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~~May 2831, 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~~July 1, 2025, the registrant had 11,~~085~~093,~~419~~889 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 Operations and Comprehensive Income (Loss)	2
	Condensed Statements of Stockholders’ Equity	3
	Condensed Statements of Cash Flows	45
	Notes to Condensed Financial Statements	56
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1315
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2325
Item 4.	Controls and Procedures	2325
PART II.	OTHER INFORMATION	2426
Item 1.	Legal Proceedings	2426
Item 1A.	Risk Factors	2426
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2426
Item 3.	Defaults Upon Senior Securities	2426
Item 4.	Mine Safety Disclosures	2426
Item 5.	Other Information	2426
Item 6.	Exhibits	2628
Signatures		2729

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Kura Sushi USA, Inc.

Condensed Balance Sheets

(amounts in thousands, except for par value)

(Unaudited)

	February 28, 2025			August 31, 2024
	May 31, 2025			August 31, 2024
Assets
Current assets:
Cash and cash equivalents	$	8547,~~171~~132		$	50,986
Accounts and other receivables		3,704			4,573
Short-term investments		13,371			—
Inventories		2,354			2,219
Accounts and other receivables		5,123			4,573
Due from affiliate		14			166
Inventories		2,293			2,219
Prepaid expenses and other current assets		3,450			3,391
Due from affiliate		13			166
Total current assets		94,693			61,335
Prepaid expenses and other current assets		4,094			3,391
Total current assets		72,026			61,335
Non-current assets:
Property and equipment – net		~~154~~164,~~077~~909			138,589
Operating lease right-of-use assets		~~140~~143,~~800~~717			123,682
Long-term investments		1532,~~106~~534			—
Deposits and other assets		56,~~696~~187			4,916
Total assets	$	~~410~~419,~~372~~373		$	328,522
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	79,~~190~~304		$	8,977
Accrued expenses and other current liabilities		53,~~226~~343			4,261
Salaries and wages payable		89,~~022~~925			8,310
Operating lease liabilities – current		1213,~~569~~279			10,674
Due to affiliate		~~816~~597			373
Sales tax payable		12,~~642~~100			1,904
Total current liabilities		3538,~~465~~548			34,499
Non-current liabilities:
Operating lease liabilities – non-current		~~148~~152,~~832~~757			130,677
Other liabilities		1,~~030~~064			808
Total liabilities		~~185~~192,~~327~~369			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, 2025and August 31, 2024, respectively		11			10
Class A common stock, $0.001 par value; 50,000 shares authorized, 11,088 and 10,253 shares issued and outstanding as of May 31, 2025and 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, 2025and August 31, 2024		1			1
Class B common stock, $0.001 par value; 10,000 shares authorized, 1,000 shares issued and outstanding as of May 31, 2025and August 31, 2024		1			1
Additional paid-in capital		~~262~~264,~~763~~165			195,515
Accumulated deficit		(37,~~730~~165	)		(32,988	)
Total stockholders' equity		225,045			162,538
Accumulated other comprehensive loss		(8	)		—
Total liabilities and stockholders' equity	$	410,372		$	328,522
Total stockholders' equity		227,004			162,538
Total liabilities and stockholders' equity	$	419,373		$	328,522

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

Kura Sushi USA, Inc.

Condensed Statements of Operations and Comprehensive Income (Loss)

(amounts in thousands, except for per share data)

(Unaudited)

	Three Months Ended						Six Months Ended
	Three Months Ended May 31,						Nine Months Ended May 31,
	February 28, 2025			February 29, 2024			February 28, 2025			February 29, 2024
	2025			2024			2025			2024
Sales	$	6473,~~894~~965		$	5763,~~291~~082		$	~~129~~203,~~350~~315		$	~~108~~171,~~766~~848
Restaurant operating costs:
Food and beverage costs		1820,~~630~~928			1618,~~935~~391			3758,~~297~~225			3250,~~300~~691
Labor and related costs		2224,~~593~~478			1820,~~924~~534			4368,~~828~~306			3555,~~334~~906
Occupancy and related expenses		5,~~099~~538			34,~~953~~318			915,~~853~~391			712,~~861~~179
Depreciation and amortization expenses		3,~~286~~450			23,~~694~~124			69,~~377~~827			58,~~170~~294
Other costs		810,~~780~~883			8,~~200~~920			1829,~~121~~004			1524,~~644~~526
Total restaurant operating costs		5865,~~388~~277			5055,~~706~~287			~~115~~180,~~476~~753			96151,~~309~~596
General and administrative expenses		108,~~985~~741			8,~~168~~857			1928,~~718~~459			1625,~~777~~634
Depreciation and amortization expenses		~~110~~109			107			~~219~~328			~~211~~318
Total operating expenses		6974,~~483~~127			5864,~~981~~251			~~135~~209,~~413~~540			~~113~~177,~~297~~548
Operating loss		(~~4,589~~162	)		(1,~~690~~169	)		(6,~~063~~225	)		(45,~~531~~700	)
Other expense (income):
Interest expense		1330			1215			2656			2035
Interest income		(~~859~~812	)		(~~754~~686	)		(12,~~424~~236	)		(12,~~594~~280	)
Loss before income taxes		(3,743	)		(948	)		(4,665	)		(2,957	)
Income (loss) before income taxes		620			(498	)		(4,045	)		(3,455	)
Income tax expense		3855			5060			77132			88148
Net loss	$	(3,781	)	$	(998	)	$	(4,742	)	$	(3,045	)
Net income (loss)	$	565		$	(558	)	$	(4,177	)	$	(3,603	)
Net loss per Class A and Class B shares
Net income (loss) per Class A and Class B shares
Basic	$	(0.3105	)	$	(0.0905	)	$	(0.4035	)	$	(0.2732	)
Diluted	$	(0.3105	)	$	(0.0905	)	$	(0.4035	)	$	(0.2732	)
Weighted average Class A and Class B shares outstanding
Basic		12,~~073~~086			11,~~179~~188			11,~~737~~855			11,~~162~~167
Diluted		12,~~073~~311			11,~~179~~188			11,~~737~~855			11,~~162~~167
Other comprehensive income:
Other comprehensive income (loss):
Unrealized gain on short-term investments	$	—		$	30		$	—		$	33
Unrealized loss on short-term investments	$	(8	)	$	(76	)	$	(8	)	$	(43	)
Comprehensive loss	$	(3,781	)	$	(968	)	$	(4,742	)	$	(3,012	)
Comprehensive income (loss)	$	557		$	(634	)	$	(4,185	)	$	(3,646	)

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~~Loss			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
Stock-based compensation		—		—		—		—		1,356		—			—			1,356
Employee stock plan		3		—		—		—		46		—			—			46
Net income		—		—		—		—		—		565			—			565
Other comprehensive loss		—		—		—		—		—		—			(8	)		(8	)
Balances as of May 31, 2025		11,088	$	11		1,000	$	1	$	264,165	$	(37,165	)	$	(8	)	$	227,004
	Common Stock								Additional					Accumulated			Total
	Class A				Class B				Paid-in		Accumulated			Other Comprehensive			Stockholders'
	Shares		Amount		Shares		Amount		Capital		Deficit			Income/(Loss)			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
Stock-based compensation		—		—		—		—		1,236		—			—			1,236
Employee stock plan		17		—		—		—		544		—			—			544
Net loss		—		—		—		—		—		(558	)		—			(558	)
Other comprehensive loss		—		—		—		—		—		—			(76	)		(76	)
Balances as of May 31, 2024		10,243	$	10		1,000	$	1	$	194,202	$	(27,787	)	$	—		$	166,426

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
	Nine Months Ended May 31,
	February 28, 2025			February 29, 2024
	2025			2024
Cash flows from operating activities
Net loss	$	(4,~~742~~177	)	$	(3,~~045~~603	)
Adjustments to reconcile net loss to net cash provided by operating activities
Depreciation and amortization		610,~~596~~155			58,~~381~~612
Stock-based compensation, net of amounts capitalized		23,~~207~~501			13,~~972~~169
Bond premium amortization		~~155~~284			—
Changes in operating assets and liabilities:
Accounts and other receivables		~~1,020~~(473	)		(~~176~~587	)
Inventories		(~~135~~74	)		(~~126~~385	)
Due from affiliate		~~152~~153			72104
Prepaid expenses and other current assets		~~375~~(298	)		~~834~~1,326
Deposits and other assets		~~112~~(261	)		32443
Accounts payable		~~(829~~343	)		~~(946~~11	)
Accrued expenses and other current liabilities		~~1,454~~(448	)		~~829~~1,485
Salaries and wages payable		~~(288~~1,615	)		~~(85~~1,001	)
Operating lease liabilities and assets		24,~~915~~851			13,~~704~~410
Due to affiliate		(6	)		(1223	)
Sales tax payable		~~(363~~161	)		(~~216~~20	)
Net cash provided by operating activities		815,~~623~~338			614,~~218~~943
Cash flows from investing activities
Payments for property and equipment		(2336,~~109~~698	)		(2233,~~845~~977	)
Payments for initial direct costs		(~~135~~277	)		(~~174~~309	)
Purchases of liquor licenses		(~~891~~1,011	)		(~~120~~219	)
Purchases of investments		(2570,~~261~~197	)		(3,~~500~~251	)
Maturities and redemptions of investments		1024,000			510,~~999~~499
Net cash used in investing activities		(3984,~~396~~183	)		(2027,~~640~~257	)
Cash flows from financing activities
Repayment of principal on finance leases		(3649	)		(4460	)
Taxes paid on vested restricted stock awards		(256	)		(~~368~~217	)
Proceeds from exercise of stock options		~~896~~942			12,~~905~~299
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~~991			12,~~493~~022
Increase/ (decrease) in cash and cash equivalents		34,185			(12,929	)
Decrease in cash and cash equivalents		(3,854	)		(10,292	)
Cash and cash equivalents, beginning of period		50,986			69,697
Cash and cash equivalents, end of period	$	8547,~~171~~132		$	5659,~~768~~405
Supplemental disclosures of cash flow information
Cash paid for income taxes	$	34231		$	~~112~~282
Noncash investing activities
Acquisition of finance leases	$	114		$	28—
Amounts unpaid for purchases of property and equipment	$	12,~~899~~574		$	21,~~394~~706
Stock-based compensation capitalized to property and equipment, net	$	47110		$	~~142~~181

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~~The ~~investments~~Company ~~consist~~invests in a range of ~~long-term~~securities, including certificates of deposit, Treasury bills, and U.S. Government Agency debt securities. ~~The~~Investment ~~Company~~classification ~~considers~~is ~~all~~determined ~~investments~~based ~~with~~on anthe ~~original~~accounting ~~maturity~~guidance ~~date~~as ~~greater~~available ~~than~~for ~~one~~sale ~~year~~or asheld ~~long-term~~to ~~investments~~maturity. ~~The~~Certificates ~~carrying value~~ of ~~the~~deposit ~~long-term~~and ~~investments~~Treasury isbills ~~equivalent~~are toclassified ~~their~~as ~~amortized~~available-for-sale ~~cost~~debt ~~basis.~~securities Asand ofmeasured ~~February~~at 28fair value, ~~2025~~with ~~and~~unrealized ~~August~~gains ~~31,~~or ~~2024,~~losses ~~long-term~~recorded ~~investments~~in ~~were~~other ~~$15.1~~comprehensive ~~million~~income ~~and none, respectively~~(loss). ~~The Company classifies the long-term~~ U.S. Government Agency debt securities are classified as held-to-maturity. Asand ofmeasured ~~February~~at ~~28, 2025, the Company’s holds a portfolio of held to maturity debt securities with an~~ amortized cost ~~basis of $15~~.1 ~~million,~~The aclassification ~~fair value~~ of ~~$15.0~~these ~~million~~investments ~~and~~as ~~gross~~either ~~unrealized~~short-term ~~holding~~or ~~losses~~long-term ofis ~~$0.1~~based ~~million. Based~~ on ~~the~~their ~~evaluation~~original ofmaturity ~~credit~~dates, ~~risk~~with ~~factors~~short-term ~~guaranteed~~investments byhaving ~~the~~maturities ~~U.S.~~greater ~~government,~~than ~~the~~three ~~Company~~months ~~has~~but ~~concluded~~less ~~that~~than anone ~~allowance~~year, ~~for~~and ~~credit~~long-term ~~losses~~investments ishaving ~~unnecessary~~maturities ~~for~~greater ~~its~~than ~~long-term~~one ~~investments~~year.

As of May 31, 2025 and August 31, 2024, short-term investments were $13.4 million and none, respectively, of which $0.5 million consists of cash that is restricted to funding a collateral account relating to a standby letter of credit. Realized gains or losses are determined on a specific identification basis.

As of May 31, 2025 and August 31, 2024, long-term investments were $32.5 million and none, respectively. As of May 31, 2025, the Company’s holds a portfolio of held to maturity debt securities with an amortized cost basis of $32.5 million, a fair value of $32.4 million and gross unrealized holding gains 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 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~~its 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~~its 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~~its 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
	May 31, 2025		August 31, 2024
	(amounts in thousands)
Lease receivables	$	1,~~853~~778	$	1,701
Credit card and other receivables		13,~~851~~345		2,872
Total accounts and other receivables	$	35,~~704~~123	$	4,573

Property and Equipment - net

	February 28, 2025			August 31, 2024
	May 31, 2025			August 31, 2024
	(amounts in thousands)
Leasehold improvements	$	~~117~~123,~~611~~702		$	100,345
Lease assets		6,135			6,108
Furniture and fixtures		71,516			57,059
Furniture and fixtures		60,911			50,951
Computer equipment		4,467			3,714
Computer equipment		4,286			3,714
Vehicles		343			243
Vehicles		273			243
Software		1,017			1,017
Construction in progress		912,~~211~~642			15,080
Property and equipment – gross		~~199~~213,~~444~~687			177,458
Less: accumulated depreciation and amortization		(4548,~~367~~778	)		(38,869	)
Total property and equipment – net	$	~~154~~164,~~077~~909		$	138,589

Depreciation and amortization expense for property and equipment was $3.46 million and $23.82 million for the three months ended ~~February~~May 2831, 2025 and ~~February~~May 2931, 2024, respectively, and was $610.62 million and $58.46 million for the ~~six~~nine months ended ~~February~~May 2831, 2025 and ~~February~~May 2931, 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 considered 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 income (loss) are as follows:

Three Months Ended

Six Months Ended

Three Months Ended May 31,

Nine Months Ended May 31,

February 28, 2025

February 29, 2024

February 28, 2025

February 29, 2024

2025

2024

2025

2024

(amounts in thousands)

Operating lease cost

Classification

Operating lease cost

Occupancy and related expenses, other costs and general and administrative expenses

4,~~031~~285

3,~~237~~380

712,~~835~~120

69,~~298~~678

Variable lease cost

Occupancy and related expenses, and general and administrative expenses

1,~~030~~271

~~724~~992

23,~~021~~292

12,~~575~~567

Total operating lease cost

5,~~061~~556

34,~~961~~372

915,~~856~~412

712,~~873~~245

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

	Six Months Ended
	Nine Months Ended May 31,
	February 28, 2025		February 29, 2024
	2025		2024
	(amounts in thousands)
Operating cash flows paid for operating lease liabilities	$	610,~~581~~177	$	47,~~954~~769
Operating right-of-use assets obtained in exchange for new operating lease liabilities	$	1923,~~496~~600	$	1117,~~893~~774

As of ~~February~~May 2831, 2025, the Company had an additional $2544.04 million of operating lease liabilities related to restaurants for which the Company had not yet taken possession. Subsequent to ~~February~~May 2831, 2025, the Company entered into one additional operating ~~leases~~lease related to ~~restaurants~~a restaurant for which the Company has not yet taken possession. The lease liabilities associated with ~~these~~the ~~leases~~lease are $225.68 million and are 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 income (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
	May 31, 2025		August 31, 2024
	(amounts in thousands)
Due from affiliate	$	1413	$	166
Due to affiliate	$	~~816~~597	$	373

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

	Three Months Ended				Six Months Ended
	Three Months Ended May 31,				Nine Months Ended May 31
	February 28, 2025		February 29, 2024		February 28, 2025		February 29, 2024
	2025		2024		2025		2024
	(amounts in thousands)
Related party transactions:
Expatriate salaries expense	$	2734	$	4833	$	5690	$	91124
Royalty payments		~~325~~370		~~287~~314		~~647~~1,017		~~545~~859
Travel and other administrative expenses		13		—		4346		56
Purchases of equipment		1,~~148~~646		~~797~~374		24,~~412~~058		1,~~437~~811
Total related party transactions	$	12,~~501~~053	$	~~1,132~~721	$	35,~~158~~211	$	2,~~078~~800

Reimbursements by Kura Japan to the Company were $4360 thousand and $6542 thousand for the three months ended ~~February~~May 2831, 2025 and ~~February~~May 2931, 2024, respectively and were $~~230~~290 thousand and $~~222~~264 thousand for the ~~six~~nine months ended ~~February~~May 2831, 2025 and ~~February~~May 2931, 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 SharesUnderlyingOutstanding Options			Weighted AverageExercisePrice 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
Granted		8,484		$	58.06
Exercised		(2,928	)	$	15.62
Cancelled/forfeited		(6,916	)	$	67.38
Outstanding — May 31, 2025		613,123		$	43.49

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

	Number of SharesUnderlyingOutstanding RSU			Weighted AverageGrant 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
Granted		—			—
Vested		—			—
Cancelled/forfeited		(731	)	$	85.15
Outstanding — May 31, 2025		55,422		$	82.06

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 $80.00.10

~~The~~In ~~total~~the ~~stock-based~~second ~~compensation~~quarter ~~recognized~~of ~~under~~fiscal 2025, the ~~Stock~~Company ~~Incentive~~granted ~~Plan~~8,724 inperformance ~~the~~restricted ~~condensed~~stock ~~statements~~units of(“PSUs”) ~~operations~~with a three-year performance vesting period and ~~comprehensive~~a ~~loss~~weighted isaverage asgrant ~~follows:~~date fair value of $80.00.

	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

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


	Three Months Ended May 31,				Nine Months Ended May 31,
	2025		2024		2025		2024
	(amounts in thousands)
Restaurant-level stock-based compensation included in labor and related costs	$	230	$	194	$	608	$	497
Corporate-level stock-based compensation included in general and administrative expenses		1,063		1,003		2,892		2,672
Stock-based compensation, net of amounts capitalized		1,293		1,197		3,500		3,169
Amount capitalized to property and equipment - net		63		39		110		181
Total stock-based compensation	$	1,356	$	1,236	$	3,610	$	3,350

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.

As of May 31, 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 74. ~~Loss~~Related ~~Per~~Party ~~Share~~Transactions.”

Note 7. Income (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:~~11

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

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.


	Three Months Ended May 31,										Nine Months Ended May 31,
	2025				2024						2025						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 income (loss) attributable to common stockholders	$	518	$	47	$	(508	)	$	(50	)	$	(3,825	)	$	(352	)	$	(3,280	)	$	(323	)

Weighted average common shares outstanding – basic		11,086		1,000		10,188			1,000			10,855			1,000			10,167			1,000
Dilutive effect of stock-based awards		225		—		—			—			—			—			—			—
Weighted average common shares outstanding – diluted		11,311		1,000		10,188			1,000			10,855			1,000			10,167			1,000

Net income (loss) per share attributable to common stockholders – basic	$	0.05	$	0.05	$	(0.05	)	$	(0.05	)	$	(0.35	)	$	(0.35	)	$	(0.32	)	$	(0.32	)
Net income (loss) per share attributable to common stockholders – diluted	$	0.05	$	0.05	$	(0.05	)	$	(0.05	)	$	(0.35	)	$	(0.35	)	$	(0.32	)	$	(0.32	)

~~For~~The ~~the~~Company ~~three~~computes ~~and~~basic ~~six~~income ~~months~~(loss) ~~ended~~per ~~February~~common ~~28,~~share ~~2025,~~using ~~there~~net ~~were~~income ~~679~~(loss) ~~thousand~~and ~~shares~~the ofweighted ~~common~~average ~~stock~~number ~~subject~~of tocommon shares outstanding ~~employee~~during ~~stock~~the ~~options~~period, ~~RSUs~~ and ~~PSUs~~computes ~~that were excluded from the calculation of~~ diluted income (loss) per common share ~~because~~using ~~their~~net ~~inclusion~~income ~~would~~(loss) ~~have~~and ~~been~~the ~~anti-dilutive.~~weighted ~~For~~average ~~the~~number ~~three~~of ~~and~~common ~~six~~shares ~~months~~and ~~ended~~potentially ~~February~~dilutive ~~29,~~common ~~2024~~shares ,outstanding ~~there~~during ~~were~~the ~~678~~period. ~~thousand~~Potentially ~~shares~~dilutive of common ~~stock~~shares ~~subject~~include todilutive outstanding employee stock options, ~~and~~ RSUs ~~that~~and ~~were excluded from the calculation of diluted loss per share because their inclusion would have been anti-dilutive~~PSUs.

10For the three months ended May 31, 2025, there were 286 thousand shares of common stock subject to outstanding employee stock options, RSUs and PSUs that were excluded from the calculation of diluted income per share because their inclusion would have been anti-dilutive. For the nine months ended May 31, 2025, there were 677 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 nine months ended May 31, 2024 , there were 662 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 income (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.

On December 9, 2024, a former employee filed a putative class action complaint in the Superior Court of California in Los Angeles, individually and on behalf of others similarly situated, against the Company alleging certain violations of California labor laws. The complaint alleges various wage and hour violations under the California Labor Code and related statutes. Plaintiff has also served a Private Attorneys General Act (“PAGA”) notice for the same alleged wage and hour violations. The Company will continue to vigorously defend its position in this matter. The Company is currently unable to estimate the range of possible losses associated with this proceeding.

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 $3855 thousand and $5060 thousand for the three months ended ~~February~~May 2831, 2025 and ~~February~~May 2931, 2024, respectively and income tax expense of $77132 thousand and $88148 thousand for the ~~six~~nine months ended ~~February~~May 2831, 2025 and ~~February~~May 2931, 2024, respectively. The Company’s effective tax rates for the three and ~~six~~nine months ended ~~February~~May 2831, 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~~differences related to ~~employer~~the ~~tip~~tax credit for a portion of the Social Security and Medicare taxes (FICA taxes) paid on employer tips.

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~~May 2831, 2025 was appropriate.

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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~~May 2831, 2025.

	Level 1		Level 2		Level 3		Total
	(amounts in thousands)
Assets:
U.S. Government Agency debt securities	$	—	$	15,011	$	—	$	15,011
Certificate of Deposit	$	—	$	524	$	—	$	524
Total assets at fair value	$	—	$	15,011	$	—	$	15,011
Treasury bills		12,847		—		—		12,847
U.S. Government Agency debt securities		—		32,378		—		32,378
Total assets at fair value	$	12,847	$	32,902	$	—	$	45,749

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 Certificate of Deposit and U.S. Government Agency debt securities are ~~considered~~valued 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.

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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~~assumptions 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~~nine months ended ~~February~~May 2831, 2025, we opened ~~nine~~thirteen restaurants and expanded our restaurant base to 7376 restaurants in twenty states and Washington, DC. Subsequent to ~~February~~May 2831, 2025, we opened two additional ~~restaurants~~restaurant totaling 7578 restaurants in 21 states and Washington, DC. We expect to open a total of 1415 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~~May 2831, 2025, there was no material impact on our business, financial condition, results of operations or cash flows. However, ~~we expect~~ tariffs ~~may~~could 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 by 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.

1315

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				28.8				29.7
Labor and related costs		34.8				33.0				33.9				32.5
Occupancy and related expenses		7.9				6.9				7.6				7.2
Depreciation and amortization expenses		5.1				4.7				4.9				4.8
Other costs		13.5				14.3				14.0				14.4
Total restaurant operating costs		90.0				88.5				89.2				88.6
General and administrative expenses		16.9				14.3				15.2				15.4
Depreciation and amortization expenses		0.2				0.2				0.2				0.2
Total operating expenses		107.1				103.0				104.6				104.2
Operating loss		(7.1	)			(3.0	)			(4.6	)			(4.2	)
Other expense (income):
Interest expense		—				—				—				—
Interest income		(1.3	)			(1.3	)			(1.1	)			(1.5	)
Loss before income taxes		(5.8	)			(1.7	)			(3.5	)			(2.7	)
Income tax expense		0.1				0.1				0.1				0.1
Net loss		(5.9	)	%		(1.8	)	%		(3.6	)	%		(2.8	)	%

Three Months Ended February 28, 2025 Compared to Three Months Ended February 29, 2024

Sales. Sales were $64.9 million for the three months ended February 28, 2025 compared to $57.3 million for the three months ended February 29, 2024, representing an increase of $7.6 million, or 13.3%. The increase in sales was primarily driven by the sales resulting from fourteen new restaurants opened subsequent to February 29, 2024, as well as increases in menu prices during the same period. Comparable restaurant sales decreased 5.3% for the three months ended February 28, 2025, as compared to the three months ended February 29, 2024 primarily due to a reduction in traffic.

Food and beverage costs. Food and beverage costs were $18.6 million for the three months ended February 28, 2025 compared to $16.9 million for the three months ended February 29, 2024, representing an increase of $1.7 million, or 10.0%. The increase in food and beverage costs was primarily driven by costs associated with sales from fourteen new restaurants opened subsequent to February 29, 2024. As a percentage of sales, food and beverage costs decreased to 28.7% in the three months ended February 28, 2025 as compared to 29.6% in the three months ended February 29, 2024, primarily due to increases in menu prices and supply chain initiatives, which was partially offset by food cost inflation.

Labor and related costs. Labor and related costs were $22.6 million for the three months ended February 28, 2025 compared to $18.9 million for the three months ended February 29, 2024, representing an increase of $3.7 million, or 19.4%. This increase in labor and related costs was primarily driven by additional labor costs incurred from fourteen new restaurants opened subsequent to February 29, 2024. As a percentage of sales, labor and related costs increased to 34.8% in the three months ended February 28, 2025 as compared to 33.0% in the three months ended February 29, 2024. The increase in cost as a percentage of sales was primarily due to increases in wage rates subsequent to February 29, 2024.

~~Occupancy~~Results and related expenses. Occupancy and related expenses were $5.1 million for the three months ended February 28, 2025 compared to $4.0 million for the three months ended February 29, 2024, representing an increase of $1.1 million, or 29.0%. The increase was primarily a result of additional lease expense related to the opening of fourteen new restaurants subsequent to February 29, 2024. As a percentage of sales, occupancy and related expenses increased to 7.9% in the three months ended February 28, 2025 as compared to 6.9% in the three months ended February 29, 2024, primarily driven by sales deleverage.Operations

~~Depreciation~~The ~~and~~following ~~amortization~~tables ~~expenses.~~present ~~Depreciation~~selected ~~and~~comparative ~~amortization~~results ~~expenses incurred as part~~ of ~~restaurant~~operations ~~operating costs were $3.3 million~~ for the three and nine months ended ~~February~~May 2831, 2025 ~~compared~~and toMay ~~$2.7 million for the three months ended February 29~~31, 2024,. ~~representing~~Our anfinancial ~~increase~~results offor ~~$0.6~~these ~~million,~~periods orare ~~22.0%.~~not ~~The~~necessarily ~~increase~~indicative ~~consists~~ of ~~depreciation of property and equipment related to~~ the ~~fourteen~~financial ~~new~~results ~~restaurants~~ that ~~opened~~we ~~subsequent~~will toachieve ~~February~~in ~~29,~~future ~~2024~~periods. AsCertain atotals ~~percentage of sales, depreciation and amortization expenses at the restaurant level was 5.1%~~ for the ~~three~~tables ~~months~~below ~~ended~~may ~~February~~not ~~28,~~recalculate ~~2025~~or assum ~~compared~~up to ~~4.7~~100% indue ~~the~~to ~~three months ended February 29, 2024~~rounding. Depreciation and amortization expenses incurred at the corporate level were $0.1 million for both the three months ended February 28, 2025 and February 29, 2024, and as a percentage of sales were both 0.2%, respectively.

Other costs. Other costs were $8.8 million for the three months ended February 28, 2025 compared to $8.2 million for the three months ended February 29, 2024, representing an increase of $0.6 million, or 7.1%. The increase was primarily driven by an increase in costs related to the fourteen new restaurants that opened subsequent to February 29, 2024. As a percentage of sales, other costs decreased to 13.5% in the three months ended February 28, 2025 as compared to 14.3% in the three months ended February 29, 2024, primarily driven by lower marketing, recruiting and travel expenses.


	Three Months Ended May 31,
	2025			2024			$ Change			% Change
	(dollar amounts in thousands)
Sales	$	73,965		$	63,082		$	10,883			17.3		%
Restaurant operating costs
Food and beverage costs		20,928			18,391			2,537			13.8
Labor and related costs		24,478			20,534			3,944			19.2
Occupancy and related expenses		5,538			4,318			1,220			28.3
Depreciation and amortization expenses		3,450			3,124			326			10.4
Other costs		10,883			8,920			1,963			22.0
Total restaurant operating costs		65,277			55,287			9,990			18.1
General and administrative expenses		8,741			8,857			(116	)		(1.3	)
Depreciation and amortization expenses		109			107			2			1.9
Total operating expenses		74,127			64,251			9,876			15.4
Operating loss		(162	)		(1,169	)		1,007			(86.1	)
Other expense (income):
Interest expense		30			15			15			100.0
Interest income		(812	)		(686	)		(126	)		18.4
Income (loss) before income taxes		620			(498	)		1,118			(224.5	)
Income tax expense		55			60			(5	)		(8.3	)
Net income (loss)	$	565		$	(558	)	$	1,123			201.3		%


	Nine Months Ended May 31,
	2025			2024			$ Change			% Change
	(dollar amounts in thousands)
Sales	$	203,315		$	171,848		$	31,467			18.3		%
Restaurant operating costs
Food and beverage costs		58,225			50,691			7,534			14.9
Labor and related costs		68,306			55,906			12,400			22.2
Occupancy and related expenses		15,391			12,179			3,212			26.4
Depreciation and amortization expenses		9,827			8,294			1,533			18.5
Other costs		29,004			24,526			4,478			18.3
Total restaurant operating costs		180,753			151,596			29,157			19.2
General and administrative expenses		28,459			25,634			2,825			11.0
Depreciation and amortization expenses		328			318			10			3.1
Total operating expenses		209,540			177,548			31,992			18.0
Operating loss		(6,225	)		(5,700	)		(525	)		(9.2	)
Other expense (income):
Interest expense		56			35			21			60.0
Interest income		(2,236	)		(2,280	)		44			(1.9	)
Loss before income taxes		(4,045	)		(3,455	)		(590	)		17.1
Income tax expense		132			148			(16	)		(10.8	)
Net loss	$	(4,177	)	$	(3,603	)	$	(574	)		15.9		%

General and administrative expenses. General and administrative expenses were $11.0 million for the three months ended February 28, 2025 compared to $8.2 million for the three months ended February 29, 2024, representing an increase of $2.8 million, or 34.5%. This increase was primarily due to the litigation settlement of $2.1 million, compensation-related costs of $0.5 million and $0.2 million in other net increases. As a percentage of sales, general and administrative expenses increased to 16.9% in the three months ended February 28, 2025 as compared to 14.3% in the three months ended February 29, 2024, primarily due to the $2.1 million litigation settlement expense, partially offset with sales leverage.

Interest expense. Interest expense was $13 thousand for the three months ended February 28, 2025 compared to $12 thousand for the three months ended February 29, 2024, respectively.

Interest income. Interest income was $859 thousand for the three months ended February 28, 2025 compared to $754 thousand for the three months ended February 29, 2024. The increase was primarily driven by investing incremental cash from our follow-on offering completed in November 2024 into money market funds and long-term investments, partially offset by lower interest rates.

Income tax expense. Income tax expense was $38 thousand for the three months ended February 28, 2025 compared to an income tax expense of $50 thousand for the three months ended February 29, 2024. For further discussion of our income taxes, see “Note 9. Income Taxes” in the Notes to Condensed Financial Statements.

Six Months Ended February 28, 2025 Compared to Six Months Ended February 29, 2024

Sales. Sales were $129.4 million for the six months ended February 28, 2025 compared to $108.8 million for the six months ended February 29, 2024, representing an increase of $20.6 million, or 18.9%. The increase in sales was primarily driven by the sales resulting from fourteen new restaurants opened subsequent to February 29, 2024, as well as increases in menu prices during the same period. Comparable restaurant sales decreased 1.6% for the six months ended February 28, 2025, as compared to the six months ended February 29, 2024, primarily due to a reduction in traffic.

Food and beverage costs. Food and beverage costs were $37.3 million for the six months ended February 28, 2025 compared to $32.3 million for the six months ended February 29, 2024, representing an increase of $5.0 million, or 15.5%. The increase in food and beverage costs was primarily driven by costs associated with sales from fourteen new restaurants opened subsequent to February 29, 2024. As a percentage of sales, food and beverage costs decreased to 28.8% in the six months ended February 28, 2025 as compared to 29.7% in the six months ended February 29, 2024, primarily due to increases in menu prices and supply chain initiatives, which was partially offset by food cost inflation.

Labor and related costs. Labor and related costs were $43.8 million for the six months ended February 28, 2025 compared to $35.3 million for the six months ended February 29, 2024, representing an increase of $8.5 million, or 24.0%. This increase in labor and related costs was primarily driven by additional labor costs incurred from fourteen new restaurants opened subsequent to February 29, 2024. As a percentage of sales, labor and related costs increased to 33.9% in the six months ended February 28, 2025 as compared to 32.5% in the six months ended February 29, 2024. The increase in cost as a percentage of sales was primarily due to increases in wage rates subsequent to February 29, 2024.

Occupancy and related expenses. Occupancy and related expenses were $9.9 million for the six months ended February 28, 2025 compared to $7.9 million for the six months ended February 29, 2024, representing an increase of $2.0 million, or 25.3%. The increase was primarily a result of additional lease expense related to the opening of fourteen new restaurants opened subsequent to February 29, 2024. As a percentage of sales, occupancy and related expenses increased to 7.6% in the six months ended February 28, 2025, compared to 7.2% in the six months ended February 29, 2024, primarily driven by sales deleverage.


	Three Months Ended May 31,								Nine Months Ended May 31,
	2025				2024				2025				2024
	(as a percentage of sales)
Sales		100.0		%		100.0		%		100.0		%		100.0		%
Restaurant operating costs
Food and beverage costs		28.3				29.2				28.6				29.5
Labor and related costs		33.1				32.6				33.6				32.5
Occupancy and related expenses		7.5				6.8				7.6				7.1
Depreciation and amortization expenses		4.7				5.0				4.8				4.8
Other costs		14.7				14.1				14.3				14.3
Total restaurant operating costs		88.3				87.7				88.9				88.2
General and administrative expenses		11.8				14.0				14.0				14.9
Depreciation and amortization expenses		0.1				0.2				0.2				0.2
Total operating expenses		100.2				101.9				103.1				103.3
Operating loss		(0.2	)			(1.9	)			(3.1	)			(3.3	)
Other expense (income):
Interest expense		—				—				—				—
Interest income		(1.1	)			(1.1	)			(1.1	)			(1.3	)
Income (loss) before income taxes		0.9				(0.8	)			(2.0	)			(2.0	)
Income tax expense		0.1				0.1				0.1				0.1
Net income (loss)		0.8		%		(0.9	)	%		(2.1	)	%		(2.1	)	%

~~Depreciation~~Three ~~and~~Months ~~amortization~~Ended ~~expenses.~~May ~~Depreciation and amortization expenses incurred as part of restaurant operating costs were $6.4 million for the six months ended February 28~~31, 2025 ~~compared~~Compared to ~~$5.2~~Three ~~million~~Months ~~for~~Ended ~~the~~May ~~six months ended February 29~~31, 2024, representing an increase of $1.2 million, or 23.3%. The increase consists of depreciation of property and equipment related to fourteen new restaurants opened subsequent to February 29, 2024. As a percentage of sales, depreciation and amortization expenses at the restaurant level remained reasonably consistent at 4.9% for the six months ended February 28, 2025 as compared to 4.8% for the six months ended February 29, 2024. Depreciation and amortization expenses incurred at the corporate level were $0.2 million for both the six months ended February 28, 2025 and February 29, 2024, and as a percentage of sales were both 0.2%, respectively.

~~Other costs~~Sales. ~~Other~~Sales ~~costs~~ were $1874.10 million for the ~~six~~three months ended ~~February~~May 2831, 2025 compared to $1563.61 million for the ~~six~~three months ended ~~February~~May 2931, 2024, representing an increase of $210.59 million, or 1517.83%. The increase in sales was primarily driven by anthe ~~increase~~sales inresulting ~~costs~~from ~~related~~thirteen ~~to fourteen~~ new restaurants that opened subsequent to ~~February~~May 2931, 2024., Asas awell ~~percentage~~as ofincreases ~~sales,~~in ~~other~~menu ~~costs~~prices ~~decreased~~during tothe 14same period.0 Comparable restaurant sales decreased 2.1%, inconsisting ~~the~~of ~~six~~negative ~~months~~traffic ~~ended~~of ~~February~~2.9% ~~28,~~and ~~2025~~a ~~from~~price/mix 14of 0.48% infor the ~~six~~three months ended ~~February~~May 2931, ~~2024~~2025, ~~primarily~~as ~~driven~~compared byto ~~lower~~the ~~marketing,~~three ~~recruiting~~months ~~and~~ended ~~travel~~May ~~expenses.~~31, 2024.

~~General~~Food and ~~administrative~~beverage ~~expenses~~costs. ~~General~~Food and ~~administrative~~beverage ~~expenses~~costs were $1920.79 million for the ~~six~~three months ended ~~February~~May 2831, 2025 compared to $1618.84 million for the ~~six~~three months ended ~~February~~May 2931, 2024, representing an increase of $2.95 million, or 1713.58%. ~~This~~The increase ~~was~~in ~~primarily~~food ~~due~~and tobeverage ~~the~~costs ~~litigation~~was ~~settlement~~primarily ofdriven ~~$2.1~~by ~~million~~costs ~~and~~associated ~~compensation-related~~with ~~costs~~sales offrom ~~$1.1~~thirteen ~~million~~new ~~partially~~restaurants ~~offset~~that byopened ~~$0.3~~subsequent ~~million~~to ~~decrease~~May in31, ~~professional fees~~2024. As a percentage of sales, ~~general~~food and ~~administrative~~beverage ~~expenses~~costs decreased to 1528.23% in the ~~six~~three months ended ~~February~~May 2831, 2025 ~~from~~as 15compared to 29.42% in the ~~six~~three months ended ~~February~~May 2931, 2024, primarily ~~driven~~due byto ~~sales~~increases ~~leverage~~in menu prices and supply chain initiatives, which was partially offset by ~~the~~food ~~$2.1~~cost ~~million litigation settlement expense~~inflation.

~~Interest~~Labor ~~expense~~and related costs. ~~Interest~~Labor ~~expense~~and ~~was~~related costs were $2624.5 ~~thousand~~million for the ~~six~~three months ended ~~February~~May 2831, 2025 compared to $20.5 ~~thousand~~million for the ~~six~~three months ended ~~February~~May 2931, 2024, representing an increase of $4.0 million, or 19.2%. This increase in labor and related costs was primarily driven by additional labor costs incurred from thirteen new restaurants that opened subsequent to May 31, 2024. As a percentage of sales, labor and related costs increased to 33.1% in the three months ended May 31, 2025 as compared to 32.6% in the three months ended May 31, 2024. The increase in cost as a percentage of sales was primarily due to increases in wage rates subsequent to May 31, 2024, partially offset by increases in menu prices and operational efficiencies.

Interest income. Interest income was $1.4 million for the six months ended February 28, 2025 compared to $1.6 million for the six months ended February 29, 2024. The decrease was primarily driven by lower interest rates.18

~~Income~~Occupancy ~~tax~~and ~~expense~~related expenses. ~~Income~~Occupancy ~~tax~~and ~~expense~~related ~~was~~expenses were $775.5 ~~thousand~~million for the ~~six~~three months ended ~~February~~May 2831, 2025 compared to $884.3 ~~thousand~~million for the ~~six~~three months ended ~~February~~May 2931, 2024, representing an increase of $1.2 ~~For~~million, ~~further~~or ~~discussion~~28.3%. The increase was primarily a result of ~~our~~additional ~~income~~lease ~~taxes,~~expense ~~see~~related ~~“Note~~to 9the opening of thirteen new restaurants that opened subsequent to May 31, 2024. ~~Income~~As ~~Taxes”~~a percentage of sales, occupancy and related expenses increased to 7.5% in the ~~Notes~~three months ended May 31, 2025 as compared to ~~Condensed~~6.8% ~~Financial~~in ~~Statements~~the three months ended May 31, 2024, primarily driven by sales deleverage.

Depreciation and amortization expenses. Depreciation and amortization expenses incurred as part of restaurant operating costs were $3.5 million for the three months ended May 31, 2025 compared to $3.1 million for the three months ended May 31, 2024, representing an increase of $0.4 million, or 10.4%. The increase consists of depreciation of property and equipment related to the thirteen new restaurants that opened subsequent to May 31, 2024. As a percentage of sales, depreciation and amortization expenses at the restaurant level was 4.7% for the three months ended May 31, 2025 as compared to 5.0% in the three months ended May 31, 2024. Depreciation and amortization expenses incurred at the corporate level were $0.1 million for both the three months ended May 31, 2025 and May 31, 2024, and as a percentage of sales were 0.1% and 0.2%, respectively.

Other costs. Other costs were $10.9 million for the three months ended May 31, 2025 compared to $8.9 million for the three months ended May 31, 2024, representing an increase of $2.0 million, or 22.0%. The increase was primarily driven by an increase in costs related to the thirteen new restaurants that opened subsequent to May 31, 2024. As a percentage of sales, other costs increased to 14.7% in the three months ended May 31, 2025 as compared to 14.1% in the three months ended May 31, 2024, primarily driven by utilities and repairs and maintenance, partially offset by lower marketing expenses.

General and administrative expenses. General and administrative expenses were $8.7 million for the three months ended May 31, 2025 compared to $8.9 million for the three months ended May 31, 2024, representing a decrease of $0.2 million, or 1.3%. This decrease was primarily due to a decrease in prior year litigation expense of $0.7 million and lower professional fees of $0.2 million, partially offset by an increase in compensation-related expenses of $0.7 million. As a percentage of sales, general and administrative expenses decreased to 11.8% in the three months ended May 31, 2025 as compared to 14.0% in the three months ended May 31, 2024, primarily due to sales leverage and a decrease in professional fees and litigation expenses.

Interest expense. Interest expense was $30 thousand for the three months ended May 31, 2025 compared to $15 thousand for the three months ended May 31, 2024.

Interest income. Interest income was $812 thousand for the three months ended May 31, 2025 compared to $686 thousand for the three months ended May 31, 2024. The increase was primarily driven by investing incremental cash from our follow-on offering completed in November 2024 into money market funds and investments, partially offset by lower interest rates.

Income tax expense. Income tax expense was $55 thousand for the three months ended May 31, 2025 compared to an income tax expense of $60 thousand for the three months ended May 31, 2024. For further discussion of our income taxes, see “Note 9. Income Taxes” in the Notes to Condensed Financial Statements.

Nine Months Ended May 31, 2025 Compared to Nine Months Ended May 31, 2024

Sales. Sales were $203.3 million for the nine months ended May 31, 2025 compared to $171.8 million for the nine months ended May 31, 2024, representing an increase of $31.5 million, or 18.3%. The increase in sales was primarily driven by the sales resulting from thirteen new restaurants that opened subsequent to May 31, 2024, as well as increases in menu prices during the same period. Comparable restaurant sales decreased 1.7%, consisting of negative traffic of 4.2% and a price/mix of 2.5% for the nine months ended May 31, 2025, as compared to the nine months ended May 31, 2024, primarily due to a reduction in traffic.

Food and beverage costs. Food and beverage costs were $58.2 million for the nine months ended May 31, 2025 compared to $50.7 million for the nine months ended May 31, 2024, representing an increase of $7.5 million, or 14.9%. The increase in food and beverage costs was primarily driven by costs associated with sales from thirteen new restaurants that opened subsequent to May 31, 2024. As a percentage of sales, food and beverage costs decreased to 28.6% in the nine months ended May 31, 2025 as compared to 29.5% in the nine months ended May 31, 2024, primarily due to increases in menu prices and supply chain initiatives, which was partially offset by food cost inflation.

Labor and related costs. Labor and related costs were $68.3 million for the nine months ended May 31, 2025 compared to $55.9 million for the nine months ended May 31, 2024, representing an increase of $12.4 million, or 22.2%. This increase in labor and related costs was primarily driven by additional labor costs incurred from thirteen new restaurants that opened subsequent to May 31, 2024. As a percentage of sales, labor and related costs increased to 33.6% in the nine months ended May 31, 2025 as compared to 32.5% in the nine months ended May 31, 2024. The increase in cost as a percentage of sales was primarily due to increases in wage rates subsequent to May 31, 2024, partially offset by increases in menu prices and operational efficiencies.

Occupancy and related expenses. Occupancy and related expenses were $15.4 million for the nine months ended May 31, 2025 compared to $12.2 million for the nine months ended May 31, 2024, representing an increase of $3.2 million, or 26.4%. The increase was primarily a result of additional lease expense related to the opening of thirteen new restaurants that opened subsequent to May 31, 2024. As a percentage of sales, occupancy and related expenses increased to 7.6% in the nine months ended May 31, 2025, compared to 7.1% in the nine months ended May 31, 2024, primarily driven by sales deleverage.

Depreciation and amortization expenses. Depreciation and amortization expenses incurred as part of restaurant operating costs were $9.8 million for the nine months ended May 31, 2025 compared to $8.3 million for the nine months ended May 31, 2024, representing an increase of $1.5 million, or 18.5%. The increase consists of depreciation of property and equipment related to thirteen new restaurants that opened subsequent to May 31, 2024. As a percentage of sales, depreciation and amortization expenses at the restaurant level were 4.8% for both the nine months ended May 31, 2025 and May 31, 2024. Depreciation and amortization expenses incurred at the corporate level were $0.3 million for both the nine months ended May 31, 2025 and May 31, 2024, and as a percentage of sales were both 0.2%, respectively.

Other costs. Other costs were $29.0 million for the nine months ended May 31, 2025 compared to $24.5 million for the nine months ended May 31, 2024, representing an increase of $4.5 million, or 18.3%. The increase was primarily driven by an increase in costs related to thirteen new restaurants that opened subsequent to May 31, 2024. As a percentage of sales, other costs remained consistent at 14.3% for both the nine months ended May 31, 2025 and May 31, 2024, primarily driven by lower marketing and travel expenses, offset by higher utilities expense.

General and administrative expenses. General and administrative expenses were $28.5 million for the nine months ended May 31, 2025 compared to $25.6 million for the nine months ended May 31, 2024, representing an increase of $2.9 million, or 11.0%. This increase was primarily due to the increase in compensation-related costs of $1.9 million, incremental litigation settlement expense of $1.3 million and $0.4 million in other expenses, partially offset by a decrease of $0.7 million in professional fees. As a percentage of sales, general and administrative expenses decreased to 14.0% in the nine months ended May 31, 2025 from 14.9% in the nine months ended May 31, 2024, primarily driven by sales leverage, lower compensation-related costs, professional fees and travel expenses, partially offset by higher litigation expense.

Interest expense. Interest expense was $56 thousand for the nine months ended May 31, 2025 compared to $35 thousand for the nine months ended May 31, 2024.

Interest income. Interest income was $2.2 million for the nine months ended May 31, 2025 compared to $2.3 million for the nine months ended May 31, 2024. The decrease was primarily driven by lower interest rates.

Income tax expense. Income tax expense was $132 thousand for the nine months ended May 31, 2025 compared to $148 thousand for the nine months ended May 31, 2024. For further discussion of our income taxes, see “Note 9. Income Taxes” in the Notes to Condensed Financial Statements.

Key Performance Indicators

In assessing the performance of our business, we consider a variety of financial and performance measures. The key measures for determining how our business is performing include sales, EBITDA, Adjusted EBITDA, Restaurant-level Operating Profit, Restaurant-level Operating Profit margin, comparable restaurant sales performance, and the number of restaurant openings.

Sales

Sales represents sales of food and beverages in restaurants, as shown on our condensed statements of operations and comprehensive income (loss). Several factors affect our restaurant sales in any given period, including the number of restaurants in operation, guest traffic and average check.

EBITDA and Adjusted EBITDA

EBITDA is defined as net income (loss) before interest, income taxes and depreciation and amortization. Adjusted EBITDA is defined as EBITDA plus stock-based compensation expense, non-cash lease expense and asset disposals, closure costs and restaurant impairments, as well as certain items, such as litigation that we believe are not indicative of our core operating results. Adjusted EBITDA margin is defined as Adjusted EBITDA divided by sales. EBITDA, Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP measures which are intended as supplemental measures of our performance and are neither required by, nor presented in accordance with, GAAP. We believe that EBITDA, Adjusted EBITDA and Adjusted EBITDA margin provide useful information to management and investors regarding certain financial and business trends relating to our financial condition and operating results.

1820

However, these measures may not provide a complete understanding of the operating results of the Company as a whole and such measures should be reviewed in conjunction with our GAAP financial results.

We believe that the use of EBITDA, Adjusted EBITDA and Adjusted EBITDA margin provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial measures with those of comparable companies, which may present similar non-GAAP financial measures to investors. However, you should be aware when evaluating EBITDA, Adjusted EBITDA and Adjusted EBITDA margin that in the future we may incur expenses similar to those excluded when calculating these measures. In addition, our presentation of these measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Our computation of Adjusted EBITDA and Adjusted EBITDA margin may not be comparable to other similarly titled measures computed by other companies, because all companies may not calculate Adjusted EBITDA and Adjusted EBITDA margin in the same fashion.

Because of these limitations, EBITDA, Adjusted EBITDA and Adjusted EBITDA margin should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using EBITDA, Adjusted EBITDA and Adjusted EBITDA margin on a supplemental basis. You should review the reconciliation of net income (loss) to EBITDA, Adjusted EBITDA and Adjusted EBITDA margin below and not rely on any single financial measure to evaluate our business.

The following table reconciles net income (loss) to EBITDA and Adjusted EBITDA:

	Three Months Ended						Six Months Ended
	Three Months Ended May 31,						Nine Months Ended May 31,
	February 28, 2025			February 29, 2024			February 28, 2025			February 29, 2024
	2025			2024			2025			2024
	(amounts in thousands)
Net loss	$	(3,781	)	$	(998	)	$	(4,742	)	$	(3,045	)
Net income (loss)	$	565		$	(558	)	$	(4,177	)	$	(3,603	)
Interest income, net		(~~846~~782	)		(~~742~~671	)		(12,~~398~~180	)		(12,~~574~~245	)
Income tax expense		3855			5060			77132			88148
Depreciation and amortization expenses		3,~~396~~559			23,~~801~~231			610,~~596~~155			58,~~381~~612
EBITDA		(13,~~193~~397	)		12,~~111~~062			~~533~~3,930			~~850~~2,912
Stock-based compensation expense(a)		1,~~081~~293			~~966~~1,197			23,~~207~~500			13,~~972~~169
Non-cash lease expense(b)		~~681~~720			~~773~~630			12,~~401~~121			12,~~590~~220
Litigation(c)		~~2,105~~—			—562			2,105			~~205~~767
Adjusted EBITDA	$	25,~~674~~410		$	24,~~850~~451		$	611,~~246~~656		$	49,~~617~~068
Adjusted EBITDA margin		47.13	%		57.01	%		45.87	%		45.23	%

(a)

Stock-based compensation expense includes non-cash stock-based compensation, which is comprised of restaurant-level stock-based compensation included in labor and related costs and of corporate-level stock-based compensation included in general and administrative expenses in the condensed statements of operations and comprehensive income (loss). For further details of stock-based compensation, see “Note 5. Stock-based Compensation” in the notes to condensed financial statements included in this Quarterly Report on Form 10-Q.

(b)

Non-cash lease expense includes lease expense from the date of possession of our restaurants that did not require cash outlay in the respective periods.

(c)

Litigation includes expenses related to legal claims or settlements.

Restaurant-level Operating Profit and Restaurant-level Operating Profit Margin

Restaurant-level Operating Profit (Loss) is defined as operating income (loss) plus depreciation and amortization; stock-based compensation expense; pre-opening costs and general and administrative expenses which are considered normal, recurring, cash operating expenses and are essential to support the development and operations of our restaurants; non-cash lease expense; asset disposals, closure costs and restaurant impairments; less corporate-level stock-based compensation expense recognized within general and administrative expenses. Restaurant-level Operating Profit (Loss) margin is defined as Restaurant-level Operating Profit (Loss) divided by sales. Restaurant-level Operating Profit (Loss) and Restaurant-level Operating Profit (Loss) margin are non-GAAP measures which are intended as supplemental measures of our performance and are neither required by, nor presented in accordance with, GAAP. We believe that Restaurant-level Operating Profit (Loss) and Restaurant-level Operating Profit (Loss) margin provide useful information to management and investors regarding certain financial and business trends relating to our financial condition and operating results, as this measure depicts normal, recurring cash operating expenses essential to supporting the development and operations of our restaurants. However, these measures may not provide a complete understanding of the operating results of the Company as a whole and such measures should be reviewed in conjunction with our GAAP financial results. We expect

1921

~~Company as a whole and such measures should be reviewed in conjunction with our GAAP financial results. We expect~~ Restaurant-level Operating Profit (Loss) to increase in proportion to the number of new restaurants we open and our comparable restaurant sales growth.

We present Restaurant-level Operating Profit (Loss) because it excludes the impact of general and administrative expenses, which are not incurred at the restaurant level. We also use Restaurant-level Operating Profit (Loss) to measure operating performance and returns from opening new restaurants. Restaurant-level Operating Profit (Loss) margin allows us to evaluate the level of Restaurant-level Operating Profit (Loss) generated from sales.

However, you should be aware that Restaurant-level Operating Profit (Loss) and Restaurant-level Operating Profit (Loss) margin are financial measures that are not indicative of overall results for the Company, and Restaurant-level Operating Profit (Loss) and Restaurant-level Operating Profit (Loss) margin do not accrue directly to the benefit of stockholders because of corporate-level expenses excluded from such measures.

In addition, when evaluating Restaurant-level Operating Profit (Loss) and Restaurant-level Operating Profit (Loss) margin, you should be aware that in the future we may incur expenses similar to those excluded when calculating these measures. Our presentation of these measures should not be construed as an inference that our future results will not be ~~unaffected~~affected by unusual or non-recurring items. Our computation of Restaurant-level Operating Profit (Loss) and Restaurant-level Operating Profit (Loss) margin may not be comparable to other similarly titled measures computed by other companies, because all companies may not calculate Restaurant-level Operating Profit (Loss) and Restaurant-level Operating Profit (Loss) margin in the same fashion. Restaurant-level Operating Profit (Loss) and Restaurant-level Operating Profit (Loss) margin have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP.

The following table reconciles operating loss to Restaurant-level Operating Profit and Restaurant-level Operating Profit margin:

	Three Months Ended						Six Months Ended
	Three Months Ended May 31,						Nine Months Ended May 31,
	February 28, 2025			February 29, 2024			February 28, 2025			February 29, 2024
	2025			2024			2025			2024
	(amounts in thousands)
Operating loss	$	(~~4,589~~162	)	$	(1,~~690~~169	)	$	(6,~~063~~225	)	$	(45,~~531~~700	)
Depreciation and amortization expenses		3,~~396~~559			23,~~801~~231			610,~~596~~155			58,~~381~~612
Stock-based compensation expense(a)		1,~~081~~293			~~966~~1,197			23,~~207~~500			13,~~972~~169
Pre-opening costs(b)		~~545~~404			~~1,001~~861			~~901~~1,305			12,~~750~~611
Non-cash lease expense(c)		~~681~~720			~~773~~630			12,~~401~~121			12,~~590~~220
General and administrative expenses		108,~~985~~741			8,~~168~~857			1928,~~718~~459			1625,~~777~~634
Corporate-level stock-based compensation in general and administrative expenses		(~~882~~1,063	)		(~~810~~1,003	)		(12,~~829~~892	)		(12,~~669~~672	)
Restaurant-level operating profit	$	1113,~~217~~492		$	1112,~~209~~604		$	2236,~~931~~423		$	2133,~~270~~874
Operating loss margin		(70.12	)%		(21.9	)%		(43.71	)%		(43.23	)%
Restaurant-level operating profit margin		1718.32	%		1920.60	%		17.79	%		19.67	%

(a)

(b)

Pre-opening costs consist of labor costs and travel expenses for new employees and trainers during the training period, recruitment fees, legal fees, cash-based lease expenses incurred between the date of possession and the opening day of our restaurants, and other related pre-opening costs.

(c)

Non-cash lease expense includes lease expense from the date of possession of our restaurants that did not require cash outlay in the respective periods.

2022

Comparable Restaurant Sales Performance

Comparable restaurant sales performance refers to the percent change in year-over-year sales for the comparable restaurant base. We include restaurants in the comparable restaurant base that have been in operation for at least 18 full calendar months ~~prior~~by to the ~~start~~end of the accounting period presented due to new restaurants experiencing a period of higher sales upon opening. For restaurants that were temporarily closed the comparative period was also adjusted accordingly.

Measuring our comparable restaurant sales performance allows us to evaluate the performance of our existing restaurant base. Various factors impact comparable restaurant sales, including:

•

consumer recognition of our brand and our ability to respond to changing consumer preferences;

•

overall economic trends, particularly those related to consumer spending;

•

our ability to operate restaurants effectively and efficiently to meet consumer expectations;

•

pricing;

•

guest traffic;

•

per-guest spend and average check;

•

marketing and promotional efforts;

•

local competition; and

•

opening of new restaurants in the vicinity of existing locations.

Since opening new restaurants will be a significant component of our sales growth, comparable restaurant sales performance is only one measure of how we evaluate our performance. The following table shows the comparable restaurant sales performance:

	Three Months Ended		Six Months Ended
	Three Months Ended May 31,		Nine Months Ended May 31,
	February 28, 2025	February 29, 2024	February 28, 2025	February 29, 2024
	2025	2024	2025	2024
Comparable restaurant sales performance (%)	(52.31)%	3.0.6%	(1.67)%	32.54%
Comparable restaurant base	4953	3840	4553	36

Number of Restaurant Openings

The number of restaurant openings reflects the number of restaurants opened during a particular reporting period. Before we open new restaurants, we incur pre-opening costs. New restaurants may not be profitable, and their sales performance may not follow historical patterns. The number and timing of restaurant openings ~~has~~have had, and is expected to continue to have, an impact on our results of operations. The following table shows the growth in our restaurant base:

	Three Months Ended				Six Months Ended
	Three Months Ended May 31,				Nine Months Ended May 31,
	February 28, 2025		February 29, 2024		February 28, 2025		February 29, 2024
	2025		2024		2025		2024
Restaurant activity:
Beginning of period		7073		5459		64		50
Openings		3		54		912		913
End of period		7376		5963		7376		5963

Liquidity and Capital Resources

Our primary sources of liquidity and cash flows are cash and cash equivalents on hand and cash provided by operating activities. Our primary uses of cash are for operational expenditures and capital investments, including new restaurants, costs incurred for restaurant remodels and restaurant fixtures. The significant components of our working capital are liquid assets such as cash, cash equivalents and receivables reduced by accounts payable and accrued expenses. Our working capital position benefits from the fact that we generally collect cash from sales to guests the same day or, in the case of credit or debit card transactions, within several days of the related sale, while we typically have longer payment terms with our vendors.

We believe that cash provided by operating activities, cash, ~~and~~on hand, cash equivalents onand ~~hand~~short-term investments will be sufficient to fund our lease obligations, capital expenditures and working capital needs for at least the next 12 months. We also maintain a Revolving Credit Agreement with Kura Japan, of which the maturity date has been extended to April 10, 2028 pursuant to the Third Amendment with Kura Japan.

2123

~~Agreement~~During ~~with~~the ~~Kura~~nine ~~Japan~~months ended May 31, of2025, ~~which~~we had no borrowings under the ~~maturity~~Revolving ~~date~~Credit ~~has~~Agreement ~~been~~and ~~extended~~have to$45.0 ~~April~~million ~~10,~~of ~~2028~~availability ~~pursuant~~remaining. toAs ~~the~~of ~~Third~~May ~~Amendment~~31, to2025, ~~Revolving~~we ~~Credit~~did ~~Agreement~~not ~~with~~have ~~Kura~~any ~~Japan.~~material off-balance sheet arrangements.

~~During~~On ~~the~~November ~~six~~13, ~~months~~2024, ~~ended~~we ~~February~~completed 28an underwritten public offering of common stock pursuant to our universal shelf registration statement on Form S-3, ~~2025~~selling an aggregate of 800,328 weshares ~~had~~of noClass ~~borrowings~~A ~~under~~common stock, including the ~~Revolving~~exercise ~~Credit~~in ~~Agreement~~full ~~and~~of ~~have~~the underwriters’ option to purchase 104,390 additional shares, at the price of $4585.000 ~~million~~per share less an underwriting discount of ~~availability~~$4.25 ~~remaining~~per share. AsWe received aggregate net proceeds of ~~February~~$64.4 28million after deducting the underwriting discounts and commissions and offering expenses payable by us. The proceeds are to be used for general corporate purposes, ~~2025~~including capital expenditures, weworking ~~did~~capital, ~~not~~and ~~have~~other ~~any~~business ~~material~~purposes. ~~off-balance~~No ~~sheet~~payments ~~arrangements~~were made by us to directors, officers or persons owning 10% or more of our common stock or to their associates, or to our affiliates.

On November 13, 2024, we completed an underwritten public offering of common stock pursuant to our 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. We received aggregate net proceeds of $64.4 million after deducting the underwriting discounts and commissions and offering expenses payable by us. The proceeds are to be used for general corporate purposes, including capital expenditures, working capital, and other business purposes. No payments were made by us to directors, officers or persons owning 10% or more of the our common stock or to their associates, or to our affiliates.

Summary of Cash Flows

The following table summarizes our cash flows for the periods presented:

	Six Months Ended
	Nine Months Ended May 31,
	February 28, 2025			February 29, 2024
	2025			2024
Statement of Cash Flow data:	(amounts in thousands)
Net cash provided by operating activities	$	815,~~623~~338		$	614,~~218~~943
Net cash used in investing activities	$	(3984,~~396~~183	)	$	(2027,~~640~~257	)
Net cash provided by financing activities	$	64,~~958~~991		$	12,~~493~~022

Cash Flows Provided by Operating Activities

Net cash provided by operating activities during the ~~six~~nine months ended ~~February~~May 2831, 2025 was $815.63 million, primarily due to a net loss of $4.72 million, non-cash charges of $610.62 million for depreciation and amortization, $23.25 million for stock-based compensation, and net cash outflows of $45.46 million from changes in operating assets and liabilities.

Net cash provided by operating activities during the ~~six~~nine months ended ~~February~~May 2931, 2024 was $614.29 million, primarily due to a net loss of $3.06 million, non-cash charges of $58.46 million for depreciation and amortization, $23.02 million for stock-based compensation, and $3.4 million in non-cash lease expense, and net cash outflows of $13.94 million from changes in operating assets and liabilities.

Cash Flows Used in Investing Activities

Net cash used in investing activities during the ~~six~~nine months ended ~~February~~May 2831, 2025 was $3984.42 million, primarily due to $2570.32 million in purchases of ~~long-term~~ investments, $2336.17 million in purchases of property and equipment and $01.90 million in purchases of liquor licenses offset by $1024.0 million ofin redemptions of long-term investments. The increase in purchases of property and equipment in the ~~six~~nine months ended ~~February~~May 2831, 2025 is primarily related to capital expenditures for current and future restaurant openings, maintaining our existing restaurants and other projects.

Net cash used in investing activities during the ~~six~~nine months ended ~~February~~May 2931, 2024 was $2027.63 million, primarily due to $3.53 million in purchases of short-term investments, $2234.80 million in purchases of property and equipment and $0.12 million in purchases of liquor licenses offset by $510.95 million ofin ~~redemption~~redemptions of short-term investments. The increase in purchases of property and equipment in the ~~six~~nine months ended ~~February~~May 2931, 2024 is primarily related to capital expenditures for current and future restaurant openings, renovations and maintaining our existing restaurants and other projects.

Cash Flows Provided by Financing Activities

Net cash provided by financing activities during the ~~six~~nine months ended ~~February~~May 2831, 2025 was $65.0 million and is primarily due to aggregate net proceeds from the issuance of stock of $64.4 million after deducting the underwriting discounts and commissions and offering expenses, $0.9 million of proceeds from exercise of stock options offset by $0.3 million in taxes paid on vested RSUs.

Net cash provided by financing activities during the ~~six~~nine months ended ~~February~~May 2931, 2024 was $12.50 million and is primarily due to $12.93 million of proceeds from exercise of stock options offset by $0.42 million in taxes paid on vested RSUs.

2224

Material Cash Requirements

As of ~~February~~May 2831, 2025, we had $711.82 million in contractual obligations relating to the construction of new restaurants and purchase commitments for goods related to restaurant operations. All contractual obligations are expected to be paid during the next 12 months utilizing cash and cash equivalents on hand and provided by operating activities. For operating lease obligations, see “Note 3. Leases” in the Notes to Condensed Financial Statements included in this Quarterly Report on Form 10-Q.

Recent Accounting Pronouncements

For a description of our recently issued or adopted accounting pronouncements, including the respective date of adoption and expected effect on our results of operations and financial condition, see “~~Part I, Item 1,~~ Note 1. Organization and Basis of Presentation” ofin the Notes to Condensed Financial Statements included in this Quarterly Report on Form 10-Q.

Critical Accounting Estimates

Our discussion and analysis of operating results and financial condition ~~are~~is based on our financial statements. Preparing our financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, sales, expenses and related disclosures of contingent assets and liabilities. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis.

Our critical accounting policies are those that materially affect our financial statements. Our critical accounting estimates are those that involve subjective or complex judgments by management. Although these estimates are based on management’s best knowledge of current events and actions that may impact us in the future, actual results may be materially different from the estimates. We believe the assessment of potential impairments of long-lived assets is affected by significant judgments and estimates used in the preparation of our financial statements and that the judgments and estimates are reasonable.

There have been no material changes in our critical accounting policies and estimates from those disclosed in our Annual Report on Form 10‑K for the fiscal year ended August 31, 2024. Please refer to “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates” of our Annual Report on Form 10‑K for the fiscal year ended August 31, 2024 for a discussion of our critical accounting policies and estimates.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There have been no material changes to our market risk during the ~~six~~nine months ended ~~February~~May 2831, 2025. For a discussion of our exposure to market risk, refer to our market risk disclosures set forth in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” of our 2024 Form 10-K.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

Our management carried out an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q.

Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q.

Changes in Internal Control over Financial Reporting

In our current fiscal quarter, we have implemented a new purchasing and inventory management system across all of our restaurants. In connection with the new system, we have implemented additional controls. There have been no ~~other~~ changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

2325

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

For a description of our legal proceedings, see ~~Part I, Item 1,~~ Note 8 – Commitments and Contingencies, ofin the Notes to Condensed Financial Statements of this Quarterly Report on Form 10-Q, which is incorporated herein by reference.

Item 1A. Risk Factors.

There have been no material changes from the risk factors associated with our business previously disclosed in the “Risk Factors” section of our Annual Report on Form 10-K for our fiscal year ended August 31, 2024, except as set forth below. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business and the trading price of our common stock.

Changes in food and supply costs and/or availability of products could adversely affect our business, financial condition or results of operations.

Our profitability depends in part on our ability to anticipate and react to changes in food and supply costs and/or the availability of products necessary to operate our business, including, but not limited to, rice vinegar from Kura Japan, which owns the recipe and is our sole supplier of such rice vinegar. Shortages or interruptions in the availability of certain supplies caused by unanticipated demand, problems in production or distribution, tariffs or other trade restrictions, food contamination, inclement weather, natural disasters, or other conditions could adversely affect the productivity, availability, quality and cost of our ingredients, which could harm our operations. Any increase in the prices of the food products most critical to our menu, such as rice, fish and other seafood, as well as fresh vegetables, could adversely affect our business, financial condition, or results from operations, or cash flows. Although we try to manage the impact that these fluctuations have on our operating results, we remain susceptible to increases in food costs and loss of supply as a result of factors beyond our control, such as general economic conditions, political instability, inflationary pressures, seasonal fluctuations, the effects of climate change and related weather conditions, demand, food safety concerns, generalized infectious diseases, product recalls and government regulations. Additionally, tariffs could impact supply chain reliability, disrupt established sourcing strategies, and result in increased operational complexity. Higher costs due to tariffs will generally lead to price increases for our products and other restaurant operating costs, potentially reducing consumer demand and impacting our competitive position in the market.

If any of our distributors or suppliers performs inadequately, or our distribution or supply relationships are disrupted for any reason, our business, financial condition, results of operations or cash flows could be adversely affected. If we cannot replace or engage distributors or suppliers who meet our specifications in a short period of time, that could increase our expenses and cause shortages of food and other items at our restaurants, which could cause a restaurant to remove items from its menu. If that were to happen, affected restaurants could experience significant reductions in sales during the shortage or thereafter, if guests change their dining habits as a result. In addition, because we provide moderately priced food, we may choose not to, or may be unable to, pass along commodity price increases to consumers. These potential changes in food and supply costs could materially adversely affect our business, financial condition or results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

~~During~~On ~~the~~May ~~three months ended February 28~~13, 2025, noHajime ~~director~~Uba, orour ~~officer~~Chairman, ofPresident ~~the~~and ~~Company~~Chief Executive Officer, adopted ~~or terminated~~ a Rule 10b5-1 trading arrangement ~~or non-Rule 10b5-1 trading arrangement~~, as ~~each~~such term is defined in Item 408(a) of Regulation S-K, for the potential exercise and sale of shares of the Company’s common stock underlying 12,134 of Mr. Uba’s outstanding option awards, from January 16, 2026, at the earliest, until July 31, 2026, at the latest.

24On May 13, 2025, Robert Kluger, our Chief Development Officer of the Company, adopted a Rule 10b5-1 trading arrangement, as such term is defined in Item 408(a) of Regulation S-K, for the potential exercise and sale of shares of the Company’s common stock underlying 9,584 of Mr. Kluger’s outstanding option awards, from January 16, 2026, at the earliest, until July 31, 2026, at the latest.

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.27

The foregoing is only a summary of the material terms of the Third Amendment and does not purport to be complete, and is qualified in its entirety by reference to the Third Amendment attached thereto, a copy of which is attached to this Quarterly Report on Form 10-Q as Exhibit 10.2 and incorporated by reference herein.

Item 6. Exhibits.

ExhibitNumber		Description
10.1		Form of Performance Restricted Stock Unit Award Notice and Award Agreement (incorporated by reference to our current report on Form 8-K filed with the SEC on January 24, 2025 as Exhibit 10.1)
10.2*		Third Amendment to Revolving Credit Agreement dated April 4, 2025.
31.1*		Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*		Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*		Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH		Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents
104		Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101)

* Filed herewith.

2628

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	KURA SUSHI USA, INC.
Date: April 8, 2025	By:	/s/ Jeffrey Uttz
Date: July 8, 2025	By:	/s/ Jeffrey Uttz
		Jeffrey Uttz
		Chief Financial Officer(Principal Financial Officer)

2729

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