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 May 31, 2021

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	Nasdaq Global Market

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, 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 July 7, 2021, the registrant had 7,427,334 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	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	29
PART II.	OTHER INFORMATION	30
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 3.	Defaults Upon Senior Securities	30
Item 4.	Mine Safety Disclosures	30
Item 5.	Other Information	30
Item 6.	Exhibits	31
Signatures		32

i

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Kura Sushi USA, Inc.

Condensed Balance Sheets

(amounts in thousands, except par value)

(Unaudited)

	May 31, 2021			August 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	4,701		$	9,259
Accounts and other receivables		3,258			2,130
Inventories		467			367
Due from affiliate		2			12
Prepaid expenses and other current assets		11,973			3,010
Total current assets		20,401			14,778
Non-current assets:
Property and equipment - net		51,783			45,541
Operating lease right-of-use assets		56,165			56,119
Deposits and other assets		2,085			1,941
Total assets	$	130,434		$	118,379
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	3,631		$	4,919
Accrued expenses and other current liabilities		1,638			720
Salaries and wages payable		4,755			1,786
Finance leases - current		1,011			1,004
Operating lease liabilities - current		5,159			5,106
Due to affiliate		60			201
Sales tax payable		687			189
Total current liabilities		16,941			13,925
Non-current liabilities:
Loan from affiliate		17,000			—
Finance leases - non-current		696			1,481
Operating lease liabilities - non-current		57,777			56,918
Other liabilities		363			342
Total liabilities		92,777			72,666
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, 7,424 and 7,342 shares issued and outstanding as of May 31, 2021 and August 31, 2020, respectively		7			7
Class B common stock, $0.001 par value; 10,000 shares authorized, 1,000 shares issued and outstanding as of May 31, 2021 and August 31, 2020		1			1
Additional paid-in capital		61,737			60,332
Accumulated deficit		(24,088	)		(14,627	)
Total stockholders' equity		37,657			45,713
Total liabilities and stockholders' equity	$	130,434		$	118,379

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 May 31,						Nine Months Ended May 31,
	2021			2020			2021			2020
Sales	$	18,471		$	2,812		$	36,967		$	39,640
Restaurant operating costs:
Food and beverage costs		5,850			1,069			12,078			12,868
Labor and related costs		1,649			3,551			8,070			15,336
Occupancy and related expenses		1,885			1,589			5,202			4,665
Depreciation and amortization expenses		1,086			743			3,015			2,118
Other costs		2,713			964			6,843			5,221
Total restaurant operating costs		13,183			7,916			35,208			40,208
General and administrative expenses		4,292			2,885			10,687			8,994
Depreciation and amortization expenses		130			39			299			97
Total operating expenses		17,605			10,840			46,194			49,299
Operating income (loss)		866			(8,028	)		(9,227	)		(9,659	)
Other expense (income):
Interest expense		67			36			154			103
Interest income		(1	)		(65	)		(8	)		(432	)
Income (loss) before income taxes		800			(7,999	)		(9,373	)		(9,330	)
Income tax expense		30			1,153			88			1,179
Net income (loss)	$	770		$	(9,152	)	$	(9,461	)	$	(10,509	)
Net income (loss) per Class A and Class B shares
Basic	$	0.09		$	(1.10	)	$	(1.13	)	$	(1.26	)
Diluted	$	0.09		$	(1.10	)	$	(1.13	)	$	(1.26	)
Weighted average Class A and Class B shares outstanding
Basic		8,383			8,341			8,381			8,337
Diluted		8,663			8,341			8,381			8,337

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, 2020		7,342	$	7		1,000	$	1	$	60,332	$	(14,627	)	$	45,713
Stock-based compensation		—		—		—		—		266		—			266
Net loss		—		—		—		—		—		(6,350	)		(6,350	)
Exercise of stock options		22		—		—		—		94		—			94
Balances as of November 30, 2020		7,364		7		1,000		1		60,692		(20,977	)		39,723
Stock-based compensation		—		—		—		—		309		—			309
Net loss		—		—		—		—		—		(3,881	)		(3,881	)
Exercise of stock options		49		—		—		—		272		—			272
Balances as of February 28, 2021		7,413	$	7		1,000	$	1	$	61,273	$	(24,858	)	$	36,423
Stock-based compensation		—		—		—		—		391		—			391
Net income		—		—		—		—		—		770			770
Exercise of stock options		11		—		—		—		73		—			73
Balances as of May 31, 2021		7,424	$	7		1,000	$	1	$	61,737	$	(24,088	)	$	37,657
	Common Stock								Additional		Retained Earnings			Total
	Class A				Class B				Paid-in		(Accumulated			Stockholders'
	Shares		Amount		Shares		Amount		Capital		Deficit)			Equity
Balances as of August 31, 2019		7,335	$	7		1,000	$	1	$	59,442	$	2,731		$	62,181
Stock-based compensation		—		—		—		—		121		—			121
Net loss		—		—		—		—		—		(1,224	)		(1,224	)
Balances as of November 30, 2019		7,335		7		1,000		1		59,563		1,507			61,078
Stock-based compensation		—		—		—		—		211		—			211
Net loss		—		—		—		—		—		(133	)		(133	)
Exercise of stock options		3		—		—		—		15		—			15
Balances as of February 29, 2020		7,338	$	7		1,000	$	1	$	59,789	$	1,374		$	61,171
Stock-based compensation		—		—		—		—		248		—			248
Net loss		—		—		—		—		—		(9,152	)		(9,152	)
Exercise of stock options		4		—		—		—		15		—			15
Balances as of May 31, 2020		7,342	$	7		1,000	$	1	$	60,052	$	(7,778	)	$	52,282

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)

	Nine Months Ended May 31,
	2021			2020
Cash flows from operating activities
Net loss	$	(9,461	)	$	(10,509	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization		3,314			2,215
Stock-based compensation		966			580
Loss on disposal of property and equipment		91			4
Deferred income taxes		—			1,114
Non-cash lease expense		1,975			1,695
Inventory write-downs		—			50
Changes in operating assets and liabilities:
Accounts and other receivables		(1,227	)		836
Inventories		(100	)		82
Due from affiliate		10			221
Prepaid expenses and other current assets		(8,963	)		(1,227	)
Deposits and other assets		(34	)		(108	)
Accounts payable		71			(2,995	)
Accrued expenses and other current liabilities		1,129			(861	)
Salaries and wages payable		2,969			(340	)
Operating lease liabilities		(1,011	)		(915	)
Due to affiliate		76			(4	)
Sales tax payable		498			(533	)
Net cash used in operating activities		(9,697	)		(10,695	)
Cash flows from investing activities
Payments for property and equipment		(11,412	)		(9,348	)
Payments for initial direct costs		—			(165	)
Payments for purchases of liquor licenses		(111	)		(58	)
Net cash used in investing activities		(11,523	)		(9,571	)
Cash flows from financing activities
Proceeds from PPP loan		—			5,983
Repayment of PPP loan		—			(5,983	)
Proceeds from loan from affiliate		17,000			—
Repayment of principal on finance leases		(777	)		(778	)
Proceeds from exercise of stock options		439			30
Net cash provided by (used in) financing activities		16,662			(748	)
Decrease in cash, cash equivalents and restricted cash		(4,558	)		(21,014	)
Cash, cash equivalents and restricted cash, beginning of period		9,259			38,044
Cash, cash equivalents and restricted cash, end of period	$	4,701		$	17,030
Noncash investing activities
Amounts included in accounts payable for purchases of property and equipment	$	641		$	1,916

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.

Effects of COVID-19

In March 2020, the World Health Organization declared the novel strain of coronavirus COVID-19 a global pandemic. This contagious virus, which has continued to spread, has adversely affected workforces, customers, economies, supply chains and financial markets globally. In response to this outbreak, many state and local authorities had mandated the temporary closure of non-essential businesses and dine-in restaurant activity or limited indoor dining capacities. COVID-19 and the government measures taken to control it have caused a significant disruption to the Company’s business operation. As of May 31, 2021, the Company had all of its 31 restaurants operating at indoor dining capacities ranging from 50% to 100%. In June 2021, the Company opened one new restaurant in Bellevue, Washington. As of the filing date of this Quarterly Report on Form 10-Q, the Company had all of its 32 restaurants operating at 100% indoor capacity with no restrictions in place.          

In response to the ongoing COVID-19 pandemic, the Company prioritized taking steps to protect the health and safety of its employees and customers. The Company has maintained its cleaning and sanitizing protocols of its restaurants and has implemented additional training and operational manuals for its restaurant employees, as well as increased handwashing procedures. The Company also provides each restaurant employee with face masks and gloves, and requires each employee to pass a health screening process, which includes a temperature check, before the start of each shift.

The reduced capacities at its restaurants have caused a substantial decline in the Company’s comparable restaurant sales in the most recently completed fiscal quarter and year-to-date period compared to pre-pandemic levels. In response to the challenges posed by the COVID-19 pandemic, the Company focused on maximizing its in-restaurant dining capacity as permitted by the jurisdictions where it operates, emphasizing mobile ordering and takeout, continuing to provide a safe environment for its employees and customers, maintaining its operational efficiencies as much as possible and preserving its liquidity. Currently, with the lift of all indoor dining restrictions at all of its restaurants, the Company has experienced a staffing shortage and has provided certain employee retention and new hire bonuses. In line with the Company’s long-term growth strategy, it expects to continue to open new restaurants at locations where it believes the restaurants have the potential to achieve profitability. The future sales levels of the Company’s restaurants and its ability to implement its growth strategy, however, remain highly uncertain, as the full impact and duration of the COVID-19 pandemic continues to evolve as of the filing date of this Quarterly Report on Form 10-Q.

Recent Events Concerning the Company’s Financial Position

On April 10, 2020, the Company and Kura Sushi, Inc. (“Kura Japan”), the majority stockholder of the Company, entered into a Revolving Credit Agreement(the “Revolving Credit Agreement”) whereby Kura Japan agreed to make available to the Company loans on a revolving credit basis in the principal amount of up to $20 million as evidenced by that certain Promissory Note dated as of the same date with the Company as maker and made payable to Kura Japan (the “Revolving Credit Note”). On September 2, 2020, the Company and Kura Japan entered into a First Amendment to Revolving Credit Agreement (the “First Amendment”) to (i) increase the maximum credit amount under the credit line from $20 million to $35 million, (ii) extend the maturity date for each advance from 12 months to 60 months from the date of disbursement and (iii) extend the last day of the period of availability for the advances under the credit line from March 31, 2024 to April 10, 2025. On April 9, 2021, the Company and Kura Japan entered into a Second Amendment to Revolving Credit Agreement (the “Second Amendment”) to increase the maximum credit amount under the credit line from $35 million to $45 million. In connection with the First Amendment and Second Amendment, the Revolving Credit Note under the Revolving Credit Agreement was also amended by incorporating the same amendments as provided under the First Amendment and Second Amendment, as well as amendments to the interest rate. For additional information, see “Note 4. Related Party Transactions” and “Note 6. Debt.”

5

Under the provisions of the extension of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) passed by the United States Congress and signed by the President, the Company is eligible for a refundable employee retention credit subject to certain criteria. The Company recognized a $6.3 millionemployee retention credit and a $1.6 million employee retention credit during thethree months ended May 31, 2021and May 31, 2020, respectively, and recognized an $8.9 millionemployee retention credit and a $1.6 millionemployee retention credit during the nine months ended May 31, 2021 and May 31, 2020, respectively. For the three months ended May 31, 2021,$5.8 millionis included in labor and related costs and $0.5 million is included in general and administrative expenses in the statements of operations and for the nine months ended May 31, 2021, $8.0 million is included in labor and related costs and $0.9 million is included in general and administrative expenses in the statement of operations. The entire amount of the employee retention credit was included in labor and related costs during the three and nine months ended May 31, 2020.  The Company has filed for refunds of the employee retention credits and as of the date of this Quarterly Report on Form 10-Q, it has not received any refunds and cannot reasonably estimate when it will receive any or all of the refunds.  

The Company has received rent concessions from its landlords for certain of its restaurants in the form of rent abatements and rent deferrals which were immaterial for the three and nine months ended May 31, 2021. Due to the current staffing shortage, the Company provided certain employee retention and new hire bonuses totaling $0.7 million in the three and nine months ended May 31, 2021.  

Due to the ongoing impact of COVID-19, the Company assessed its long-lived assets for potential impairment, which resulted in no impairment charges recorded as of May 31, 2021.

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, 2020.

The accounting policies followed by the Company are set forth in Part II, Item 8, Note 2, Basis of Presentation and Summary of 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, 2020. 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 year ending August 31, 2021 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 2022”, “fiscal year 2021,” “fiscal year 2020” and “fiscal year 2019” refer to the Company’s fiscal years ending August 31, 2022 and August 31, 2021, and ended August 31, 2020 and August 31, 2019, 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.

6

Recently Issued Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,” which is intended to simplify various aspects related to accounting for income taxes. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. ASU 2019-12 is effective for the Company beginning in fiscal year 2022. The Company is currently in the process of evaluating the effects of this pronouncement on its financial statements.

Note 2. Balance Sheet Components

Accounts and Other Receivables

	May 31, 2021		August 31, 2020
	(amounts in thousands)
Lease receivable	$	1,694	$	1,811
Credit card receivable		1,491		281
Other receivables		73		38
Total accounts and other receivables	$	3,258	$	2,130

Prepaid Expenses and Other Current Assets

	May 31, 2021		August 31, 2020
	(amounts in thousands)
Employee retention credit	$	10,697	$	1,750
Prepaid expenses		1,046		885
Other current assets		230		375
Total prepaid expenses and other current assets	$	11,973	$	3,010

Property and Equipment - net

	May 31, 2021			August 31, 2020
	(amounts in thousands)
Leasehold improvements	$	41,239		$	30,497
Lease assets		6,102			6,117
Furniture and fixtures		12,359			7,908
Computer equipment		800			696
Vehicles		110			88
Software		761			689
Construction in progress		3,647			9,558
Property and equipment – gross		65,018			55,553
Less: accumulated depreciation and amortization		(13,235	)		(10,012	)
Total property and equipment – net	$	51,783		$	45,541

Depreciation and amortization expense for property and equipment was approximately $1.2 million and $0.8million for the three months ended May 31, 2021 and May 31, 2020, respectively, and was approximately $3.3 million and $2.2 million for the nine months ended May 31, 2021 and May 31, 2020, respectively.

7

Accrued Expenses and Other Current Liabilities

	May 31, 2021		August 31, 2020
	(amounts in thousands)
Credit card payable	$	135	$	84
Income taxes payable		143		56
Other current liabilities		1,360		580
Total accrued expenses and other current liabilities	$	1,638	$	720

Note 3. Leases

At inception of a contract, the Company assesses whether the contract is a lease based on whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Lease classification, measurement, and recognition are determined at lease commencement, which is the date the underlying asset is available for use by the Company. The accounting classification of a lease is based on whether the arrangement is effectively a financed purchase of the underlying asset (finance lease) or not (operating lease). 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. For leases with renewal periods at the Company’s option, the Company determines the expected lease period based on whether the renewal of any options is reasonably assured at the inception of the lease.

Operating leases are accounted for on the balance sheet within the right-of-use (“ROU”) assets and lease liabilities recognized in “Operating lease right-of-use assets,” “Operating lease liabilities – current” and “Operating lease liabilities – non-current,” respectively. Finance leases are accounted for on the balance sheet within ROU assets and lease liabilities recognized in “Property and equipment – net,” “Finance lease – current” and “Finance lease – non-current,” respectively.

Lease assets and liabilities are recognized at the lease commencement date. Lease liabilities are measured at the present value of the lease payments not yet paid. To determine the present value of lease payments not yet paid, the Company estimates incremental borrowing rates corresponding to the maturities of the leases based on prevailing financial market conditions, comparable company and credit analysis, and management judgment. ROU assets, for both operating and finance leases, are initially measured based on the lease liability, adjusted for initial direct costs, prepaid or deferred rent, and lease incentives. The operating lease ROU assets are subsequently measured at the carrying amount of the lease liability adjusted for initial direct costs, prepaid or accrued lease payments, and lease incentives. Depreciation of the finance lease ROU assets are subsequently calculated using the straight-line method over the shorter of the estimated useful lives or the expected lease terms and recorded in “Depreciation and amortization expense” on the statements of operations.

The Company recognizes expense for these leases on a straight-line basis over the lease term. In addition to the fixed minimum payments required under the lease arrangements, certain leases require variable lease payments, such as common area maintenance, insurance and real estate taxes, which are recognized when the associated activity occurs. Additionally, contingent rental payments based on sales thresholds for certain of the Company’s restaurants are accrued based on estimated sales.

8

Lease related costs recognized in the statements of operations for the three and nine months ended May 31, 2021 and May 31, 2020are as follows:

		Three Months Ended May 31,				Nine Months Ended May 31,
		May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020
		(amounts in thousands)
Finance lease cost	Classification
Amortization of right-of-use assets	Depreciation and amortization expenses	$	157	$	141	$	465	$	419
Interest on lease liabilities	Interest expense		20		30		69		95
Total finance lease cost		$	177	$	171	$	534	$	514
		Three Months Ended May 31,				Nine Months Ended May 31,
		May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020
		(amounts in thousands)
Operating lease cost	Classification
Operating lease cost	Occupancy and related expenses, other costs and general and administrative expenses	$	1,571	$	1,244	$	4,687	$	3,688
Variable lease cost	Occupancy and related expenses, and general and administrative expenses		401		223		898		923
Total operating lease cost		$	1,972	$	1,467	$	5,585	$	4,611

Supplemental balance sheet information related to leases is as follows:

Operating Leases

	May 31, 2021		August 31, 2020
	(amounts in thousands)
Operating lease right-of-use assets	$	56,165	$	56,119
Operating lease liabilities – current	$	5,159	$	5,106
Operating lease liabilities – non-current		57,777		56,918
Total operating lease liabilities	$	62,936	$	62,024

Finance Lease Assets – net

	May 31, 2021			August 31, 2020
	(amounts in thousands)
Finance lease assets	$	6,102		$	6,117
Accumulated depreciation		(2,644	)		(2,178	)
Total finance lease assets - net	$	3,458		$	3,939

Finance Leases Liabilities

	May 31, 2021		August 31, 2020
	(amounts in thousands)
Finance lease liabilities - current	$	1,011	$	1,004
Finance lease liabilities - non-current		696		1,481
Total finance lease liabilities	$	1,707	$	2,485

9

	May 31, 2021			May 31, 2020
Weighted Average Remaining Lease Term (Years)
Operating leases		16.0			15.1
Finance leases		1.7			2.6
Weighted Average Discount Rate
Operating leases		6.6	%		5.8	%
Finance leases		4.5	%		4.5	%

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

	Nine Months Ended May 31,
	May 31, 2021		May 31, 2020
	(amounts in thousands)
Operating cash flows paid for operating lease liabilities	$	3,234	$	2,644
Operating right-of-use assets obtained in exchange for new operating lease liabilities	$	2,952	$	15,074

As of May 31, 2021, the Company had additional operating leases liabilities related to restaurants of which the Company has not yet taken possession of $22.8 million. These operating leases are expected to commence in fiscal years 2021 and 2022 with lease terms of 20 years.Subsequent to May 31, 2021, the Company entered into an additional operating lease related to a restaurant of which the Company has not yet taken possession. The lease liabilities associated with the lease are $5.5 million. The operating lease is expected to commence in fiscal year 2022 with a lease term of 20 years.

Maturities of lease liabilities, net of lease receivables, were as follows as of May 31, 2021:

	Operating Leases			Finance Leases
	(amounts in thousands)
Remainder of 2021	$	428		$	263
2022		3,828			1,005
2023		6,106			483
2024		6,237			17
2025		6,335			1
Thereafter		79,694			—
Total lease payments		102,628			1,769
Less: imputed interest		(39,692	)		(62	)
Present value of lease liabilities	$	62,936		$	1,707

Note 4. Related Party Transactions

Kura Sushi, Inc. (“Kura Japan”) is the majority stockholder of the Company, and is incorporated and headquartered in Japan. In August 2019 the Company entered into a Shared Services Agreement with Kura Japan, pursuant to which Kura Japan provides the Company with certain strategic, operational and other support services, including assigning certain employees to work for the Company as expatriates to provide support to the Company’s operations, sending certain employees to work for 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 analyses. In exchange for such services, supplies, parts and equipment, the parties pay fees to each other as set forth in the Shared Services Agreement. A right of setoff is not required, however, from time to time, either party net settles transactions as needed. Purchases of administrative supplies, expatriate salaries and travel and other administrative expenses payable to Kura Japan are included in general and administrative expenses in the accompanying statements of operations. Purchases of equipment from Kura Japan are included in property and equipment in the accompanying balance sheets.

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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, which was subsequently amended on September 2, 2020 and April 9, 2021, to provide the Company a credit line of $45 million. For additional information, see “Note 6. Debt.”

Balances with Kura Japan as of May 31, 2021 and August 31, 2020 are as follows:

	May 31, 2021		August 31, 2020
	(amounts in thousands)
Due from affiliate	$	2	$	12
Due to affiliate	$	60	$	201
Loan from affiliate	$	17,000	$	—

Reimbursements and other payments by the Company to Kura Japan for the three and nine months ended May 31, 2021 and May 31, 2020 were as follows:

	Three Months Ended May 31,				Nine Months Ended May 31,
	2021		2020		2021		2020
	(amounts in thousands)
Related party transactions:
Purchases of administrative supplies	$	4	$	8	$	76	$	31
Expatriate salaries expense		30		34		92		106
Royalty payments		93		14		185		198
Travel and other administrative expenses		—		23		17		73
Purchases of equipment		29		200		430		833
Interest expense		47		—		74		—
Total related party transactions	$	203	$	279	$	874	$	1,241

Reimbursements by Kura Japan to the Company were $2 thousand and $17 thousand for the three months ended May 31, 2021 and May 31, 2020, respectively, and were $27 thousand and $86 thousand for the nine months ended May 31, 2021 and May 31, 2020, respectively. The reimbursements were for travel and audit 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”) for the period from August 31, 2020 through May 31, 2021:

	Options Outstanding
	Number of Shares Underlying Outstanding Options			Weighted Average Exercise Price Per Share
Outstanding—August 31, 2020		531,747		$	9.51
Options granted		152,260			20.97
Options exercised		(82,588	)		5.31
Options canceled/forfeited		(22,537	)		10.88
Outstanding— May 31, 2021		578,882		$	13.07

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The Company issued seven thousand restricted stock awards during the nine months ended May 31, 2021 in addition to the option awards stated above, amounting to an expense of $32 thousand for the three months ended May 31, 2021 and $60 thousand for the nine months ended May 31, 2021. No restricted stock awards were issued during the three months ended May 31, 2021 and the three and nine months ended May 31, 2020.

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

	Three Months Ended May 31,				Nine Months Ended May 31,
	2021		2020		2021		2020
	(amounts in thousands)
Restaurant-level stock-based compensation included in other costs	$	34	$	23	$	83	$	59
Corporate-level stock-based compensation included in general and administrative expenses		357		225		883		521
Total stock-based compensation	$	391	$	248	$	966	$	580

Note 6. Debt

On April 10, 2020, the Company and Kura Japan entered into a Revolving Credit Agreement establishing a $20 million revolving credit line for the Company.On September 2, 2020, the Company and Kura Japan entered into a First Amendment to Revolving Credit Agreement (the “First Amendment”) to (i) increase the maximum credit amount under the credit line from $20 million to $35 million, (ii) extend the maturity date for each advance from 12 months to 60 months from the date of disbursement and (iii) extend the last day of the period of availability for the advances under the credit line from March 31, 2024 to April 10, 2025. On April 9, 2021, the Company and Kura Japan entered into a Second Amendment to Revolving Credit agreement (the “Second Amendment”) to increase the maximum credit amount under the credit line from $35 million to $45 million.

In connection with the First Amendment and Second Amendment, the Revolving Credit Note under the Revolving Credit Agreement was also amended by incorporating the same amendments as provided under the First Amendment and Second Amendment, and additionally, amending the interest rate for advances disbursed prior to April 10, 2021 to be fixed at 1.1% and the interest rate for advances disbursed on or after April 10, 2021 to be fixed at 130% of the Annual Compounding Long-Term Applicable Federal Rate (“AFR”) on the date such advance is made. The AFR as of May 31, 2021 was 2.82%. There are no financial covenants under the Revolving Credit Agreement with which the Company must comply.

As of May 31, 2021, the Company had borrowed $14.0 million at a fixed interest rate of 1.1% and $3.0 million at a fixed interest rate of 2.8% under the Revolving Credit Agreement. Interest expense for the three and nine months ended May 31, 2021 was immaterial. As of May 31, 2021, the Company had$28.0 million of availability remaining under the Revolving Credit Agreement. For additional information, see “Note 4. Related Party Transactions.”

Note 7. Income (Loss) Per Share

The net income (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 the liquidation and dividend rights for Class A and Class B common stock are identical, the net income (loss) attributable to common stockholders is allocated on a proportionate basis.

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

	Three Months Ended May 31,										Nine Months Ended May 31,
	2021				2020						2021						2020
	Class A		Class B		Class A			Class B			Class A			Class B			Class A			Class B
	(amounts in thousands, except per share data)
Net income (loss) attributable to common stockholders - basic	$	678	$	92	$	(8,055	)	$	(1,097	)	$	(8,332	)	$	(1,129	)	$	(9,248	)	$	(1,261	)
Weighted average common shares outstanding - basic		7,383		1,000		7,341			1,000			7,381			1,000			7,337			1,000
Net income (loss) per share attributable to common stockholders - basic	$	0.09	$	0.09	$	(1.10	)	$	(1.10	)	$	(1.13	)	$	(1.13	)	$	(1.26	)	$	(1.26	)
Net income (loss) attributable to common stockholders - diluted	$	681	$	89	$	(8,055	)	$	(1,097	)	$	(8,332	)	$	(1,129	)	$	(9,248	)	$	(1,261	)
Weighted average shares outstanding - basic		7,383		1,000		7,341			1,000			7,381			1,000			7,337			1,000
Dilutive effect of stock-based awards		280		—		—			—			—			—			—			—
Weighted average shares outstanding - diluted		7,663		1,000		7,341			1,000			7,381			1,000			7,337			1,000
Net income (loss) per share attributable to common stockholders - diluted	$	0.09	$	0.09	$	(1.10	)	$	(1.10	)	$	(1.13	)	$	(1.13	)	$	(1.26	)	$	(1.26	)

The Company computes basic income (loss) per common share using net income (loss) and the weighted average number of common shares outstanding during the period. Diluted income (loss) per common share is computed using net income (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 awards.

For the three months ended May 31, 2021 and May 31, 2020, there were 87 thousand and 21 thousand shares of common stock subject to outstanding employee stock options that were excluded from the calculation of diluted income (loss) per share because their inclusion would have been anti-dilutive. For the nine months ended May 31, 2021 and May 31, 2020, there were approximately 586 thousand and 137 thousand shares of common stock subject to outstanding employee stock options and restricted stock awards, respectively, that were excluded from the calculation of diluted loss per share because their inclusion would have been anti-dilutive.

Note 8. Commitments and Contingencies

On 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. During the three months ended May 31, 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.  Based on research conducted by the Company in preparation for the mediation, the Company recorded an accrued liability of $1.0 million related to this complaint within general and administrative expenses in the statements of operations during the three months ended May 31, 2021, as the liability associated with a potential settlement became probable and reasonably estimable. The Company is unable to reasonably estimate the upper end of the range of possible loss.  There can be no assurance of the actual liability associated with this complaint, which may be higher than the estimated amount accrued during the three months ended May 31, 2021. As the Company receives new information, it will reevaluate its estimated liability and the estimated liability may change significantly.

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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.

Note 9. Income Taxes

The Company recorded income tax expense of $30 thousand and $1.2 million for the three months ended May 31, 2021 and May 31, 2020, respectively, and of $88 thousand and $1.2 million for the nine months ended May 31, 2021 and May 31, 2020, respectively. The Company’s effective tax rates for the three and nine months ended May 31, 2021 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 its 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 May 31, 2021 was appropriate.

On December 27, 2020, Congress passed, and the President signed into law, the Consolidated Appropriations Act, 2021 (the “Act”), which includes certain business tax provisions.  The Company does not expect the Act to have a material impact on the Company’s effective tax rate or income tax expense for the fiscal year ending August 31, 2021.

On March 11, 2021, Congress passed, and the President signed into law, the American Rescue Plan Act, 2021 (the “ARP”), which includes certain business tax provisions. The Company does not expect the ARP to have a material impact on the Company’s effective tax rate or income tax expense for the fiscal year ending August 31, 2021.

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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, 2020 (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, 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 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; Effects of COVID-19 on Our Business

In March 2020, the World Health Organization declared the novel strain of coronavirus COVID-19 a global pandemic. This contagious virus, which has continued to spread, has adversely affected workforces, customers, economies and financial markets and supply chains globally. In response to this outbreak, many state and local authorities had mandated the temporary closure of non-essential businesses and dine-in restaurant activity or limited indoor dining capacities. COVID-19 and the government measures taken to control it have caused a significant disruption to our business operation. Due to these government restrictions, the weighted average indoor dining capacities of our restaurants for the first quarter of fiscal 2021, second quarter of fiscal 2021 and third quarter of fiscal 2021 were 35%, 26% and 62%, respectively. As of May 31, 2021, we had all of our 31 restaurants operating at indoor dining capacities ranging from 50% to 100%. In June 2021, we opened one new restaurant in Bellevue, Washington. As of the filing date of this Quarterly Report on Form 10-Q, we had all of our 32 restaurants operating at 100% indoor dining capacity with no restrictions in place.

In response to the ongoing COVID-19 pandemic, we have prioritized taking steps to protect the health and safety of our employees and customers. We have maintained cleaning and sanitizing protocols of our restaurants and have implemented additional training and operational manuals for our restaurant employees, as well as increased handwashing procedures. We have also provided each restaurant employee with face masks and gloves, and require each employee to pass a health screening process, which includes a temperature check, before the start of each shift.

The reduced capacities at our restaurants have caused a substantial decline in our comparable restaurant sales in the three and nine months ended May 31, 2021 compared to pre-pandemic levels in the three and nine months ended May 31, 2019 of 19% and 39%, respectively. In response to the ongoing challenges posed by the COVID-19 pandemic, we focused on maximizing our in-restaurant dining capacity as permitted by the jurisdictions where we operate, emphasizing mobile ordering and takeout, continuing to provide a safe environment for our employees and customers, maintaining our operational efficiencies as much as possible and preserving our liquidity. Currently, with the lift of all indoor dining restrictions at all of our restaurants, we have experienced a staffing shortage and have provided certain employee retention and new hire bonuses. In line with our long-term growth strategy, we expect to continue to open new restaurants at locations where we believe the restaurants have the potential to achieve profitability. The future sales levels of our restaurants and our ability to implement our growth strategy, however, remain highly uncertain, as the full impact and duration of the COVID-19 pandemic continues to evolve as of the filing date of this Quarterly Report on Form 10-Q.

Recent Events Concerning Our Financial Position

On April 10, 2020, we and Kura Sushi, Inc. (“Kura Japan”), our majority stockholder, entered into a Revolving Credit Agreement(the “Revolving Credit Agreement”) whereby Kura Japan agreed to make available to us loans on a revolving credit basis in the principal amount of up to $20 million as evidenced by that certain Promissory Note dated as of the same date with us as maker

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and made payable to Kura Japan (the “Revolving Credit Note”). On September 2, 2020, we and Kura Japan entered into a First Amendment to Revolving Credit Agreement (the “First Amendment”) to (i) increase the maximum credit amount under the credit line from $20 million to $35 million, (ii) extend the maturity date for each advance from 12 months to 60 months from the date of disbursement and (iii) extend the last day of the period of availability for the advances under the credit line from March 31, 2024 to April 10, 2025. On April 9, 2021, we and Kura Japan entered into a Second Amendment to Revolving Credit Agreement (the “Second Amendment”) to increase the maximum credit amount under the credit line from $35 million to $45 million. In connection with the First Amendment and Second Amendment, the Revolving Credit Note under the Revolving Credit Agreement was also amended by incorporating the same amendments as provided under the First Amendment and Second Amendment, as well as amendments to the interest rate.

As of May 31, 2021, we had borrowings outstanding of $17.0 million under the Revolving Credit Agreements. See “Note 4. Related Party Transactions” and “Note 6. Debt” in the Notes to Condensed Financial Statements for further discussion.

Under the provisions of the extension of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), we are eligible for a refundable employee retention credit subject to certain criteria. We recognized a $6.3 million employee retention credit and a $1.6 million employee retention credit during the three months ended May 31, 2021 and May 31, 2020 and recognized a $8.9 million employee retention credit and a $1.6 million during the nine months ended May 31, 2021 and May 31, 2020, respectively.  For the three months ended May 31, 2021, $5.8 million is included in labor and related costs and $0.5 million is included in general and administrative expenses in the statements of operations and for the nine months ended May 31, 2021, $8.0 million is included in labor and related costs and $0.9 million is included in general and administrative expenses in the statement of operations. The entire value of the employee retention credit was included in labor and related costs during the three and nine months ended May 31, 2020. We have filed for refunds of the employee retention credits and as of the date of this Quarterly Report on Form 10-Q, we have not received any refunds and cannot reasonably estimate when we will receive any or all of the refunds. We believe we became ineligible for further employee retention credits upon the lifting of indoor dining restrictions on our California restaurants effective June 15, 2021.  

We have received rent concessions from our landlords for certain of our restaurants in the form of rent abatements and rent deferrals which were immaterial for the three and nine months ended May 31, 2021. Due to the current staffing shortage, we provided certain employee retention and new hire bonuses totaling $0.7 million in the three and nine months ended May 31, 2021.

Due to the impact of COVID-19, we assessed our long-lived assets for potential impairment, which resulted in no impairment charges recorded as of May 31, 2021.

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 growth.

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 grows.

Labor and related expenses. Labor and related expenses include all restaurant-level management and hourly labor costs, including wages, employee benefits and payroll taxes. Labor and related expenses are expected to grow as our sales grows. 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 and amortization of fixed assets, including equipment and capitalized leasehold improvements. Depreciation and amortization are determined using the straight-line method over the assets’ estimated useful lives, ranging from three to 20 years.

Other costs. Other costs include utilities, repairs and maintenance, credit card fees, royalty payments to Kura Japan, stock-based compensation expenses for restaurant-level employees and other restaurant-level expenses.

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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 expenses 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, including incremental legal, accounting, insurance and other expenses.

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 investments.

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

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Results of Operations

The following tables present selected comparative results of operations for the three and nine months ended May 31, 2021 and May 31, 2020.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 sum to 100% due to rounding.

	Three Months Ended May 31,
	2021			2020			$ Change			% Change
	(dollar amounts in thousands)
Sales	$	18,471		$	2,812		$	15,659			556.9		%
Restaurant operating costs
Food and beverage costs		5,850			1,069			4,781			447.2
Labor and related costs		1,649			3,551			(1,902	)		(53.6	)
Occupancy and related expenses		1,885			1,589			296			18.6
Depreciation and amortization expenses		1,086			743			343			46.2
Other costs		2,713			964			1,749			181.4
Total restaurant operating costs		13,183			7,916			5,267			66.5
General and administrative expenses		4,292			2,885			1,407			48.8
Depreciation and amortization expenses		130			39			91			233.3
Total operating expenses		17,605			10,840			6,765			62.4
Operating income (loss)		866			(8,028	)		8,894			110.8
Other expense (income):
Interest expense		67			36			31			86.1
Interest income		(1	)		(65	)		64			(98.5	)
Income (loss) before income taxes		800			(7,999	)		8,799			110.0
Income tax expense		30			1,153			(1,123	)		(97.4	)
Net income (loss)	$	770		$	(9,152	)	$	9,922			108.4		%
	Nine Months Ended May 31,
	2021			2020			$ Change			% Change
	(dollar amounts in thousands)
Sales	$	36,967		$	39,640		$	(2,673	)		(6.7	)	%
Restaurant operating costs
Food and beverage costs		12,078			12,868			(790	)		(6.1	)
Labor and related costs		8,070			15,336			(7,266	)		(47.4	)
Occupancy and related expenses		5,202			4,665			537			11.5
Depreciation and amortization expenses		3,015			2,118			897			42.4
Other costs		6,843			5,221			1,622			31.1
Total restaurant operating costs		35,208			40,208			(5,000	)		(12.4	)
General and administrative expenses		10,687			8,994			1,693			18.8
Depreciation and amortization expenses		299			97			202			208.2
Total operating expenses		46,194			49,299			(3,105	)		(6.3	)
Operating income (loss)		(9,227	)		(9,659	)		432			4.5
Other expense (income):
Interest expense		154			103			51			49.5
Interest income		(8	)		(432	)		424			(98.1	)
Income (loss) before income taxes		(9,373	)		(9,330	)		(43	)		(0.5	)
Income tax expense		88			1,179			(1,091	)		(92.5	)
Net income (loss)	$	(9,461	)	$	(10,509	)	$	1,048			10.0		%

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	Three Months Ended May 31,							Nine Months Ended May 31,
	2021			2020				2021				2020
	(as a percentage of sales)
Sales		100.0	%		100.0		%		100.0		%		100.0		%
Restaurant operating costs
Food and beverage costs		31.7			38.0				32.7				32.5
Labor and related costs		8.9			126.3				21.8				38.7
Occupancy and related expenses		10.2			56.5				14.1				11.8
Depreciation and amortization expenses		5.9			26.4				8.2				5.3
Other costs		14.7			34.3				18.5				13.2
Total restaurant operating costs		71.4			281.5				95.3				101.4
General and administrative expenses		23.2			102.6				28.9				22.7
Depreciation and amortization expenses		0.7			1.4				0.8				0.2
Total operating expenses		95.3			385.5				125.0				124.4
Operating income (loss)		4.7			(285.5	)			(25.0	)			(24.4	)
Other expense (income):
Interest expense		0.4			1.3				0.4				0.3
Interest income		—			(2.3	)			—				(1.1	)
Income (loss) before income taxes		4.3			(284.5	)			(25.4	)			(23.5	)
Income tax expense		0.2			41.0				0.2				3.0
Net income (loss)		4.1	%		(325.5	)	%		(25.6	)	%		(26.5	)	%

Three Months Ended May 31, 2021 Compared to Three Months Ended May 31, 2020

Sales. Sales were $18.5 million for the three months ended May 31, 2021 compared to $2.8 million for the three months ended May 31, 2020, representing an increase of approximately $15.7 million, or 556.9%. The increase in sales was primarily driven by an increased level of operating capacities of our restaurants as the prior year sales were impacted by the temporary closure of our restaurants as mandated by local government restrictions during the three months ended May 31, 2020 in response to the COVID-19 pandemic, as well as the sales from six new restaurants opened subsequent to May 31, 2020 and an increase in off-premises sales. As of May 31, 2021, all 31 of our restaurants were open with at least 50% indoor dining capacity.

Food and beverage costs. Food and beverage costs were $5.9 million for the three months ended May 31, 2021 compared to $1.1 million for the three months ended May 31, 2020, representing an increase of approximately $4.8 million or 447.2%. The increase in food and beverage costs was primarily driven by an increased level of operating capacities of our restaurants as the prior year was impacted by the temporary closure of our restaurants as mandated by local government restrictions during the three months ended May 31, 2020 in response to the COVID-19 pandemic, as well as costs associated with sales from six new restaurants opened subsequent to May 31, 2020. As a percentage of sales, food and beverage costs was 31.7% in the three months ended May 31, 2021, compared to 38.0% in the three months ended May 31, 2020. The decrease in percentage of sales is primarily due to higher inventory spoilage during the three months ended May 31, 2020 as compared to the three months ended May 31, 2021.

Labor and related costs. Labor and related costs were $1.6 million for the three months ended May 31, 2021 compared to $3.6 million for the three months ended May 31, 2020, representing a decrease of approximately $2.0 million, or 53.6%. Labor and related costs decreased as a result of $5.8 million of employee retention credits recognized under the CARES Act extension during the three months ended May 31, 2021, compared to $1.6 million of employee retention credits recognized during the three months ended May 31, 2020. This was partially offset by an increased level of operating capacities of our restaurants as the prior year was impacted by the temporary closure of our restaurants as mandated by local government restrictions during the three months ended May 31, 2020 in response to the COVID-19 pandemic, $0.7 million in employee retention and new hire bonuses during the three months ended May 31, 2021, as well as additional labor costs incurred from six new restaurants opened subsequent to May 31, 2020. As a percentage of sales, labor and related costs decreased to 8.9% in the three months ended May 31, 2021, compared to 126.3% in the three months ended May 31, 2020. The decrease in labor and related costs as a percentage of sales was primarily due to the recognition of the employee retention credits and the prior year retention of certain restaurant employees during the temporary restaurant closures, partially offset by employee bonuses.

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Occupancy and related expenses. Occupancy and related expenses were $1.9 millionfor the three months ended May 31, 2021compared to $1.6 million for the three months ended May 31, 2020, representing an increase of $0.3 million. As a percentage of sales, occupancy and related expenses decreased to 10.2% in the three months ended May 31, 2021, compared to 56.5% in thethree months ended May 31, 2020. The decrease as a percentage of sales was primarily driven by the increase in sales due to theincreased level of operating capacities of our restaurantsas the prior year sales were impacted by thetemporary closure of our restaurants as mandated by local government restrictions during the three months ended May 31, 2020 in response to the COVID-19 pandemic.

Depreciation and amortization expenses. Depreciation and amortization expenses incurred as part of restaurant operating costs were $1.1 million for the three months ended May 31, 2021 compared to $0.7 million for the three months ended May 31, 2020, representing an increase of approximately $0.4 million, or 46.2%. The increase was primarily due to depreciation of property and equipment related to the six new restaurants opened subsequent to May 31, 2020. As a percentage of sales, depreciation and amortization expenses at the restaurant level decreased to 5.9% in the three months ended May 31, 2021 as compared to 26.4% in the three months ended May 31, 2020. The decrease as a percentage of sales was primarily driven by the increase in sales due to the increased level of operating capacities of our restaurants as the prior year sales were impacted by the temporary closure of our restaurants as mandated by local government restrictions during the three months ended May 31, 2020 in response to the COVID-19 pandemic. Depreciation and amortization expenses incurred at the corporate level were $0.1 million for the three months ended May 31, 2021 and were immaterial for the three months ended May 31, 2020, and as a percentage of sales were 0.7% and 1.4%, respectively.

Other costs. Other costs were $2.7 million for the three months ended May 31, 2021 compared to $1.0 million for the three months ended May 31, 2020, representing an increase of approximately $1.7 million, or 181.4%. The increase was primarily driven by an increase in credit card fees due to higher sales during three months ended May 31, 2021, as well as costs related to six new restaurants opened subsequent to May 31, 2020. As a percentage of sales, other costs decreased to 14.7% in the three months ended May 31, 2021 from 34.3% in the three months ended May 31, 2020, primarily driven by the increase in sales due to the increased level of operating capacities of our restaurants as the prior year was impacted by costs that are not directly variable with the decrease in sales due to the temporary closure of our restaurants as mandated by local government restrictions during the three months ended May 31, 2020 in response to the COVID-19 pandemic.

General and administrative expenses. General and administrative expenses were $4.3 million for the three months ended May 31, 2021 compared to $2.9 million for the three months ended May 31, 2020, representing an increase of approximately $1.4 million, or 48.8%. This increase in general and administrative expenses was primarily due to an accrued estimated liability of $1.0 million associated with pending litigation and $1.1 million in increased compensation expenses, which was partially offset by a $0.5 million employee retention credit recognized under the CARES Act extension. As a percentage of sales, general and administrative expenses decreased to 23.2% in the three months ended May 31, 2021 from 102.6% in the three months ended May 31, 2020, primarily driven by the increase in sales due to the increased level of operating capacities of our restaurants as the prior year sales were impacted by the temporary closure of our restaurants as mandated by local government restrictions during the three months ended May 31, 2020 in response to the COVID-19 pandemic.

Interest expense. Interest expense was $67 thousand for the three months ended May 31, 2021 and was $36 thousand for the three months ended May 31, 2020.

Interest income. Interest income was $1 thousand for the three months ended May 31, 2021 compared to $65 thousand for the three months ended May 31, 2020, due to a decrease in our cash and cash equivalents balance.

Income tax expense. Income tax expense was $30 thousand for the three months ended May 31, 2021 compared to $1.2 million for the three months ended May 31, 2020. For further discussion of our income taxes, see “Note 9. Income Taxes” in the Notes to Condensed Financial Statements.

Nine Months Ended May 31, 2021 Compared to Nine Months Ended May 31, 2020

Sales. Sales were $37.0 million for the nine months ended May 31, 2021 compared to $39.6 million for the nine months ended May 31, 2020, representing a decrease of approximately $2.6 million or 6.7%. The decrease in sales was primarily driven by local government restrictions in response to the COVID-19 pandemic limiting operating capacities of our restaurants during the nine months ended May 31, 2021, which had a greater impact than the temporary closure of our restaurants that occurred during the nine months ended May 31, 2020. The decrease was partially offset by the sales of six new restaurants opened subsequent to May 31, 2020 and an increase in off-premises sales.

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Food and beverage costs. Food and beverage costs were $12.1 millionfor thenine months ended May 31, 2021 compared to $12.9 millionfor the nine months ended May 31, 2020, representing a decrease of approximately $0.8 million,or 6.1%. The decrease in food and beverage costs was primarily driven by local government restrictions in response to the COVID-19 pandemic limiting operating capacities of our restaurants during the nine months ended May 31, 2021, which had a greater impact than the temporary closure of our restaurants that occurred during the nine months ended May 31, 2020.  The decrease was partially offset by the costs related tosales from six new restaurants opened subsequent toMay 31, 2020. As a percentage of sales, food and beverage costs was 32.7% in the nine months ended May 31, 2021, compared to 32.5% in the nine months ended May 31, 2020.

Labor and related costs. Labor and related costs were $8.1 million for the nine months ended May 31, 2021 compared to $15.3 million for the nine months ended May 31, 2020, representing a decrease of approximately $7.2 million, or 47.4%. Labor and related costs decreased as a result of a $8.0 million of employee retention credits recognized under the CARES Act extension during the nine months ended May 31, 2021, compared to $1.6 million of employee retention credits recognized during the nine months ended May 31, 2020, and local government restrictions in response to the COVID-19 pandemic limiting operating capacities of our restaurants during the nine months ended May 31, 2021, which had a greater impact than the temporary closure of our restaurants that occurred during nine months ended May 31, 2020.  The decrease was partially offset by $0.7 million in employee retention and new hire bonuses during the nine months ended May 31, 2021, and additional labor costs incurred from six new restaurants opened subsequent to May 31, 2020. As a percentage of sales, labor and related costs decreased to 21.8% in the nine months ended May 31, 2021, compared to 38.7% in the nine months ended May 31, 2020. The decrease in labor and related costs as a percentage of sales was primarily due to the employee retention credits, partially offset by the employee bonuses.

Occupancy and related expenses. Occupancy and related expenses were $5.2 million for the nine months ended May 31, 2021 compared to $4.7 million for the nine months ended May 31, 2020, representing an increase of approximately $0.5 million, or 11.5%. The increase was primarily a result of additional lease expense incurred with respect to six new restaurants opened subsequent to May 31, 2020. As a percentage of sales, occupancy and related expenses increased to 14.1% in the nine months ended May 31, 2021, compared to 11.8% in the nine months ended May 31, 2020. The increase as a percentage of sales was primarily driven by local government restrictions in response to the COVID-19 limiting our operating capacities of our restaurants during the nine months ended May 31, 2021, which had a greater impact than the temporary closure of our restaurants that occurred during the nine months ended May 31, 2020.   

Depreciation and amortization expenses. Depreciation and amortization expenses incurred as part of restaurant operating costs were $3.0 million for the nine months ended May 31, 2021 compared to $2.1 million for the nine months ended May 31, 2020, representing an increase of approximately $0.9 million, or 42.4%. The increase was primarily due to depreciation of property and equipment related to six new restaurants opened subsequent to May 31, 2020. As a percentage of sales, depreciation and amortization expenses at the restaurant level increased to 8.2% in the nine months ended May 31, 2021 as compared to 5.3% in the nine months ended May 31, 2020. The increase as a percentage of sales is primarily due to local government restrictions in response to the COVID-19 limiting our operating capacities of our restaurants during the nine months ended May 31, 2021, which had a greater impact than the temporary closure of our restaurants during the nine months ended May 31, 2020. Depreciation and amortization expenses incurred at the corporate level were $0.3 million for the nine months ended May 31, 2021 and were $0.1 million for the nine months ended May 31, 2020. As a percentage of sales, depreciation and amortization expenses incurred at the corporate level were 0.8% and 0.2%, respectively.

Other costs. Other costs were $6.8 million for the nine months ended May 31, 2021 compared to $5.2 million for the nine months ended May 31, 2020, representing an increase of approximately $1.6 million, or 31.1%. The increase was primarily driven by an increase in small tools expense during the nine months ended May 31, 2021, as well as costs related to six new restaurants opened subsequent to May 31, 2020. As a percentage of sales, other costs increased to 18.5% in the nine months ended May 31, 2021 from 13.2% in the nine months ended May 31, 2020. The increase was primarily due to costs that are not directly variable with the decrease in sales, such as maintenance, utilities and business insurance.

General and administrative expenses. General and administrative expenses were $10.7 million for the nine months ended May 31, 2021 compared to $9.0 million for the nine months ended May 31, 2020, representing an increase of approximately $1.7 million, or 18.8%. This increase in general and administrative expenses was primarily due to an accrued estimated liability of $1.0 million associated with pending litigation and $1.7 million in increased compensation expenses, partially offset by a $0.9 million employee retention credit recognized under the CARES Act extension. As a percentage of sales, general and administrative expenses increased to 28.9% in the nine months ended May 31, 2021 from 22.7% in the nine months ended May 31, 2020, primarily due to local government restrictions in response to the COVID-19 pandemic limiting our operating capacities of our restaurants during the nine months ended May 31, 2021, which had a greater impact than the temporary closure of our restaurants during nine months ended May 31, 2020.

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Interest expense. Interest expense was $0.2 million for the nine months ended May 31, 2021 and was $0.1 million for the nine months ended May 31, 2020.

Interest income. Interest income was $8 thousand for the nine months ended May 31, 2021 compared to $432 thousand for the nine months ended May 31, 2020, due to a decrease in our cash and cash equivalents balance during the nine months ended May 31, 2021.

Income tax expense. Income tax expense was $88 thousand for the nine months ended May 31, 2021 compared to $1.2 million for the nine months ended May 31, 2020. For further discussion of our income taxes, see “Note 9. Income Taxes” in the Notes to Condensed Financial Statements.

Key Performance Indicators

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

EBITDA and Adjusted EBITDA

EBITDA is defined as net income (loss) before interest, income taxes and depreciation and amortization expenses. Adjusted EBITDA is defined as EBITDA plus stock-based compensation expense, non-cash lease expense and asset disposals, closure costs and restaurant impairments, as well as certain items, such as employee retention credit, litigation accrual and certain executive transition costs, that we believe are not indicative of our core operating results. EBITDA and Adjusted EBITDA 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 and Adjusted EBITDA 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 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 and Adjusted EBITDA provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company’s 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 and Adjusted EBITDA 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 may not be comparable to other similarly titled measures computed by other companies, because all companies may not calculate Adjusted EBITDA in the same fashion.

Because of these limitations, EBITDA and Adjusted EBITDA 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 and Adjusted EBITDA on a supplemental basis. You should review the reconciliation of net income (loss) to EBITDA and Adjusted EBITDA below and not rely on any single financial measure to evaluate our business.

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The following table reconciles net income (loss)to EBITDA and Adjusted EBITDA for thethree and nine months ended May 31, 2021 and May 31, 2020:

	Three Months Ended May 31,						Nine Months Ended May 31,
	2021			2020			2021			2020
	(amounts in thousands)
Net income (loss)	$	770		$	(9,152	)	$	(9,461	)	$	(10,509	)
Interest expense (income), net		66			(29	)		146			(329	)
Income tax expense		30			1,153			88			1,179
Depreciation and amortization expenses		1,216			782			3,314			2,215
EBITDA		2,082			(7,246	)		(5,913	)		(7,444	)
Stock-based compensation expense(a)		391			248			966			580
Non-cash lease expense(b)		231			353			935			857
Executive transition costs(c)		—			—			390			—
Employee retention credit(d)		(6,296	)		(1,580	)		(8,931	)		(1,580	)
Litigation accrual(e)		1,000			—			1,000			—
Adjusted EBITDA	$	(2,592	)	$	(8,225	)	$	(11,553	)	$	(7,587	)
Adjusted EBITDA margin		(14.0	)%		(292.5	)%		(31.3	)%		(19.1	)%

(a) Stock-based compensation expense includes non-cash stock-based compensation, which is comprised of restaurant-level stock-based compensation included in other costs in the statements of operations 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” to the financial statements included in this Quarterly Report on Form 10-Q.

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

(c) Executive transition costs include severance and search fees associated with the transition of our Chief Financial Officer.

(d) Employee retention credit includes a refundable credit recognized under the provisions of the CARES Act and extension thereof.

(e) Accrual related to a litigation claim. See “Note 8. Commitments and Contingencies” to the financial statements includes in this Quarterly Report on Form 10-Q.

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

Restaurant-level Operating Profit is defined as operating income (loss) plus depreciation and amortization expenses; stock-based compensation expense; employee retention credit; pre-opening costs and general and administrative expenses which are considered normal, recurring cash operating expensesand 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 and employee retention credit recognized within general and administrative expenses. Restaurant-level Operating Profit margin is defined as Restaurant-level Operating Profit divided by sales. Restaurant-level Operating Profit and Restaurant-level Operating Profit margin 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 and Restaurant-level Operating Profit 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 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 to increase in proportion to the number of new restaurants we open and our comparable restaurant sales growth, if any.

We present Restaurant-level Operating Profit 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 to measure operating performance and returns from opening new restaurants. Restaurant-level Operating Profit margin allows us to evaluate the level of Restaurant-level Operating Profit generated from sales.

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

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In addition, when evaluating Restaurant-level Operating Profitand Restaurant-level Operating Profitmargin, 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 Profitand Restaurant-level Operating Profitmargin may not be comparable to other similarly titled measures computed by other companies, because all companies may not calculate Restaurant-level Operating Profitand Restaurant-level Operating Profitmargin in the same fashion. Restaurant-level Operating Profitand Restaurant-level Operating Profitmargin have limitations as analytical tools, and you should not consider those measures in isolation or as a substitute for analysis of our results as reported under GAAP.

The following table reconciles operating income (loss) to Restaurant-level Operating Profit (Loss) and Restaurant-level Operating Profit (Loss) margin for the three and nine months ended May 31, 2021 and May 31, 2020:

	Three Months Ended May 31,						Nine Months Ended May 31,
	2021			2020			2021			2020
	(amounts in thousands)
Operating income (loss)	$	866		$	(8,028	)	$	(9,227	)	$	(9,659	)
Depreciation and amortization expenses		1,216			782			3,314			2,215
Stock-based compensation expense(a)		391			248			966			580
Pre-opening costs(b)		271			232			832			680
Non-cash lease expense(c)		231			353			935			857
Employee retention credit(d)		(6,296	)		(1,580	)		(8,931	)		(1,580	)
General and administrative expenses		4,292			2,885			10,687			8,994
Corporate-level stock-based compensation and employee retention credit included in general and administrative expenses		93			(225	)		1			(521	)
Restaurant-level operating profit (loss)	$	1,064		$	(5,333	)	$	(1,423	)	$	1,566
Operating profit (loss) margin		4.7	%		(285.5	)%		(25.0	)%		(24.4	)%
Restaurant-level operating profit (loss) margin		5.8	%		(189.7	)%		(3.8	)%		4.0	%

(a) Stock-based compensation expense includes non-cash stock-based compensation, which is comprised of restaurant-level stock-based compensation included in other costs in the statements of operations 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” to the 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.

(d) Employee retention credit includes a refundable credit recognized under the provisions of the CARES Act and extension thereof.

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. Performance in comparable restaurant sales represents the percent change in sales from the same period in the prior year for the comparable restaurant base. We did not make any adjustments for the temporary restaurant closures due to COVID-19 during the three and nine months ended May 31, 2021 and May 31, 2020.

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

• government restrictions on indoor dining capacity due to COVID-19;

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

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• 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 amount;

• 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 for the three and nine months ended May 31, 2021 and May 31, 2020:

	Three Months Ended May 31,		Nine Months Ended May 31,
	2021	2020	2021	2020
Comparable restaurant sales performance (%)	455.6%	(85.4)%	(20.5)%	(24.5)%
Comparable restaurant base	23	17	21	14

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 thegrowth in our restaurant base for the three and nine months ended May 31, 2021 and May 31, 2020:

	Three Months Ended May 31,				Nine Months Ended May 31,
	2021		2020		2021		2020
Restaurant activity:
Beginning of period		30		25		25		23
Openings		1		—		6		2
End of period		31		25		31		25

Subsequent to May 31, 2021, we opened one new restaurant in Bellevue, Washington.

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. Historically, our main sources of liquidity have been cash flows from operations, cash proceeds from our initial public offering in fiscal 2019 and proceeds under our Revolving Credit Agreement. The continuing impact of the COVID-19 pandemic is highly uncertain and management expects that the current restaurant sales levels and ongoing length and severity of the economic downturn may have a material adverse impact on our business, financial condition, liquidity and financial results. For further discussion, see above under “—Business Trends; Effects of COVID-19 on our Business.”

On May 7, 2021, 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 was declared effective on May 17, 2021 and 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 $50 million, which may be sold from time to time. 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 from May 17, 2021, the date of effectiveness.  

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During the three months ended May 31, 2021, we borrowed $5.0 million under the Revolving Credit Agreement. As of May 31, 2021, we had outstanding borrowings of $17.0 million under the Revolving Credit Agreement and have $28.0 million of availability remaining.

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 at least 30 days to pay vendors.

We believe that cash provided by operating activities, cash on hand and availability under our 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, cash on hand and proceeds from our Revolving Credit Agreement. We use this to fund investing expenditures for new restaurant openings, reinvest in our existing restaurants, and contribute to our working capital. Our working capital position is impacted by collecting 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:

	Nine Months Ended May 31,
	2021			2020
Statement of Cash Flow data:	(amounts in thousands)
Net cash used in operating activities	$	(9,697	)	$	(10,695	)
Net cash used in investing activities	$	(11,523	)	$	(9,571	)
Net cash provided by (used in) financing activities	$	16,662		$	(748	)

Cash Flows Used in Operating Activities

Net cash used in operating activities during the nine months ended May 31, 2021 was $9.7 million, which results from net loss of $9.5 million, non-cash charges of $3.3 million for depreciation and amortization, $1.0 million for stock-based compensation, and $2.0 million in non-cash lease expense, and net cash outflows of approximately $6.6 million from changes in operating assets and liabilities. The net cash outflows from changes in operating assets and liabilities were primarily the result of increases of $9.0 million in prepaid expenses and other current assets, and $1.2 million in accounts and other receivables, and a decrease of $1.0 million in operating lease liabilities. The cash outflow is partially offset by increases of $3.0 million in salaries and wages payable, $1.1 million in accrued expenses and other current liabilities and $0.5 million sales tax payable. The increases in prepaid expenses and other current assets was primarily due to the employee retention credit recognized under the CARES Act extension.

Net cash used in operating activities during the nine months ended May 31, 2020 was $10.7 million, which results from net loss of $10.5 million, non-cash charges of $2.2 million for depreciation and amortization, $0.6 million for stock-based compensation, $1.7 million in noncash lease expense, and $1.1 million for deferred income taxes, and net cash outflows of approximately $5.8 million from changes in operating assets and liabilities. The net cash outflows from changes in operating assets and liabilities were primarily the result of decreases of $3.0 million for accounts payable, $0.9 million for operating lease liabilities, $0.9 million for accrued expenses and other current liabilities, $0.5 million for sales tax payable, and $0.3 million for salaries and wages payable, as well as increases of $0.8 million for accounts and other receivables, $1.2 million for prepaid expenses and other current assets, and $0.2 million for amounts due from affiliate. The decrease in accounts payable and accrued expenses and other current liabilities was primarily driven by timing of payment for certain liabilities. The increase in accounts and other receivables was due to the timing of tenant allowance receivables as well as lower credit card receivable balances at May 31, 2020 due to the temporary restaurant closures.

Cash Flows Used in Investing Activities

Net cash used in investing activities during the nine months ended May 31, 2021 was $11.5 million, primarily due to purchases of property and equipment. The increase in purchases of property and equipment in the nine months ended May 31, 2021 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 nine months ended May 31, 2020was $9.6 million, primarily due to purchases of property and equipment. The increase in purchases of property and equipment in the nine months ended May 31, 2020 is primarily related to capital expenditures for current and future restaurant openings, renovations, maintaining our existing restaurants and other projects.

Cash Flows Provided by (Used in) Financing Activities

Net cash provided by financing activities during the nine months ended May 31, 2021 was $16.7 million and is primarily due to $17.0 million in loan proceeds from our Revolving Credit Agreement.

Net cash used in financing activities during the nine months ended May 31, 2020 was $0.7 million primarily due to repayment of principal on financing leases.

Contractual Obligations

As of May 31, 2021, we had $2.1 million in contractual obligations relating to purchase commitments for goods related to restaurant operations and commitments for construction of new restaurants. All purchase commitments are expected to be paid during the fiscal years 2021 and 2022. For operating and finance lease obligations, see “Note 3. Leases” to the financial statements included in this Quarterly Report on Form 10-Q.

Off-Balance Sheet Arrangements

As of May 31, 2021, we did not have any material off-balance sheet arrangements.

Recent Accounting Pronouncements

For a description of recently issued accounting pronouncements, including the respective dates of adoption and expected effects 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 and 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.

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, 2020. 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, 2020 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 Jumpstart Our Business Startups Act of 2012 (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.

27

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 we had total annual gross revenue of $1 billion or more 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 beverage and other commodities. We have been able topartially 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, equipment costs, construction material 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. 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 sales growth in an amount sufficient to offset inflationary or other cost pressures.

28

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 report. 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 report.

The design of any system of control is based upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated objectives under all future events, no matter how remote, or that the degree of compliance with the policies or procedures may not deteriorate. Because of its inherent limitations, disclosure controls and procedures may not prevent or detect all misstatements. Accordingly, even effective disclosure controls and procedures can provide only reasonable assurance of achieving their control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting 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.

29

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 ourAnnual Report on Form 10-K for our fiscal year ended August 31, 2020. 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.

30

Item 6. Exhibits.

Exhibit Number	Description
10.1	Second Amendment to Revolving Credit Agreement, dated April 9, 2021, between Kura Sushi USA, Inc. and Kura Sushi, Inc. (incorporated by reference to our current report on Form 8-K filed with the SEC on April 13, 2021 as Exhibit 10.1)
10.2	Amended and Restated Revolving Credit Note, dated April 9, 2021, made by Kura Sushi USA, Inc. payable to Kura Sushi, Inc. (incorporated by reference to our current report on Form 8-K filed with the SEC on April 13, 2021 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	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.

31

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: July 13, 2021	By:	/s/ Steven H. Benrubi
		Steven H. Benrubi
		Chief Financial Officer, Treasurer and Secretary (Principal Financial Officer and Principal Accounting Officer)

32

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: July 13, 2021	/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, Steven Benrubi, 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: July 13, 2021	/s/ Steven H. Benrubi
	Steven H. Benrubi
	Chief Financial Officer, Treasurer and Secretary

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 May 31, 2021 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: July 13, 2021	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 May 31, 2021 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: July 13, 2021	By:	/s/ Steven H. Benrubi
		Steven H. Benrubi
		Chief Financial Officer, Treasurer and Secretary

XML

Document and Entity Information - shares	9 Months Ended
	May 31, 2021	Jul. 07, 2021
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	May 31, 2021
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q3
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	Non-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		7,427,334
Class B
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		1,000,050

XML

Condensed Balance Sheets - USD ($) $ in Thousands	May 31, 2021	Aug. 31, 2020
Current assets:
Cash and cash equivalents	$ 4,701	$ 9,259
Accounts and other receivables	3,258	2,130
Inventories	467	367
Due from affiliate	2	12
Prepaid expenses and other current assets	11,973	3,010
Total current assets	20,401	14,778
Non-current assets:
Property and equipment - net	51,783	45,541
Operating lease right-of-use assets	56,165	56,119
Deposits and other assets	2,085	1,941
Total assets	130,434	118,379
Current liabilities:
Accounts payable	3,631	4,919
Accrued expenses and other current liabilities	1,638	720
Salaries and wages payable	4,755	1,786
Finance leases - current	1,011	1,004
Operating lease liabilities - current	5,159	5,106
Due to affiliate	60	201
Sales tax payable	687	189
Total current liabilities	16,941	13,925
Non-current liabilities:
Loan from affiliate	17,000
Finance leases - non-current	696	1,481
Operating lease liabilities - non-current	57,777	56,918
Other liabilities	363	342
Total liabilities	92,777	72,666
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	61,737	60,332
Accumulated deficit	(24,088)	(14,627)
Total stockholders' equity	37,657	45,713
Total liabilities and stockholders' equity	130,434	118,379
Class A
Stockholders' equity:
Common stock	7	7
Class B
Stockholders' equity:
Common stock	$ 1	$ 1

XML

Condensed Balance Sheets (Parenthetical) - $ / shares	May 31, 2021	Aug. 31, 2020
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	7,424,000	7,342,000
Common stock, shares outstanding	7,424,000	7,342,000
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 ($) $ in Thousands	3 Months Ended		9 Months Ended
	May 31, 2021	May 31, 2020	May 31, 2021	May 31, 2020
Sales	$ 18,471	$ 2,812	$ 36,967	$ 39,640
Restaurant operating costs:
Depreciation and amortization expenses	1,086	743	3,015	2,118
Other costs	2,713	964	6,843	5,221
Total restaurant operating costs	13,183	7,916	35,208	40,208
General and administrative expenses	4,292	2,885	10,687	8,994
Depreciation and amortization expenses	130	39	299	97
Total operating expenses	17,605	10,840	46,194	49,299
Operating income (loss)	866	(8,028)	(9,227)	(9,659)
Other expense (income):
Interest expense	67	36	154	103
Interest income	(1)	(65)	(8)	(432)
Income (loss) before income taxes	800	(7,999)	(9,373)	(9,330)
Income tax expense	30	1,153	88	1,179
Net income (loss)	$ 770	$ (9,152)	$ (9,461)	$ (10,509)
Net income (loss) per Class A and Class B shares
Basic	$ 0.09	$ (1.10)	$ (1.13)	$ (1.26)
Diluted	$ 0.09	$ (1.10)	$ (1.13)	$ (1.26)
Weighted average Class A and Class B shares outstanding
Basic	8,383	8,341	8,381	8,337
Diluted	8,663	8,341	8,381	8,337
Food and Beverage Costs
Restaurant operating costs:
Cost of goods and services sold	$ 5,850	$ 1,069	$ 12,078	$ 12,868
Labor and Related Costs
Restaurant operating costs:
Cost of goods and services sold	1,649	3,551	8,070	15,336
Occupancy and Related Expenses
Restaurant operating costs:
Cost of goods and services sold	$ 1,885	$ 1,589	$ 5,202	$ 4,665

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	Retained Earnings (Accumulated Deficit)
Beginning balances at Aug. 31, 2019	$ 62,181			$ 7	$ 1	$ 59,442	$ 2,731
Beginning balance, shares at Aug. 31, 2019				7,335	1,000
Stock-based compensation	121					121
Net income (loss)	(1,224)						(1,224)
Ending balances at Nov. 30, 2019	61,078			$ 7	$ 1	59,563	1,507
Ending balance, shares at Nov. 30, 2019				7,335	1,000
Beginning balances at Aug. 31, 2019	62,181			$ 7	$ 1	59,442	2,731
Beginning balance, shares at Aug. 31, 2019				7,335	1,000
Net income (loss)	(10,509)
Ending balances at May. 31, 2020	52,282			$ 7	$ 1	60,052	(7,778)
Ending balance, shares at May. 31, 2020				7,342	1,000
Beginning balances at Nov. 30, 2019	61,078			$ 7	$ 1	59,563	1,507
Beginning balance, shares at Nov. 30, 2019				7,335	1,000
Stock-based compensation	211					211
Net income (loss)	(133)						(133)
Exercise of stock options	15					15
Exercise of stock options, shares				3
Ending balances at Feb. 29, 2020	61,171			$ 7	$ 1	59,789	1,374
Ending balance, shares at Feb. 29, 2020				7,338	1,000
Stock-based compensation	248					248
Net income (loss)	(9,152)						(9,152)
Exercise of stock options	15					15
Exercise of stock options, shares				4
Ending balances at May. 31, 2020	52,282			$ 7	$ 1	60,052	(7,778)
Ending balance, shares at May. 31, 2020				7,342	1,000
Beginning balances at Aug. 31, 2020	45,713			$ 7	$ 1	60,332	(14,627)
Beginning balance, shares at Aug. 31, 2020		7,342	1,000	7,342	1,000
Stock-based compensation	266					266
Net income (loss)	(6,350)						(6,350)
Exercise of stock options	94					94
Exercise of stock options, shares				22
Ending balances at Nov. 30, 2020	39,723			$ 7	$ 1	60,692	(20,977)
Ending balance, shares at Nov. 30, 2020				7,364	1,000
Beginning balances at Aug. 31, 2020	45,713			$ 7	$ 1	60,332	(14,627)
Beginning balance, shares at Aug. 31, 2020		7,342	1,000	7,342	1,000
Net income (loss)	(9,461)
Ending balances at May. 31, 2021	37,657			$ 7	$ 1	61,737	(24,088)
Ending balance, shares at May. 31, 2021		7,424	1,000	7,424	1,000
Beginning balances at Nov. 30, 2020	39,723			$ 7	$ 1	60,692	(20,977)
Beginning balance, shares at Nov. 30, 2020				7,364	1,000
Stock-based compensation	309					309
Net income (loss)	(3,881)						(3,881)
Exercise of stock options	272					272
Exercise of stock options, shares				49
Ending balances at Feb. 28, 2021	36,423			$ 7	$ 1	61,273	(24,858)
Ending balance, shares at Feb. 28, 2021				7,413	1,000
Stock-based compensation	391					391
Net income (loss)	770						770
Exercise of stock options	73					73
Exercise of stock options, shares				11
Ending balances at May. 31, 2021	$ 37,657			$ 7	$ 1	$ 61,737	$ (24,088)
Ending balance, shares at May. 31, 2021		7,424	1,000	7,424	1,000

XML

Condensed Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	May 31, 2021	May 31, 2020
Cash flows from operating activities
Net loss	$ (9,461)	$ (10,509)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization	3,314	2,215
Stock-based compensation	966	580
Loss on disposal of property and equipment	91	4
Deferred income taxes		1,114
Non-cash lease expense	1,975	1,695
Inventory write-downs		50
Changes in operating assets and liabilities:
Accounts and other receivables	(1,227)	836
Inventories	(100)	82
Due from affiliate	10	221
Prepaid expenses and other current assets	(8,963)	(1,227)
Deposits and other assets	(34)	(108)
Accounts payable	71	(2,995)
Accrued expenses and other current liabilities	1,129	(861)
Salaries and wages payable	2,969	(340)
Operating lease liabilities	(1,011)	(915)
Due to affiliate	76	(4)
Sales tax payable	498	(533)
Net cash used in operating activities	(9,697)	(10,695)
Cash flows from investing activities
Payments for property and equipment	(11,412)	(9,348)
Payments for initial direct costs		(165)
Payments for purchases of liquor licenses	(111)	(58)
Net cash used in investing activities	(11,523)	(9,571)
Cash flows from financing activities
Proceeds from PPP loan		5,983
Repayment of PPP loan		(5,983)
Proceeds from loan from affiliate	17,000
Repayment of principal on finance leases	(777)	(778)
Proceeds from exercise of stock options	439	30
Net cash provided by (used in) financing activities	16,662	(748)
Decrease in cash, cash equivalents and restricted cash	(4,558)	(21,014)
Cash, cash equivalents and restricted cash, beginning of period	9,259	38,044
Cash, cash equivalents and restricted cash, end of period	4,701	17,030
Noncash investing activities
Amounts included in accounts payable for purchases of property and equipment	$ 641	$ 1,916

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Organization and Basis of Presentation

9 Months Ended

May 31, 2021

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.

Effects of COVID-19

In March 2020, the World Health Organization declared the novel strain of coronavirus COVID-19 a global pandemic. This contagious virus, which has continued to spread, has adversely affected workforces, customers, economies, supply chains and financial markets globally. In response to this outbreak, many state and local authorities had mandated the temporary closure of non-essential businesses and dine-in restaurant activity or limited indoor dining capacities. COVID-19 and the government measures taken to control it have caused a significant disruption to the Company’s business operation. As of May 31, 2021, the Company had all of its 31 restaurants operating at indoor dining capacities ranging from 50% to 100%. In June 2021, the Company opened one new restaurant in Bellevue, Washington. As of the filing date of this Quarterly Report on Form 10-Q, the Company had all of its 32 restaurants operating at 100% indoor capacity with no restrictions in place.          

In response to the ongoing COVID-19 pandemic, the Company prioritized taking steps to protect the health and safety of its employees and customers. The Company has maintained its cleaning and sanitizing protocols of its restaurants and has implemented additional training and operational manuals for its restaurant employees, as well as increased handwashing procedures. The Company also provides each restaurant employee with face masks and gloves, and requires each employee to pass a health screening process, which includes a temperature check, before the start of each shift.

The reduced capacities at its restaurants have caused a substantial decline in the Company’s comparable restaurant sales in the most recently completed fiscal quarter and year-to-date period compared to pre-pandemic levels. In response to the challenges posed by the COVID-19 pandemic, the Company focused on maximizing its in-restaurant dining capacity as permitted by the jurisdictions where it operates, emphasizing mobile ordering and takeout, continuing to provide a safe environment for its employees and customers, maintaining its operational efficiencies as much as possible and preserving its liquidity. Currently, with the lift of all indoor dining restrictions at all of its restaurants, the Company has experienced a staffing shortage and has provided certain employee retention and new hire bonuses. In line with the Company’s long-term growth strategy, it expects to continue to open new restaurants at locations where it believes the restaurants have the potential to achieve profitability. The future sales levels of the Company’s restaurants and its ability to implement its growth strategy, however, remain highly uncertain, as the full impact and duration of the COVID-19 pandemic continues to evolve as of the filing date of this Quarterly Report on Form 10-Q.

Recent Events Concerning the Company’s Financial Position

On April 10, 2020, the Company and Kura Sushi, Inc. (“Kura Japan”), the majority stockholder of the Company, entered into a Revolving Credit Agreement(the “Revolving Credit Agreement”) whereby Kura Japan agreed to make available to the Company loans on a revolving credit basis in the principal amount of up to $20 million as evidenced by that certain Promissory Note dated as of the same date with the Company as maker and made payable to Kura Japan (the “Revolving Credit Note”). On September 2, 2020, the Company and Kura Japan entered into a First Amendment to Revolving Credit Agreement (the “First Amendment”) to (i) increase the maximum credit amount under the credit line from $20 million to $35 million, (ii) extend the maturity date for each advance from 12 months to 60 months from the date of disbursement and (iii) extend the last day of the period of availability for the advances under the credit line from March 31, 2024 to April 10, 2025. On April 9, 2021, the Company and Kura Japan entered into a Second Amendment to Revolving Credit Agreement (the “Second Amendment”) to increase the maximum credit amount under the credit line from $35 million to $45 million. In connection with the First Amendment and Second Amendment, the Revolving Credit Note under the Revolving Credit Agreement was also amended by incorporating the same amendments as provided under the First Amendment and Second Amendment, as well as amendments to the interest rate. For additional information, see “Note 4. Related Party Transactions” and “Note 6. Debt.”

Under the provisions of the extension of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) passed by the United States Congress and signed by the President, the Company is eligible for a refundable employee retention credit subject to certain criteria. The Company recognized a $6.3 million employee retention credit and a $1.6 million employee retention credit during the three months ended May 31, 2021 and May 31, 2020, respectively, and recognized an $8.9 million employee retention credit and a $1.6 million employee retention credit during the nine months ended May 31, 2021 and May 31, 2020, respectively. For the three months ended May 31, 2021, $ 5.8 million is included in labor and related costs and $0.5 million is included in general and administrative expenses in the statements of operations and for the nine months ended May 31, 2021, $8.0 million is included in labor and related costs and $0.9 million is included in general and administrative expenses in the statement of operations. The entire amount of the employee retention credit was included in labor and related costs during the three and nine months ended May 31, 2020.  The Company has filed for refunds of the employee retention credits and as of the date of this Quarterly Report on Form 10-Q, it has not received any refunds and cannot reasonably estimate when it will receive any or all of the refunds.  

The Company has received rent concessions from its landlords for certain of its restaurants in the form of rent abatements and rent deferrals which were immaterial for the three and nine months ended May 31, 2021. Due to the current staffing shortage, the Company provided certain employee retention and new hire bonuses totaling $0.7 million in the three and nine months ended May 31, 2021.  

Due to the ongoing impact of COVID-19, the Company assessed its long-lived assets for potential impairment, which resulted in no impairment charges recorded as of May 31, 2021.

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, 2020.

The accounting policies followed by the Company are set forth in Part II, Item 8, Note 2, Basis of Presentation and Summary of 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, 2020. 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 year ending August 31, 2021 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 2022”, “fiscal year 2021,” “fiscal year 2020” and “fiscal year 2019” refer to the Company’s fiscal years ending August 31, 2022 and August 31, 2021, and ended August 31, 2020 and August 31, 2019, 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 Issued Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,” which is intended to simplify various aspects related to accounting for income taxes. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. ASU 2019-12 is effective for the Company beginning in fiscal year 2022. The Company is currently in the process of evaluating the effects of this pronouncement on its financial statements.

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Balance Sheet Components

9 Months Ended

May 31, 2021

Balance Sheet Related Disclosures [Abstract]

Balance Sheet Components

Note 2. Balance Sheet Components

Accounts and Other Receivables

	May 31, 2021		August 31, 2020
	(amounts in thousands)
Lease receivable	$	1,694	$	1,811
Credit card receivable		1,491		281
Other receivables		73		38
Total accounts and other receivables	$	3,258	$	2,130

Prepaid Expenses and Other Current Assets

	May 31, 2021		August 31, 2020
	(amounts in thousands)
Employee retention credit	$	10,697	$	1,750
Prepaid expenses		1,046		885
Other current assets		230		375
Total prepaid expenses and other current assets	$	11,973	$	3,010

Property and Equipment - net

	May 31, 2021			August 31, 2020
	(amounts in thousands)
Leasehold improvements	$	41,239		$	30,497
Lease assets		6,102			6,117
Furniture and fixtures		12,359			7,908
Computer equipment		800			696
Vehicles		110			88
Software		761			689
Construction in progress		3,647			9,558
Property and equipment – gross		65,018			55,553
Less: accumulated depreciation and amortization		(13,235	)		(10,012	)
Total property and equipment – net	$	51,783		$	45,541

Depreciation and amortization expense for property and equipment was approximately $1.2 million and $0.8million for the three months ended May 31, 2021 and May 31, 2020, respectively, and was approximately $3.3 million and $2.2 million for the nine months ended May 31, 2021 and May 31, 2020, respectively.

Accrued Expenses and Other Current Liabilities

	May 31, 2021		August 31, 2020
	(amounts in thousands)
Credit card payable	$	135	$	84
Income taxes payable		143		56
Other current liabilities		1,360		580
Total accrued expenses and other current liabilities	$	1,638	$	720

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Leases

9 Months Ended

May 31, 2021

Leases [Abstract]

Leases

Note 3. Leases

At inception of a contract, the Company assesses whether the contract is a lease based on whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Lease classification, measurement, and recognition are determined at lease commencement, which is the date the underlying asset is available for use by the Company. The accounting classification of a lease is based on whether the arrangement is effectively a financed purchase of the underlying asset (finance lease) or not (operating lease). 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. For leases with renewal periods at the Company’s option, the Company determines the expected lease period based on whether the renewal of any options is reasonably assured at the inception of the lease.

Operating leases are accounted for on the balance sheet within the right-of-use (“ROU”) assets and lease liabilities recognized in “Operating lease right-of-use assets,” “Operating lease liabilities – current” and “Operating lease liabilities – non-current,” respectively. Finance leases are accounted for on the balance sheet within ROU assets and lease liabilities recognized in “Property and equipment – net,” “Finance lease – current” and “Finance lease – non-current,” respectively.

Lease assets and liabilities are recognized at the lease commencement date. Lease liabilities are measured at the present value of the lease payments not yet paid. To determine the present value of lease payments not yet paid, the Company estimates incremental borrowing rates corresponding to the maturities of the leases based on prevailing financial market conditions, comparable company and credit analysis, and management judgment. ROU assets, for both operating and finance leases, are initially measured based on the lease liability, adjusted for initial direct costs, prepaid or deferred rent, and lease incentives. The operating lease ROU assets are subsequently measured at the carrying amount of the lease liability adjusted for initial direct costs, prepaid or accrued lease payments, and lease incentives. Depreciation of the finance lease ROU assets are subsequently calculated using the straight-line method over the shorter of the estimated useful lives or the expected lease terms and recorded in “Depreciation and amortization expense” on the statements of operations.

The Company recognizes expense for these leases on a straight-line basis over the lease term. In addition to the fixed minimum payments required under the lease arrangements, certain leases require variable lease payments, such as common area maintenance, insurance and real estate taxes, which are recognized when the associated activity occurs. Additionally, contingent rental payments based on sales thresholds for certain of the Company’s restaurants are accrued based on estimated sales.

Lease related costs recognized in the statements of operations for the three and nine months ended May 31, 2021 and May 31, 2020 are as follows:

		Three Months Ended May 31,				Nine Months Ended May 31,
		May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020
		(amounts in thousands)
Finance lease cost	Classification
Amortization of right-of-use assets	Depreciation and amortization expenses	$	157	$	141	$	465	$	419
Interest on lease liabilities	Interest expense		20		30		69		95
Total finance lease cost		$	177	$	171	$	534	$	514
		Three Months Ended May 31,				Nine Months Ended May 31,
		May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020
		(amounts in thousands)
Operating lease cost	Classification
Operating lease cost	Occupancy and related expenses, other costs and general and administrative expenses	$	1,571	$	1,244	$	4,687	$	3,688
Variable lease cost	Occupancy and related expenses, and general and administrative expenses		401		223		898		923
Total operating lease cost		$	1,972	$	1,467	$	5,585	$	4,611

Supplemental balance sheet information related to leases is as follows:

Operating Leases

	May 31, 2021		August 31, 2020
	(amounts in thousands)
Operating lease right-of-use assets	$	56,165	$	56,119
Operating lease liabilities – current	$	5,159	$	5,106
Operating lease liabilities – non-current		57,777		56,918
Total operating lease liabilities	$	62,936	$	62,024

Finance Lease Assets – net

	May 31, 2021			August 31, 2020
	(amounts in thousands)
Finance lease assets	$	6,102		$	6,117
Accumulated depreciation		(2,644	)		(2,178	)
Total finance lease assets - net	$	3,458		$	3,939

Finance Leases Liabilities

	May 31, 2021		August 31, 2020
	(amounts in thousands)
Finance lease liabilities - current	$	1,011	$	1,004
Finance lease liabilities - non-current		696		1,481
Total finance lease liabilities	$	1,707	$	2,485

	May 31, 2021			May 31, 2020
Weighted Average Remaining Lease Term (Years)
Operating leases		16.0			15.1
Finance leases		1.7			2.6
Weighted Average Discount Rate
Operating leases		6.6	%		5.8	%
Finance leases		4.5	%		4.5	%

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

	Nine Months Ended May 31,
	May 31, 2021		May 31, 2020
	(amounts in thousands)
Operating cash flows paid for operating lease liabilities	$	3,234	$	2,644
Operating right-of-use assets obtained in exchange for new operating lease liabilities	$	2,952	$	15,074

As of May 31, 2021, the Company had additional operating leases liabilities related to restaurants of which the Company has not yet taken possession of $22.8 million. These operating leases are expected to commence in fiscal years 2021 and 2022 with lease terms of 20 years.Subsequent to May 31, 2021, the Company entered into an additional operating lease related to a restaurant of which the Company has not yet taken possession. The lease liabilities associated with the lease are $5.5 million. The operating lease is expected to commence in fiscal year 2022 with a lease term of 20 years.

Maturities of lease liabilities, net of lease receivables, were as follows as of May 31, 2021:

	Operating Leases			Finance Leases
	(amounts in thousands)
Remainder of 2021	$	428		$	263
2022		3,828			1,005
2023		6,106			483
2024		6,237			17
2025		6,335			1
Thereafter		79,694			—
Total lease payments		102,628			1,769
Less: imputed interest		(39,692	)		(62	)
Present value of lease liabilities	$	62,936		$	1,707

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Related Party Transactions

9 Months Ended

May 31, 2021

Related Party Transactions [Abstract]

Related Party Transactions

Note 4. Related Party Transactions

Kura Sushi, Inc. (“Kura Japan”) is the majority stockholder of the Company, and is incorporated and headquartered in Japan. In August 2019 the Company entered into a Shared Services Agreement with Kura Japan, pursuant to which Kura Japan provides the Company with certain strategic, operational and other support services, including assigning certain employees to work for the Company as expatriates to provide support to the Company’s operations, sending certain employees to work for 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 analyses. In exchange for such services, supplies, parts and equipment, the parties pay fees to each other as set forth in the Shared Services Agreement. A right of setoff is not required, however, from time to time, either party net settles transactions as needed. Purchases of administrative supplies, expatriate salaries and travel and other administrative expenses payable to Kura Japan are included in general and administrative expenses in the accompanying statements of operations. 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, which was subsequently amended on September 2, 2020 and April 9, 2021, to provide the Company a credit line of $45 million. For additional information, see “Note 6. Debt.”

Balances with Kura Japan as of May 31, 2021 and August 31, 2020 are as follows:

	May 31, 2021		August 31, 2020
	(amounts in thousands)
Due from affiliate	$	2	$	12
Due to affiliate	$	60	$	201
Loan from affiliate	$	17,000	$	—

Reimbursements and other payments by the Company to Kura Japan for the three and nine months ended May 31, 2021 and May 31, 2020 were as follows:

	Three Months Ended May 31,				Nine Months Ended May 31,
	2021		2020		2021		2020
	(amounts in thousands)
Related party transactions:
Purchases of administrative supplies	$	4	$	8	$	76	$	31
Expatriate salaries expense		30		34		92		106
Royalty payments		93		14		185		198
Travel and other administrative expenses		—		23		17		73
Purchases of equipment		29		200		430		833
Interest expense		47		—		74		—
Total related party transactions	$	203	$	279	$	874	$	1,241

Reimbursements by Kura Japan to the Company were $2 thousand and $17 thousand for the three months ended May 31, 2021 and May 31, 2020, respectively, and were $27 thousand and $86 thousand for the nine months ended May 31, 2021 and May 31, 2020, respectively. The reimbursements were for travel and audit expenses.

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Stock-based Compensation

9 Months Ended

May 31, 2021

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”) for the period from August 31, 2020 through May 31, 2021:

	Options Outstanding
	Number of Shares Underlying Outstanding Options			Weighted Average Exercise Price Per Share
Outstanding—August 31, 2020		531,747		$	9.51
Options granted		152,260			20.97
Options exercised		(82,588	)		5.31
Options canceled/forfeited		(22,537	)		10.88
Outstanding— May 31, 2021		578,882		$	13.07

The Company issued seven thousand restricted stock awards during the nine months ended May 31, 2021 in addition to the option awards stated above, amounting to an expense of $32 thousand for the three months ended May 31, 2021 and $60 thousand for the nine months ended May 31, 2021. No restricted stock awards were issued during the three months ended May 31, 2021 and the three and nine months ended May 31, 2020.

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

	Three Months Ended May 31,				Nine Months Ended May 31,
	2021		2020		2021		2020
	(amounts in thousands)
Restaurant-level stock-based compensation included in other costs	$	34	$	23	$	83	$	59
Corporate-level stock-based compensation included in general and administrative expenses		357		225		883		521
Total stock-based compensation	$	391	$	248	$	966	$	580

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Debt

9 Months Ended

May 31, 2021

Debt Disclosure [Abstract]

Debt

Note 6. Debt

On April 10, 2020, the Company and Kura Japan entered into a Revolving Credit Agreement establishing a $20 million revolving credit line for the Company.On September 2, 2020, the Company and Kura Japan entered into a First Amendment to Revolving Credit Agreement (the “First Amendment”) to (i) increase the maximum credit amount under the credit line from $20 million to $35 million, (ii) extend the maturity date for each advance from 12 months to 60 months from the date of disbursement and (iii) extend the last day of the period of availability for the advances under the credit line from March 31, 2024 to April 10, 2025. On April 9, 2021, the Company and Kura Japan entered into a Second Amendment to Revolving Credit agreement (the “Second Amendment”) to increase the maximum credit amount under the credit line from $35 million to $45 million.

In connection with the First Amendment and Second Amendment, the Revolving Credit Note under the Revolving Credit Agreement was also amended by incorporating the same amendments as provided under the First Amendment and Second Amendment, and additionally, amending the interest rate for advances disbursed prior to April 10, 2021 to be fixed at 1.1% and the interest rate for advances disbursed on or after April 10, 2021 to be fixed at 130% of the Annual Compounding Long-Term Applicable Federal Rate (“AFR”) on the date such advance is made. The AFR as of May 31, 2021 was 2.82%. There are no financial covenants under the Revolving Credit Agreement with which the Company must comply.

As of May 31, 2021, the Company had borrowed $14.0 million at a fixed interest rate of 1.1% and $3.0 million at a fixed interest rate of 2.8% under the Revolving Credit Agreement. Interest expense for the three and nine months ended May 31, 2021 was immaterial. As of May 31, 2021, the Company had$28.0 million of availability remaining under the Revolving Credit Agreement. For additional information, see “Note 4. Related Party Transactions.”

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Income (Loss) Per Share

9 Months Ended

May 31, 2021

Earnings Per Share [Abstract]

Income (Loss) Per Share

Note 7. Income (Loss) Per Share

The net income (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 the liquidation and dividend rights for Class A and Class B common stock are identical, the net income (loss) attributable to common stockholders is allocated on a proportionate basis.

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

	Three Months Ended May 31,										Nine Months Ended May 31,
	2021				2020						2021						2020
	Class A		Class B		Class A			Class B			Class A			Class B			Class A			Class B
	(amounts in thousands, except per share data)
Net income (loss) attributable to common stockholders - basic	$	678	$	92	$	(8,055	)	$	(1,097	)	$	(8,332	)	$	(1,129	)	$	(9,248	)	$	(1,261	)
Weighted average common shares outstanding - basic		7,383		1,000		7,341			1,000			7,381			1,000			7,337			1,000
Net income (loss) per share attributable to common stockholders - basic	$	0.09	$	0.09	$	(1.10	)	$	(1.10	)	$	(1.13	)	$	(1.13	)	$	(1.26	)	$	(1.26	)
Net income (loss) attributable to common stockholders - diluted	$	681	$	89	$	(8,055	)	$	(1,097	)	$	(8,332	)	$	(1,129	)	$	(9,248	)	$	(1,261	)
Weighted average shares outstanding - basic		7,383		1,000		7,341			1,000			7,381			1,000			7,337			1,000
Dilutive effect of stock-based awards		280		—		—			—			—			—			—			—
Weighted average shares outstanding - diluted		7,663		1,000		7,341			1,000			7,381			1,000			7,337			1,000
Net income (loss) per share attributable to common stockholders - diluted	$	0.09	$	0.09	$	(1.10	)	$	(1.10	)	$	(1.13	)	$	(1.13	)	$	(1.26	)	$	(1.26	)

The Company computes basic income (loss) per common share using net income (loss) and the weighted average number of common shares outstanding during the period. Diluted income (loss) per common share is computed using net income (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 awards.

For the three months ended May 31, 2021 and May 31, 2020, there were 87 thousand and 21 thousand shares of common stock subject to outstanding employee stock options that were excluded from the calculation of diluted income (loss) per share because their inclusion would have been anti-dilutive. For the nine months ended May 31, 2021 and May 31, 2020, there were approximately 586 thousand and 137 thousand shares of common stock subject to outstanding employee stock options and restricted stock awards, respectively, that were excluded from the calculation of diluted loss per share because their inclusion would have been anti-dilutive.

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Commitments and Contingencies

9 Months Ended

May 31, 2021

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. During the three months ended May 31, 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.  Based on research conducted by the Company in preparation for the mediation, the Company recorded an accrued liability of $1.0 million related to this complaint within general and administrative expenses in the statements of operations during the three months ended May 31, 2021, as the liability associated with a potential settlement became probable and reasonably estimable. The Company is unable to reasonably estimate the upper end of the range of possible loss.  There can be no assurance of the actual liability associated with this complaint, which may be higher than the estimated amount accrued during the three months ended May 31, 2021. As the Company receives new information, it will reevaluate its estimated liability and the estimated liability may change significantly.

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

9 Months Ended

May 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Note 9. Income Taxes

The Company recorded income tax expense of $30 thousand and $1.2 million for the three months ended May 31, 2021 and May 31, 2020, respectively, and of $88 thousand and $1.2 million for the nine months ended May 31, 2021 and May 31, 2020, respectively. The Company’s effective tax rates for the three and nine months ended May 31, 2021 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 its 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 May 31, 2021 was appropriate.

On December 27, 2020, Congress passed, and the President signed into law, the Consolidated Appropriations Act, 2021 (the “Act”), which includes certain business tax provisions.  The Company does not expect the Act to have a material impact on the Company’s effective tax rate or income tax expense for the fiscal year ending August 31, 2021.

On March 11, 2021, Congress passed, and the President signed into law, the American Rescue Plan Act, 2021 (the “ARP”), which includes certain business tax provisions. The Company does not expect the ARP to have a material impact on the Company’s effective tax rate or income tax expense for the fiscal year ending August 31, 2021.

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Organization and Basis of Presentation (Policies)

9 Months Ended

May 31, 2021

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Effects of COVID-19

Effects of COVID-19

In March 2020, the World Health Organization declared the novel strain of coronavirus COVID-19 a global pandemic. This contagious virus, which has continued to spread, has adversely affected workforces, customers, economies, supply chains and financial markets globally. In response to this outbreak, many state and local authorities had mandated the temporary closure of non-essential businesses and dine-in restaurant activity or limited indoor dining capacities. COVID-19 and the government measures taken to control it have caused a significant disruption to the Company’s business operation. As of May 31, 2021, the Company had all of its 31 restaurants operating at indoor dining capacities ranging from 50% to 100%. In June 2021, the Company opened one new restaurant in Bellevue, Washington. As of the filing date of this Quarterly Report on Form 10-Q, the Company had all of its 32 restaurants operating at 100% indoor capacity with no restrictions in place.          

In response to the ongoing COVID-19 pandemic, the Company prioritized taking steps to protect the health and safety of its employees and customers. The Company has maintained its cleaning and sanitizing protocols of its restaurants and has implemented additional training and operational manuals for its restaurant employees, as well as increased handwashing procedures. The Company also provides each restaurant employee with face masks and gloves, and requires each employee to pass a health screening process, which includes a temperature check, before the start of each shift.

The reduced capacities at its restaurants have caused a substantial decline in the Company’s comparable restaurant sales in the most recently completed fiscal quarter and year-to-date period compared to pre-pandemic levels. In response to the challenges posed by the COVID-19 pandemic, the Company focused on maximizing its in-restaurant dining capacity as permitted by the jurisdictions where it operates, emphasizing mobile ordering and takeout, continuing to provide a safe environment for its employees and customers, maintaining its operational efficiencies as much as possible and preserving its liquidity. Currently, with the lift of all indoor dining restrictions at all of its restaurants, the Company has experienced a staffing shortage and has provided certain employee retention and new hire bonuses. In line with the Company’s long-term growth strategy, it expects to continue to open new restaurants at locations where it believes the restaurants have the potential to achieve profitability. The future sales levels of the Company’s restaurants and its ability to implement its growth strategy, however, remain highly uncertain, as the full impact and duration of the COVID-19 pandemic continues to evolve as of the filing date of this Quarterly Report on Form 10-Q.

Recent Events Concerning the Company’s Financial Position

Recent Events Concerning the Company’s Financial Position

On April 10, 2020, the Company and Kura Sushi, Inc. (“Kura Japan”), the majority stockholder of the Company, entered into a Revolving Credit Agreement(the “Revolving Credit Agreement”) whereby Kura Japan agreed to make available to the Company loans on a revolving credit basis in the principal amount of up to $20 million as evidenced by that certain Promissory Note dated as of the same date with the Company as maker and made payable to Kura Japan (the “Revolving Credit Note”). On September 2, 2020, the Company and Kura Japan entered into a First Amendment to Revolving Credit Agreement (the “First Amendment”) to (i) increase the maximum credit amount under the credit line from $20 million to $35 million, (ii) extend the maturity date for each advance from 12 months to 60 months from the date of disbursement and (iii) extend the last day of the period of availability for the advances under the credit line from March 31, 2024 to April 10, 2025. On April 9, 2021, the Company and Kura Japan entered into a Second Amendment to Revolving Credit Agreement (the “Second Amendment”) to increase the maximum credit amount under the credit line from $35 million to $45 million. In connection with the First Amendment and Second Amendment, the Revolving Credit Note under the Revolving Credit Agreement was also amended by incorporating the same amendments as provided under the First Amendment and Second Amendment, as well as amendments to the interest rate. For additional information, see “Note 4. Related Party Transactions” and “Note 6. Debt.”

Under the provisions of the extension of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) passed by the United States Congress and signed by the President, the Company is eligible for a refundable employee retention credit subject to certain criteria. The Company recognized a $6.3 million employee retention credit and a $1.6 million employee retention credit during the three months ended May 31, 2021 and May 31, 2020, respectively, and recognized an $8.9 million employee retention credit and a $1.6 million employee retention credit during the nine months ended May 31, 2021 and May 31, 2020, respectively. For the three months ended May 31, 2021, $ 5.8 million is included in labor and related costs and $0.5 million is included in general and administrative expenses in the statements of operations and for the nine months ended May 31, 2021, $8.0 million is included in labor and related costs and $0.9 million is included in general and administrative expenses in the statement of operations. The entire amount of the employee retention credit was included in labor and related costs during the three and nine months ended May 31, 2020.  The Company has filed for refunds of the employee retention credits and as of the date of this Quarterly Report on Form 10-Q, it has not received any refunds and cannot reasonably estimate when it will receive any or all of the refunds.  

The Company has received rent concessions from its landlords for certain of its restaurants in the form of rent abatements and rent deferrals which were immaterial for the three and nine months ended May 31, 2021. Due to the current staffing shortage, the Company provided certain employee retention and new hire bonuses totaling $0.7 million in the three and nine months ended May 31, 2021.  

Due to the ongoing impact of COVID-19, the Company assessed its long-lived assets for potential impairment, which resulted in no impairment charges recorded as of May 31, 2021.

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, 2020.

The accounting policies followed by the Company are set forth in Part II, Item 8, Note 2, Basis of Presentation and Summary of 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, 2020. 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 year ending August 31, 2021 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 2022”, “fiscal year 2021,” “fiscal year 2020” and “fiscal year 2019” refer to the Company’s fiscal years ending August 31, 2022 and August 31, 2021, and ended August 31, 2020 and August 31, 2019, 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 Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,” which is intended to simplify various aspects related to accounting for income taxes. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. ASU 2019-12 is effective for the Company beginning in fiscal year 2022. The Company is currently in the process of evaluating the effects of this pronouncement on its financial statements.

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Balance Sheet Components (Tables)

9 Months Ended

May 31, 2021

Property Plant And Equipment Net [Abstract]

Schedule of Accounts and Other Receivables

Accounts and Other Receivables

	May 31, 2021		August 31, 2020
	(amounts in thousands)
Lease receivable	$	1,694	$	1,811
Credit card receivable		1,491		281
Other receivables		73		38
Total accounts and other receivables	$	3,258	$	2,130

Schedule of Prepaid Expenses and Other Current Assets

Prepaid Expenses and Other Current Assets

	May 31, 2021		August 31, 2020
	(amounts in thousands)
Employee retention credit	$	10,697	$	1,750
Prepaid expenses		1,046		885
Other current assets		230		375
Total prepaid expenses and other current assets	$	11,973	$	3,010

Schedule of Property and Equipment - Net

Property and Equipment - net

	May 31, 2021			August 31, 2020
	(amounts in thousands)
Leasehold improvements	$	41,239		$	30,497
Lease assets		6,102			6,117
Furniture and fixtures		12,359			7,908
Computer equipment		800			696
Vehicles		110			88
Software		761			689
Construction in progress		3,647			9,558
Property and equipment – gross		65,018			55,553
Less: accumulated depreciation and amortization		(13,235	)		(10,012	)
Total property and equipment – net	$	51,783		$	45,541

Schedule of Accrued Expenses and Other Current Liabilities

Accrued Expenses and Other Current Liabilities

	May 31, 2021		August 31, 2020
	(amounts in thousands)
Credit card payable	$	135	$	84
Income taxes payable		143		56
Other current liabilities		1,360		580
Total accrued expenses and other current liabilities	$	1,638	$	720

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Leases (Tables)

9 Months Ended

May 31, 2021

Leases [Abstract]

Summary of Lease Related Costs

Lease related costs recognized in the statements of operations for the three and nine months ended May 31, 2021 and May 31, 2020 are as follows:

		Three Months Ended May 31,				Nine Months Ended May 31,
		May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020
		(amounts in thousands)
Finance lease cost	Classification
Amortization of right-of-use assets	Depreciation and amortization expenses	$	157	$	141	$	465	$	419
Interest on lease liabilities	Interest expense		20		30		69		95
Total finance lease cost		$	177	$	171	$	534	$	514
		Three Months Ended May 31,				Nine Months Ended May 31,
		May 31, 2021		May 31, 2020		May 31, 2021		May 31, 2020
		(amounts in thousands)
Operating lease cost	Classification
Operating lease cost	Occupancy and related expenses, other costs and general and administrative expenses	$	1,571	$	1,244	$	4,687	$	3,688
Variable lease cost	Occupancy and related expenses, and general and administrative expenses		401		223		898		923
Total operating lease cost		$	1,972	$	1,467	$	5,585	$	4,611

Summary of Supplemental Balance Sheet Information

Supplemental balance sheet information related to leases is as follows:

Operating Leases

	May 31, 2021		August 31, 2020
	(amounts in thousands)
Operating lease right-of-use assets	$	56,165	$	56,119
Operating lease liabilities – current	$	5,159	$	5,106
Operating lease liabilities – non-current		57,777		56,918
Total operating lease liabilities	$	62,936	$	62,024

Finance Lease Assets – net

	May 31, 2021			August 31, 2020
	(amounts in thousands)
Finance lease assets	$	6,102		$	6,117
Accumulated depreciation		(2,644	)		(2,178	)
Total finance lease assets - net	$	3,458		$	3,939

Finance Leases Liabilities

	May 31, 2021		August 31, 2020
	(amounts in thousands)
Finance lease liabilities - current	$	1,011	$	1,004
Finance lease liabilities - non-current		696		1,481
Total finance lease liabilities	$	1,707	$	2,485

	May 31, 2021			May 31, 2020
Weighted Average Remaining Lease Term (Years)
Operating leases		16.0			15.1
Finance leases		1.7			2.6
Weighted Average Discount Rate
Operating leases		6.6	%		5.8	%
Finance leases		4.5	%		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:

	Nine Months Ended May 31,
	May 31, 2021		May 31, 2020
	(amounts in thousands)
Operating cash flows paid for operating lease liabilities	$	3,234	$	2,644
Operating right-of-use assets obtained in exchange for new operating lease liabilities	$	2,952	$	15,074

Summary of Maturities of Lease Liabilities Net of Lease Receivables

Maturities of lease liabilities, net of lease receivables, were as follows as of May 31, 2021:

	Operating Leases			Finance Leases
	(amounts in thousands)
Remainder of 2021	$	428		$	263
2022		3,828			1,005
2023		6,106			483
2024		6,237			17
2025		6,335			1
Thereafter		79,694			—
Total lease payments		102,628			1,769
Less: imputed interest		(39,692	)		(62	)
Present value of lease liabilities	$	62,936		$	1,707

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Related Party Transactions (Tables)

9 Months Ended

May 31, 2021

Related Party Transactions [Abstract]

Schedule of Related Party Transactions Due to and from Affiliates

Balances with Kura Japan as of May 31, 2021 and August 31, 2020 are as follows:

	May 31, 2021		August 31, 2020
	(amounts in thousands)
Due from affiliate	$	2	$	12
Due to affiliate	$	60	$	201
Loan from affiliate	$	17,000	$	—

Schedule of Related Party Reimbursements and Other Payments

Reimbursements and other payments by the Company to Kura Japan for the three and nine months ended May 31, 2021 and May 31, 2020 were as follows:

	Three Months Ended May 31,				Nine Months Ended May 31,
	2021		2020		2021		2020
	(amounts in thousands)
Related party transactions:
Purchases of administrative supplies	$	4	$	8	$	76	$	31
Expatriate salaries expense		30		34		92		106
Royalty payments		93		14		185		198
Travel and other administrative expenses		—		23		17		73
Purchases of equipment		29		200		430		833
Interest expense		47		—		74		—
Total related party transactions	$	203	$	279	$	874	$	1,241

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Stock-based Compensation (Tables)

9 Months Ended

May 31, 2021

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”) for the period from August 31, 2020 through May 31, 2021:

	Options Outstanding
	Number of Shares Underlying Outstanding Options			Weighted Average Exercise Price Per Share
Outstanding—August 31, 2020		531,747		$	9.51
Options granted		152,260			20.97
Options exercised		(82,588	)		5.31
Options canceled/forfeited		(22,537	)		10.88
Outstanding— May 31, 2021		578,882		$	13.07

Summary of Stock Based Compensation Expense Recognized under Stock Incentive Plan

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

	Three Months Ended May 31,				Nine Months Ended May 31,
	2021		2020		2021		2020
	(amounts in thousands)
Restaurant-level stock-based compensation included in other costs	$	34	$	23	$	83	$	59
Corporate-level stock-based compensation included in general and administrative expenses		357		225		883		521
Total stock-based compensation	$	391	$	248	$	966	$	580

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Income (Loss) Per Share (Tables)

9 Months Ended

May 31, 2021

Earnings Per Share [Abstract]

Computation of Basic and Diluted Net Income (Loss) Per Share

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

	Three Months Ended May 31,										Nine Months Ended May 31,
	2021				2020						2021						2020
	Class A		Class B		Class A			Class B			Class A			Class B			Class A			Class B
	(amounts in thousands, except per share data)
Net income (loss) attributable to common stockholders - basic	$	678	$	92	$	(8,055	)	$	(1,097	)	$	(8,332	)	$	(1,129	)	$	(9,248	)	$	(1,261	)
Weighted average common shares outstanding - basic		7,383		1,000		7,341			1,000			7,381			1,000			7,337			1,000
Net income (loss) per share attributable to common stockholders - basic	$	0.09	$	0.09	$	(1.10	)	$	(1.10	)	$	(1.13	)	$	(1.13	)	$	(1.26	)	$	(1.26	)
Net income (loss) attributable to common stockholders - diluted	$	681	$	89	$	(8,055	)	$	(1,097	)	$	(8,332	)	$	(1,129	)	$	(9,248	)	$	(1,261	)
Weighted average shares outstanding - basic		7,383		1,000		7,341			1,000			7,381			1,000			7,337			1,000
Dilutive effect of stock-based awards		280		—		—			—			—			—			—			—
Weighted average shares outstanding - diluted		7,663		1,000		7,341			1,000			7,381			1,000			7,337			1,000
Net income (loss) per share attributable to common stockholders - diluted	$	0.09	$	0.09	$	(1.10	)	$	(1.10	)	$	(1.13	)	$	(1.13	)	$	(1.26	)	$	(1.26	)

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Organization and Basis of Presentation - Additional Information (Details)					3 Months Ended		9 Months Ended
	Jul. 13, 2021 Restaurant	May 31, 2021 USD ($) Restaurant	Sep. 02, 2020 USD ($)	Apr. 10, 2020 USD ($)	May 31, 2021 USD ($) Restaurant	May 31, 2020 USD ($)	May 31, 2021 USD ($) Restaurant	May 31, 2020 USD ($)	Jun. 30, 2021 Restaurant	Apr. 09, 2021 USD ($)
Revolving Credit Facility Agreement
Organization and Basis of Presentation [Line Items]
Revolving credit line		$ 28,000,000			$ 28,000,000		$ 28,000,000
Kura Japan | Revolving Credit Facility Agreement
Organization and Basis of Presentation [Line Items]
Credit facility maximum borrowing capacity				$ 20,000,000
Revolving credit line, termination date				Mar. 31, 2024
Kura Japan | First Amendment
Organization and Basis of Presentation [Line Items]
Credit facility maximum borrowing capacity			$ 35,000,000
Revolving credit line, termination date			Apr. 10, 2025
Revolving credit line, maturity date description							(i) increase the maximum credit amount under the credit line from $20 million to $35 million, (ii) extend the maturity date for each advance from 12 months to 60 months from the date of disbursement and (iii) extend the last day of the period of availability for the advances under the credit line from March 31, 2024 to April 10, 2025.
Kura Japan | Second Amendment
Organization and Basis of Presentation [Line Items]
Credit facility maximum borrowing capacity										$ 45,000,000
COVID-19
Organization and Basis of Presentation [Line Items]
Employee retention and new hire bonuses		$ 700,000			$ 700,000		$ 700,000
Impairment of long-lived assets							$ 0
COVID-19 | Kura Japan
Organization and Basis of Presentation [Line Items]
Number of restaurants, total | Restaurant		31			31		31
Revolving credit line				$ 20,000,000
COVID-19 | Kura Japan | Revolving Credit Facility Agreement
Organization and Basis of Presentation [Line Items]
Credit facility maximum borrowing capacity										$ 45,000,000
COVID-19 | Kura Japan | Subsequent Event
Organization and Basis of Presentation [Line Items]
Number of restaurants, total | Restaurant	32
Number of new restaurant opened | Restaurant									1
Reduced percentage of capacities	100.00%
CARES Act
Organization and Basis of Presentation [Line Items]
Employee retention credit					$ 6,300,000	$ 1,600,000	$ 8,900,000	$ 1,600,000
CARES Act | General and Administrative Expenses
Organization and Basis of Presentation [Line Items]
Employee retention credit					500,000		900,000
CARES Act | Labor and Related Costs
Organization and Basis of Presentation [Line Items]
Employee retention credit					$ 5,800,000		$ 8,000,000
Minimum | COVID-19 | Kura Japan
Organization and Basis of Presentation [Line Items]
Reduced percentage of capacities		50.00%
Maximum | COVID-19 | Kura Japan
Organization and Basis of Presentation [Line Items]
Reduced percentage of capacities		100.00%

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Balance Sheet Components - Schedule of Accounts and Other Receivables (Details) - USD ($) $ in Thousands	May 31, 2021	Aug. 31, 2020
Receivables Net Current [Line Items]
Accounts and other receivables	$ 3,258	$ 2,130
Lease Receivable
Receivables Net Current [Line Items]
Accounts and other receivables	1,694	1,811
Credit Card Receivable
Receivables Net Current [Line Items]
Accounts and other receivables	1,491	281
Other Receivables
Receivables Net Current [Line Items]
Accounts and other receivables	$ 73	$ 38

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Balance Sheet Components - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands	May 31, 2021	Aug. 31, 2020
Prepaid Expense And Other Assets Current [Abstract]
Employee retention credit	$ 10,697	$ 1,750
Prepaid expenses	1,046	885
Other current assets	230	375
Total prepaid expenses and other current assets	$ 11,973	$ 3,010

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Balance Sheet Components - Schedule of Property and Equipment - Net (Details) - USD ($) $ in Thousands	May 31, 2021	Aug. 31, 2020
Property Plant And Equipment [Line Items]
Property and equipment - gross	$ 65,018	$ 55,553
Less: accumulated depreciation and amortization	(13,235)	(10,012)
Total property and equipment – net	51,783	45,541
Leasehold Improvements
Property Plant And Equipment [Line Items]
Property and equipment - gross	41,239	30,497
Lease Assets
Property Plant And Equipment [Line Items]
Property and equipment - gross	6,102	6,117
Furniture and Fixtures
Property Plant And Equipment [Line Items]
Property and equipment - gross	12,359	7,908
Computer Equipment
Property Plant And Equipment [Line Items]
Property and equipment - gross	800	696
Vehicles
Property Plant And Equipment [Line Items]
Property and equipment - gross	110	88
Software
Property Plant And Equipment [Line Items]
Property and equipment - gross	761	689
Construction in Progress
Property Plant And Equipment [Line Items]
Property and equipment - gross	$ 3,647	$ 9,558

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Balance Sheet Components - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	May 31, 2021	May 31, 2020	May 31, 2021	May 31, 2020
Property Plant And Equipment Net [Abstract]
Depreciation and amortization expenses	$ 1,200	$ 800	$ 3,314	$ 2,215

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Balance Sheet Components - Schedule of Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	May 31, 2021	Aug. 31, 2020
Accrued Liabilities And Other Liabilities [Abstract]
Credit card payable	$ 135	$ 84
Income taxes payable	143	56
Other current liabilities	1,360	580
Total accrued expenses and other current liabilities	$ 1,638	$ 720

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Leases - Additional Information (Details) - USD ($) $ in Millions		9 Months Ended
	Jun. 01, 2021	May 31, 2021
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		$ 22.8
Operating lease liabilities not yet commenced, lease term		20 years
Option to extend, existence, lease liabilities not yet commenced, operating lease		true
Subsequent Event
Lessee Lease Description [Line Items]
Operating lease liabilities not yet commenced, liability	$ 5.5
Operating lease liabilities not yet commenced, lease term	20 years
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

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Leases - Summary of Lease Related Costs (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	May 31, 2021	May 31, 2020	May 31, 2021	May 31, 2020
Finance lease cost
Amortization of right-of-use assets	$ 157	$ 141	$ 465	$ 419
Interest on lease liabilities	20	30	69	95
Total finance lease cost	177	171	534	514
Operating lease cost
Operating lease cost	1,571	1,244	4,687	3,688
Variable lease cost	401	223	898	923
Total operating lease cost	$ 1,972	$ 1,467	$ 5,585	$ 4,611

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Leases - Summary of Operating Leases (Details) - USD ($) $ in Thousands	May 31, 2021	Aug. 31, 2020
Leases [Abstract]
Operating lease right-of-use assets	$ 56,165	$ 56,119
Operating lease liabilities – current	5,159	5,106
Operating lease liabilities – non-current	57,777	56,918
Total operating lease liabilities	$ 62,936	$ 62,024

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Leases - Summary of Finance Lease Assets - Net (Details) - USD ($) $ in Thousands	May 31, 2021	Aug. 31, 2020
Leases [Abstract]
Finance lease assets	$ 6,102	$ 6,117
Accumulated depreciation	(2,644)	(2,178)
Total finance lease assets - net	$ 3,458	$ 3,939

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Leases - Summary of Finance Leases Liabilities (Details) - USD ($) $ in Thousands	May 31, 2021	Aug. 31, 2020
Leases [Abstract]
Finance lease liabilities - current	$ 1,011	$ 1,004
Finance lease liabilities - non-current	696	1,481
Total finance lease liabilities	$ 1,707	$ 2,485

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Leases - Summary of Weighted Average Remaining Lease Term and Weighted Average Discount Rate (Details)	May 31, 2021	May 31, 2020
Weighted Average Remaining Lease Term (Years)
Operating leases	16 years	15 years 1 month 6 days
Finance leases	1 year 8 months 12 days	2 years 7 months 6 days
Weighted Average Discount Rate
Operating leases	6.60%	5.80%
Finance leases	4.50%	4.50%

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Leases - Summary of Supplemental Disclosures of Cash Flow Information Related to Leases (Details) - USD ($) $ in Thousands	9 Months Ended
	May 31, 2021	May 31, 2020
Leases [Abstract]
Operating cash flows paid for operating lease liabilities	$ 3,234	$ 2,644
Operating right-of-use assets obtained in exchange for new operating lease liabilities	$ 2,952	$ 15,074

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Leases - Summary of Maturities of Lease Liabilities Net of Lease Receivables (Details) - USD ($) $ in Thousands	May 31, 2021	Aug. 31, 2020
Operating Leases
Remainder of 2021	$ 428
2022	3,828
2023	6,106
2024	6,237
2025	6,335
Thereafter	79,694
Total lease payments	102,628
Less: imputed interest	(39,692)
Present value of lease liabilities	62,936	$ 62,024
Finance Leases
Remainder of 2021	263
2022	1,005
2023	483
2024	17
2025	1
Total lease payments	1,769
Less: imputed interest	(62)
Present value of lease liabilities	$ 1,707	$ 2,485

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Related Party Transactions - Additional Information (Details) - Kura Japan - USD ($)	1 Months Ended	3 Months Ended		9 Months Ended
	Aug. 31, 2019	May 31, 2021	May 31, 2020	May 31, 2021	May 31, 2020	Apr. 09, 2021	Apr. 10, 2020
Travel and Translation Expense
Related Party Transaction [Line Items]
Reimbursements by related party		$ 2,000	$ 17,000	$ 27,000	$ 86,000
Revolving Credit Facility Agreement
Related Party Transaction [Line Items]
Credit facility maximum borrowing capacity							$ 20,000,000
Revolving Credit Facility Agreement | COVID-19
Related Party Transaction [Line Items]
Credit facility maximum borrowing capacity						$ 45,000,000
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	May 31, 2021	Aug. 31, 2020
Related Party Transaction [Line Items]
Due from affiliate	$ 2	$ 12
Due to affiliate	60	201
Kura Japan
Related Party Transaction [Line Items]
Due from affiliate	2	12
Due to affiliate	60	$ 201
Loan from affiliate	$ 17,000

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Related Party Transactions - Schedule of Related Party Reimbursements and Other Payments (Details) - Kura Japan - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	May 31, 2021	May 31, 2020	May 31, 2021	May 31, 2020
Related Party Transaction [Line Items]
Total related party transactions	$ 203	$ 279	$ 874	$ 1,241
Purchases of Administrative Supplies
Related Party Transaction [Line Items]
Total related party transactions	4	8	76	31
Expatriate Salaries Expense
Related Party Transaction [Line Items]
Total related party transactions	30	34	92	106
Royalty Payments
Related Party Transaction [Line Items]
Total related party transactions	93	14	185	198
Travel and Other Administrative Expenses
Related Party Transaction [Line Items]
Total related party transactions		23	17	73
Purchases of Equipment
Related Party Transaction [Line Items]
Total related party transactions	29	$ 200	430	$ 833
Interest Expense
Related Party Transaction [Line Items]
Total related party transactions	$ 47		$ 74

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Stock-based Compensation - Summary of Stock Option Activity under Stock Incentive Plan (Details) - Stock Incentive Plan	9 Months Ended
	May 31, 2021 $ / shares shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Options Outstanding, Number of Shares Underlying Outstanding Options, Beginning balance | shares	531,747
Options Outstanding, Number of Shares Underlying Outstanding Options, Options granted | shares	152,260
Options Outstanding, Number of Shares Underlying Outstanding Options, Options exercised | shares	(82,588)
Options Outstanding, Number of Shares Underlying Outstanding Options, Options canceled/forfeited | shares	(22,537)
Options Outstanding, Number of Shares Underlying Outstanding Options, Ending balance | shares	578,882
Options Outstanding, Weighted Average Exercise Price Per Share, Beginning balance | $ / shares	$ 9.51
Options Outstanding, Weighted Average Exercise Price Per Share, Options granted | $ / shares	20.97
Options Outstanding, Weighted Average Exercise Price Per Share, Options exercised | $ / shares	5.31
Options Outstanding, Weighted Average Exercise Price Per Share, Options canceled/forfeited | $ / shares	10.88
Options Outstanding, Weighted Average Exercise Price Per Share, Ending balance | $ / shares	$ 13.07

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Stock-based Compensation - Additional Information (Details) - Restricted Stock Awards - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	May 31, 2021	May 31, 2020	May 31, 2021	May 31, 2020
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of shares issued	0	0	7,000	0
Stock-based compensation expense	$ 32		$ 60

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Stock-based Compensation - Summary of Stock Based Compensation Expense Recognized under Stock Incentive Plan (Details) - Stock Incentive Plan - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	May 31, 2021	May 31, 2020	May 31, 2021	May 31, 2020
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total stock-based compensation	$ 391	$ 248	$ 966	$ 580
Restaurant-level Stock-based Compensation Included In Other Costs
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total stock-based compensation	34	23	83	59
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	$ 357	$ 225	$ 883	$ 521

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Debt - Additional Information (Details) - USD ($)					9 Months Ended
	Apr. 11, 2021	Apr. 09, 2021	Sep. 02, 2020	Apr. 10, 2020	May 31, 2021
Debt Instrument [Line Items]
Revolving credit line					$ 14,000,000
Revolving credit line interest rate					1.10%
Revolving Credit Facility Agreement
Debt Instrument [Line Items]
Revolving credit line					$ 3,000,000
Revolving credit line interest rate					2.80%
Remaining availability under credit agreement					$ 28,000,000
Revolving Credit Facility Agreement | Kura Japan
Debt Instrument [Line Items]
Revolving credit line				$ 20,000,000
Credit facility maximum borrowing capacity				$ 20,000,000
Revolving credit line, termination date				Mar. 31, 2024
First Amendment | Kura Japan
Debt Instrument [Line Items]
Credit facility maximum borrowing capacity			$ 35,000,000
Revolving credit line, termination date			Apr. 10, 2025
Revolving credit line, maturity date description					(i) increase the maximum credit amount under the credit line from $20 million to $35 million, (ii) extend the maturity date for each advance from 12 months to 60 months from the date of disbursement and (iii) extend the last day of the period of availability for the advances under the credit line from March 31, 2024 to April 10, 2025.
Second Amendment | Kura Japan
Debt Instrument [Line Items]
Credit facility maximum borrowing capacity		$ 45,000,000
First Amendment and Second Amendment
Debt Instrument [Line Items]
Revolving credit line interest rate	130.00%	1.10%
Applicable federal rate					2.82%

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Income (Loss) Per Share - Computation of Basic and Diluted Net Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	May 31, 2021	May 31, 2020	May 31, 2021	May 31, 2020
Earnings Per Share Diluted [Line Items]
Weighted average common shares outstanding - basic	8,383	8,341	8,381	8,337
Net income (loss) per share attributable to common stockholders - basic	$ 0.09	$ (1.10)	$ (1.13)	$ (1.26)
Weighted average shares outstanding - diluted	8,663	8,341	8,381	8,337
Net income (loss) per share attributable to common stockholders - diluted	$ 0.09	$ (1.10)	$ (1.13)	$ (1.26)
Class A
Earnings Per Share Diluted [Line Items]
Net income (loss) attributable to common stockholders - basic	$ 678	$ (8,055)	$ (8,332)	$ (9,248)
Weighted average common shares outstanding - basic	7,383	7,341	7,381	7,337
Net income (loss) per share attributable to common stockholders - basic	$ 0.09	$ (1.10)	$ (1.13)	$ (1.26)
Net income (loss) attributable to common stockholders - diluted	$ 681	$ (8,055)	$ (8,332)	$ (9,248)
Dilutive effect of stock-based awards	280
Weighted average shares outstanding - diluted	7,663	7,341	7,381	7,337
Net income (loss) per share attributable to common stockholders - diluted	$ 0.09	$ (1.10)	$ (1.13)	$ (1.26)
Class B
Earnings Per Share Diluted [Line Items]
Net income (loss) attributable to common stockholders - basic	$ 92	$ (1,097)	$ (1,129)	$ (1,261)
Weighted average common shares outstanding - basic	1,000	1,000	1,000	1,000
Net income (loss) per share attributable to common stockholders - basic	$ 0.09	$ (1.10)	$ (1.13)	$ (1.26)
Net income (loss) attributable to common stockholders - diluted	$ 89	$ (1,097)	$ (1,129)	$ (1,261)
Weighted average shares outstanding - diluted	1,000	1,000	1,000	1,000
Net income (loss) per share attributable to common stockholders - diluted	$ 0.09	$ (1.10)	$ (1.13)	$ (1.26)

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Income (Loss) Per Share - Additional Information (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	May 31, 2021	May 31, 2020	May 31, 2021	May 31, 2020
Employee Stock Option
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	87	21	586
Restricted Stock
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				137

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Commitments and Contingencies - Additional Information (Details) $ in Millions	3 Months Ended
	May 31, 2021 USD ($)
General and Administrative Expenses
Loss Contingencies [Line Items]
Accrued liability	$ 1.0

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Income Taxes - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	May 31, 2021	May 31, 2020	May 31, 2021	May 31, 2020
Income Tax Disclosure [Abstract]
Income tax expense	$ 30	$ 1,153	$ 88	$ 1,179
Federal statutory tax rate	21.00%		21.00%