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Kura Sushi USA: Revolution in sushi restaurants through technology and tradition

Many restaurants are looking for the best way to integrate automation technology without losing the human touch. Kura Sushi USA has been refining the balance between hospitality and technology for years. The successful concept has been transferred from Japan to the USA, as the parent company already operates over 500 restaurants in Japan and has been in existence since 1977. With around 59 locations, it is the leading sushi chain in the USA. With conveyor belts, robots, gamification and automation, Kura Sushi is taking sushi eating into the future.

The Kura Sushi experience begins with checking in and being added to the waiting list via the Kura app. Once at the restaurant, guests immediately select a sushi plate from the conveyor belt, which unlike other sushi restaurants is designed in an E-shape to reach as many guests as possible.

In addition to the traditional conveyor belt, every Kura Sushi restaurant also offers a tray at each table. Guests can use this to order additional dishes from the kitchen, which are then served via a separate "express highway" conveyor belt. Drinks are delivered by a Kura robot, which is designed for entertainment rather than efficiency.

After the meal, the empty plates are placed in a disposal integrated at the table, which counts the plates and transports them to the dishwashing station via a water system running under the conveyor belts. The water from this system is recirculated and reused every 3-4 hours, making the process environmentally friendly. Customers can pay directly at the table or wait for a waiter.

Kura Sushi has also patented a freshness system called "Mr.Fresh", which keeps dishes under plastic domes - until a guest reaches for them. Fitted with RFID tags, these domes can track how long a dish is on the conveyor belt to ensure freshness, and at which points which dishes are consumed.

Much of the technology that Kura Sushi uses is developed in-house, apart from payment systems and service robots. There is even automation in the kitchen, with automatic rice bowl makers and stoves, rice washing machines and machines that mix the vinegar with the sushi rice.

Another aspect of the Kura Sushi experience is gamification. In Japan, customers are invited to play a game to win prizes after every five plates consumed. In the US, every customer is automatically offered a prize after 15 plates, usually a toy, due to the different gambling laws.

Despite the technological interactions, Hideto Sugimoto, the US Vice President of Systems and Menu Development, emphasizes that Kura Sushi does not want to offer its customers a purely self-service experience. Servers are always present to support the fast pace of the concept while providing personalized service. The robots and automation simply make some tasks easier.

In the First Quarter, Kura Sushi USA reported revenue of $51.5 million, up 31% year-over-year, and opened four new locations. The company is aiming for 290 locations in the long term, around 5 times as many as it currently has. Revenue in existing stores increased by a solid 3.8%. As the sushi chain is still small, profits are still negligible due to the high fixed costs. At restaurant level, however, the potential is recognizable with a continuously growing operating margin of currently 19.5%. The valuation appears fair with an expected P/S ratio of 5 for 2024.

Conclusion:

The Craig Hallum analysts describe Kura Sushi as the best growth story in the restaurant sector. In chart terms, an upward trend to new highs could be on the horizon, although the last three attempts were similarly dynamic but short-lived and were followed by sharp price declines. Due to the high volatility, it could make sense to wait for a 4-6 month phase of weakness for long-term entries.

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