June 23, 2020

 

VIA EDGAR

 

United States Securities and Exchange Commission

Division of Corporate Finance

100 F Street, N.E.

Washington, D.C. 20549

 

 

Re:  Kura Sushi USA, Inc.

        Form 10-K for the Fiscal Year Ended August 31, 2019

        Response dated June 3, 2020

        File No. 1-39012

 

 

Ladies and Gentlemen:

 

Kura Sushi USA, Inc. (the “Company”) is in receipt of your letter dated June 12, 2020 (the “Letter”) setting forth comments of the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) with regard to the above-referenced report as filed with the Commission.  Our response to these comments is set forth below.  For the convenience of the Staff, the comments from the Letter are restated in bold prior to the response to such comments.  

 

Form 10-K filed November 26, 2019

Management’s Discussion and Analysis of Financial Condition and Results of Operations

EBITDA and Adjusted EBITDA, page 48

 

 

We also note your response to the presentation of Restaurant-level Contribution and Restaurant-level Contribution Margin.  Please expand your disclosures to address the measures’ limitations, including, but not limited to the fact that these non-GAAP measures exclude costs such as corporate overhead and pre-opening expenses, which are essential to support the development and operations of your restaurants.  Understanding that the most directly comparable GAAP measure is Operating Income, please revise the name of these measures so they are not confused with a measure of gross profit or contribution margin.  

 

Response:

 

We respectfully acknowledge the Staff’s comments and will revise our calculation of Adjusted EBITDA in future filings to not exclude pre-opening rent expense and pre-opening costs.  

 

We will also revise the name of Restaurant-level Contribution and Restaurant-level Contribution Margin to Restaurant-level Operating Profit and Restaurant-level Operating Profit Margin, respectively, and expand our disclosures to address the limitations that these non-GAAP measures exclude costs such as corporate overhead and pre-opening expenses, which are essential to support the development and operations of our restaurants.  A revised form of disclosures we would intend to include in future filings (changes from the prior proposed disclosure previously submitted to the Staff are identified below in bold/underline and deleted text shown as stricken) is as follows:

 

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U.S. Securities and Exchange Commission

June 23, 2020

Page 2

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

Restaurant-level Operating Profit Contribution is defined as operating income plus depreciation and amortization; stock-based compensation expense; pre-opening rent expense, pre-opening costs and general and administrative expenses which are considered normal, recurring, cash operating expenses and are essential to support the development and operations of our restaurants necessary to operate our business; non-cash rent expense; asset disposals, closure costs and restaurant impairments; less corporate-level stock-based compensation expense and pre-opening costs recognized within general and administrative expenses. Restaurant-level Operating Profit Contribution margin is defined as Restaurant-level Operating Profit Contribution divided by sales. Restaurant-level Operating Profit Contribution and Restaurant-level Operating Profit Contribution 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 Contribution and Restaurant-level Operating Profit Contribution 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 Contribution to increase in proportion to the number of new restaurants we open and our comparable restaurant sales growth.

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

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

 

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

 

 

 

 

 

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U.S. Securities and Exchange Commission

June 23, 2020

Page 3

Should you have any questions regarding any of the foregoing, please contact me via phone at (657) 333-4040 or via email at K.shinohara@kurausa.com.

 

We thank the Staff for its time and consideration with respect to this matter.

 

 

 

cc:  Aaron Seamon, Squire Patton Boggs (US) LLP

       Hiroki Suyama, Squire Patton Boggs (US) LLP