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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended February 28, 2025


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 001-39012

KURA SUSHI USA, INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware	26-3808434
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
17461 Derian Avenue, Suite 200 Irvine, California	92614
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (657) 333-4100

Securities registered pursuant to Section 12(b) of the Act:

     Title of each class

     Trading
Symbol(s)

     Name of each exchange on which registered

     Class A Common Stock, $0.001 par value per share

     KRUS

     The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 1, 2025, the registrant had 11,085,419 shares of Class A common stock, $0.001 par value per share, outstanding and 1,000,050 shares of Class B common stock, $0.001 par value per share, outstanding.

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements (Unaudited)	1
	Condensed Balance Sheets	1
	Condensed Statements of Operations and Comprehensive Loss	2
	Condensed Statements of Stockholders’ Equity	3
	Condensed Statements of Cash Flows	4
	Notes to Condensed Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4.	Controls and Procedures	23
PART II.	OTHER INFORMATION	24
Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3.	Defaults Upon Senior Securities	24
Item 4.	Mine Safety Disclosures	24
Item 5.	Other Information	24
Item 6.	Exhibits	26
Signatures		27

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Kura Sushi USA, Inc.

Condensed Balance Sheets

(amounts in thousands, except par value)

(Unaudited)


	February 28, 2025			August 31, 2024
Assets
Current assets:
Cash and cash equivalents	$	85,171		$	50,986
Accounts and other receivables		3,704			4,573
Inventories		2,354			2,219
Due from affiliate		14			166
Prepaid expenses and other current assets		3,450			3,391
Total current assets		94,693			61,335
Non-current assets:
Property and equipment – net		154,077			138,589
Operating lease right-of-use assets		140,800			123,682
Long-term investments		15,106			—
Deposits and other assets		5,696			4,916
Total assets	$	410,372		$	328,522

Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	7,190		$	8,977
Accrued expenses and other current liabilities		5,226			4,261
Salaries and wages payable		8,022			8,310
Operating lease liabilities – current		12,569			10,674
Due to affiliate		816			373
Sales tax payable		1,642			1,904
Total current liabilities		35,465			34,499
Non-current liabilities:
Operating lease liabilities – non-current		148,832			130,677
Other liabilities		1,030			808
Total liabilities		185,327			165,984
Commitments and contingencies (Note 8)
Stockholders' equity:
Preferred stock, $0.001 par value; 1,000 shares authorized, no shares issued or outstanding		—			—
Class A common stock, $0.001 par value; 50,000 shares authorized, 11,085 and 10,253 shares issued and outstanding as of February 28, 2025 and August 31, 2024, respectively		11			10
Class B common stock, $0.001 par value; 10,000 shares authorized, 1,000 shares issued and outstanding as of February 28, 2025 and August 31, 2024		1			1
Additional paid-in capital		262,763			195,515
Accumulated deficit		(37,730	)		(32,988	)
Total stockholders' equity		225,045			162,538
Total liabilities and stockholders' equity	$	410,372		$	328,522

The accompanying notes are an integral part of these condensed financial statements.

Kura Sushi USA, Inc.

Condensed Statements of Operations and Comprehensive Loss

(amounts in thousands, except per share data)

(Unaudited)


	Three Months Ended						Six Months Ended
	February 28, 2025			February 29, 2024			February 28, 2025			February 29, 2024
Sales	$	64,894		$	57,291		$	129,350		$	108,766
Restaurant operating costs:
Food and beverage costs		18,630			16,935			37,297			32,300
Labor and related costs		22,593			18,924			43,828			35,334
Occupancy and related expenses		5,099			3,953			9,853			7,861
Depreciation and amortization expenses		3,286			2,694			6,377			5,170
Other costs		8,780			8,200			18,121			15,644
Total restaurant operating costs		58,388			50,706			115,476			96,309
General and administrative expenses		10,985			8,168			19,718			16,777
Depreciation and amortization expenses		110			107			219			211
Total operating expenses		69,483			58,981			135,413			113,297
Operating loss		(4,589	)		(1,690	)		(6,063	)		(4,531	)
Other expense (income):
Interest expense		13			12			26			20
Interest income		(859	)		(754	)		(1,424	)		(1,594	)
Loss before income taxes		(3,743	)		(948	)		(4,665	)		(2,957	)
Income tax expense		38			50			77			88
Net loss	$	(3,781	)	$	(998	)	$	(4,742	)	$	(3,045	)
Net loss per Class A and Class B shares
Basic	$	(0.31	)	$	(0.09	)	$	(0.40	)	$	(0.27	)
Diluted	$	(0.31	)	$	(0.09	)	$	(0.40	)	$	(0.27	)
Weighted average Class A and Class B shares outstanding
Basic		12,073			11,179			11,737			11,162
Diluted		12,073			11,179			11,737			11,162

Other comprehensive income:
Unrealized gain on short-term investments	$	—		$	30		$	—		$	33
Comprehensive loss	$	(3,781	)	$	(968	)	$	(4,742	)	$	(3,012	)

The accompanying notes are an integral part of these condensed financial statements.

Kura Sushi USA, Inc.

Condensed Statements of Stockholders’ Equity

(amounts in thousands)

(Unaudited)


	Common Stock								Additional					Total
	Class A				Class B				Paid-in		Accumulated			Stockholders'
	Shares		Amount		Shares		Amount		Capital		Deficit			Equity
Balances as of August 31, 2024		10,253	$	10		1,000	$	1	$	195,515	$	(32,988	)	$	162,538
Stock-based compensation		—		—		—		—		1,152		—			1,152
Employee stock plan		11		—		—		—		493		—			493
Issuance of common stock in connection with follow-on public offering, net of underwriter discounts and issuance costs		800		1		—		—		64,354		—			64,355
Net loss		—		—		—		—		—		(961	)		(961	)
Balances as of November 30, 2024		11,064	$	11		1,000	$	1	$	261,514	$	(33,949	)	$	227,577
Stock-based compensation		—		—		—		—		1,102		—			1,102
Employee stock plan		21		—		—		—		147		—			147
Net loss		—		—		—		—		—		(3,781	)		(3,781	)
Balances as of February 28, 2025		11,085	$	11		1,000	$	1	$	262,763	$	(37,730	)	$	225,045


	Common Stock								Additional					Accumulated			Total
	Class A				Class B				Paid-in		Accumulated			Other Comprehensive			Stockholders'
	Shares		Amount		Shares		Amount		Capital		Deficit			Income			Equity
Balances as of August 31, 2023		10,147	$	10		1,000	$	1	$	188,771	$	(24,184	)	$	43		$	164,641
Stock-based compensation		—		—		—		—		1,034		—			—			1,034
Employee stock plan		8		—		—		—		110		—			—			110
Net loss		—		—		—		—		—		(2,047	)		—			(2,047	)
Other comprehensive income		—		—		—		—		—		—			3			3
Balances as of November 30, 2023		10,155	$	10		1,000	$	1	$	189,915	$	(26,231	)	$	46		$	163,741
Stock-based compensation		—		—		—		—		1,080		—			—			1,080
Employee stock plan		71		—		—		—		1,427		—			—			1,427
Net loss		—		—		—		—		—		(998	)		—			(998	)
Other comprehensive income		—		—		—		—		—		—			30			30
Balances as of February 29, 2024		10,226	$	10		1,000	$	1	$	192,422	$	(27,229	)	$	76		$	165,280

The accompanying notes are an integral part of these condensed financial statements.

Kura Sushi USA, Inc.

Condensed Statements of Cash Flows

(amounts in thousands)

(Unaudited)


	Six Months Ended
	February 28, 2025			February 29, 2024
Cash flows from operating activities
Net loss	$	(4,742	)	$	(3,045	)
Adjustments to reconcile net loss to net cash provided by operating activities
Depreciation and amortization		6,596			5,381
Stock-based compensation, net of amounts capitalized		2,207			1,972
Bond premium amortization		155			—
Changes in operating assets and liabilities:
Accounts and other receivables		1,020			(176	)
Inventories		(135	)		(126	)
Due from affiliate		152			72
Prepaid expenses and other current assets		375			834
Deposits and other assets		112			32
Accounts payable		(829	)		(946	)
Accrued expenses and other current liabilities		1,454			829
Salaries and wages payable		(288	)		(85	)
Operating lease liabilities and assets		2,915			1,704
Due to affiliate		(6	)		(12	)
Sales tax payable		(363	)		(216	)
Net cash provided by operating activities		8,623			6,218
Cash flows from investing activities
Payments for property and equipment		(23,109	)		(22,845	)
Payments for initial direct costs		(135	)		(174	)
Purchases of liquor licenses		(891	)		(120	)
Purchases of investments		(25,261	)		(3,500	)
Maturities and redemptions of investments		10,000			5,999
Net cash used in investing activities		(39,396	)		(20,640	)
Cash flows from financing activities
Repayment of principal on finance leases		(36	)		(44	)
Taxes paid on vested restricted stock awards		(256	)		(368	)
Proceeds from exercise of stock options		896			1,905
Proceeds from the follow-on public offering, net of discounts and commissions		64,626			—
Payments of costs related to the follow-on offering		(272	)		—
Net cash provided by financing activities		64,958			1,493
Increase/ (decrease) in cash and cash equivalents		34,185			(12,929	)
Cash and cash equivalents, beginning of period		50,986			69,697
Cash and cash equivalents, end of period	$	85,171		$	56,768
Supplemental disclosures of cash flow information
Cash paid for income taxes	$	34		$	112
Noncash investing activities
Acquisition of finance leases	$	114		$	28
Amounts unpaid for purchases of property and equipment	$	1,899		$	2,394
Stock-based compensation capitalized to property and equipment, net	$	47		$	142

The accompanying notes are an integral part of these condensed financial statements.

Kura Sushi USA, Inc.

Notes to Condensed Financial Statements

(Unaudited)

Note 1. Organization and Basis of Presentation

Kura Sushi USA, Inc. is a technology-enabled Japanese restaurant concept that provides guests with a distinctive dining experience by serving authentic Japanese cuisine through an engaging revolving sushi service model, which the Company refers to as the “Kura Experience.” Kura Sushi encourages healthy lifestyles by serving freshly prepared Japanese cuisine using high-quality ingredients that are free from artificial seasonings, sweeteners, colorings, and preservatives. Kura Sushi aims to make quality Japanese cuisine accessible to its guests across the United States through affordable prices and an inviting atmosphere. “Kura Sushi USA,” “Kura Sushi,” “Kura,” “our” and the “Company” refer to Kura Sushi USA, Inc. unless expressly indicated or the context otherwise requires.

Follow-On Offering

On November 13, 2024, the Company completed an underwritten public offering of common stock pursuant to the Company’s universal shelf registration statement on Form S-3, selling an aggregate of 800,328 shares of Class A common stock, including the exercise in full of the underwriters’ option to purchase 104,390 additional shares, at the price of $85.00 per share less an underwriting discount of $4.25 per share. The Company received aggregate net proceeds of $64.4 million after deducting the underwriting discounts and commissions and offering expenses payable by the Company. The proceeds are to be used for general corporate purposes, including capital expenditures, working capital, and other business purposes. No payments were made by the Company to directors, officers or persons owning 10% or more of the Company’s common stock or to their associates, or to the Company’s affiliates.

Basis of Presentation

The accompanying unaudited condensed financial statements (the “Condensed Financial Statements”) have been prepared by the Company in accordance with generally accepted accounting principles in the United States (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. As such, these Condensed Financial Statements should be read in conjunction with the Company’s audited financial statements and accompanying notes included in its Annual Report on Form 10-K for the fiscal year ended August 31, 2024.

The accounting policies followed by the Company are set forth in Part II, Item 8, Note 2, Basis of Presentation and Summary of Significant Accounting Policies, of the Notes to Financial Statements included in the Company’s Annual Report on Form 10‑K for the fiscal year ended August 31, 2024. In the opinion of management, all adjustments necessary to fairly state the Condensed Financial Statements have been made. All such adjustments are of a normal, recurring nature. The results of operations for interim periods are not necessarily indicative of results to be expected for the fiscal year ending August 31, 2025 or for any other future annual or interim period.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation.

Fiscal Year

The Company’s fiscal year begins on September 1 and ends on August 31, and references made to “fiscal year 2025” and “fiscal year 2024” refer to the Company’s fiscal years ending August 31, 2025 and ended August 31, 2024, respectively.

Use of Estimates

Preparing financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods presented.

Significant items subject to such estimates include asset retirement obligations, stock-based compensation, the useful lives of assets, the assessment of the recoverability of long-lived assets, and income taxes. The Company evaluates its estimates and

assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could differ materially from those estimates and assumptions.

Long-Term Investments

Long-term investments consist of long-term U.S. Government Agency debt securities. The Company considers all investments with an original maturity date greater than one year as long-term investments. The carrying value of the long-term investments is equivalent to their amortized cost basis. As of February 28, 2025 and August 31, 2024, long-term investments were $15.1 million and none, respectively. The Company classifies the long-term U.S. Government Agency debt securities as held-to-maturity. As of February 28, 2025, the Company’s holds a portfolio of held to maturity debt securities with an amortized cost basis of $15.1 million, a fair value of $15.0 million and gross unrealized holding losses of $0.1 million. Based on the evaluation of credit risk factors guaranteed by the U.S. government, the Company has concluded that an allowance for credit losses is unnecessary for its long-term investments.

Recently Issued Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, “Disaggregation of Income Statement Expenses”, which requires public companies to disaggregate key expense categories such as inventory purchases, employee compensation and depreciation in their financial statements. In January 2025, the FASB issued ASU 2025-01 “Income Statement-Reporting Comprehensive Income- Expense Disaggregation Disclosures- Clarifying the Effective Date”, which amends the effective date of ASU 2024-03 to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company expects to adopt the guidance in our annual report on Form 10-K for the fiscal year ending August 31, 2028. The Company is currently evaluating the effects of this pronouncement on its financial statements and expects the update to result in additional disclosures.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, which requires greater disaggregation of income tax disclosures related to the income tax rate reconciliation and income taxes paid and effective for fiscal years beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued. The amendments should be applied on a prospective basis although retrospective application is permitted. The Company expects to adopt the guidance in our annual report on Form 10-K for the fiscal year ending August 31, 2026. The Company is currently evaluating the effects of this pronouncement on its financial statements and expects the update to result in additional disclosures.

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The guidance in this update is effective for all public entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company expects to adopt the guidance in our annual report on Form 10-K for the fiscal year ending August 31, 2025. The Company is currently evaluating the effects of this pronouncement on its financial statements and expects the update to result in additional disclosures.

Note 2. Balance Sheet Components

Accounts and Other Receivables


	February 28, 2025		August 31, 2024
	(amounts in thousands)
Lease receivables	$	1,853	$	1,701
Credit card and other receivables		1,851		2,872
Total accounts and other receivables	$	3,704	$	4,573

Property and Equipment - net


	February 28, 2025			August 31, 2024
	(amounts in thousands)
Leasehold improvements	$	117,611		$	100,345
Lease assets		6,135			6,108
Furniture and fixtures		60,911			50,951
Computer equipment		4,286			3,714
Vehicles		273			243
Software		1,017			1,017
Construction in progress		9,211			15,080
Property and equipment – gross		199,444			177,458
Less: accumulated depreciation and amortization		(45,367	)		(38,869	)
Total property and equipment – net	$	154,077		$	138,589

Depreciation and amortization expense for property and equipment was $3.4 million and $2.8 million for the three months ended February 28, 2025 and February 29, 2024, respectively, and was $6.6 million and $5.4 million for the six months ended February 28, 2025 and February 29, 2024, respectively.

Note 3. Leases

The Company has operating and finance leases for its corporate offices, restaurant locations, office equipment, kitchen equipment and automobiles. The Company’s finance leases are not material. The Company’s leases have remaining lease terms of less than 1 year to 30 years, some of which include options to extend the leases.

Lease related costs recognized in the condensed statements of operations and comprehensive loss are as follows:




		Three Months Ended				Six Months Ended
		February 28, 2025		February 29, 2024		February 28, 2025		February 29, 2024
		(amounts in thousands)
Operating lease cost	Classification
Operating lease cost	Occupancy and related expenses, other costs and general and administrative expenses	$	4,031	$	3,237	$	7,835	$	6,298
Variable lease cost	Occupancy and related expenses, and general and administrative expenses		1,030		724		2,021		1,575
Total operating lease cost		$	5,061	$	3,961	$	9,856	$	7,873

Supplemental disclosures of cash flow information related to leases are as follows:


	Six Months Ended
	February 28, 2025		February 29, 2024
	(amounts in thousands)
Operating cash flows paid for operating lease liabilities	$	6,581	$	4,954
Operating right-of-use assets obtained in exchange for new operating lease liabilities	$	19,496	$	11,893

As of February 28, 2025, the Company had an additional $25.0 million of operating lease liabilities related to restaurants for which the Company had not yet taken possession. Subsequent to February 28, 2025, the Company entered into additional operating leases related to restaurants for which the Company has not yet taken possession. The lease liabilities associated with these leases are $22.6 million and expected to commence in fiscal year 2025 and 2026 with lease terms of up to 20 years.

Note 4. Related Party Transactions

Kura Sushi, Inc. (“Kura Japan”) is the majority stockholder of the Company and is incorporated and headquartered in Japan. In August 2019, the Company entered into a Shared Services Agreement with Kura Japan, pursuant to which Kura Japan provides the Company with certain strategic, operational and other support services, including assigning certain employees to work for the Company as expatriates to provide support to the Company’s operations, sending its employees to the Company on a short-term basis to provide support for the opening of new restaurants or renovation of existing restaurants, and providing the Company with certain supplies, parts and equipment for use in the Company’s restaurants. In addition, the Company has agreed to continue to provide Kura Japan with certain translational support services and market research. In exchange for such services, supplies, parts and equipment, the parties pay fees to each other as set forth under the Shared Services Agreement. A right of setoff is not required; however, from time to time, either party will net settle transactions as needed. Purchases of administrative supplies, expatriate salaries and travel and other administrative expenses payable to Kura Japan are included in general and administrative expenses in the accompanying statements of operations and comprehensive loss. Purchases of equipment from Kura Japan are included in property and equipment in the accompanying balance sheets.

In August 2019, the Company entered into an Amended and Restated Exclusive License Agreement (the “License Agreement”) with Kura Japan. Pursuant to the License Agreement, the Company pays Kura Japan a royalty fee of 0.5% of the Company’s net sales in exchange for an exclusive, royalty-bearing license for the use of certain of Kura Japan’s intellectual property rights, including, but not limited to, Kura Japan’s trademarks for “Kura Sushi,” “Mr. Fresh” and “Kura Revolving Sushi Bar,” and patents for a food management system and the Mr. Fresh protective dome, among other intellectual property rights necessary to continue operation of the Company’s restaurants. Royalty payments to Kura Japan are included in other costs at the restaurant level in the accompanying condensed statements of operations and comprehensive income loss.

On April 10, 2020, the Company and Kura Japan entered into a Revolving Credit Agreement, as amended, to provide the Company a revolving credit line of $45.0 million (as amended, the “Revolving Credit Agreement”). For additional information, see “Note 6. Debt.”

Balances with Kura Japan are as follows:


	February 28, 2025		August 31, 2024
	(amounts in thousands)
Due from affiliate	$	14	$	166
Due to affiliate	$	816	$	373

Reimbursements and other payments by the Company to Kura Japan were as follows:


	Three Months Ended				Six Months Ended
	February 28, 2025		February 29, 2024		February 28, 2025		February 29, 2024
	(amounts in thousands)
Related party transactions:
Expatriate salaries expense	$	27	$	48	$	56	$	91
Royalty payments		325		287		647		545
Travel and other administrative expenses		1		—		43		5
Purchases of equipment		1,148		797		2,412		1,437
Total related party transactions	$	1,501	$	1,132	$	3,158	$	2,078

Reimbursements by Kura Japan to the Company were $43 thousand and $65 thousand for the three months ended February 28, 2025 and February 29, 2024, respectively and were $230 thousand and $222 thousand for the six months ended February 28, 2025 and February 29, 2024, respectively. The reimbursements were primarily for travel, professional fees and other administrative expenses.

Note 5. Stock-based Compensation

The following table summarizes the stock option activity under the Company’s 2018 Incentive Compensation Plan, as amended and restated (the “Stock Incentive Plan”):


	Options Outstanding
	Number of Shares Underlying Outstanding Options			Weighted Average Exercise Price Per Share
Outstanding — August 31, 2024		610,514		$	41.11
Granted		2,195		$	77.53
Exercised		(11,006	)	$	44.84
Cancelled/forfeited		(5,919	)	$	56.32
Outstanding — November 30, 2024		595,784		$	41.03
Granted		38,457		$	80.61
Exercised		(13,581	)	$	29.69
Cancelled/forfeited		(6,177	)	$	73.93
Outstanding — February 28, 2025		614,483		$	43.42

The following table summarizes the restricted stock unit (“RSU”) activity under the Stock Incentive Plan:


	Number of Shares Underlying Outstanding RSU			Weighted Average Grant Date Fair Value
Outstanding — August 31, 2024		36,120		$	84.01
Granted		—			—
Vested		—			—
Cancelled/forfeited		(873	)	$	81.89
Outstanding — November 30, 2024		35,247		$	84.06
Granted		33,021		$	80.00
Vested		(10,499	)	$	81.11
Cancelled/forfeited		(1,616	)	$	88.44
Outstanding — February 28, 2025		56,153		$	82.10

During the three months ended February 28, 2025, the Company granted 8,724 performance restricted stock units (“PSUs”) with a three-year performance vesting period and a weighted average grant date fair value of $80.00.

The total stock-based compensation recognized under the Stock Incentive Plan in the condensed statements of operations and comprehensive loss is as follows:


	Three Months Ended				Six Months Ended
	February 28, 2025		February 29, 2024		February 28, 2025		February 29, 2024
	(amounts in thousands)
Restaurant-level stock-based compensation included in labor and related costs	$	199	$	156	$	378	$	303
Corporate-level stock-based compensation included in general and administrative expenses		882		810		1,829		1,669
Stock-based compensation, net of amounts capitalized		1,081		966		2,207		1,972
Amount capitalized to property and equipment - net		21		114		47		142
Total stock-based compensation	$	1,102	$	1,080	$	2,254	$	2,114

Note 6. Debt

On April 10, 2020, the Company and Kura Japan entered into a Revolving Credit Agreement, as amended, establishing a $45.0 million revolving credit line for the Company. The maturity date for each advance is 60 months from the date of disbursement and the last day of the period of availability for advances is April 10, 2025. The Revolving Credit Note under the Revolving Credit Agreement has an interest rate for advances (made on or after April 10, 2021) fixed at 130% of the Annual Compounding Long-Term Applicable Federal Rate (“AFR”) on the date such advance is made. There are no financial covenants under the Revolving Credit Agreement with which the Company must comply.

As of February 28, 2025 and August 31, 2024, the Company had no outstanding balance and $45.0 million of availability remaining under the Revolving Credit Agreement. For additional information, see “Note 4. Related Party Transactions.”

On April 4, 2025, the Company and Kura Japan entered into a Third Amendment to Revolving Credit Agreement (the “Third Amendment”) to extend the last day of the period of availability for the advances under the credit line from April 10, 2025 to April 10, 2028. In connection with the Third Amendment, the Revolving Credit Note under the Revolving Credit Agreement was also amended by incorporating the same amendments as provided under the Third Amendment.

Note 7. Loss Per Share

The net loss per share attributable to common stockholders is allocated based on the contractual participation rights of the Class A common stock and Class B common stock as if the loss for the year had been distributed. As the liquidation and dividend rights for Class A and Class B common stock are identical, the net loss attributable to all common stockholders is allocated on a proportionate basis.

The following table sets forth the computation of the Company’s basic and diluted net loss per share:


	Three Months Ended												Six Months Ended
	February 28, 2025						February 29, 2024						February 28, 2025						February 29, 2024
	Class A			Class B			Class A			Class B			Class A			Class B			Class A			Class B
	(amounts in thousands, except per share data)
Net loss attributable to common stockholders	$	(3,468	)	$	(313	)	$	(909	)	$	(89	)	$	(4,338	)	$	(404	)	$	(2,772	)	$	(273	)

Weighted average common shares outstanding – basic		11,073			1,000			10,179			1,000			10,737			1,000			10,162			1,000
Dilutive effect of stock-based awards		—			—			—			—			—			—			—			—
Weighted average common shares outstanding – diluted		11,073			1,000			10,179			1,000			10,737			1,000			10,162			1,000

Net loss per share attributable to common stockholders – basic	$	(0.31	)	$	(0.31	)	$	(0.09	)	$	(0.09	)	$	(0.40	)	$	(0.40	)	$	(0.27	)	$	(0.27	)
Net loss per share attributable to common stockholders – diluted	$	(0.31	)	$	(0.31	)	$	(0.09	)	$	(0.09	)	$	(0.40	)	$	(0.40	)	$	(0.27	)	$	(0.27	)

The Company computes basic loss per common share using net loss and the weighted average number of common shares outstanding during the period, and computes diluted loss per common share using net loss and the weighted average number of common shares and potentially dilutive common shares outstanding during the period. Potentially dilutive common shares include dilutive outstanding employee stock options and restricted stock units.

For the three and six months ended February 28, 2025, there were 679 thousand shares of common stock subject to outstanding employee stock options, RSUs and PSUs that were excluded from the calculation of diluted loss per share because their inclusion would have been anti-dilutive. For the three and six months ended February 29, 2024 , there were 678 thousand shares of common stock subject to outstanding employee stock options and RSUs that were excluded from the calculation of diluted loss per share because their inclusion would have been anti-dilutive.

Note 8. Commitments and Contingencies

On January 19, 2024, two former employees initiated arbitration against the Company. Subsequently, on February 26, 2024, three additional former employees initiated a separate arbitration against the Company. Both sets of claimants allege violations of the Fair Labor Standards Act (“FLSA”) and violations of certain Washington, D.C. wage laws. In both arbitrations, claimants purported to raise collective claims on behalf of other similarly situated employees and former employees. In August 2024, the Company settled the claims with these five former employees, as well as 58 other current and former employees asserting similar claims (some under the laws of Pennsylvania, Virginia and Massachusetts), for approximately $3.9 million. Since that time, other current and former employees have asserted claims under the FLSA and applicable state laws (including Pennsylvania, New Jersey and Massachusetts) through counsel. In October 2024, the Company agreed to settle those claims for approximately $1.2 million.

The Company expensed $5.1 million related to these matters within general and administrative expenses in the condensed statements of operations and comprehensive loss and paid $3.9 million during the fiscal year ended August 31, 2024. The Company paid the remaining accrued liability of $1.2 million related to these matters in October 2024. In February 2025, the Company agreed to settle additional claims for approximately $2.1 million, which was paid in March 2025.

The Company is involved from time to time in various legal proceedings that arise in the ordinary course of business, including but not limited to commercial disputes, environmental matters, employee related claims, intellectual property disputes and litigation in connection with transactions, including acquisitions and divestitures.

In the opinion of management, the Company does not believe that such litigation, claims, and administrative proceedings will have a material adverse effect on its business, financial position, results of operations or cash flows. However, a significant increase in the number of these claims or an increase in amounts owing under successful claims, including the putative class action referenced above, could materially and adversely affect its business, financial condition, results of operations or cash flows. The Company records a liability when a loss is considered probable, and the amount can be reasonably estimated.

Note 9. Income Taxes

The Company recorded an income tax expense of $38 thousand and $50 thousand for the three months ended February 28, 2025 and February 29, 2024, respectively and income tax expense of $77 thousand and $88 thousand for the six months ended February 28, 2025 and February 29, 2024, respectively. The Company’s effective tax rates for the three and six months ended February 28, 2025 substantially differed from the federal statutory tax rate of 21% primarily due to a valuation allowance for the Company’s deferred tax assets and permanent difference related to employer tip credit.

The Company continually monitors and performs an assessment of the realizability of its deferred tax assets, including an analysis of factors such as future taxable income, reversal of existing taxable temporary differences, and tax planning strategies. In assessing the need for a valuation allowance, the Company considered both positive and negative evidence related to the likelihood of realization of deferred tax assets using a “more likely than not” standard. In making such assessment, more weight was given to evidence that could be objectively verified, including recent cumulative losses. Based on the Company’s review of this evidence, management determined that a full valuation allowance against all of the Company’s net deferred tax assets at February 28, 2025 was appropriate.

Note 10. Fair Value Measurements

The following table sets forth the Company’s assets measured at fair value on a recurring basis as of February 28, 2025.


	Level 1		Level 2		Level 3		Total
	(amounts in thousands)
Assets:
U.S. Government Agency debt securities	$	—	$	15,011	$	—	$	15,011
Total assets at fair value	$	—	$	15,011	$	—	$	15,011

The Company’s cash and cash equivalents include cash on hand, deposits in banks, certificates of deposits and money market funds. Due to their short-term nature, the carrying amounts reported in the accompanying balance sheets approximate the fair value of cash and cash equivalents. The fair value of our U.S. Government Agency debt securities are considered using Level 2 inputs of the fair value hierarchy. Level 2 inputs are based on market data that include factors such as interest rates, market and pricing activity and other market-based valuation techniques.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited financial statements and the related notes included in this Quarterly Report on Form 10-Q and with the audited financial statements and the related notes included in our Annual Report on Form 10-K for the fiscal year ended August 31, 2024 (the “Annual Report”).

In addition to historical information, the following discussion and analysis contains forward-looking statements, such as statements about our plans, objectives, expectations, and intentions, which are based on current expectations and that involve risks, uncertainties and assumptions as set forth and described in the “Special Note Regarding Forward-Looking Statements” and “Risk Factors” sections of the Annual Report. You should review those sections in our Annual Report for a discussion of important factors, including the continuing development of our business and other factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in this Quarterly Report on Form 10-Q.

“Kura Sushi USA,” “Kura Sushi,” “Kura,” “we,” “us,” “our,” “our company” and the “Company” refer to Kura Sushi USA, Inc. unless expressly indicated or the context otherwise requires.

Overview

Kura Sushi USA is a technology-enabled Japanese restaurant concept that provides guests with a distinctive dining experience by serving authentic Japanese cuisine through an engaging revolving sushi service model, which we refer to as the “Kura Experience.” We encourage healthy lifestyles by serving freshly prepared Japanese cuisine using high-quality ingredients that are free from artificial seasonings, sweeteners, colorings, and preservatives. We aim to make quality Japanese cuisine accessible to our guests across the United States through affordable prices and an inviting atmosphere.

Business Trends

During the six months ended February 28, 2025, we opened nine restaurants and expanded our restaurant base to 73 restaurants in twenty states and Washington, DC. Subsequent to February 28, 2025, we opened two additional restaurants totaling 75 restaurants. We expect to open a total of 14 new restaurants in fiscal year 2025 and therefore, we expect our revenue and restaurant operating costs to increase in fiscal year 2025. We also expect our general and administrative expenses to increase on a dollar basis in fiscal 2025 to support the growth of the company.

We have evaluated and will continue to evaluate the impact of import laws and tariffs on our operations. As of February 28, 2025, there was no material impact on our business, financial condition, results of operations or cash flows. However, we expect tariffs may impact our operations in certain areas, such as food and beverage costs, construction and equipment costs and other restaurant operating costs, for the remainder of fiscal 2025.

Key Financial Definitions

Sales. Sales represent sales of food and beverages in restaurants. Restaurant sales in a given period are directly impacted by the number of restaurants we operate and comparable restaurant sales performance.

Food and beverage costs. Food and beverage costs are variable in nature, change with sales volume and are influenced by menu mix and subject to increases or decreases based on fluctuations in commodity costs. Other important factors causing fluctuations in food and beverage costs include seasonality and restaurant-level management of food waste. Food and beverage costs are a substantial expense and are expected to grow proportionally as our sales grow.

Labor and related expenses. Labor and related expenses include all restaurant-level management and hourly labor costs, including wages, employee benefits, stock-based compensation for restaurant-level employees and payroll taxes. Similar to the food and beverage costs that we incur, labor and related expenses are expected to grow proportionally as our sales grow. Factors that influence fluctuations in our labor and related expenses include minimum wage and payroll tax legislation, the frequency and severity of workers’ compensation claims, healthcare costs and the performance of our restaurants.

Occupancy and related expenses. Occupancy and related expenses include rent for all restaurant locations and related taxes.

Depreciation and amortization expenses. Depreciation and amortization expenses are periodic non-cash charges that consist of depreciation of fixed assets, including equipment and capitalized leasehold improvements. Depreciation is determined using the straight-line method over the assets’ estimated useful lives, which range from three to 20 years.

Other costs. Other costs include credit card processing fees, repairs and maintenance, restaurant-level advertising and promotions, restaurant supplies, royalty payments to Kura Japan, utilities and other restaurant-level expenses.

General and administrative expenses. General and administrative expenses include expenses associated with corporate and regional supervision functions that support the operations of existing restaurants and development of new restaurants, including compensation and benefits, travel expenses, stock-based compensation for corporate-level employees, legal and professional fees, information systems, corporate office rent and other related corporate costs. General and administrative expenses are expected to grow as our unit base grows.

Interest expense. Interest expense includes cash and non-cash charges related to our line of credit and finance lease obligations.

Interest income. Interest income includes income earned on our money market funds and investments.

Income tax expense (benefit). Provision for income taxes represents federal, state and local current and deferred income tax expense (benefit).

Results of Operations

The following tables present selected comparative results of operations for the three and six months ended February 28, 2025 and February 29, 2024. Our financial results for these periods are not necessarily indicative of the financial results that we will achieve in future periods. Certain totals for the tables below may not recalculate or sum to 100% due to rounding.


	Three Months Ended
	February 28, 2025			February 29, 2024			$ Change			% Change
	(dollar amounts in thousands)
Sales	$	64,894		$	57,291		$	7,603			13.3		%
Restaurant operating costs
Food and beverage costs		18,630			16,935			1,695			10.0
Labor and related costs		22,593			18,924			3,669			19.4
Occupancy and related expenses		5,099			3,953			1,146			29.0
Depreciation and amortization expenses		3,286			2,694			592			22.0
Other costs		8,780			8,200			580			7.1
Total restaurant operating costs		58,388			50,706			7,682			15.2
General and administrative expenses		10,985			8,168			2,817			34.5
Depreciation and amortization expenses		110			107			3			2.8
Total operating expenses		69,483			58,981			10,502			17.8
Operating loss		(4,589	)		(1,690	)		(2,899	)		(171.5	)
Other expense (income):
Interest expense		13			12			1			8.3
Interest income		(859	)		(754	)		(105	)		13.9
Loss before income taxes		(3,743	)		(948	)		(2,795	)		294.8
Income tax expense		38			50			(12	)		(24.0	)
Net loss	$	(3,781	)	$	(998	)	$	(2,783	)		278.9		%


	Six Months Ended
	February 28, 2025			February 29, 2024			$ Change			% Change
	(dollar amounts in thousands)
Sales	$	129,350		$	108,766		$	20,584			18.9		%
Restaurant operating costs
Food and beverage costs		37,297			32,300			4,997			15.5
Labor and related costs		43,828			35,334			8,494			24.0
Occupancy and related expenses		9,853			7,861			1,992			25.3
Depreciation and amortization expenses		6,377			5,170			1,207			23.3
Other costs		18,121			15,644			2,477			15.8
Total restaurant operating costs		115,476			96,309			19,167			19.9
General and administrative expenses		19,718			16,777			2,941			17.5
Depreciation and amortization expenses		219			211			8			3.8
Total operating expenses		135,413			113,297			22,116			19.5
Operating loss		(6,063	)		(4,531	)		(1,532	)		(33.8	)
Other expense (income):
Interest expense		26			20			6			30.0
Interest income		(1,424	)		(1,594	)		170			(10.7	)
Loss before income taxes		(4,665	)		(2,957	)		(1,708	)		57.8
Income tax expense		77			88			(11	)		(12.5	)
Net loss	$	(4,742	)	$	(3,045	)	$	(1,697	)		55.7		%


	Three Months Ended						Six Months Ended
	February 28, 2025			February 29, 2024			February 28, 2025			February 29, 2024
	(as a percentage of sales)
Sales		100.0	%		100.0	%		100.0	%		100.0	%
Restaurant operating costs
Food and beverage costs		28.7			29.6

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Non-accelerated filer

Smaller reporting company

Emerging growth company

KURA SUSHI USA, INC. 10-Q