybe a positive 4 or 5 percent in the second quarter as you're comparing to you by, I think, 700 basis points. So I'm just trying to clarify, I think you said you assume modest positive comp for the full year, just trying to clarify that, and did your trend in November and December improve on a one-year or a two-year stack basis? Just trying to get the sense for the underlying momentum versus just comparisons. Please, please.

I would like to give you a comment on the performance performance without providing commentary on the comp performance to date.

We remain very very confident about our ability to hit flat to slightly positive comps. The momentum as we added the quarter was very encouraging. And to Jimmy's repeated comments, that momentum has continued. And so we feel very good about achieving that flat deposit of comp for the full year.

Understood. And then just to clarify, I think you said we know you opened four units in the first quarter and you have 10 more. I'm guessing it's not surprising to you or maybe you turn these units around faster. But you're talking about 16 for the full year. It seems that you already have 14 with good visibility. I'm just wondering how much lead time is needed in terms of construction that you're confident in that 16-plus relative to the 14 you have visibility on today.

Looking at the Fiscal 26 pipeline, we think that The 16-unit target as the upper bound, we continue to think that's the appropriate target. We don't expect that to change. There might be a little bit of benefit in terms of faster lead times, but that's not really something that we expect. It should pretty much be business as usual. So we open four in Q1. We expect to open one in Q2, and the remainder are in the back half. Yeah, and so for those 10 units, a lot of them just broke ground. And so, yeah, if you keep that in mind for modeling purposes, that'd be great.

Normally, you have two more to get you to that 16 that maybe haven't broke ground yet, but you have a good line of sight to.

Yes. Yes. Thank you.

Thank you.

Thank you. And our next question comes from the line of John Tower with Citi. Please proceed with your question.

Great. Thanks for taking the question. Maybe just circling back to a comment that, Jimmy, you had just made, or maybe, Ben, it was you, in response to the question. You had mentioned that the promos that you had done in November had played a decent part in terms of getting some traffic back into stores and lifting sales. Can you dig into that a little bit? Like, what exactly did you do during that window? Is it something that you feel like you can repeat in the future? and how can you or is it something that was just one off and you don't expect to bring to future windows I think that's what I think.

I think that's what I think is really important. So I think that's what I think. 12 months' next year, I think that's not what I think. But I think that's what I think. I think that's what I think. So, it's not the same thing, but it's not the same thing, but it's not the same thing, but it's not the same thing, but it's not the same thing, but it's not the same thing.

John, so as it relates to November, we had our second One Piece giveaway, and that outperformed our expectations a little bit. We had a gift card promotion. We typically have whatever years we get closer to the holidays, but really the biggest factor for the November outperformance was our LTO, our Kerr Reserve. This month, or for November, the sort of theme item was Sakura Bacon, and we weren't sure how big of a hit Bacon Sushi would be, but in retrospect, in hindsight, of course Bacon Sushi is going to be a slam dunk, and so that really was a big hit for us. In terms of whether or not it's replicable, we're not – we don't have plans to, you know, have another soccer vacant, but there's nothing to preclude that in the future. Certainly, we're putting as much energy as we can into our LTOs. We know that that's a really – you know, it's another lever for us. But looking to December, while we don't have, you know, another LTO, a food LTO along those lines, we have our most exciting IP of the year, Kirby. And so we're, you know, not to give a dead horse, but we're really happy with how December's shaken out. Okay.

Yeah, and that kind of leads to a question just regarding, you had mentioned earlier the idea of advertising the reservation system and reservation program more broadly to the non-rewards members. And I'm just curious to hear where you guys think the brand, well, where the brand is today with respect to broad advertising, which i don't think it does much of but where you want to be over time either as a percentage sales you know what mediums you want to go in and frankly where the message should be to guests is it more about hey this is what core sushi is or is it more about a call to action in terms of lto's like you know whether it's the the core reserve or it's the curvy ip tie-in um you know if you could expand on that would be great.

Yeah, so I wouldn't expect us to do anything like television advertising. We're very happy with the marketing efforts to date. We think that they've done a phenomenal job just in terms of spending our ad dollars effectively, primarily on social media influencers, et cetera. But those have been exceptional in terms of return on ad spend. And I would say that there's probably going to be more of an emphasis on call to actions, to your point. Our rewards members very much are moved by call to action, and so that's going to be an ongoing point of focus, especially because they're continuing to trend upward in terms of spend, which is great.

Okay. So just rewards members in general now that we're pretty far, I think we're a year in or so, maybe I'm off a little bit, but can you speak to how they have moved in terms of either frequency and or spending levels versus where we started off, you know, a year or so ago?

Yeah, so we're now up to a million members. If we're counting newsletter members, it's actually 1.7 million members, and so that's really been very aggressive growth thanks to the efforts of the marketing team. And in terms of spend, a two-person ticket, per person they spend about $6 more on. And so that's a pretty meaningful difference. And they visit more than twice or even triple a non-member.

Okay, awesome. I will pass it along. I appreciate you taking the question.

Thank you, John.

Thank you. And our next question comes from the line of Mark Smith with Lake Street Capital. Please proceed with your question.

Hi, guys. I'm curious if there's any other demographic or geographic trends that you saw in the quarter or even post-quarter that are worth calling out. For instance, I'm curious if you saw any impact when government shutdown ended. Did that drive any incremental traffic or spend or anything else to call out here in the quarter?

There are 22 stores, but most of the stores are 1 stores, so there is no big difference in any of these things. In March 11th, the traffic, and the traffic, and the traffic, the traffic, and the traffic, the traffic, the traffic, and the traffic, the traffic, the traffic, and the traffic. And of course, the region's impact has been greatly affected by the current current, and the current current impact has been affected by the current current.

So, the major change that we have seen is just the broad based improvement from November onward, really are not seeing any sort of differences on a regional or geographic basis. As we've mentioned in the past, the differential between any given region in terms of comp performance is really driven more by the timing of infills than anything else. And so it's really just been a broad-based improvement, both in traffic and ticket. And so that's been really, I guess I keep coming back to the word encouraging, but it really has been encouraging. Excellent.

And then as we look at restaurant level margins, I'm curious if you can talk about comp units versus non-comp restaurants, kind of where the margins are shaking out for each, and then if we've seen any real change over time in one or the other.

So, we haven't really commented too much on the difference between comp and non-comp unit performance. What we have said is that historically, new units have pretty strong honeymoons. They'll have elevated revenues, but they're not as efficient as, you know, managing costs as a more seasoned restaurant. And so the RLOPMs, they actually end up shaking about the same.

That's helpful. Thank you.

Thank you, Mark. Thank you, Mark. Thank you. And our next question comes from the line of James Sanderson with the North Coast Research. Please proceed with your question.

Hey, thanks for the question. I wanted to go back to the labor line item. Just wondering if you could walk through any milestones or key drivers operationally that you'll need in order to achieve that 100 basis point improvement and when we can expect that to build in the next three quarters.

Yes, I think that's what I'm going to say. That's why I'm very encouraged. That's why I had the three initiatives in Q3. I mean, Q1 is a big deal, but in Q2, in the 12th and 11th season, I'm very happy. As I said, 100 basis points, I think it's possible to improve the changes that are very high.

Hi, James. In terms of labor, As it relates to Q1, the biggest driving factor was the pricing that we've taken. We feel that we're making great progress in terms of the leverage that we expect to make for the full year and have no concerns about hitting that 100 basis point target. And, in fact, you know, feel that there is a real possibility that we'll be able to get there even, to get even beyond 100 basis points of leverage. In terms of the factors that need to go right, so to speak, for us to hit that, those are already in play or in place they're largely going to be driven by the initiatives that we put in the last fiscal year so the reservation system the the new touch panels the new mr. fresh tones those cumulatively will get us at least those hundred basis points and the any sort of labor initiative just the the benefit trends along with seasonality and so we were frankly a little bit surprised to see benefit as early as we did and we just expect that to become more pronounced as sales grow and we're better able to leverage fixed costs.

Okay so not necessarily need to see the robotic dishwashers and other technology and into the store in order to achieve that gain.

Yeah, so the robotic dishwashers are contemplated in that 18%, but the impact is going to be pretty minimal for the full 18% ROLPM. And so we'll see even more benefit as we enter fiscal 27 and we've got, you know, more of the system updated to have the robotic dishwashers. And so if we're able to implement these sooner than expected, then that's a potential point of opportunity as well.

All right, all right, very good. Could you also review the collaborations you offered in the first quarter if they performed to your expectations?

In terms of Q1's collaborations, We had Demon Slayer in September, that was the second month of Demon Slayer, and then we had one piece in October and November, both met our expectations.

Okay, very good. Last question for me, I just wondered if you had thought about your long-term growth target rate of about 300 units in the United States, if you had revised that.

If we do have plans for a formal update, we'll be sure to let everybody know, but in the meantime, we will let the analysts provide their own estimates on that bigger number.

All right. Thank you very much. Thank you.

Thank you. Our next question comes from the line of George Kelly with Ralph Capital Partners. Please proceed with your question.

Hey, everyone. Thanks for taking my questions. So, first one, just to revisit the tariff conversation, just want to make sure I'm capturing everything properly. So, your 30% COGS target for the year base, and is it a 200 basis point impact from tariffs? And then can you quantify the tariff impact on your other expense line?

Well, other cost line in terms of price to give away, but it's about 150 basis points so it's about 30% so it's about 40 basis points to 50 basis points. It's about pricing. It's about pricing. It's about pricing.

Hey George. George, as it relates to the other costs, the impact was largely on the promotional items, the Bickro Pond prices and the giveaways. Cumulatively, as a percentage of sales, there was about a 40 to 50 basis point impact from This is pre-pricing, and so, you know, the post-November results, that should ease a little bit, but it is a pretty meaningful step up in our promotional costs.

And then, Jeremy, George, on cost of goods sold, on cost of goods sold, 30% of is where we think it's going to end up for the year. It is about a 200 basis point impact, but we've had some other pretty good negotiations that have offset that a little bit. So when you look at the math from last year to get to 30%, I think it's like it'll end up being like 150 basis points, you know, delta between the two years. But the tariff impact alone is pretty significant at 200 basis points, but we've had some other good negotiations to offset that a little bit, which is why we ended up 30% for the year.

Okay, okay, helpful. And then second question I had is just related to promotions. You sound very pleased with how Kirby is performing. So I guess the question is, is the performance there, you know, I understand Kirby, that's a big, you know, draw a big, big partner. But how have you executed it differently? Is it partly sort of an internal execution issue? Maybe you're monetizing it better or advertising it better. So I wonder if that's sort of part of the reason. And then a second question is, can you talk at all about your future plans promotions for the remainder of the year?

Yes. I'm going to talk about the Prepaid Remax. Mr. Fresh's Dome, or Touch Panel Upgrade, and have been a lot of support for this past. So, we've improved the collaboration with the space. So, I'm very happy to talk about this.

As it relates to Curvy, there were a number of things we tried for the first time, with this collaboration we have these customized Mr. Fresh domes and so instead of you know just a clear dome you have a Kirby protecting your sushi and we also updated the touch panels to be Kirby themed these are both very well received by guests we really want to try to just keep trying new things and continue to grow the experience and so the guests feel that much more that you know it's something that can't be missed and we are very uh very pleased with the results okay that's great and can you comment at all about future plan promotions for this year oh yeah sorry um sure so uh curvy runs through the end of january and then we have uh sanrio for February. And then March and April, we have Jujutsu Kaisen to coincide with their new anime season.

Thank you. Thanks, George. Thank you, Tom.

Thank you. And our final question comes from the line of Todd Brooks with BenchmarkstoneX. Please proceed with your question.

Great, thanks, and thanks for squeezing me in. Appreciate it. Couple questions, a few leftovers here. If we're thinking about the same-store sales guidance you provided for the full year and the price increase that we took at the beginning of November what's the right way to think about uh p-mix for the balance of the year as we're kind of building into a component of same-store sales um uh uh yeah In terms of the components of COMP, we'd be pretty low to share the price and mix expectations just given

Well, you know, early results post the November pricing have been very, very encouraging. It's really just two months, and so it's hard for us to extrapolate onwards or outwards. That being said, we do feel very confident that we'll be able to achieve that flat to slightly positive, just based off of our trajectory to date, as well as the easier comparisons that we're enjoying now.

Yeah, fair enough. Back in the other class, I just wanted to clarify. when you talk about elevated marketing cost was that referring to kind of the promotional cost around tariff-related or upon pressures and exactly okay so as far as marketing spend on the brand itself there's really no change year over year this was that tariff related pressure that you were pointing to on What do you think?

As it relates to other costs, if we're comparing year over year, the comps for the prior year quarter were 1.8% against the negative 2.5% that we've posted for the current quarter. And so that alone gets you pretty meaningful deleverage. So that, together with the tariff impact, is how we got to the current quarter's other costs. That being said, in terms of the comp being a drag and deleveraging, we expect that dynamic to flip with Q2 as we comp positively. We expect the other costs to stabilize.

Okay, great. And the final one for me, and this goes back when you guys talked about the environment coming out of the pandemic and just the kind of competitive decimation, the closures that you've seen. I'm just thinking about if you guys are absorbing two-hour basis points of tariff pressure, if we start to think about independent competitors and absorbing that kind of 300 to 400 basis points of pressure that Jeff was talking about related to tariffs, are we seeing another wave of kind of mom-and-pop type of closures as you're continuing to roll out across the country here where you've just got a more open runway as you continue to grow your footprint?

Unfortunately, yes. Yeah, it's a weird thing to say.

I'll go ahead.

Yeah, I mean, we can't quantify it, and it's never good to see people go out of business, but this is a pretty consistent pattern. Whether or not, you know, there are going to be closures on the scale of the pandemic, I mean, I don't think that'll be the case. But regardless of whether a restaurant closes out right, I still think that we'll be able to capture traffic just because the pricing that our direct competitors are taking to offset their costs are only serving to highlight the incredible value that we offer.

Also, this is about 2 months just not yet, but 11月, I think 3.5% is quite big, but I think it's a huge amount of I think it's a traffic or price-and-mix that's not So it's just that other individual restaurants compared to I think it's a lot of support, so I think it's a lot of support I think it's a lot of support, so I think it's a lot of support It might be too fast, but I will tell you how to encourage this early result.

And then, looking to November, we took 3.5% pricing. Granted, 2.5% was rolling off, and so we were offsetting, a big part of the pricing was to offset that, but 3.5% is an unusually large step up for us. we typically price in increments of one to 2% historically. And the fact that, you know, traffic and mix have only grown since is extremely encouraging. You know, it's only been a couple months, and so we don't want to read too much into it, but one possible interpretation is that the 3.5% that we've taken tails in comparison to the pricing that our competitors are taking, and that is why our traffic grows in spite of the pricing.

Okay, great, thank you all. Thank you, Todd.

Thank you. and ladies and gentlemen that does conclude today's question and answer session as well as today's teleconference we thank you for your participation you may disconnect your lines at this time and have a wonderful day.