Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Curasushi USA Inc. Fiscal First Quarter 2025 Earnings Conference Call. At this time, all participants have been placed in a listen-only mode. The lines will be open for your questions following the presentation. Please note that this call is being recorded. On the call today, we have Hajime Jimmy Uba, President and Chief Executive Officer; Jeff Uttz, Chief Financial Officer; and Benjamin Porten, Senior Vice President, Investor Relations and System Development. And now, I would like to turn the call over to Mr. Porten. Please go ahead.

Thank you, Operator. Good afternoon, everyone, and thank you all for joining. By now, everyone should have access to our fiscal first quarter 2025 earnings release. It can be found at investors.prosody.com in the investor relations section. A copy of the earnings release has also been included in the 8-Ks we submitted to the SEC. Before we begin our formal remarks, I need to remind everyone that part of our discussions today will include forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance and therefore should not be relied upon. These statements are also subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. We refer all of you to our SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition. Also, during today's call, we will discuss certain non-GAAP financial measures which we use for evaluating our performance. The presentation of this additional information should not be considered in isolation nor as a substitute for results in accordance with GAAP. The reconciliations to comparable GAAP measures are available in our earnings release. With that out of the way, I would like to turn the call over to Jimmy.

Thanks, Ben, and thank you to everyone for joining us today. We are very pleased to begin the new year by reporting our strong Q1 results, including positive comps of 1.8% and six exceptional new unit openings. I am especially proud to announce another set EBITDA margin of 5.5%, representing a 210 basis point improvement year over year. I cannot think of a better demonstration of controlling what we can control than the significant year-over-year growth in corporate profitability. I am extremely proud of our entire team and the work they have put in to make this possible, which has effectively given us a head start on the level that we expect as we continue to scale our base. Total sales for the fiscal first quarter were $64.5 million, representing comparable sales growth of 1.8%, driven by a mix of 4.1% offset by 3.3% of negative traffic. Our cost of goods sold as a percentage of sales improved by 80 basis points year over year to 29% due to pricing under the ongoing efforts of our supply chain department. Labor as a percentage of sales increased to 32.9% compared to the prior year quarter's 31.9%, driven by wage inflation, including the fact that the majority of fiscal 2024 restaurant openings were in high labor cost markets, and partially offset by operational streamlining efforts. Net operating profit margin was 18.3% compared to 19.5% in the prior year quarter, mainly due to wage inflation. In terms of development, we opened six new units in the fiscal first quarter: Beaverton, Oregon; Tacoma, Washington; Brookville, Maryland; City Hill, New Jersey; Batacerville, California; and the Peach of Indiana. We currently have six units under construction but continue to expect the majority of this year's remaining openings to be back-half weighted. In our last call, we…

Thank you, Jimmy. I will now turn it over to Jeff to discuss our financial results and liquidity.

Thanks, Jimmy. For the first quarter, total sales were $64.5 million compared to $51.5 million in the prior year period. Comparable restaurant sales performance compared to the prior year period was positive 1.8%, with regional comps of positive 7.8% and a negative 2.3% in our Southwest market. Food and beverage costs as a percentage of sales were 29% compared to 29.8% in the prior year quarter, largely due to pricing and supply chain initiatives. Labor and related costs as a percentage of sales were 32.9% compared to 31.9% in the prior year quarter. This increase was largely due to wage increases and restaurant openings in higher labor cost markets. Occupancy and related expenses as a percentage of sales were 7.4% compared to the prior year quarter's 7.6%. Depreciation and amortization expenses as a percentage of sales remained flat year over year at 4.8%. Other costs as a percentage of sales were flat year over year at 14.5%. General and administrative expenses as a percentage of sales decreased to 13.5% compared to 16% in the prior year quarter due to significant leveraging of corporate costs against a growing unit base. Operating loss was $1.5 million compared to an operating loss of $2.8 million in the prior year quarter due to the previously mentioned G&A leverage. Income tax expense was $39,000 compared to $38,000 in the prior year quarter. Net loss was $1 million or a loss of $0.08 per share compared to a net loss of $2 million or a loss of $0.18 per share in the prior year quarter. Restaurant-level operating profit as a percentage of sales was 18.2% compared to 19.5% in the prior year quarter, largely due to higher labor-related costs. Adjusted EBITDA was $3.6 million compared to $1.8 million in the prior year quarter, largely due to greater G&A leverage. Turning now to our cash and liquidity, at the end of the fiscal first quarter, we had $107.7 million in cash and cash equivalents and no debt. This increase in our cash balance is due to the follow-on offering that we closed in November. Lastly, I would like to reiterate our guidance for fiscal year 2025. We expect total sales to be between $275 million and $279 million. We expect to open 14 units, maintaining an annual unit growth rate above 20%, with average net capital expenditures per unit of approximately $2.5 million. Lastly, we expect general and administrative expenses as a percentage of sales to be approximately 13.5%. With that, I will turn it back over to Jimmy.

Sounds good. This concludes our prepared remarks. We are now happy to answer any questions you have. Operator, please open the line for questions. As a reminder, during the Q&A session, I may answer in Japanese before my response is translated into English.

Thank you. On your telephone keypad, press star one to ask a question. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Our first question comes from the line of Jeremy Hamblin with Craig Hallum. Please proceed.

Thanks, and congratulations on the strong results. I wanted to just dive into what you have seen in terms of trends here. It looks like you got mid-single-digit improvement on your comps in both of your key markets. I wanted to just get a sense of what was driving that. It appears as though your mix was a little bit better in the quarter. I think menu pricing was not significantly different from your last quarter. So I wanted to see if you could provide a little bit of color on that and maybe a little bit of color on the cadence throughout Q1.

Sure. Thank you for your first question, Jeremy. Please, I will need to answer your question in Japanese. Ben is going to translate.

In terms of the improvement that we saw in Q1 over Q4, certainly one of the major tailwinds that we had was the successes of the IP collaborations we had with One Piece and Pikmin. Those were very successful campaigns. In terms of price mix, as you mentioned, effective pricing was largely flat quarter over quarter. We did see meaningful improvement in mix. We have been talking about having more food-focused marketing efforts, and this would be an example of the fruits of those labors. We have been really talking up the quality of our Udon, the way that we make it from scratch every morning, and we had a follow-up campaign called The Perfect Pair, which was a combo of Udon and a sushi bowl. That led to significant improvements in mix and inside menu attachment without any reductions to per person ticket consumption, so this is some of the best mix we have seen in recent memory. We are really pleased to see it. In terms of the monthly cadence that we saw, it was largely the same as the rest of the industry. November was the strongest month for us.

Got it. And then you noted a little bit of change here in your collaboration packages you are thinking about for fiscal 2025. You are lapping Snoopy Peanuts from last year in the December and January time frame, and you really do not have that same kind of collaboration going on right now. As you noted, you have focused on food marketing, and I think you have some premium items coming here in the next couple of weeks. I wanted to get a sense of how consumers were responding to that and then just kind of as a tangent-related question, whether or not the shift in the calendar this year is having any impact on results?

Sure. Let me speak to the first question.

In terms of the IP collaboration, it is certainly true that Q2 is a more difficult comparison than Q1. To your point, we are lapping Peanuts, which is one of the most successful campaigns we have had, and we are not running an IP collaboration into Q2. This is going to be a more difficult comp from that perspective in Q1. Knowing that, our focus is going to be on cost control and delivering profitability regardless of that headwind. That is really what we are focused on in terms of Q2 specifically. Looking to the full year and to future years, I would characterize Q2 as really just a sort of hiccup growing pain as we pivot to our new strategy. A big part of why we do not have a collaboration in Q2 is simply the timing of different licenses was not one that we felt really checked all of our boxes. Sort of the same thinking as how we pruned our LOIs going into fiscal 2025. While we will not have a collaboration for Q2, we have seen the results in future quarters and just how strong the IPs are. I think everybody will be quite pleased with what we have in store.

Got it. And then just the question on the impact, there is a shift in the timing of the holidays this year in December into January. I wanted to get a sense of whether or not that is having any impact, good or bad, on what you would expect in those months.

Can I answer the question? Yes.

I assume this is the case for much everybody else in the industry, but just looking at the calendar shift, the fact that Thanksgiving came so late into November, we are looking at December and January really as a combined month, sort of along the lines of how you treat March and April as a combined month, just given the calendar shifts that are so typical of those months.

Thanks for taking the questions, and best wishes in 2025.

Thanks, Jeremy.

The next question comes from the line of Jeffrey Bernstein with Barclays. Please proceed.

Great. Thank you very much. A couple of questions. The first one, just following up from a comp perspective. I think one quarter ago, you had guided to loosely positive comps for fiscal 2025, but you noted that you were still kind of in recovery mode, so it was difficult to forecast. It seems like you have some better visibility now. I am just trying to clarify. It sounds like you are saying for fiscal Q2, it is possible that the comp reverts to perhaps a modest negative with the collaboration mismatch, but the focus is on protecting profitability, and then you would expect with the stronger collabs in the back half, you would return to positive comps in the second half of fiscal 2025. Is that a fair assessment of your outlook for the next few quarters in terms of how to play that?

Hi, Jeffrey. Or, Jeff, thanks for the question. In terms of IP collaborations, our Q1 performance is certainly buoyed by the success of One Piece and Pikmin, which we are very pleased with. To your point, Q2, we are lapping Peanuts without an IP collaboration. Thinking about the comp relative to Q1 is certainly more difficult. The guidance that we gave at the beginning of the year contemplated this. This is not a surprise to us, and so it was always our plan to focus on operations and driving profitability in Q2. It is the reason that when we talked about comps, we always talk about it in the full-year context. The back half is really where the major opportunity lies, both in terms of the easier comparisons, the implementation of our new technologies, and the IP collaborations that we have in store.

Got it. Very helpful. Jeff, it is Jeff. The same in the past was that we have our Q1 confident. We get sequentially better throughout the year. I do not think we anticipated a 1.8% comp for Q1. So, you know, that may not necessarily be the case. Like Jimmy and Ben just talked about for the year, we do anticipate that our comp will be a positive number for the full year.

Understood. And then just following up from a cost side of things, you know, again, you are focused on profitability in the short term. But inflation, can you update us on the food and labor inflation that you saw in the first quarter and what your outlook is for the second quarter and the full year? Just wondering whether you are able to leverage those line items as we think about the full year.

Sure. I will answer the question first.

So just to start with the conclusion, our expectations for labor for Q2 are to be largely in line with the prior year's percentage of sales. For Q3 and Q4 for fiscal 2025, we expect them to be superior to fiscal 2024's percentage of labor of sales. I am sorry. Labor as a percentage of sales. So for the full year, we expect labor leverage as well. If you look at our historical earnings calls, you can see that our general experience has been that we have seen labor inflation of mid-single digits, low single digits. The most recent quarter, we actually experienced high single digits. That was a little bit unexpected. But the operational implementations, the streamlining that we have put in place, we have already seen very meaningful improvements in sales per man-hour. These sorts of labor initiatives, the upside is really it tracks along with our seasonality. It tracks along with general sales and labor leverage. The opportunity presented by the operational streamlining as well as the additional initiatives that we have coming up later in the year, they really come live in the latter half, the busier half of the fiscal year. So for labor, we continue to be bullish.

And then on the body side, okay.

Inflation for this quarter on COGS, Jeff, was basically flat. In fact, it was just slightly inflationary year over year. So we are very happy with that, and I do not expect significant increases or any significant inflation for the remainder of the year for COGS and would expect that line as a percentage of sales to remain where it is or even trend down somewhat for the remainder of the year. If you look year over year, last year, we were at 29.8%, and this year we are at 29%. So that is a big improvement over last year, and I expect it to potentially stay the same or potentially get a little better if we have some stars aligned and things go our way.

Yeah. And my last question was just on the labor initiative. I think you guys previously talked about how you had already achieved maybe a hundred basis points from back-of-house initiatives, and I think you were talking about how maybe the reservation system and the self-seating system had potential for another fifty basis points of opportunity. I am just wondering how that is tracking and maybe what key performance indicators you will be able to share with us over the next few quarters to kind of see. It sounds like your first one is in February where you are going to be rolling that out. So just what kind of expectations you have over the next few quarters in terms of the initial impact? Thank you.

Yeah. So we are really pleased with the operational improvements. We mentioned that we started them in fiscal 2024. Rollout was complete by September, and so they are live in pretty much every restaurant. In terms of the productivity, beyond a doubt, we have seen very meaningful improvements. We are very, very happy with the results. That being said, we did not see labor as a percentage of sales improve year over year just given that the high single-digit wage inflation was more than we expected. That being said, the nature of the improvements is station consolidation. You can go from five people to four people or four people to three people, but you cannot really go smaller than that. The opportunities where you can go from four to five or, I am sorry, five to four, four to three, those become much more frequent as we approach the summer and we end for the summer. The upside from those, that hundred basis points, you are really going to see that in the back half. In terms of the fifty basis points that we expect from self-seating and reservation system, that remains unchanged.

Thank you very much.

Thank you, Jeff.

The next question comes from the line of John Tower with Citi. Please proceed.

Great. Thanks for taking the questions, guys, and happy New Year to you. So maybe just, I guess, a couple of nuances on the quarter itself, the fiscal second quarter. Just on the modeling side, I believe in January, you traditionally take some around the pricing, and it did not sound like you spoke to that yet. So did you take any pricing, number one, and number two? Last year, there was a leap day. I cannot recall whether or not that was included in your same-store sales number or if it was not. Could you speak to both?

In terms of the leap day, we adjusted for it. So it was not included in our same-store sales.

Okay.

And then on pricing, we took about a 2% price increase the first week of November. So the effective pricing for Q1 that just ended is about 4.5%.

Okay. And similar, okay. So we will have a little bit closer to 5% say in the fiscal second quarter because I do not think anything is rolling off unless there is.

There is a little bit rolling off on January first. It just rolled off. But your number around 5% for effective pricing for Q2 is about right, a little bit over 5%. In terms of additional menu price increases, we typically take them, as you know, at the beginning of the year and in the middle of the year. We took the beginning of the year one early, as I mentioned, the first week of November. Right now, we do not have any additional plans to take anything in the summertime. But we typically do. But that is to be determined as we continue throughout the year, and I think we all hope that we have to continue to provide the great value for our guests.

Got it. Cool. Thank you for that. Maybe just zooming out a little bit. I am a little surprised at how conservative your guidance appears on revenue. For the year again. I mean, just based on you guys came in in the fiscal first quarter, on the, you know, obviously, same-store sales and aggregate revenue front up 25% year over year. The guidance itself would imply a fairly aggressive slowdown in the back half. So I am just curious. I know you have some tough comparisons and some IP collabs that you are not doing this year, but is there anything else we should think about with respect to new store productivity? Perhaps opening in markets that are maybe more challenging or you are expecting a higher level of cannibalization that might be weighing on the revenue growth on a year-over-year basis?

Yeah. So, John, the reason behind the guidance, we mentioned in the last call that it was conservative. The $275 to $279 million is conservative. I think we are all very bullish that that can be beat at some point. But if you take the clock back to last April in our call, which is when we based our guidance, and then in July, we had to lower the guidance. We want to be very careful about being in a position of that happening, make sure that when we do a guidance raise, that we do see a trend and we do not jump the gun too quickly on a raise. It really has nothing to do with, you know, our product company productivity restaurants or any additional cannibalization. We are not already experiencing what we have already talked about in the past. So there is nothing out there that is causing that number to be where it is. It is because we would all like to make sure that we are seeing a trend before we put it out there. And raise our guidance and want to be sure that when we do raise our guidance, we can keep our promise to the street. And not have to reduce it three months later.

Got it. Makes sense, and I appreciate that. Can you maybe then just pivoting a little bit to marketing, it sounds like, obviously, fewer IP collaborations in the future, perhaps more potent than ones you have done in the past. Maybe could you speak to the differential in spend expected on those versus, you know, at least year over year in the back half, number one. And then number two, you know, your approach to marketing in general, it does sound like you are focusing a little bit more on the food side. I know you, Ben, you mentioned earlier the perfect pairing promotion that you did that helped drive mix during the period. So, you know, as consumers and, frankly, as investors, is that how we should think about some of the marketing going forward as more of these perfect pair promos or something like that running through and being promoted through social media rather than these IPs going forward?

For these IPs, you can assume that when we do not have an IP, we are always going to have some sort of alternative going on, whether it is something like a perfect pair or a fifteenth-anniversary campaign or our holiday scratchers. You know, our pivoting from a constantly packed calendar of IP collaborations does not mean that we are not going to continue to have a packed marketing calendar.

Got it.

And then in terms of the cost difference between, say, something like the perfect pair or another food-focused campaign versus an IP collaboration, the difference would be about $150,000 to $200,000.

To the better? Two hundred thousand. Two hundred thousand.

It is $200,000 more expensive when we collaborate with an IP.

Okay. Makes sense. Cool. Alright. That is it for me for now. So I appreciate you taking the questions.

Thanks, John. Happy New Year to you too.

The next question comes from the line of Brian Mullen with Piper Sandler. Please proceed.

Thank you. Just a question on development. In the prepared remarks, I think you spoke to continuing to move into smaller DMAs over time. You know, I am just wondering if you could speak to the targeted volumes of those stores. You know, does the DMA dictate what the volume of a store can be, or is it really just a function of the size of the box and it really does not have to do with the location?

Sorry. Go ahead, Jimmy.

Brian, when we do site selection, our focus really is on cash-on-cash returns. We do not have a target AUV. And so that remains unchanged in terms of how we approach smaller DMAs. We are focused on cash-on-cash returns, and our standards for the smaller DMAs are the same as all of our other DMAs.

Okay. Thank you. And then just a follow-up, just a clarification item. You gave the menu price for the quarter. Can you just let us know what traffic was? And I apologize if I missed it.

Traffic was down 2.3%, and price and mix were 4.1%.

Okay. Thank you very much.

Thank you.

The next question comes from the line of Sharon Zackfia with William Blair. Please proceed.

Hey. Thanks for taking the question, and happy New Year. You know, it is really nice to see the improvement in mix. And I know you touched on earlier some of the drivers there. I guess I am curious about your thoughts on the sustainability of mix becoming a more neutralized part of comps going forward.

Without giving too much forward expectations, we think the days of negative high single-digit mix are behind us. We are really pleased with the efforts that the marketing team has made. Typically, when we have a two-month campaign, you see deceleration in the effectiveness in the second half. But we are continuing to see success in December with the most recent Udon campaign. Without commenting about the long-term sustainability of the flattish mix that we had, we think that we are in a much better position than before, and we have got all these levers that we never even considered pulling in the past. This is great progress.

Can you talk a little bit about...

In addition to the great efforts by the marketing team, one of the other reasons why mix is improving is that in the past year to year and a half, when we have taken menu price increases, we have not touched the side menu items at all. So we are lapping the increase in menu price increases on side menus, which, you know, when you take some menu price increase on things, it does impact mix, you know, to some extent. And because we are lapping the price increases on side menu, I think that is also why mix is coming in line a little bit as well as the previously mentioned.

Then I am sorry if you talked about this. My cell cut out, and I had to redial back in. But on delivery, I know that is, you know, a more nascent part of your business, and I understand there is obviously some operational tension just given how busy the restaurants are. I mean, where are you on delivery at this point? Is it fully kind of turned on all of the time to all locations? How are you handling that? Is it proving to be incremental or bringing in kind of new people to the brand?

Yeah. So I think it is definitely incremental. I think, you know, as soon as somebody opens up their DoorDash app, they are basically committed to eating inside. So that guest would not have been coming into our restaurants anyway, and so any sale we do believe is incremental. I would say in terms of where we are on that journey, DoorDash has been live at all of our restaurants for almost a year now. It is fruitful. The issue is we are constantly hitting ceilings just because our restaurants are so busy, which is a great problem to have. But we are always going to be prioritizing the guests that have gotten into trouble coming to our restaurants. As we infill markets and we are able to use the incremental restaurants as sort of pressure release valves for the kitchens, that is when we really see the off-premise opportunity becoming more meaningful. But at this point, we are happy where it is, especially given that it is incremental. We do not want to distract ourselves from the major opportunity, which is the tremendous white space of the United States.

Great. Thank you.

Sure.

The next question comes from the line of Mark Smith with Lake Street Capital. Please proceed.

Hi, guys. First question for me is really on the cost side on corporate kind of G&A, you know, really solid leverage during the quarter. Curious, you know, if the guidance is maybe conservative as well as it kind of does not bake in any more additional leverage throughout the remainder of the year. But any insight you can give us on the guidance and if there are any costs coming in here later this year that maybe we should be watching for.

No. There are no more costs coming in. The guidance implies a 60 basis point improvement year over year. I am still comfortable with that number. I do believe that after having like, 80 bips two years ago and 90 last year in leverage, that it is hard to keep that trend of 80 to 90 points a year. So I am comfortable with the 60. However, if sales trends do pick up and come in higher than where we expect them to be, then there will be additional leverage here. So when we get into April, I am happy to give an update on that if we are at the point where we can, but I do want to get through a couple more months, Mark, before I increase any guidance on G&A because I still think that a 60 basis point improvement for the year is pretty good.

Absolutely. Another question for me is just around kind of preopening expenses. You know, came in a little lower than we expected during the quarter. Was that a function of just kind of timing of some of the openings earlier in the quarter? Or are you getting more efficiencies and lower costs kind of as we think about preopening expenses, maybe even in some of these smaller markets?

So there are two major things that worked in our favor in terms of preopening. The first is, last year, we had nine units under construction versus the six units we had under construction during the same period this year. We have four managers for any new restaurant, and so that is twelve managers across the three-restaurant difference that we had in training. So that is an incremental labor cost incurred in fiscal 2024 that we did not have this year. The other major change is the shift in our opening team structure. Now that we have established beachheads largely across the country, we do not need the what right now, we have two and a half or historically, we have had two and a half opening teams. Now that we have established a geographic presence in enough markets, we have been able to pare back to one and a half teams by reassigning the other members to become store managers at local restaurants. That has meaningfully reduced our training costs as well. That has helped with labor. It has also helped with our G&A.

Excellent. Thank you, sir.

Thanks, Mark.

The next question comes from the line of Jim Sanderson with Northcoast Research. Please proceed.

Hey. Thanks for the question. I wanted to follow on to some of the conversations about mix and the shift from mid-single-digit negative to flattish. Have you built similar promotions to drive items per check, similar to, I think, what happened in the first quarter? If I understood the benefit of the pair combo. Is that the right way to think of it?

Yeah. No. We are really pleased with the perfect pair campaign. It is the first time we have done something like that. I would be very, very surprised if it was the last time we will do something like that. I think it will be a useful tool in our food-focused marketing box. Jimmy, I am sorry. What was the second part? And the other part of mix is that we have not taken pricing on side menu up to the last year. The reason that is important in terms of mixed headwinds is that there is less attachment on side menu items, and so you get less flow-through on pricing that you take on side menu versus pricing that you take on plates. That was a mixed pressure now that we have lapped that. That is less of the mixed pressure. Another thing that we are doing to support mix is leading into our LTOs with some more premium items. We have seen that if we have the right LTOs, we can just increase attachment. It is not really a trade so much as just a check growth opportunity, and so that is another lever that we have for our mix.

Alright. Thank you for that. Just a follow-up question on that. I think you had a promotion in the current quarter that is related to a contest for an average check higher than seventy dollars. Is that the type of promotion that could help improve mix going forward, that the way to think of it?

Absolutely. So this is the first time we have done, like, a holiday scratch or any sort of scratch card, but this is not the first time that we have tied a marketing campaign to a spending threshold. In the past, when we have had IP collaborations, we have had giveaways where you can get, say, like, a t-shirt or something if you spend more than seventy dollars. These sorts of efforts have, yeah, you can really see the impact in check size, mix attachment.

Alright. Thank you for that. And a quick question on traffic trend. I think on a two-year stack basis, you saw a deceleration in traffic trend. Is that where we are today? Is that a good run rate, the low single-digit positive traffic on a two-year stack?

Yeah. I mean, the thing, the number, really, I want you guys to focus on is the improvement from Q4, the minus 6.1 to minus 2.3 in this quarter. I think that is what is important because, you know, we had some bumps in the road last year in July, in summertime, and we talked about that in some of our previous calls. Where the number came out for this quarter at 1.8%, we are very happy with that. Quite honestly, even though we do not give quarterly guidance, I do not have a problem telling you it is higher than I thought it would be for Q1. I think it is higher than any of us thought it would be. So I am happy with that number. I think it is most important to look at it that way just because of the summertime. Like I said, some of the bumps in the road during the summertime. And then also some of the weird things happening in November with the election. I think there is a lot of noise to look at on a two-year stack. So I would rather focus on the quarter over quarter from Q4 to Q1.

Alright. Last question for me. Could you just briefly review the shares outstanding to be used for the second quarter in fiscal 2025 based on the follow-on?

Yeah. I have that number. Why do not we go to the next question, and I will get you that, John. I do not have that in front of me, but I will get that.

Yep. Yep.

I believe it is twelve million shares.

Understood. Yeah. Understood. I think now that I...

It is probably 12.6 or something like that.

Understood. Okay. Very good. Thank you.

The next question comes from the line of George Kelly with Roth Capital Partners. Please proceed.

Hey, everybody. Thanks for taking the questions. First one, I think you mentioned in your prepared remarks that there is a new Mister Fresh Dome launching in February. I was just curious, kind of surprised to hear that. What is the opportunity there? Is it maybe more kind of labor-intensive than I would have thought? Or what is the reasoning behind that launch?

Do you remember the first time you went to a Curasushi and you tried to open one of those Mister Freshers? They are not intuitive. You sort of need somebody to explain them because you need to go under and lift it. Pretty much, if you go to one of our restaurants, pretty much every time I go, I see somebody trying to pry it open like an otter with a clam. It is confusing because most things are not opened like that. Because it is not intuitive, our servers will spend two, three minutes explaining this. They will even bring Mister Fresh to the table so the guests can actually practice it to get accustomed to that. It is not very guest-friendly. It eats up our server's time. The new Mister Fresh is just a push button. It works exactly as you would expect it to work. We are really excited. It is a lot friendlier. It could be intimidating to come into a restaurant and not know how to order, not know how to take things off the belt, and this, we think, just makes it a friendlier experience for everybody.

Okay.

There are a lot of things that are unique to our restaurant that need to be explained if you are coming for the first time, such as how our plate slots work, the fact that we have a contest where you can win prizes. For first-time guests, you need to go through a spiel. But in tandem with the Mister Fresh 2.0, we are actually releasing an update to the order panel software that on its landing page will have a button asking if you are a first-time guest. If you click that, it will play a video that will basically teach you how to enjoy Curasushi. That meaningfully reduces server work as well. Having to do dozens of those during, like, a weekend peak hour is just a meaningful drain on productivity. Being able to streamline this is something that we are really excited about.

Okay. Excellent. That is helpful. Thank you. And then the second question for me is, or maybe a couple of questions, on the reservation system. Most of the conversation in this call with respect to the reservation system has been about the opportunity for cost savings. But I am curious if you could also discuss the opportunity to drive comp growth. What I am unclear on, I guess, is sort of how much you talked about it in, I think, improving comp performance for a bunch of different reasons in the back half. Is the reservation system a big factor in that sort of accelerating comp as well? How is it going to work? Are you going to open up a lot of inventory to the system, or is it really just kind of shoulder periods? If you could just give more detail there too, that would be helpful. Thank you.

Yeah. So in terms of inventory, that is actually one of the most difficult parts of this project is figuring out the right number of tables to allocate for reservations. That is something we need to do on a store-by-store basis. The operations team is hard at work on that. In terms of the traffic opportunity, what Japan saw with its implementation is that the peak hours would fill up pretty much immediately. People would realize that rather than show up and wait for an hour and leave, they would make reservations for the shoulder periods, five o'clock, nine o'clock, ten o'clock. If they did not want to do that, then they made reservations for the next day or the weekend. With our historical waitlist, we have had about a 20% drop-off where people will sign in and then not eat because the line is too long. That 20% is an opportunity to address that directly. By no means am I expecting a 20% traffic bump, but that is a massive opportunity for us. I am really excited.

Okay. Understood. Thank you.

Thanks, George.

The next question comes from the line of Todd Brooks with The Benchmark Company. Please proceed.

Hey. Thanks. And great start to the year. How about just a few tagging type of questions? Just following up on George's question there. How quickly does this turn on once you start the rollout of the reservation and self-seating platform, Ben? You said it is a store-by-store algorithm, but is this a start to turn on in Q2 and it takes a couple of months to turn the system on, or is it a longer duration than that?

The goal that I am holding myself to, which is ambitious, is a full system-wide rollout by the end of the fiscal year. Everything so far has moved on track. It has been remarkably smooth. We have our first in-restaurant test next month. I am extremely pleased with all of our partners. Everybody is really coming together to make sure that this goes on schedule. After we have, we will probably test in the first restaurant for about a month or so and then begin the rollout in earnest. My expectation would be April.

Okay. Great. You spoke to Japan's experience in rolling it out and picking up shoulder reservation forward day reservations. You talked about the abandonment off the waitlist here in the States. Can you talk to the experience in Japan from a traffic lift standpoint from having the system fully rolled out?

We cannot speak to them in too much detail. Our understanding and what we have heard from them is that it did have a meaningful impact on traffic. We are not able to quantify that right now. In terms of the sales lift, one thing that we are really excited about with the reservation system is that there is a guaranteed benefit in headcount reduction as it is coupled with the self-seating system. It is a massive improvement to guest satisfaction because we are introducing reservations for the first time, and our primary complaint is our wait times. This is a direct way to address that. We have got two things that we know for a fact are coming with this project. Even if there is not a sales lift, there is still plenty of upside. We do expect a sales lift. In any case, we are still happy with this project.

That is great. And a follow-up from a different angle. With the labor efficiency, and you look at the initiatives around consolidating the stations down to three in the back of house, and you look at upcoming self-seating, if you look at what it took to staff the restaurant two years ago versus what it should take to staff the restaurant post the rollout of self-seating, how much has that number dropped from a number of body standpoint?

Just to confirm, are you talking about historically or expectations going forward?

I am just trying to get an idea of the efficiency if you pick. I am pulling the numbers up from memory, but if it was twenty-two people per shift and with what we say for the consolidation, say, are we going to eighteen people per shift once we get to the end of these improvements?

So if we are comparing, like, say, pre-pandemic staffing, I would say that back of house and front of house has gone down by about two people each. It has been a pretty meaningful streamlining of the operations. In terms of the operational streamlining that we discussed in the past call, about the station consolidation, that opportunity really does come from the restaurants being busy. The upside is just going to grow and grow as the seasonality kicks in as we progress through the year.

Okay. And then last one for me. You obviously have visibility into the IP partnerships for the back half. I think we had two in Q1. We will not have one in Q2. How does the back half from a number of partnerships match up versus, I think, three last year? Is it three to three, or are we stepping down a number of partnerships, but maybe making it up with the magnitude of who we are partnering with?

So we have two lined up for the back half. They are very strong. We are really excited about them.

Okay. Perfect. Thank you.

Thank you.

There are no further questions at this time, and this will conclude today's conference. You may disconnect your lines at this time. Enjoy the rest of your day.