10-Q

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 November 30, 2022

OR

☐ 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.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☒

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 January 2, 2023, the registrant had 8,792,126 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	2
	Condensed Statements of Stockholders’ Equity	3
	Condensed Statements of Cash Flows	4
	Notes to Condensed Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22
Item 4.	Controls and Procedures	22
PART II.	OTHER INFORMATION	23
Item 1.	Legal Proceedings	23
Item 1A.	Risk Factors	23
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 3.	Defaults Upon Senior Securities	23
Item 4.	Mine Safety Disclosures	23
Item 5.	Other Information	23
Item 6.	Exhibits	24
Signatures		25

i

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Kura Sushi USA, Inc.

Condensed Balance Sheets

(amounts in thousands, except par value)

(Unaudited)

	November 30, 2022			August 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	26,934		$	35,782
Accounts and other receivables		2,916			2,486
Inventories		1,278			1,120
Due from affiliate		34			156
Prepaid expenses and other current assets		3,877			2,852
Total current assets		35,039			42,396
Non-current assets:
Property and equipment – net		81,109			75,590
Operating lease right-of-use assets		84,154			79,990
Deposits and other assets		4,147			3,380
Total assets	$	204,449		$	201,356
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	5,304		$	5,559
Accrued expenses and other current liabilities		3,518			3,731
Salaries and wages payable		5,481			5,955
Finance leases – current		337			507
Operating lease liabilities – current		8,041			7,992
Due to affiliate		648			285
Sales tax payable		1,162			1,240
Total current liabilities		24,491			25,269
Non-current liabilities:
Finance leases – non-current		22			30
Operating lease liabilities – non-current		87,519			82,280
Other liabilities		510			483
Total liabilities		112,542			108,062
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, 8,791 and 8,788 shares issued and outstanding as of November 30, 2022 and August 31, 2022, respectively		9			9
Class B common stock, $0.001 par value; 10,000 shares authorized, 1,000 shares issued and outstanding as of November 30, 2022 and August 31, 2022		1			1
Additional paid-in capital		119,671			118,970
Accumulated deficit		(27,774	)		(25,686	)
Total stockholders' equity		91,907			93,294
Total liabilities and stockholders' equity	$	204,449		$	201,356

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

1

Kura Sushi USA, Inc.

Condensed Statements of Operations

(amounts in thousands, except per share data)

(Unaudited)

	Three Months Ended November 30,
	2022			2021
Sales	$	39,318		$	29,832
Restaurant operating costs:
Food and beverage costs		12,430			8,957
Labor and related costs		12,535			9,710
Occupancy and related expenses		2,885			2,200
Depreciation and amortization expenses		1,576			1,171
Other costs		5,321			3,610
Total restaurant operating costs		34,747			25,648
General and administrative expenses		6,642			5,360
Depreciation and amortization expenses		85			88
Total operating expenses		41,474			31,096
Operating loss		(2,156	)		(1,264	)
Other expense (income):
Interest expense		16			25
Interest income		(94	)		(26	)
Loss before income taxes		(2,078	)		(1,263	)
Income tax expense		10			12
Net loss	$	(2,088	)	$	(1,275	)
Net loss per Class A and Class B shares
Basic	$	(0.21	)	$	(0.13	)
Diluted	$	(0.21	)	$	(0.13	)
Weighted average Class A and Class B shares outstanding
Basic		9,789			9,710
Diluted		9,789			9,710

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

2

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, 2022		8,788	$	9		1,000	$	1	$	118,970	$	(25,686	)	$	93,294
Stock-based compensation		—		—		—		—		650		—			650
Employee stock plan		3		—		—		—		51		—			51
Net loss		—		—		—		—		—		(2,088	)		(2,088	)
Balances as of November 30, 2022		8,791	$	9		1,000	$	1	$	119,671	$	(27,774	)	$	91,907
	Common Stock								Additional					Total
	Class A				Class B				Paid-in		Accumulated			Stockholders'
	Shares		Amount		Shares		Amount		Capital		Deficit			Equity
Balances as of August 31, 2021		8,700	$	9		1,000	$	1	$	115,756	$	(24,922	)	$	90,844
Stock-based compensation		—		—		—		—		443		—			443
Employee stock plan		13		—		—		—		19		—			19
Net loss		—		—		—		—		—		(1,275	)		(1,275	)
Balances as of November 30, 2021		8,713	$	9		1,000	$	1	$	116,218	$	(26,197	)	$	90,031

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

3

Kura Sushi USA, Inc.

Condensed Statements of Cash Flows

(amounts in thousands)

(Unaudited)

	Three Months Ended November 30,
	2022			2021
Cash flows from operating activities
Net loss	$	(2,088	)	$	(1,275	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
Depreciation and amortization		1,661			1,259
Stock-based compensation		650			443
Non-cash lease expense		844			709
Changes in operating assets and liabilities:
Accounts and other receivables		108			84
Inventories		(158	)		(87	)
Due from affiliate		122			329
Prepaid expenses and other current assets		(568	)		8,303
Deposits and other assets		43			(69	)
Accounts payable		(896	)		194
Accrued expenses and other current liabilities		1,061			241
Salaries and wages payable		(474	)		143
Operating lease liabilities		(162	)		205
Due to affiliate		567			67
Sales tax payable		(181	)		30
Net cash provided by operating activities		529			10,576
Cash flows from investing activities
Payments for property and equipment		(8,344	)		(6,036	)
Payments for initial direct costs		(95	)		(225	)
Payments for purchases of liquor licenses		(811	)		(84	)
Net cash used in investing activities		(9,250	)		(6,345	)
Cash flows from financing activities
Repayment of principal on finance leases		(178	)		(259	)
Proceeds from exercise of stock options		51			19
Net cash used in financing activities		(127	)		(240	)
(Decrease) increase in cash and cash equivalents		(8,848	)		3,991
Cash and cash equivalents, beginning of period		35,782			40,430
Cash and cash equivalents, end of period	$	26,934		$	44,421
Supplemental disclosures of cash flow information
Cash paid for income taxes	$	65		$	45
Noncash investing activities
Amounts unpaid for purchases of property and equipment	$	1,095		$	2,394

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

4

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

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, 2022.

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, 2022. 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, 2023 or for any other future annual or interim period.

Fiscal Year

The Company’s fiscal year begins on September 1 and ends on August 31, and references made to “fiscal year 2023” and “fiscal year 2022” refer to the Company’s fiscal years ending August 31, 2023 and ended August 31, 2022, respectively.

Use of Estimates

The preparation of 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.

Comprehensive Income (Loss)

Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. Comprehensive income (loss) is the same as net income (loss) for all periods presented. Therefore, a separate statement of comprehensive income (loss) is not included in the accompanying financial statements.

5

Recently Adopted Accounting Pronouncement

In November 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-10, “Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance,” which provides guidance on disclosures for transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2021, with early adoption permitted. The Company adopted this update effective September 1, 2022. The adoption of this update did not have a material impact to the consolidated financial statements.

Note 2. Balance Sheet Components

Accounts and Other Receivables

	November 30, 2022		August 31, 2022
	(amounts in thousands)
Lease receivables	$	2,305	$	1,767
Credit card and other receivables		611		719
Total accounts and other receivables	$	2,916	$	2,486

Prepaid Expenses and Other Current Assets

	November 30, 2022		August 31, 2022
	(amounts in thousands)
Employee retention credit	$	34	$	34
Prepaid expenses		3,525		2,588
Other current assets		318		230
Total prepaid expenses and other current assets	$	3,877	$	2,852

Property and Equipment - net

	November 30, 2022			August 31, 2022
	(amounts in thousands)
Leasehold improvements	$	60,780		$	56,668
Lease assets		6,166			6,166
Furniture and fixtures		24,707			21,759
Computer equipment		1,510			1,307
Vehicles		159			159
Software		924			921
Construction in progress		8,580			8,666
Property and equipment – gross		102,826			95,646
Less: accumulated depreciation and amortization		(21,717	)		(20,056	)
Total property and equipment – net	$	81,109		$	75,590

Depreciation and amortization expense for property and equipment was $1.7 million and $1.3 million for the three months ended November 30, 2022 and November 30, 2021, respectively.

6

Note 3. Leases

The Company has operating and finance leases for its corporate office, restaurant locations, office equipment, kitchen equipment and automobiles. The Company’s leases have remaining lease terms of less than 1 year to 20 years, some of which include options to extend the leases.

Lease related costs recognized in the statements of operations are as follows:

		Three Months Ended November 30,
		2022		2021
		(amounts in thousands)
Finance lease cost	Classification
Amortization of right-of-use assets	Depreciation and amortization expenses	$	235	$	136
Interest on lease liabilities	Interest expense		4		13
Total finance lease cost		$	239	$	149
		Three Months Ended November 30,
		2022		2021
		(amounts in thousands)
Operating lease cost	Classification
Operating lease cost	Occupancy and related expenses, other costs and general and administrative expenses	$	2,262	$	1,832
Variable lease cost	Occupancy and related expenses, and general and administrative expenses		645		436
Total operating lease cost		$	2,907	$	2,268

Supplemental balance sheet information related to leases is as follows:

Operating Leases

	November 30, 2022		August 31, 2022
	(amounts in thousands)
Right-of-use assets	$	84,154	$	79,990
Lease liabilities – current	$	8,041	$	7,992
Lease liabilities – non-current		87,519		82,280
Total lease liabilities	$	95,560	$	90,272

Finance Lease Assets – net

	November 30, 2022			August 31, 2022
	(amounts in thousands)
Property and equipment	$	6,166		$	6,166
Accumulated depreciation		(3,487	)		(3,348	)
Total property and equipment – net	$	2,679		$	2,818

Finance Leases Liabilities

	November 30, 2022		August 31, 2022
	(amounts in thousands)
Finance lease – current	$	337	$	507
Finance lease – non-current		22		30
Total finance lease liabilities	$	359	$	537

7

	Three months ended November 30,
	2022			2021
Weighted Average Remaining Lease Term (Years)
Operating leases		16.0			16.2
Finance leases		0.6			1.3
Weighted Average Discount Rate
Operating leases		6.6	%		6.4	%
Finance leases		4.7	%		4.5	%

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

	Three Months Ended November 30,
	2022		2021
	(amounts in thousands)
Operating cash flows paid for operating lease liabilities	$	1,865	$	1,478
Operating right-of-use assets obtained in exchange for new operating lease liabilities	$	4,911	$	—

As of November 30, 2022, the Company has an additional $45.3 million of operating leases related to restaurants for which the Company has not yet taken possession. Subsequent to November 30, 2022, the Company entered into additional operating leases related to restaurants for which the Company has not yet taken possession. The lease liabilities associated with these leases after November 30, 2022 are $9.2 million. These operating leases are expected to commence in fiscal years 2023 and 2024, with lease terms of 15 to 20 years.

8

Maturities of lease liabilities, net of lease receivables, were as follows:

	Operating Leases			Finance Leases
	(amounts in thousands)
Remainder of 2023	$	4,599		$	326
2024		6,956			36
2025		8,819			7
2026		8,751			—
2027		8,550			—
Thereafter		112,414			—
Total lease payments		150,089			369
Less: imputed interest		(54,529	)		(10	)
Present value of lease liabilities	$	95,560		$	359

Note 4. Related Party Transactions

Kura Sushi, Inc. (“Kura Japan”) is the majority shareholder 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 statement of operations. 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 use of certain of Kura Japan’s intellectual property rights, including, but not limited to, Kura Japan’s trademarks “Kura Sushi” 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 statements of operations.

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 million (the “Revolving Credit Agreement”). For additional information, see “Note 6. Debt.”

Balances with Kura Japan are as follows:

	November 30, 2022		August 31, 2022
	(amounts in thousands)
Due from affiliate	$	34	$	156
Due to affiliate	$	648	$	285

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

	Three Months Ended November 30,
	2022		2021
	(amounts in thousands)
Related party transactions:
Expatriate salaries expense	$	21	$	42
Royalty payments		197		149
Travel and other administrative expenses		—		2
Purchases of equipment		738		280
Total related party transactions	$	956	$	473

9

Reimbursements by Kura Japan to the Company were $34 thousand and $17 thousand for the three months ended November 30, 2022 and November 30, 2021, respectively. The reimbursements were primarily for D&O insurance and other administrative expenses.

Note 5. Stock-based Compensation

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

	Options Outstanding
	Number of Shares Underlying Outstanding Options			Weighted Average Exercise Price Per Share
Outstanding — August 31, 2022		675,942		$	27.12
Options granted		56,951		$	73.20
Options exercised		(2,491	)	$	12.82
Options canceled/forfeited		(23,781	)	$	46.47
Outstanding — November 30, 2022		706,621		$	30.28

During the three months ended November 30, 2022, approximately one thousand restricted stock units were issued under the Stock Incentive Plan, in addition to the option grants stated above. The Company incurred stock-based compensation related to restricted stock units of $16 thousand for the three months ended November 30, 2022.

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

	Three Months Ended November 30,
	2022		2021
	(amounts in thousands)
Restaurant-level stock-based compensation included in other costs	$	94	$	35
Corporate-level stock-based compensation included in general and administrative expenses		556		408
Total stock-based compensation	$	650	$	443

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 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 November 30, 2022 and August 31, 2022, 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.”

Note 7. Loss Per Share

The net loss per share attributable to common stockholders is allocated based on the contractual participation rights of the Class A common stock and Class B common stock as if the income for the year has 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.

10

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

	Three Months Ended November 30,
	2022						2021
	Class A			Class B			Class A			Class B
	(amounts in thousands, except per share data)
Net loss attributable to common stockholders	$	(1,875	)	$	(213	)	$	(1,144	)	$	(131	)
Weighted average common shares outstanding – basic		8,789			1,000			8,710			1,000
Dilutive effect of stock-based awards		—			—			—			—
Weighted average common shares outstanding – diluted		8,789			1,000			8,710			1,000
Net loss per share attributable to common stockholders – basic	$	(0.21	)	$	(0.21	)	$	(0.13	)	$	(0.13	)
Net loss per share attributable to common stockholders – diluted	$	(0.21	)	$	(0.21	)	$	(0.13	)	$	(0.13	)

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

For the three months ended November 30, 2022 and November 30, 2021, there were 708 thousand and 623 thousand shares of common stock subject to outstanding employee stock options and restricted stock units that were excluded from the calculation of diluted income per share because their inclusion would have been anti-dilutive.

Note 8. Commitments and Contingencies

On May 31, 2019, a putative class action complaint was filed by a former employee, Brandy Gomes, in Los Angeles County Superior Court, alleging violations of California wage and hour laws. On July 9, 2020, plaintiff’s counsel filed a first amended class action complaint to add Jamar Spencer, another former employee, as a plaintiff to this action. In addition, the first amended class action complaint added new causes of action alleging violations of California wage and hour laws including a cause of action brought under the California Private Attorney General Act. On August 7, 2020, the Company filed its answer to the first amended complaint, generally denying the allegations in the complaint. In May 2021, a joint stipulation was filed requesting a delay in the class certification hearing date to March 3, 2022, and a mediation was scheduled for September 24, 2021. During the mediation, a settlement was agreed upon in the amount of $1.75 million. The Company recorded an accrued liability of $1.78 million, including an estimated $30 thousand in employer payroll taxes, related to this settlement within general and administrative expenses in the statements of operations during the fiscal year ended August 31, 2021. The court granted final approval of the settlement on November 18, 2022. In December 2022, pursuant to the court’s order granting final approval of the settlement, the Company deposited $1.78 million into an account controlled by a settlement administrator for disbursement to class participants and other parties to the litigation. A final report regarding the distribution of settlement funds is due on July 6, 2023, and a non-appearance case review is scheduled for July 13, 2023.

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, excluding the putative class action matter referenced above, 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.

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Note 9. Income Taxes

The Company recorded an income tax expense of $10 thousand and $12 thousand for the three months ended November 30, 2022 and November 30, 2021, respectively. The Company’s effective tax rates for the three months ended November 30, 2022 substantially differed from the federal statutory tax rate of 21% primarily due to a valuation allowance for the Company’s deferred tax assets.

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 November 30, 2022 was appropriate.

Note 10. Subsequent Event

On December 28, 2022, the Company filed a universal shelf registration statement on Form S-3 (the “Registration Statement”) with the SEC in accordance with the Securities Act of 1933, as amended (the “Securities Act”). The Registration Statement registers Class A common stock, preferred stock, depositary shares, warrants, subscription rights, share purchase contracts, share purchase units, and any combination of the foregoing, for a maximum aggregate offering price of up to $125.0 million, which may be sold from time to time, subject to the Registration Statement being declared effective by the SEC. The terms of any securities offered under the Registration Statement and intended use of proceeds will be established at the times of the offerings and will be described in prospectus supplements filed with the SEC at the times of the offerings. The Registration Statement has a three-year term once declared effective by the SEC.

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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, 2022 (the “Annual Report”).

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

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

Overview

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

Business Trends

We have experienced inflationary pressures affecting our operations in certain areas such as food and beverage costs, labor costs, construction costs and energy costs. We have also experienced temporary shortages in food, equipment and other goods, as well as an increase in freights costs, due in part to supply chain impacts of overall economic conditions in the markets in which we operate. We have been able to offset to some extent these inflationary and other cost pressures through various actions, such as increasing menu prices, productivity improvements, and supply chain initiatives, however, we expect these inflationary and other cost pressures to continue throughout the remainder of fiscal year 2023.

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 and payroll taxes. Similar to the food and beverage costs that we incur, labor and related expenses are expected to grow proportionally as our sales grow. Factors that influence fluctuations in our labor and related expenses include minimum wage and payroll tax legislation, the frequency and severity of workers’ compensation claims, healthcare costs and the performance of our restaurants.

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

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

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Other costs. Other costs include credit card processing fees, repairs and maintenance, restaurant-level advertising and promotions, restaurant supplies, royalty payments to Kura Japan, stock-based compensation for restaurant-level employees, 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, marketing costs, 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.

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

Results of Operations

The following tables present selected comparative results of operations for the three months ended November 30, 2022 and 2021. 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 November 30,
	2022			2021			$ Change			% Change
	(dollar amounts in thousands)
Sales	$	39,318		$	29,832		$	9,486			31.8		%
Restaurant operating costs
Food and beverage costs		12,430			8,957			3,473			38.8
Labor and related costs		12,535			9,710			2,825			29.1
Occupancy and related expenses		2,885			2,200			685			31.1
Depreciation and amortization expenses		1,576			1,171			405			34.6
Other costs		5,321			3,610			1,711			47.4
Total restaurant operating costs		34,747			25,648			9,099			35.5
General and administrative expenses		6,642			5,360			1,282			23.9
Depreciation and amortization expenses		85			88			(3	)		(3.4	)
Total operating expenses		41,474			31,096			10,378			33.4
Operating loss		(2,156	)		(1,264	)		(892	)		(70.6	)
Other expense (income):
Interest expense		16			25			(9	)		(36.0	)
Interest income		(94	)		(26	)		(68	)		261.5
Loss before income taxes		(2,078	)		(1,263	)		(815	)		64.5
Income tax expense		10			12			(2	)		(16.7	)
Net loss	$	(2,088	)	$	(1,275	)	$	(813	)		63.8		%

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	Three Months Ended November 30,
	2022				2021
	(as a percentage of sales)
Sales		100.0		%		100.0		%
Restaurant operating costs
Food and beverage costs		31.6				30.0
Labor and related costs		31.9				32.5
Occupancy and related expenses		7.3				7.4
Depreciation and amortization expenses		4.0				3.9
Other costs		13.5				12.1
Total restaurant operating costs		88.4				86.0
General and administrative expenses		16.9				18.0
Depreciation and amortization expenses		0.2				0.3
Total operating expenses		105.5				104.3
Operating loss		(5.5	)			(4.3	)
Other expense (income):
Interest expense		-				0.1
Interest income		(0.2	)			(0.1	)
Loss before income taxes		(5.3	)			(4.3	)
Income tax expense		—				—
Net loss		(5.3	)	%		(4.3	)	%

Three Months Ended November 30, 2022 Compared to Three Months Ended November 30, 2021

Sales. Sales were $39.3 million for the three months ended November 30, 2022 compared to $29.8 million for the three months ended November 30, 2021, representing an increase of $9.5 million, or 31.8%. Comparable restaurant sales increased 6.9% for the three months ended November 30, 2022, as compared to the three months ended November 30, 2021. The increase in sales was primarily driven by the sales resulting from nine new restaurants opened subsequent to November 30, 2021, as well as increases in menu prices during the same period.

Food and beverage costs. Food and beverage costs were $12.4 million for the three months ended November 30, 2022 compared to $9.0 million for the three months ended November 30, 2021, representing an increase of $3.4 million, or 38.8%. The increase in food and beverage costs was primarily driven by costs associated with sales from nine new restaurants opened subsequent to November 30, 2021. As a percentage of sales, food and beverage costs increased to 31.6% in the three months ended November 30, 2022 as compared to 30.0% in the three months ended November 30, 2021, primarily due to food cost inflation partially offset by increases in menu prices.

Labor and related costs. Labor and related costs were $12.5 million for the three months ended November 30, 2022 compared to $9.7 million for the three months ended November 30, 2021, representing an increase of $2.8 million, or 29.1%. This increase in labor and related costs was primarily driven by additional labor costs incurred from nine new restaurants opened subsequent to November 30, 2021. As a percentage of sales, labor and related costs decreased to 31.9% in the three months ended November 30, 2022 as compared to 32.5% in the three months ended November 30, 2021. The decrease in cost as a percentage of sales was primarily due to increases in menu prices and technological initiatives, partially offset by increases in wages rates and incremental pre-opening labor.

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Occupancy and related expenses. Occupancy and related expenses were $2.9 million for the three months ended November 30, 2022 compared to $2.2 million for the three months ended November 30, 2021, representing an increase of $0.7 million, or 31.1%. The increase was primarily a result of additional lease expense related to the opening of nine new restaurants subsequent to November 30, 2021. As a percentage of sales, occupancy and related expenses decreased to 7.3% in the three months ended November 30, 2022 as compared to 7.4% in the three months ended November 30, 2021, primarily driven by leverage benefits from the increase in sales.

Depreciation and amortization expenses. Depreciation and amortization expenses incurred as part of restaurant operating costs were $1.6 million for the three months ended November 30, 2022 compared to $1.2 million for the three months ended November 30, 2021, representing an increase of $0.4 million, or 34.6%. The increase was primarily due to depreciation of property and equipment related to the nine new restaurants opened subsequent to November 30, 2021. As a percentage of sales, depreciation and amortization expenses at the restaurant level increased to 4.0% in the three months ended November 30, 2022 as compared to 3.9% in the three months ended November 30, 2021. Depreciation and amortization expenses incurred at the corporate level were $0.1 million for both the three months ended November 30, 2022 and November 30, 2021, and as a percentage of sales were 0.2% and 0.3%, respectively.

Other costs. Other costs were $5.3 million for the three months ended November 30, 2022 compared to $3.6 million for the three months ended November 30, 2021, representing an increase of $1.7 million, or 47.4%. The increase was primarily driven by an increase in costs related to nine new restaurants opened subsequent to November 30, 2021. As a percentage of sales, other costs increased to 13.5% in the three months ended November 30, 2022 as compared to 12.1% in the three months ended November 30, 2021, primarily driven by increases in pre-opening costs, advertising and promotional costs and repair and maintenance costs.

General and administrative expenses. General and administrative expenses were $6.6 million for the three months ended November 30, 2022 compared to $5.4 million for the three months ended November 30, 2021, representing an increase of $1.2 million, or 23.9%. This increase was primarily due to increases in compensation related costs of $1.4 million due to additional headcount and $0.2 million in travel expenses, offset by reductions of $0.2 million in recruiting costs and $0.2 million in legal fees, insurance and other costs. As a percentage of sales, general and administrative expenses decreased to 16.9% in the three months ended November 30, 2022 from 18.0% in the three months ended November 30, 2021, primarily driven by leverage benefits from the increase in sales.

Interest expense. Interest expense was $16 thousand for the three months ended November 30, 2022 compared to $25 thousand for the three months ended November 30, 2021.

Interest income. Interest income was $94 thousand for the three months ended November 30, 2022 compared to $26 thousand for the three months ended November 30, 2021.

Income tax expense. Income tax expense was $10 thousand for the three months ended November 30, 2022 compared to $12 thousand for the three months ended November 30, 2021. 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, Average Unit Volumes (“AUVs”), comparable restaurant sales performance, and the number of restaurant openings.

Sales

Sales represents sales of food and beverages in restaurants, as shown on our statements of operations. 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, 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. However, these measures may not

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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 loss to EBITDA and Adjusted EBITDA:

	Three Months Ended November 30,
	2022			2021
	(amounts in thousands)
Net loss	$	(2,088	)	$	(1,275	)
Interest income, net		(78	)		(1	)
Income tax expense		10			12
Depreciation and amortization expenses		1,661			1,259
EBITDA		(495	)		(5	)
Stock-based compensation expense(a)		650			443
Non-cash lease expense(b)		482			354
Adjusted EBITDA	$	637		$	792
Adjusted EBITDA margin		1.6	%		2.7	%

(a)Stock-based compensation expense includes non-cash stock-based compensation, which is comprised of restaurant-level stock-based compensation included in other costs and of corporate-level stock-based compensation included in general and administrative expenses in the statements of operations. 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.

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 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 Restaurant-level Operating Profit (Loss) to increase in proportion to the number of new restaurants we open and our comparable restaurant sales growth.

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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 which 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 be unaffected 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 November 30,
	2022			2021
	(amounts in thousands)
Operating loss	$	(2,156	)	$	(1,264	)
Depreciation and amortization expenses		1,661			1,259
Stock-based compensation expense(a)		650			443
Pre-opening costs(b)		437			73
Non-cash lease expense(c)		482			354
General and administrative expenses		6,642			5,360
Corporate-level stock-based compensation in general and administrative expenses		(556	)		(408	)
Restaurant-level operating profit	$	7,160		$	5,817
Operating loss margin		(5.5	)%		(4.2	)%
Restaurant-level operating profit margin		18.2	%		19.5	%

(a)Stock-based compensation expense includes non-cash stock-based compensation, which is comprised of restaurant-level stock-based compensation included in other costs and of corporate-level stock-based compensation included in general and administrative expenses in the statements of operations. 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)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 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.

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Comparable Restaurant Sales Performance

Comparable restaurant sales performance refers to the 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 months prior to the start of the accounting period presented due to new restaurants experiencing a period of higher sales upon opening, including those temporarily closed for renovations during the year. For restaurants that were temporarily closed for renovations during the year, we make fractional adjustments to sales such that sales are annualized in the associated period.

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 November 30,
	2022	2021
Comparable restaurant sales performance (%)	6.9%	154.3%
Comparable restaurant base	30	25

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 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 November 30,
	2022		2021
Restaurant activity:
Beginning of period		40		32
Openings		2		1
End of period		42		33

Subsequent to November 30, 2022, we opened one new restaurant in Philadelphia, PA.

Liquidity and Capital Resources

Our primary uses of cash are for operational expenditures and capital investments, including new restaurants, costs incurred for restaurant remodels and restaurant fixtures.

On December 28, 2022, we filed a universal shelf registration statement on Form S-3 (the “Registration Statement”) with the SEC in accordance with the Securities Act of 1933, as amended (the “Securities Act”). The Registration Statement registers Class A common stock, preferred stock, depositary shares, warrants, subscription rights, share purchase contracts, share purchase units, and any combination of the foregoing, for a maximum aggregate offering price of up to $125.0 million, which may be sold from time to time, subject to the Registration Statement being declared effective by the SEC. The terms of any securities offered under the Registration Statement and intended use of proceeds will be established at the times of the offerings and will be described in

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prospectus supplements filed with the SEC at the times of the offerings. The Registration Statement has a three-year term once declared effective by the SEC.

During the three months ended November 30, 2022, we had no borrowings under the Revolving Credit Agreement and have $45.0 million of availability remaining. As of November 30, 2022, we did not have any material off-balance sheet arrangements.

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 on hand and availability under our existing Revolving Credit Agreement will be sufficient to fund our lease obligations, capital expenditures and working capital needs for at least the next 12 months.

Summary of Cash Flows

Our primary sources of liquidity and cash flows are operating cash flows and cash on hand. We use this to fund investing expenditures for new restaurant openings, reinvest in our existing restaurants, and increase our working capital. 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, and we typically have at least 30 days to pay our vendors.

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

	Three Months Ended November 30,
	2022			2021
Statement of Cash Flow data:	(amounts in thousands)
Net cash provided by operating activities	$	529		$	10,576
Net cash used in investing activities	$	(9,250	)	$	(6,345	)
Net cash used in financing activities	$	(127	)	$	(240	)

Cash Flows Provided by Operating Activities

Net cash provided by operating activities during the three months ended November 30, 2022 was $0.5 million, which results from a net loss of $2.1 million, non-cash charges of $1.7 million for depreciation and amortization, $0.7 million for stock-based compensation, and $0.8 million in non-cash lease expense, and net cash outflows of $0.5 million from changes in operating assets and liabilities.

Net cash provided by operating activities during the three months ended November 30, 2021 was $10.6 million, which results from a net loss of $1.3 million offset by non-cash charges of $1.3 million for depreciation and amortization, $0.4 million for stock-based compensation, and $0.7 million in non-cash lease expense, and net cash inflows of approximately $9.4 million from changes in operating assets and liabilities. The net cash inflows from changes in operating assets and liabilities were primarily the result of $8.3 million in prepaid expenses and other current assets, $0.1 million in accounts and other receivables, an increase of $0.2 million in operating lease liabilities and $0.3 million in due from our affiliate Kura Japan. The change in prepaid expenses and other current assets was primarily due to the receipt of employee retention credits under the CARES Act extension during the three months ended November 30, 2021.

Cash Flows Used in Investing Activities

Net cash used in investing activities during the three months ended November 30, 2022 was $9.3 million, primarily due to $8.3 million in purchases of property and equipment and $0.8 million in purchases of liquor licenses. The purchases of property and equipment in the three months ended November 30, 2022 is primarily related to capital expenditures for current and future restaurant openings and renovations, maintaining our existing restaurants and other projects.

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Net cash used in investing activities during the three months ended November 30, 2021 was $6.3 million, primarily due to purchases of property and equipment. The purchases of property and equipment in the three months ended November 30, 2021 was primarily related to capital expenditures for current and future restaurant openings, renovations, maintaining our existing restaurants and other projects.

Cash Flows Used in Financing Activities

Net cash used in financing activities during the three months ended November 30, 2022 was $0.1 million and is primarily due to $0.2 million in repayments of principal on finance leases.

Net cash used in financing activities during the three months ended November 30, 2021 was $0.2 million and is primarily due to $0.3 million in repayments of principal on finance leases.

Material Cash Requirements

As of November 30, 2022, we had $7.5 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 fiscal year 2023 utilizing cash and cash equivalents on hand and provided by operations. For operating and finance 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 adopted accounting pronouncement, 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” of the Notes to Condensed Financial Statements included in this Quarterly Report on Form 10-Q.

Critical Accounting Policies and Estimates

Our discussion and analysis of operating results and financial condition are based upon our financial statements. The preparation of 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, 2022. 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, 2022 for a discussion of our critical accounting policies and estimates.

Jumpstart Our Business Startups Act of 2012

We qualify as an “emerging growth company” as defined in Section 2(a)(19) of the Securities Act, as modified by the JOBS Act. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this extended transition period and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies.

21

Subject to certain conditions set forth in the JOBS Act, we are also eligible for and intend to take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies, including (i) the exemption from the auditor attestation requirements with respect to internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act, (ii) the exemptions from say-on-pay, say-on-frequency and say-on-golden parachute voting requirements and (iii) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. We may take advantage of these exemptions until we are no longer an emerging growth company. We will continue to be an emerging growth company until the earliest to occur of (i) the last day of the fiscal year in which the market value of our Class A common stock that is held by non-affiliates exceeds $700 million as of June 30 of that fiscal year, (ii) the last day of the fiscal year in which our annual gross revenues exceed $1.235 billion during such fiscal year (as indexed for inflation), (iii) the date on which we have issued more than $1 billion in non-convertible debt in the prior three-year period or (iv) the last day of the fiscal year following the fifth anniversary of the date of the completion of our initial public offering.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Commodity and Food Price Risks

Our profitability is dependent on, among other things, our ability to anticipate and react to changes in the costs of key operating resources, including food and beverages and other commodities. We have been able to partially offset cost increases resulting from a number of factors, including market conditions, shortages or interruptions in supply due to weather or other conditions beyond our control, governmental regulations, and inflation, by increasing our menu prices, as well as making other operational adjustments that increase productivity. However, substantial increases in costs and expenses could impact our operating results to the extent that such increases cannot be offset by menu price increases or operational adjustments.

Inflation Risk

The primary inflationary factors affecting our operations are food and beverage costs, labor costs, construction costs and energy costs. Our restaurant operations are subject to federal and state minimum wage and other laws governing such matters as working conditions, overtime and tip credits. Significant numbers of our restaurant personnel are paid at rates related to the federal and/or state minimum wage and, accordingly, increases in the minimum wage increase our labor costs. To the extent permitted by competition and the economy, we have mitigated increased costs by increasing menu prices and may continue to do so if deemed necessary in future years. Substantial increases in costs and expenses could impact our operating results to the extent such increases cannot be passed through to our guests. Historically, inflation has not had a material effect on our results of operations, although inflationary pressures have increased across our business, including with respect to food and beverage costs, due in part to supply chain impacts of overall economic conditions in the markets in which we operate. Severe increases in inflation, however, could affect the global and U.S. economies and could have an adverse impact on our business, financial condition or results of operations.

While we have been able to partially offset inflation and other changes in the costs of core operating resources by gradually increasing menu prices, coupled with more efficient purchasing practices, productivity improvements and greater economies of scale, there can be no assurance that we will be able to continue to do so in the future. From time to time, competitive conditions could limit our menu pricing flexibility. In addition, macroeconomic conditions could make additional menu price increases imprudent. There can be no assurance that future cost increases can be offset by increased menu prices or that increased menu prices will be fully absorbed by our guests without any resulting change to their visit frequencies or purchasing patterns. In addition, there can be no assurance that we will generate the same sales growth in an amount sufficient to offset inflationary or other cost pressures.

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) 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

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-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.

22

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, of the Notes to Condensed Financial Statements of this Quarterly Report on Form 10-Q, which is incorporated herein by reference.

Item 1A. Risk Factors.

A description of the risk factors associated with our business is contained in the “Risk Factors” section of our Annual Report on Form 10-K for our fiscal year ended August 31, 2022. There have been no material changes to our Risk Factors as therein previously reported.

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.

None.

23

Item 6. Exhibits.

Exhibit Number	Description
10.1	Employment Agreement, dated September 30, 2022, between Kura Sushi USA, Inc. and Jeffrey J. Uttz (incorporated by reference to our current report on Form 8-K filed with the SEC on October 3, 2022 as Exhibit 10.1)
10.2	Form of Restricted Stock Unit Award Notice and Award Agreement (incorporated by reference to our current report on Form 8-K filed with the SEC on October 3, 2022 as Exhibit 10.2)
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 Document
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101)

* Filed herewith.

24

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: January 5, 2023	By:	/s/ Jeffrey Uttz
		Jeffrey Uttz
		Chief Financial Officer (Principal Financial Officer )

25

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Hajime Uba, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Kura Sushi USA, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15(d)-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: January 5, 2023	/s/ Hajime Uba
	Hajime Uba
	Chairman, President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jeffrey Uttz, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Kura Sushi USA, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15(d)-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: January 5, 2023	/s/ Jeffrey Uttz
	Jeffrey Uttz
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Kura Sushi USA, Inc. (the “Company”) on Form 10-Q for the period ending November 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Dated: January 5, 2023	By:	/s/ Hajime Uba
		Hajime Uba
		Chairman, President and Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Kura Sushi USA, Inc. (the “Company”) on Form 10-Q for the period ending November 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Dated: January 5, 2023	By:	/s/ Jeffrey Uttz
		Jeffrey Uttz
		Chief Financial Officer

XML

Document and Entity Information - shares	3 Months Ended
	Nov. 30, 2022	Jan. 02, 2023
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Nov. 30, 2022
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q1
Title of 12(b) Security	Class A Common Stock, $0.001 par value per share
Trading Symbol	KRUS
Security Exchange Name	NASDAQ
Entity Registrant Name	KURA SUSHI USA, INC.
Entity Central Index Key	0001772177
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Current Fiscal Year End Date	--08-31
Entity Filer Category	Accelerated Filer
Entity Shell Company	false
Entity Small Business	false
Entity Emerging Growth Company	true
Entity Ex Transition Period	true
Entity File Number	001-39012
Entity Tax Identification Number	26-3808434
Entity Address, Address Line One	17461 Derian Avenue
Entity Address, Address Line Two	Suite 200
Entity Address, City or Town	Irvine
Entity Address, State or Province	CA
Entity Incorporation, State or Country Code	DE
Entity Address, Postal Zip Code	92614
City Area Code	657
Local Phone Number	333-4100
Document Quarterly Report	true
Document Transition Report	false
Class A
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		8,792,126
Class B
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		1,000,050

XML

Condensed Balance Sheets - USD ($) $ in Thousands	Nov. 30, 2022	Aug. 31, 2022
Current assets:
Cash and cash equivalents	$ 26,934	$ 35,782
Accounts and other receivables	2,916	2,486
Inventories	1,278	1,120
Due from affiliate	34	156
Prepaid expenses and other current assets	3,877	2,852
Total current assets	35,039	42,396
Non-current assets:
Property and equipment – net	81,109	75,590
Operating lease right-of-use assets	84,154	79,990
Deposits and other assets	4,147	3,380
Total assets	204,449	201,356
Current liabilities:
Accounts payable	5,304	5,559
Accrued expenses and other current liabilities	3,518	3,731
Salaries and wages payable	5,481	5,955
Finance leases – current	337	507
Operating lease liabilities – current	8,041	7,992
Due to affiliate	648	285
Sales tax payable	1,162	1,240
Total current liabilities	24,491	25,269
Non-current liabilities:
Finance leases – non-current	22	30
Operating lease liabilities – non-current	87,519	82,280
Other liabilities	510	483
Total liabilities	112,542	108,062
Commitments and contingencies (Note 8)
Stockholders' equity:
Preferred stock, $0.001 par value; 1,000 shares authorized, no shares issued or outstanding
Additional paid-in capital	119,671	118,970
Accumulated deficit	(27,774)	(25,686)
Total stockholders' equity	91,907	93,294
Total liabilities and stockholders' equity	204,449	201,356
Class A
Stockholders' equity:
Common stock	9	9
Class B
Stockholders' equity:
Common stock	$ 1	$ 1

XML

Condensed Balance Sheets (Parenthetical) - $ / shares	Nov. 30, 2022	Aug. 31, 2022
Preferred stock, par value	$ 0.001	$ 0.001
Preferred Stock, Shares Authorized	1,000,000	1,000,000
Preferred Stock, Shares Issued	0	0
Preferred Stock, Shares Outstanding	0	0
Class A
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	50,000,000	50,000,000
Common Stock, Shares, Issued	8,791,000	8,788,000
Common stock, shares outstanding	8,791,000	8,788,000
Class B
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	10,000,000	10,000,000
Common Stock, Shares, Issued	1,000,000	1,000,000
Common stock, shares outstanding	1,000,000	1,000,000

XML

Condensed Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Nov. 30, 2022	Nov. 30, 2021
Sales	$ 39,318	$ 29,832
Restaurant operating costs:
Depreciation and amortization expenses	1,576	1,171
Other costs	5,321	3,610
Total restaurant operating costs	34,747	25,648
General and administrative expenses	6,642	5,360
Depreciation and amortization expenses	85	88
Total operating expenses	41,474	31,096
Operating loss	(2,156)	(1,264)
Other expense (income):
Interest expense	16	25
Interest income	(94)	(26)
Loss before income taxes	(2,078)	(1,263)
Income tax expense	10	12
Net loss	$ (2,088)	$ (1,275)
Net loss per Class A and Class B shares
Basic	$ (0.21)	$ (0.13)
Diluted	$ (0.21)	$ (0.13)
Weighted average Class A and Class B shares outstanding
Basic	9,789	9,710
Diluted	9,789	9,710
Food and Beverage Costs
Restaurant operating costs:
Cost of goods and services sold	$ 12,430	$ 8,957
Labor and Related Costs
Restaurant operating costs:
Cost of goods and services sold	12,535	9,710
Occupancy and Related Expenses
Restaurant operating costs:
Cost of goods and services sold	$ 2,885	$ 2,200

XML

Condensed Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands	Total	Class A	Class B	Common Stock Class A	Common Stock Class B	Additional Paid-in-Capital	Accumulated Deficit
Beginning balances at Aug. 31, 2021	$ 90,844			$ 9	$ 1	$ 115,756	$ (24,922)
Beginning balance, shares at Aug. 31, 2021				8,700	1,000
Stock-based compensation	443					443
Employee stock plan	19					19
Employee stock plan, shares				13
Net loss	(1,275)						(1,275)
Ending balances at Nov. 30, 2021	90,031			$ 9	$ 1	116,218	(26,197)
Ending balance, shares at Nov. 30, 2021				8,713	1,000
Beginning balances at Aug. 31, 2022	93,294			$ 9	$ 1	118,970	(25,686)
Beginning balance, shares at Aug. 31, 2022		8,788	1,000	8,788	1,000
Stock-based compensation	650					650
Employee stock plan	51					51
Employee stock plan, shares				3
Net loss	(2,088)						(2,088)
Ending balances at Nov. 30, 2022	$ 91,907			$ 9	$ 1	$ 119,671	$ (27,774)
Ending balance, shares at Nov. 30, 2022		8,791	1,000	8,791	1,000

XML

Condensed Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Nov. 30, 2022	Nov. 30, 2021
Cash flows from operating activities
Net loss	$ (2,088)	$ (1,275)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
Depreciation and amortization	1,661	1,259
Stock-based compensation	650	443
Non-cash lease expense	844	709
Changes in operating assets and liabilities:
Accounts and other receivables	108	84
Inventories	(158)	(87)
Due from affiliate	122	329
Prepaid expenses and other current assets	(568)	8,303
Deposits and other assets	43	(69)
Accounts payable	(896)	194
Accrued expenses and other current liabilities	1,061	241
Salaries and wages payable	(474)	143
Operating lease liabilities	(162)	205
Due to affiliate	567	67
Sales tax payable	(181)	30
Net cash provided by operating activities	529	10,576
Cash flows from investing activities
Payments for property and equipment	(8,344)	(6,036)
Payments for initial direct costs	(95)	(225)
Payments for purchases of liquor licenses	(811)	(84)
Net cash used in investing activities	(9,250)	(6,345)
Cash flows from financing activities
Repayment of principal on finance leases	(178)	(259)
Proceeds from exercise of stock options	51	19
Net cash used in financing activities	(127)	(240)
(Decrease) increase in cash and cash equivalents	(8,848)	3,991
Cash and cash equivalents, beginning of period	35,782	40,430
Cash and cash equivalents, end of period	26,934	44,421
Supplemental disclosures of cash flow information
Cash paid for income taxes	65	45
Noncash investing activities
Amounts unpaid for purchases of property and equipment	$ 1,095	$ 2,394

XML

Organization and Basis of Presentation

3 Months Ended

Nov. 30, 2022

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Organization and Basis of Presentation

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

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, 2022.

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, 2022. 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, 2023 or for any other future annual or interim period.

Fiscal Year

The Company’s fiscal year begins on September 1 and ends on August 31, and references made to “fiscal year 2023” and “fiscal year 2022” refer to the Company’s fiscal years ending August 31, 2023 and ended August 31, 2022, respectively.

Use of Estimates

The preparation of 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.

Comprehensive Income (Loss)

Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. Comprehensive income (loss) is the same as net income (loss) for all periods presented. Therefore, a separate statement of comprehensive income (loss) is not included in the accompanying financial statements.

Recently Adopted Accounting Pronouncement

In November 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-10, “Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance,” which provides guidance on disclosures for transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2021, with early adoption permitted. The Company adopted this update effective September 1, 2022. The adoption of this update did not have a material impact to the consolidated financial statements.

XML

Balance Sheet Components

3 Months Ended

Nov. 30, 2022

Balance Sheet Related Disclosures [Abstract]

Balance Sheet Components

Note 2. Balance Sheet Components

Accounts and Other Receivables

	November 30, 2022		August 31, 2022
	(amounts in thousands)
Lease receivables	$	2,305	$	1,767
Credit card and other receivables		611		719
Total accounts and other receivables	$	2,916	$	2,486

Prepaid Expenses and Other Current Assets

	November 30, 2022		August 31, 2022
	(amounts in thousands)
Employee retention credit	$	34	$	34
Prepaid expenses		3,525		2,588
Other current assets		318		230
Total prepaid expenses and other current assets	$	3,877	$	2,852

Property and Equipment - net

	November 30, 2022			August 31, 2022
	(amounts in thousands)
Leasehold improvements	$	60,780		$	56,668
Lease assets		6,166			6,166
Furniture and fixtures		24,707			21,759
Computer equipment		1,510			1,307
Vehicles		159			159
Software		924			921
Construction in progress		8,580			8,666
Property and equipment – gross		102,826			95,646
Less: accumulated depreciation and amortization		(21,717	)		(20,056	)
Total property and equipment – net	$	81,109		$	75,590

Depreciation and amortization expense for property and equipment was $1.7 million and $1.3 million for the three months ended November 30, 2022 and November 30, 2021, respectively.

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Leases

3 Months Ended

Nov. 30, 2022

Leases [Abstract]

Leases

Note 3. Leases

The Company has operating and finance leases for its corporate office, restaurant locations, office equipment, kitchen equipment and automobiles. The Company’s leases have remaining lease terms of less than 1 year to 20 years, some of which include options to extend the leases.

Lease related costs recognized in the statements of operations are as follows:

		Three Months Ended November 30,
		2022		2021
		(amounts in thousands)
Finance lease cost	Classification
Amortization of right-of-use assets	Depreciation and amortization expenses	$	235	$	136
Interest on lease liabilities	Interest expense		4		13
Total finance lease cost		$	239	$	149
		Three Months Ended November 30,
		2022		2021
		(amounts in thousands)
Operating lease cost	Classification
Operating lease cost	Occupancy and related expenses, other costs and general and administrative expenses	$	2,262	$	1,832
Variable lease cost	Occupancy and related expenses, and general and administrative expenses		645		436
Total operating lease cost		$	2,907	$	2,268

Supplemental balance sheet information related to leases is as follows:

Operating Leases

	November 30, 2022		August 31, 2022
	(amounts in thousands)
Right-of-use assets	$	84,154	$	79,990
Lease liabilities – current	$	8,041	$	7,992
Lease liabilities – non-current		87,519		82,280
Total lease liabilities	$	95,560	$	90,272

Finance Lease Assets – net

	November 30, 2022			August 31, 2022
	(amounts in thousands)
Property and equipment	$	6,166		$	6,166
Accumulated depreciation		(3,487	)		(3,348	)
Total property and equipment – net	$	2,679		$	2,818

Finance Leases Liabilities

	November 30, 2022		August 31, 2022
	(amounts in thousands)
Finance lease – current	$	337	$	507
Finance lease – non-current		22		30
Total finance lease liabilities	$	359	$	537

	Three months ended November 30,
	2022			2021
Weighted Average Remaining Lease Term (Years)
Operating leases		16.0			16.2
Finance leases		0.6			1.3
Weighted Average Discount Rate
Operating leases		6.6	%		6.4	%
Finance leases		4.7	%		4.5	%

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

	Three Months Ended November 30,
	2022		2021
	(amounts in thousands)
Operating cash flows paid for operating lease liabilities	$	1,865	$	1,478
Operating right-of-use assets obtained in exchange for new operating lease liabilities	$	4,911	$	—

As of November 30, 2022, the Company has an additional $45.3 million of operating leases related to restaurants for which the Company has not yet taken possession. Subsequent to November 30, 2022, the Company entered into additional operating leases related to restaurants for which the Company has not yet taken possession. The lease liabilities associated with these leases after November 30, 2022 are $9.2 million. These operating leases are expected to commence in fiscal years 2023 and 2024, with lease terms of 15 to 20 years.

Maturities of lease liabilities, net of lease receivables, were as follows:

	Operating Leases			Finance Leases
	(amounts in thousands)
Remainder of 2023	$	4,599		$	326
2024		6,956			36
2025		8,819			7
2026		8,751			—
2027		8,550			—
Thereafter		112,414			—
Total lease payments		150,089			369
Less: imputed interest		(54,529	)		(10	)
Present value of lease liabilities	$	95,560		$	359

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Related Party Transactions

3 Months Ended

Nov. 30, 2022

Related Party Transactions [Abstract]

Related Party Transactions

Note 4. Related Party Transactions

Kura Sushi, Inc. (“Kura Japan”) is the majority shareholder 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 statement of operations. 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 use of certain of Kura Japan’s intellectual property rights, including, but not limited to, Kura Japan’s trademarks “Kura Sushi” 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 statements of operations.

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 million (the “Revolving Credit Agreement”). For additional information, see “Note 6. Debt.”

Balances with Kura Japan are as follows:

	November 30, 2022		August 31, 2022
	(amounts in thousands)
Due from affiliate	$	34	$	156
Due to affiliate	$	648	$	285

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

	Three Months Ended November 30,
	2022		2021
	(amounts in thousands)
Related party transactions:
Expatriate salaries expense	$	21	$	42
Royalty payments		197		149
Travel and other administrative expenses		—		2
Purchases of equipment		738		280
Total related party transactions	$	956	$	473

Reimbursements by Kura Japan to the Company were $34 thousand and $17 thousand for the three months ended November 30, 2022 and November 30, 2021, respectively. The reimbursements were primarily for D&O insurance and other administrative expenses.

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Stock-based Compensation

3 Months Ended

Nov. 30, 2022

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-based Compensation

Note 5. Stock-based Compensation

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

	Options Outstanding
	Number of Shares Underlying Outstanding Options			Weighted Average Exercise Price Per Share
Outstanding — August 31, 2022		675,942		$	27.12
Options granted		56,951		$	73.20
Options exercised		(2,491	)	$	12.82
Options canceled/forfeited		(23,781	)	$	46.47
Outstanding — November 30, 2022		706,621		$	30.28

During the three months ended November 30, 2022, approximately one thousand restricted stock units were issued under the Stock Incentive Plan, in addition to the option grants stated above. The Company incurred stock-based compensation related to restricted stock units of $16 thousand for the three months ended November 30, 2022.

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

	Three Months Ended November 30,
	2022		2021
	(amounts in thousands)
Restaurant-level stock-based compensation included in other costs	$	94	$	35
Corporate-level stock-based compensation included in general and administrative expenses		556		408
Total stock-based compensation	$	650	$	443

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Debt

3 Months Ended

Nov. 30, 2022

Debt Disclosure [Abstract]

Debt

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 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 November 30, 2022 and August 31, 2022, 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.”

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Loss Per Share

3 Months Ended

Nov. 30, 2022

Earnings Per Share [Abstract]

Loss Per Share

Note 7. Loss Per Share

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

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

	Three Months Ended November 30,
	2022						2021
	Class A			Class B			Class A			Class B
	(amounts in thousands, except per share data)
Net loss attributable to common stockholders	$	(1,875	)	$	(213	)	$	(1,144	)	$	(131	)
Weighted average common shares outstanding – basic		8,789			1,000			8,710			1,000
Dilutive effect of stock-based awards		—			—			—			—
Weighted average common shares outstanding – diluted		8,789			1,000			8,710			1,000
Net loss per share attributable to common stockholders – basic	$	(0.21	)	$	(0.21	)	$	(0.13	)	$	(0.13	)
Net loss per share attributable to common stockholders – diluted	$	(0.21	)	$	(0.21	)	$	(0.13	)	$	(0.13	)

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

For the three months ended November 30, 2022 and November 30, 2021, there were 708 thousand and 623 thousand shares of common stock subject to outstanding employee stock options and restricted stock units that were excluded from the calculation of diluted income per share because their inclusion would have been anti-dilutive.

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Commitments and Contingencies

3 Months Ended

Nov. 30, 2022

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 8. Commitments and Contingencies

On May 31, 2019, a putative class action complaint was filed by a former employee, Brandy Gomes, in Los Angeles County Superior Court, alleging violations of California wage and hour laws. On July 9, 2020, plaintiff’s counsel filed a first amended class action complaint to add Jamar Spencer, another former employee, as a plaintiff to this action. In addition, the first amended class action complaint added new causes of action alleging violations of California wage and hour laws including a cause of action brought under the California Private Attorney General Act. On August 7, 2020, the Company filed its answer to the first amended complaint, generally denying the allegations in the complaint. In May 2021, a joint stipulation was filed requesting a delay in the class certification hearing date to March 3, 2022, and a mediation was scheduled for September 24, 2021. During the mediation, a settlement was agreed upon in the amount of $1.75 million. The Company recorded an accrued liability of $1.78 million, including an estimated $30 thousand in employer payroll taxes, related to this settlement within general and administrative expenses in the statements of operations during the fiscal year ended August 31, 2021. The court granted final approval of the settlement on November 18, 2022. In December 2022, pursuant to the court’s order granting final approval of the settlement, the Company deposited $1.78 million into an account controlled by a settlement administrator for disbursement to class participants and other parties to the litigation. A final report regarding the distribution of settlement funds is due on July 6, 2023, and a non-appearance case review is scheduled for July 13, 2023.

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, excluding the putative class action matter referenced above, 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.

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Income Taxes

3 Months Ended

Nov. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Note 9. Income Taxes

The Company recorded an income tax expense of $10 thousand and $12 thousand for the three months ended November 30, 2022 and November 30, 2021, respectively. The Company’s effective tax rates for the three months ended November 30, 2022 substantially differed from the federal statutory tax rate of 21% primarily due to a valuation allowance for the Company’s deferred tax assets.

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 November 30, 2022 was appropriate.

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Subsequent Event

3 Months Ended

Nov. 30, 2022

Subsequent Events [Abstract]

Subsequent Event

Note 10. Subsequent Event

On December 28, 2022, the Company filed a universal shelf registration statement on Form S-3 (the “Registration Statement”) with the SEC in accordance with the Securities Act of 1933, as amended (the “Securities Act”). The Registration Statement registers Class A common stock, preferred stock, depositary shares, warrants, subscription rights, share purchase contracts, share purchase units, and any combination of the foregoing, for a maximum aggregate offering price of up to $125.0 million, which may be sold from time to time, subject to the Registration Statement being declared effective by the SEC. The terms of any securities offered under the Registration Statement and intended use of proceeds will be established at the times of the offerings and will be described in prospectus supplements filed with the SEC at the times of the offerings. The Registration Statement has a three-year term once declared effective by the SEC.

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Organization and Basis of Presentation (Policies)

3 Months Ended

Nov. 30, 2022

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Basis of Presentation

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, 2022.

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, 2022. 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, 2023 or for any other future annual or interim period.

Fiscal Year

Fiscal Year

The Company’s fiscal year begins on September 1 and ends on August 31, and references made to “fiscal year 2023” and “fiscal year 2022” refer to the Company’s fiscal years ending August 31, 2023 and ended August 31, 2022, respectively.

Use of Estimates

Use of Estimates

The preparation of 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.

Comprehensive Income (Loss)

Comprehensive Income (Loss)

Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. Comprehensive income (loss) is the same as net income (loss) for all periods presented. Therefore, a separate statement of comprehensive income (loss) is not included in the accompanying financial statements.

Recently Adopted Accounting Pronouncement

Recently Adopted Accounting Pronouncement

In November 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-10, “Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance,” which provides guidance on disclosures for transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2021, with early adoption permitted. The Company adopted this update effective September 1, 2022. The adoption of this update did not have a material impact to the consolidated financial statements.

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Balance Sheet Components (Tables)

3 Months Ended

Nov. 30, 2022

Property Plant And Equipment Net [Abstract]

Schedule of Accounts and Other Receivables

Accounts and Other Receivables

	November 30, 2022		August 31, 2022
	(amounts in thousands)
Lease receivables	$	2,305	$	1,767
Credit card and other receivables		611		719
Total accounts and other receivables	$	2,916	$	2,486

Schedule of Prepaid Expenses and Other Current Assets

Prepaid Expenses and Other Current Assets

	November 30, 2022		August 31, 2022
	(amounts in thousands)
Employee retention credit	$	34	$	34
Prepaid expenses		3,525		2,588
Other current assets		318		230
Total prepaid expenses and other current assets	$	3,877	$	2,852

Schedule of Property and Equipment - Net

Property and Equipment - net

	November 30, 2022			August 31, 2022
	(amounts in thousands)
Leasehold improvements	$	60,780		$	56,668
Lease assets		6,166			6,166
Furniture and fixtures		24,707			21,759
Computer equipment		1,510			1,307
Vehicles		159			159
Software		924			921
Construction in progress		8,580			8,666
Property and equipment – gross		102,826			95,646
Less: accumulated depreciation and amortization		(21,717	)		(20,056	)
Total property and equipment – net	$	81,109		$	75,590

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Leases (Tables)

3 Months Ended

Nov. 30, 2022

Leases [Abstract]

Summary of Lease Related Costs

Lease related costs recognized in the statements of operations are as follows:

		Three Months Ended November 30,
		2022		2021
		(amounts in thousands)
Finance lease cost	Classification
Amortization of right-of-use assets	Depreciation and amortization expenses	$	235	$	136
Interest on lease liabilities	Interest expense		4		13
Total finance lease cost		$	239	$	149
		Three Months Ended November 30,
		2022		2021
		(amounts in thousands)
Operating lease cost	Classification
Operating lease cost	Occupancy and related expenses, other costs and general and administrative expenses	$	2,262	$	1,832
Variable lease cost	Occupancy and related expenses, and general and administrative expenses		645		436
Total operating lease cost		$	2,907	$	2,268

Summary of Supplemental Balance Sheet Information

Supplemental balance sheet information related to leases is as follows:

Operating Leases

	November 30, 2022		August 31, 2022
	(amounts in thousands)
Right-of-use assets	$	84,154	$	79,990
Lease liabilities – current	$	8,041	$	7,992
Lease liabilities – non-current		87,519		82,280
Total lease liabilities	$	95,560	$	90,272

Finance Lease Assets – net

	November 30, 2022			August 31, 2022
	(amounts in thousands)
Property and equipment	$	6,166		$	6,166
Accumulated depreciation		(3,487	)		(3,348	)
Total property and equipment – net	$	2,679		$	2,818

Finance Leases Liabilities

	November 30, 2022		August 31, 2022
	(amounts in thousands)
Finance lease – current	$	337	$	507
Finance lease – non-current		22		30
Total finance lease liabilities	$	359	$	537

	Three months ended November 30,
	2022			2021
Weighted Average Remaining Lease Term (Years)
Operating leases		16.0			16.2
Finance leases		0.6			1.3
Weighted Average Discount Rate
Operating leases		6.6	%		6.4	%
Finance leases		4.7	%		4.5	%

Summary of Supplemental Disclosures of Cash Flow Information Related to Leases

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

	Three Months Ended November 30,
	2022		2021
	(amounts in thousands)
Operating cash flows paid for operating lease liabilities	$	1,865	$	1,478
Operating right-of-use assets obtained in exchange for new operating lease liabilities	$	4,911	$	—

Summary of Maturities of Lease Liabilities Net of Lease Receivables

Maturities of lease liabilities, net of lease receivables, were as follows:

	Operating Leases			Finance Leases
	(amounts in thousands)
Remainder of 2023	$	4,599		$	326
2024		6,956			36
2025		8,819			7
2026		8,751			—
2027		8,550			—
Thereafter		112,414			—
Total lease payments		150,089			369
Less: imputed interest		(54,529	)		(10	)
Present value of lease liabilities	$	95,560		$	359

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Related Party Transactions (Tables)

3 Months Ended

Nov. 30, 2022

Related Party Transactions [Abstract]

Schedule of Related Party Transactions Due to and from Affiliates

Balances with Kura Japan are as follows:

	November 30, 2022		August 31, 2022
	(amounts in thousands)
Due from affiliate	$	34	$	156
Due to affiliate	$	648	$	285

Schedule of Related Party Reimbursements and Other Payments

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

	Three Months Ended November 30,
	2022		2021
	(amounts in thousands)
Related party transactions:
Expatriate salaries expense	$	21	$	42
Royalty payments		197		149
Travel and other administrative expenses		—		2
Purchases of equipment		738		280
Total related party transactions	$	956	$	473

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Stock-based Compensation (Tables)

3 Months Ended

Nov. 30, 2022

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Summary of Stock Option Activity under Stock Incentive Plan

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

	Options Outstanding
	Number of Shares Underlying Outstanding Options			Weighted Average Exercise Price Per Share
Outstanding — August 31, 2022		675,942		$	27.12
Options granted		56,951		$	73.20
Options exercised		(2,491	)	$	12.82
Options canceled/forfeited		(23,781	)	$	46.47
Outstanding — November 30, 2022		706,621		$	30.28

Summary of Stock Based Compensation Recognized under Stock Incentive Plan

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

	Three Months Ended November 30,
	2022		2021
	(amounts in thousands)
Restaurant-level stock-based compensation included in other costs	$	94	$	35
Corporate-level stock-based compensation included in general and administrative expenses		556		408
Total stock-based compensation	$	650	$	443

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Loss Per Share (Tables)

3 Months Ended

Nov. 30, 2022

Earnings Per Share [Abstract]

Computation of Basic and Diluted Net Loss Per Share

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

	Three Months Ended November 30,
	2022						2021
	Class A			Class B			Class A			Class B
	(amounts in thousands, except per share data)
Net loss attributable to common stockholders	$	(1,875	)	$	(213	)	$	(1,144	)	$	(131	)
Weighted average common shares outstanding – basic		8,789			1,000			8,710			1,000
Dilutive effect of stock-based awards		—			—			—			—
Weighted average common shares outstanding – diluted		8,789			1,000			8,710			1,000
Net loss per share attributable to common stockholders – basic	$	(0.21	)	$	(0.21	)	$	(0.13	)	$	(0.13	)
Net loss per share attributable to common stockholders – diluted	$	(0.21	)	$	(0.21	)	$	(0.13	)	$	(0.13	)

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Balance Sheet Components - Schedule of Accounts and Other Receivables (Details) - USD ($) $ in Thousands	Nov. 30, 2022	Aug. 31, 2022
Receivables Net Current [Line Items]
Accounts and other receivables	$ 2,916	$ 2,486
Lease Receivables
Receivables Net Current [Line Items]
Accounts and other receivables	2,305	1,767
Credit Card and Other Receivables
Receivables Net Current [Line Items]
Accounts and other receivables	$ 611	$ 719

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Balance Sheet Components - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands	Nov. 30, 2022	Aug. 31, 2022
Prepaid Expense And Other Assets Current [Abstract]
Employee retention credit	$ 34	$ 34
Prepaid expenses	3,525	2,588
Other current assets	318	230
Total prepaid expenses and other current assets	$ 3,877	$ 2,852

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Balance Sheet Components - Schedule of Property and Equipment - Net (Details) - USD ($) $ in Thousands	Nov. 30, 2022	Aug. 31, 2022
Property Plant And Equipment [Line Items]
Property and equipment - gross	$ 102,826	$ 95,646
Accumulated depreciation	(21,717)	(20,056)
Total property and equipment – net	81,109	75,590
Leasehold Improvements
Property Plant And Equipment [Line Items]
Property and equipment - gross	60,780	56,668
Lease Assets
Property Plant And Equipment [Line Items]
Property and equipment - gross	6,166	6,166
Furniture and Fixtures
Property Plant And Equipment [Line Items]
Property and equipment - gross	24,707	21,759
Computer Equipment
Property Plant And Equipment [Line Items]
Property and equipment - gross	1,510	1,307
Vehicles
Property Plant And Equipment [Line Items]
Property and equipment - gross	159	159
Software
Property Plant And Equipment [Line Items]
Property and equipment - gross	924	921
Construction in Progress
Property Plant And Equipment [Line Items]
Property and equipment - gross	$ 8,580	$ 8,666

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Balance Sheet Components - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Nov. 30, 2022	Nov. 30, 2021
Property Plant And Equipment Net [Abstract]
Depreciation and amortization expenses	$ 1,661	$ 1,259

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Leases - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended
	Nov. 30, 2022	Dec. 01, 2022
Lessee Lease Description [Line Items]
Operating and finance leases, remaining lease start range terms description	less than 1 year
Operating lease liabilities not yet commenced, liability	$ 45.3
Option to extend, existence, lease liabilities not yet commenced, operating lease	true
Maximum
Lessee Lease Description [Line Items]
Operating and finance leases, remaining lease terms	20 years
Subsequent Event
Lessee Lease Description [Line Items]
Operating lease liabilities not yet commenced, liability		$ 9.2
Subsequent Event | Maximum
Lessee Lease Description [Line Items]
Operating lease liabilities not yet commenced, lease term		20 years
Subsequent Event | Minimum
Lessee Lease Description [Line Items]
Operating lease liabilities not yet commenced, lease term		15 years

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Leases - Summary of Lease Related Costs (Details) - USD ($) $ in Thousands	3 Months Ended
	Nov. 30, 2022	Nov. 30, 2021
Finance lease cost
Amortization of right-of-use assets	$ 235	$ 136
Interest on lease liabilities	4	13
Total finance lease cost	239	149
Operating lease cost
Operating lease cost	2,262	1,832
Variable lease cost	645	436
Total operating lease cost	$ 2,907	$ 2,268

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Leases - Summary of Operating Leases (Details) - USD ($) $ in Thousands	Nov. 30, 2022	Aug. 31, 2022
Leases [Abstract]
Right-of-use assets	$ 84,154	$ 79,990
Lease liabilities – current	8,041	7,992
Lease liabilities – non-current	87,519	82,280
Total lease liabilities	$ 95,560	$ 90,272

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Leases - Summary of Finance Lease Assets - Net (Details) - USD ($) $ in Thousands	Nov. 30, 2022	Aug. 31, 2022
Lessee Lease Description [Line Items]
Property and equipment	$ 102,826	$ 95,646
Accumulated depreciation	(21,717)	(20,056)
Total property and equipment – net	81,109	75,590
Finance Lease Assets
Lessee Lease Description [Line Items]
Property and equipment	6,166	6,166
Accumulated depreciation	(3,487)	(3,348)
Total property and equipment – net	$ 2,679	$ 2,818

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Leases - Summary of Finance Leases Liabilities (Details) - USD ($) $ in Thousands	Nov. 30, 2022	Aug. 31, 2022
Leases [Abstract]
Finance lease – current	$ 337	$ 507
Finance lease – non-current	22	30
Total finance lease liabilities	$ 359	$ 537

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Leases - Summary of Weighted Average Remaining Lease Term and Weighted Average Discount Rate (Details)	Nov. 30, 2022	Nov. 30, 2021
Weighted Average Remaining Lease Term (Years)
Operating leases	16 years	16 years 2 months 12 days
Finance leases	7 months 6 days	1 year 3 months 18 days
Weighted Average Discount Rate
Operating leases	6.60%	6.40%
Finance leases	4.70%	4.50%

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Leases - Summary of Supplemental Disclosures of Cash Flow Information Related to Leases (Details) - USD ($) $ in Thousands	3 Months Ended
	Nov. 30, 2022	Nov. 30, 2021
Leases [Abstract]
Operating cash flows paid for operating lease liabilities	$ 1,865	$ 1,478
Operating right-of-use assets obtained in exchange for new operating lease liabilities	$ 4,911

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Leases - Summary of Maturities of Lease Liabilities Net of Lease Receivables (Details) - USD ($) $ in Thousands	Nov. 30, 2022	Aug. 31, 2022
Operating Leases
Remainder of 2023	$ 4,599
2024	6,956
2025	8,819
2026	8,751
2027	8,550
Thereafter	112,414
Total lease payments	150,089
Less: imputed interest	(54,529)
Present value of lease liabilities	95,560	$ 90,272
Finance Leases
Remainder of 2023	326
2024	36
2025	7
Total lease payments	369
Less: imputed interest	(10)
Present value of lease liabilities	$ 359	$ 537

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Related Party Transactions - Additional Information (Details) - Kura Japan - USD ($) $ in Thousands	1 Months Ended	3 Months Ended
	Aug. 31, 2019	Nov. 30, 2022	Nov. 30, 2021
Travel and Translation Expense
Related Party Transaction [Line Items]
Reimbursements by related party		$ 34	$ 17
Revolving Credit Facility Agreement | COVID-19
Related Party Transaction [Line Items]
Credit facility maximum borrowing capacity		$ 45,000
Amended and Restated Exclusive License Agreement
Related Party Transaction [Line Items]
Royalty fee of net sales	0.50%

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Related Party Transactions - Schedule of Related Party Transactions Due to and from Affiliates (Details) - USD ($) $ in Thousands	Nov. 30, 2022	Aug. 31, 2022
Related Party Transaction [Line Items]
Due from affiliate	$ 34	$ 156
Due to affiliate	648	285
Kura Japan
Related Party Transaction [Line Items]
Due from affiliate	34	156
Due to affiliate	$ 648	$ 285

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Related Party Transactions - Schedule of Related Party Reimbursements and Other Payments (Details) - Kura Japan - USD ($) $ in Thousands	3 Months Ended
	Nov. 30, 2022	Nov. 30, 2021
Related Party Transaction [Line Items]
Total related party transactions	$ 956	$ 473
Expatriate Salaries Expense
Related Party Transaction [Line Items]
Total related party transactions	21	42
Royalty Payments
Related Party Transaction [Line Items]
Total related party transactions	197	149
Travel and Other Administrative Expenses
Related Party Transaction [Line Items]
Total related party transactions		2
Purchases of Equipment
Related Party Transaction [Line Items]
Total related party transactions	$ 738	$ 280

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Stock-based Compensation - Summary of Stock Option Activity under Stock Incentive Plan (Details) - Stock Incentive Plan	3 Months Ended
	Nov. 30, 2022 $ / shares shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Options Outstanding, Number of shares underlying outstanding options, Beginning balance | shares	675,942,000
Options Outstanding, Number of shares underlying outstanding options, Options granted | shares	56,951,000
Options Outstanding, Number of shares underlying outstanding options, Options exercised | shares	(2,491,000)
Options Outstanding, Number of shares underlying outstanding options, Options canceled/forfeited | shares	(23,781,000)
Options Outstanding, Number of shares underlying outstanding options, Ending balance | shares	706,621,000
Options Outstanding, Weighted Average Exercise Price Per Share, Beginning balance | $ / shares	$ 27.12
Options Outstanding, Weighted Average Exercise Price Per Share, Options granted | $ / shares	73.20
Options Outstanding, Weighted Average Exercise Price Per Share, Options exercised | $ / shares	12.82
Options Outstanding, Weighted Average Exercise Price Per Share, Options canceled/forfeited | $ / shares	46.47
Options Outstanding, Weighted Average Exercise Price Per Share, Ending balance | $ / shares	$ 30.28

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Stock-based Compensation - Additional Information (Details) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Nov. 30, 2022	Nov. 30, 2021
Stock Incentive Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation	$ 650	$ 443
Restricted Stock Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of shares issued	1
Stock-based compensation	$ 16

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Stock-based Compensation - Summary of Stock Based Compensation Recognized under Stock Incentive Plan (Details) - Stock Incentive Plan - USD ($) $ in Thousands	3 Months Ended
	Nov. 30, 2022	Nov. 30, 2021
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total stock-based compensation	$ 650	$ 443
Restaurant-level Stock-based Compensation Included In Other Costs
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total stock-based compensation	94	35
Corporate-level Stock-based Compensation Included In General and Administrative Expenses
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total stock-based compensation	$ 556	$ 408

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Debt - Additional Information (Details) - Revolving Credit Facility Agreement - USD ($)	3 Months Ended
	Nov. 30, 2022	Aug. 31, 2022	Apr. 10, 2020
Debt Instrument [Line Items]
Outstanding balance	$ 0
Remaining availability under credit agreement		$ 45,000,000.0
Kura Japan
Debt Instrument [Line Items]
Outstanding borrowings			$ 45,000,000.0

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Loss Per Share - Computation of Basic and Diluted Net Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Nov. 30, 2022	Nov. 30, 2021
Earnings Per Share Diluted [Line Items]
Weighted average common shares outstanding – basic	9,789	9,710
Diluted	9,789	9,710
Basic	$ (0.21)	$ (0.13)
Diluted	$ (0.21)	$ (0.13)
Class A
Earnings Per Share Diluted [Line Items]
Net loss attributable to common stockholders	$ (1,875)	$ (1,144)
Weighted average common shares outstanding – basic	8,789	8,710
Diluted	8,789	8,710
Basic	$ (0.21)	$ (0.13)
Diluted	$ (0.21)	$ (0.13)
Class B
Earnings Per Share Diluted [Line Items]
Net loss attributable to common stockholders	$ (213)	$ (131)
Weighted average common shares outstanding – basic	1,000	1,000
Diluted	1,000	1,000
Basic	$ (0.21)	$ (0.13)
Diluted	$ (0.21)	$ (0.13)

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Loss Per Share - Additional Information (Details) - shares shares in Thousands	3 Months Ended
	Nov. 30, 2022	Nov. 30, 2021
Earnings Per Share [Line Items]
Shares of common stock subject to outstanding employee stock options that were excluded from the calculation of diluted income (loss) per share	708	623

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Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended
	Dec. 31, 2022	Nov. 30, 2022
Loss Contingencies [Line Items]
Settlement amount		$ 1,750
Subsequent Event
Loss Contingencies [Line Items]
Amount deposited into an account controlled by a settlement administrator	$ 1,780
General and Administrative Expenses
Loss Contingencies [Line Items]
Accrued liability		1,780
Payroll taxes		$ 30

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Income Taxes - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Nov. 30, 2022	Nov. 30, 2021
Income Tax Disclosure [Abstract]
Income tax expense	$ 10	$ 12
Federal statutory tax rate	21.00%

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Subsequent Event (Additional Information) (Details) $ in Millions	Dec. 28, 2022 USD ($)
Subsequent Event | Maximum
Subsequent Event [Line Items]
Aggregate offering price of securities	$ 125.0