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Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Kura Sushi USA, Inc. Fiscal First Quarter 2023 Earnings Conference Call. At this time, all participants have been placed in a listen-only mode. And 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 Jimmy Uba, President and Chief Executive Officer; Jeff Uttz, Chief Financial Officer; and Benjamin Porten, Senior Vice President, Investor Relations and Business Development. And now, I'd like to turn the call over to Mr. Porten.

Thank you, operator. Good afternoon, everyone, and thank you all for joining. By now, everyone should have access to our fiscal first quarter 2023 earnings release. It can be found at www.kurasushi.com in the Investor Relations section. A copy of the earnings release has also been included in the 8-K we submitted to the SEC. Before we begin our formal remarks, I need to remind everyone that part of our discussion 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 you should not put undue reliance on them. 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 believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation nor as a substitute for results prepared in accordance with GAAP. And 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.

Thank you, Ben. And thank you everyone for joining us today. I'm excited to report another strong quarter where we outperformed industry averages with regards to traffic growth, saw two strong restaurant openings, and delivered restaurant-level operating profit margin that exceeded the same period prior to the pandemic. Our performance has been driven by the steadfast support from our loyal guests and warm receptions by new fans alike. In an environment where consumers are forced to be more careful with their discretionary spending, we’re delighted to see that when our guests go out to eat, they choose to dine with us. Our three goals for this year are to continue our rapid unit expansion, grow into our G&A, and to maintain the operational excellence and incredible values that have made us our guest’s top choice for dining out. Our first quarter sales were $39.3 million represent revenue growth of over 30% over the previous year's first quarter revenue. We saw comparable sales growth of 6.9%, while facing headwinds created by adopting of 8% of pricing at the beginning of September. This 6.9% comp figure breaks down to 4% from traffic and 2.9% from price and mix. We are especially pleased by our traffic growth, which outpaced the casual dining segment by a monthly average of more than 700 basis points and which we believe is an indication of our concept resilience in a potential economic downturn. As mentioned in our previous earnings call, we believe that there is significant opportunity in capturing new guests as they trade down from local sushi restaurants will have taken price much aggressively than we have. On traffic growth during the period in casual dining as a whole is suffering from declining traffic only underscores opportunity created by our unparalleled value progression. Looking at our operating results. We are pleased to note that our labor costs as a percentage of sales are 60 basis points below the prior year, confirming the expectation that a 50 basis point labor improvement in the prior quarter, driven by the implementation of our three technology initiatives was not just a onetime benefit, but potentially a long term tailwind for our operational efficiencies. Due to ongoing inflation, our cost of goods sold as a percentage of sales was 160 basis points higher compared against the previous year. And it's largely responsible for the year over year decline in restaurant-level. But it is difficult to predict when we can expect a moderation in commodity cost. We do not expect this inflation to be permanent and remain optimistic that we can achieve the margin price we saw in the previous fiscal year as we enter a more normalized environment. As Jeff mentioned in the last earnings call, key area of focus as our new CFO was to manage G&A expense. For a growing company, there are certain investments in people and infrastructure that are necessary to support the growth and we will not compromise that. However, this does not mean that there are not opportunities for savings and pursuing these savings is a top priority. Since the IPO, we have said that the best possible profitability for us is it to leverage our G&A cost against an increasing larger store base. While this leveraging will be a multi-year process, we are proud to announce that we are making substantial progress throughout this call as demonstrated by the improvement in G&A expense as a percentage of sales of over 100 basis points as compared to the prior year. I'm particularly impressed by the teams efforts to control cost and for us to have achieved the leverage during the period when we are continuing to see inflation in the underlying items. Our G&A strategy is to renegotiate existing contracts and to [indiscernible] efficiencies, which will allow us to minimize new hires. Our support center employees have listened to the occasion and I'm proud of the company wide cooperation that had made this possible. Turning to development. We opened two new locations in the first quarter, one in the Mall of America in Bloomington, Minnesota and one in Jersey City, New Jersey. Subsequent to the end of the quarter, we opened our Philadelphia location in late December. As I'm sure you heard on our previous earnings call, construction and permitting delays have been a headache for the rest of the industry. And two of these units similarly suffered from unusually long opening delays. That being said, we believe that the worst is behind us as the remainder of our fiscal ‘23 pipeline is really survival, which typically make for further experiences. Additionally, we are very pleased by the early performance of these three units. It's great to see our restaurant drive in the Mall of America, further indicating cross national portability and across demographics and Jersey City [indiscernible] continue to show the east coast market tremendous potential. We currently have four units under active construction is still more breaking ground later this month. With still more restaurant openings expected in Q2, we are on track to achieve the annual guidance -- growth guidance we provided in the last earnings call. Lastly, I'm very excited to announce that we have made significant progress in the implementation of our new Waitlist app and reward program platform and expect the testing to begin during this quarter. The Waitlist app we will have an immediate positive impact on customer satisfaction by improving waiting time accuracy, which we hope will translate into improved attrition rate for guest waiting time. With the new reward program platform, not only will we have greater flexibility in the way that we can reward our guests, but we will be able to begin leveraging environmental data for targeted marketing for the faster time. Our levered program has been hugely effective in driving frequency and average check growth, but still mid of program based in the power of data and the utilization of this data represents a new chapter in our marketing efforts. On that note, we began our targeted marketing efforts specifically geared towards first time guests in December. But it's too early for us to discuss the impact yet, we believe that the opportunity in capturing new guests who have been discouraged by the aggressive price taking we have seen among local fish competitors. It's truly significant that capturing these guests remains a key pillar of our marketing strategy for the fiscal year. Before I hand things over to Jeff, I would like to note that we took pricing of approximately 7% in the first week of December. Finally, I would like to thank all of our team members, both at our restaurant and the support center for the great work they do every day to create the magic that is a great experience. And with that, I'll turn it over to Jeff to briefly discuss our financial results and liquidity. Jeff?

Thank you, Jimmy. For the first quarter, total sales were $39.3 million as compared to $29.8 million in the prior year period. Comparable sales growth as compared to the prior-year period was 6.9% with regional comps of 10.3% in California, and 2.1% in Texas. Turning to cost, food and beverage costs as a percentage of sales were 31.6% as compared to 30% in the prior year quarter due to food cost inflation, partially offset by pricing taken over the course of fiscal 2022. Labor and related costs as a percentage of sales decreased to 31.9% from 32.5% in the prior year quarter. This decrease is due to incremental efficiencies created by the implementation of technological initiatives, as well as sales leveraging from pricing taken over the course of fiscal 2022. This leveraging was partially offset by wage increases and incremental pre-opening labor. Occupancy and related expenses as a percentage of sales were 7.3% and were largely flat year-over-year compared to the prior year quarter 7.4%. Other costs as a percentage of sales increased to 13.5% compared to 12.1% in the prior year quarter due to increases in pre-opening costs, advertising and promotional costs and repair and maintenance costs. General and administrative expenses as a percentage of sales decreased to 16.9% as compared to 18% in the prior year quarter. On a dollar basis, general and administrative expenses were $6.6 million as compared to $5.4 million in the prior year quarter. With the increase, largely driven by compensation and partially offset by reductions in professional fees and insurance costs. Operating loss was $2.2 million as compared to an operating loss of $1.3 million in the prior year quarter. As a percentage of sales, operating loss was 5.5% as compared to a loss of 4.2% in the prior year quarter. Income tax expense was $10,000 compared to $12,000 in the prior year quarter. Net loss was $2.1 million or $0.21 diluted share compared to a net loss of $1.3 million or $0.13 per diluted 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. Adjusted EBITDA was $0.6 million compared to $0.8 million in the prior year quarter. Turning to cash and liquidity. At the end of the fiscal first quarter, we had $26.9 million in cash and cash equivalent and no debt. Lastly, I would like to reaffirm the following guidance for fiscal year 2023, we expect our total sales to be between $183 million and $188 million, we expect general and administrative expenses as a percentage of sales to be approximately 16% and we expect to open between nine and 11 new units with average net capital expenditures per unit of approximately $2.5 million. And with that, I'd like to turn it back over to Jimmy.

Thanks, Jeff. 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. Please bear with us.

Thank you. Ladies and gentlemen, at this time we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Andrew Strelzik with BMO Capital Markets. Please proceed with your question.

Hi, this is Daniel Gold on for Andrew. Thanks for taking the question. When we think about the results in the quarter, our math suggests your comp slowed throughout the quarter to 2.5% in November. What do you attribute that to? And what are you tracking quarter to date or in December?

Thank you Daniel for your question. Please allow me to answer your question in Japanese and Ben is going to translate it. [Foreign Language] [interrupted] In terms of our comps, we were exceptionally pleased to see that in this environment we were able to achieve comps of 6.9%, particularly because our traffic was up 4% over the course of the quarter, which, as everybody knows in this environment is pretty rare. So looking at industry averages, like those provided by NATRAX over the period that was our Q1. It's pretty clear that our peers in the casual dining space are down in traffic. And so, again, the fact that traffic is up for us is a great sign for concept, it's a great sign for the strength of the consumer. But that being said, as Jimmy mentioned in the prepared remarks, our focus for fiscal '23 is going to be in terms of capturing first-time guests in this sort of environment, it's only natural that people are going to reduce the frequency of their out-of-home dining occasions, and we've been able to remain one of them for -- remain a dining occasion for our guests. But for us to maintain the traffic growth that we've seen in the last quarter, we think it's imperative for us to capture first-time guests. Jeff, is there anything you wanted to add?

No, I think the traffic that we were able to get is something we're very happy with. Getting people in the door is the first step, and we've been able to do that. We've been able to increase the number of people coming in by 4% over last year in a very, very tough environment. So we're not really going to give monthly comps, and I know we did give September and October on the last call, so you can obviously do math yourself. But we're very, very happy with where the comp came out for the first quarter of our fiscal year, especially compared to our peers. People are still coming in. And as Ben said, if people were going out 3 times, now they're only going out 2 times. It appears based on the numbers that we've been lucky enough to remain one of those two dining occasions that people do choose to eat away from home.

Got it. That's really helpful. Thank you. And one other question for me. One of the stated goals for the year is G&A. I'm curious on what your plans are on a multiyear basis. You've guided to 16% sales -- G&A as a percent of sales for the year. What do you think is a reasonable place to get to longer term? Are you expecting linear progression down or plans for G&A investment?

I'm expecting near progression down. We're not going to give any guidance past this current fiscal year. We are a growth company. I do think that our G&A is elevated. And as we've said many times on these calls and then in meetings with investors and conferences and whatnot that we -- one of my goals -- my top goal is to get it down. We did see a little bit of leverage when you compare the first quarter of this year to the first quarter last year, which we're very pleased with. But it's not a trend yet, and we're going to continue to guide towards the 16%. The number came in where we expected it to for Q1, so there were no surprises, but stick with the 16% for now. I do expect that to get better in future years, but I'm just not able to quantify that at this time. But Jimmy also said in the prepared remarks that we're also not going to compromise investments that we need to invest in our company for future growth, but there is room for improvement. And that's a promise that we have made to everybody, and that's a promise we're going to keep. I just can't quantify for future years right out past fiscal '23.

Got it. Thank you very much.

You are welcome.

Our next question comes from the line of Jeremy Hamblin with Craig-Hallum. Please proceed with your questions.

Thanks. I wanted to just come back to the traffic versus menu pricing versus mix portion of the commentary for the November quarter. In terms of -- I think that I calculate close to 8% menu pricing that you would have been carrying throughout the quarter before you took this December price increase. And if traffic was up of 4%, does that imply that you had a fairly significant mix shift during the quarter?

What did suggest -- go ahead, Jimmy. Go ahead, Jimmy.

Okay. Thank you. [Foreign Language] [interrupted] So in terms of Q1, we did see a little bit less of flow-through from pricing than we had in past quarters. That being said, we did see average check growth on a quarterly sequential basis from Q4 to Q1, and so, it's not like there's aggressive check management, checks are still growing. And the purpose and plate consumption over the same period was flat as well. Certainly, it's a point of focus for us. But given that this is just result from one quarter, we don't think this is necessarily indicative of a trend yet.

Okay. Got you. And you're not providing any color on kind of quarter-to-date trends, whether or not because I did want to ask you a 7% price increase that you took in December, whether or not that's having any impact on traffic trends? And then the second part that's kind of tied into that is, you did see a pretty healthy jump now the last two quarters in food and beverage costs. We know that there's inflation out there, certainly on commodities. But I wanted to get a sense for, are we getting close to where you feel like that peak in food cost inflation has happened? And with that incremental 7% that you took in December, is that hopefully going to balance out kind of your COGS as a percent of sales?

So in terms of -- let's take the first part of your question, which is about December and the price increase, and early indications that we've seen is that, the response by guests has been just fine. Previous price increases that we've taken, we're seeing pretty much the same pattern, which is little to no negative response to the pricing increase. We're very lucky where our pricing is compared to our competitors. We do have headroom to take price, and we did take that price to 7% at the beginning of December. So we're happy with what we've seen so far in terms of no negative response to that. But we're not going to give any other more color. December is only closed five days ago, so we're not able to really give any more color as it relates to the beginning of the second quarter. As far as your question on COGS. I am optimistic that we're reaching a peak, but I'm not banking on that. We do see some things continue to go up when we have seen sequential month-to-month inflation since the beginning of the year and even as we go back into Q4 of last year. And I'm planning for that to continue to go up, which is why we took the price. The price does not fully offset the impact of what we're seeing with inflation, and we don't expect it to, but it is helping. And one thing that really encourages us is because of that traffic of 4% during the quarter. Is that -- guests are reacting pretty favorably to the pricing. That really isn't impacting whether or not they want to come visit us. But I'm optimistic, but I'm not optimistic enough to tell you that I believe that we've reached the peak. There are some positive signs out there. But again, same thing we see on the last couple of questions, that's not a trend yet.

Just to add on that note about commodity inflation. As we mentioned earlier, what are the few concepts that are posting positive traffic in the casual guiding sector? And I think, really a big part of this is due to our exceptional value proposition, and that includes a lot of guests that are trading down from more expensive sushi restaurants. And so this -- we sort of see this as a long-term investment in terms of growing our overall restaurant base, which is an opportunity that I just don't think other people are seeing here. And so, while there may be short-term commodity pressures, this -- in the end, having this excellent value, I think is going to position us for that much more success once we see a normalization in inflation.

Got it. And then just wanted to clarify another comment from the script, which was on the unit openings and kind of the cadence that you're expecting. So I think what you said was that you had four units actively under construction and then a couple that -- additional that you are going to expecting to break ground by the end of the month. In terms of completing those, getting them open, because I know, as you noted, that they've -- they're a little bit behind schedule for a variety of reasons, construction permitting delays, HVAC systems, whatnot, but can you give a sense for your expectations around how many -- you've opened one quarter-to-date thus far? Are you thinking you're going to get two more open this quarter? And then just in terms of even for the back half of the year, is that going to be even split? Is it going to be back half-weighted? Any color you could provide would be super helpful.

[Foreign Language] [interrupted] In terms of -- I mean, we're sort of going to repeat what you just mentioned, and we're going to be repeating ourselves from the prepared remarks. But what we can say is that, we've got four units under construction. We've got two that are just about to break ground. So we've already opened one to date in Q2, we expect a couple more in Q2 one or two, and the remainder will be in the back half. One thing to keep in mind is that, the actual construction times haven't really gotten longer. The delays in openings that we're seeing are largely due to inspections and permitting where, for example, before, if you had an inspection, you could get a follow-up inspection the next day. Now this is like a two week wait. And that's a lot more typical in urban markets versus several rural markets, which is why we have a lot of optimism for the back half in terms of not seeing the sort of hiccups that we saw with, say, Philadelphia. And then the other thing that gives us a lot of comfort is that the remainder of our pipeline are largely in new build-outs, and so that just generally makes for a much smoother process. There's very rarely issues with gas lines or having to get the floor level or anything like that, and so that's another tailwind that we have for the remainder of the pipeline.

Got it. Thanks for the color guys. Best wishes.

Thanks, Jeremy.

Thanks, Jeremy.

Our next question comes from the line of Sharon

Hi, good afternoon. I guess circling back on inflation, Jeff, could you quantify the commodity and labor inflation you saw in the quarter and what you're expecting for the year?

We haven't quantified it. I mean you can see the math quarter-over-quarter, what we've seen. We were very fortunate this year on the wage inflation or in this quarter as we also said in the prepared remarks, I think with the price increases as well as the three initiatives, the technological initiatives that we implemented, which we've mentioned, give us about 50 basis points to 60 basis points of labor leverage. But along with the pricing, we were able to come out with a better quarter this year from a labor perspective. So I have -- and on the food, I already mentioned kind of what's going on with inflation. I'm sorry that I can't quantify what I've seen. But as I mentioned, I'm optimistic, fingers crossed, but not promising that we'll see an improvement or at least a leveling out of food cost.

And just to follow up on that. I think you said the 7% wasn't -- it wasn't enough to cover all of the inflation you're seeing. So should we kind of read into that to anticipate restaurant-level margins kind of being under some pressure all year? Or I know there are other initiatives that you guys have and that you've been working on and abilities to kind of pivot that could help bolster margin. But I'm just kind of looking for some clarity and maybe on what the messaging is that you're trying to get across there.

The first thing to remember is that, our Q1 is our -- seasonality-wise is our lowest performing quarter from a margin perspective. So as we go throughout the year, we do expect margins to improve. I do not see much more downward pressure on margins. I really don't. I feel like we've reached the peak or getting -- nearing the peak, both in terms of wage and cost of goods sold. I mean if you really look at the numbers, it was really all COGS this quarter, really that impacted our bottom line and our margins. So if we can get or what control we have, and I think we have some control, but a lot of it's out of our control of the macro environment. Once inflation comes down or inflation eases, I really think that our margins are going to see some improvement. And when that's going to happen, I can't say, but I really feel like maybe the worst is behind us as it relates to that.

Okay. And then I'm sorry if I missed this, but I don't think I heard any update on loyalty and the membership trends there. And I'm just curious, as you're continuing to generate the positive traffic, are you having continued success converting folks to loyalty? And is there any update on frequency of loyalty versus non-loyalty?

Yes. So the number -- the loyalty -- the rewards membership growth rate has pretty much been in line with the exceptional rate that we've been seeing over the last year or two. We're really pleased with that. In terms of the rewards program, the bigger news is really the fact that we're able to begin testing with Punch in this quarter. Up until now, we've used an in-house platform, and it's been very useful in terms of driving frequency and increased check spend. But in terms of data leveraging or targeted marketing, we haven't been able to use it. And so being able to switch to that, it's really kind of a paradigm shift in our rewards program and our marketing strategy. And so that's something that we're -- that's going to be the big news for rewards this year.

Okay. Thank you.

[Operator Instructions] Our next question comes from the line of Joshua Long with Stephens. Please proceed with your questions.

Hi. Thank you for taking the question. I was hoping we could dig into some of the either initiative platforms, tools and just your overall approach in terms of going after that first-time guest and getting them into the funnel. It seems like that's a big opportunity. You talked about it a couple of times. I imagine that there is either some tools, marketing or some sort of approach that you're bringing. And without giving it away too much, I'm just curious if you could talk about it high level and how you're thinking about that unfolding as we go forward.

[Foreign Language] [interrupted] In terms of our targeted marketing, just at a very high level, it's going to be heavily focused on search engine optimization. So whether it's Google or Yelp, we'll be able to drive that many more guests who are interested in Japanese or sushi. We'll be top of mind because we'll be at the top of the list, and so that's something that we're excited for. The incremental spend that we spend on targeted marketing is not going to really result in a change in the overall marketing budget. It's going to be more -- we're optimizing -- we're always optimizing our marketing efforts, and we'll be able to reallocate some of those savings towards that targeted marketing, which goes very far in terms of the effectiveness on a dollar basis, and so that would be a high level. And then with the rewards program platform, Punch, we're really going to be able to slice and dice our consumers in a way that we just have never been able to do that before. So for instance, if there are guests that are -- we know that they eat noodles every time, then we can send them a noodle coupon for half off at, say, 4 p.m., which is historically a shoulder period for us. People ask us, "You've got incredible wait times. How are you going to be able to drive comps in these tremendous over performing stores?" And this is one of those opportunities. It's going to be harder to get somebody get additional parties in the door during 8:00, but that's certainly not the case in 4:00. And so that's one of the other big things that we're excited about.

Very helpful. Thank you for that. Maybe coming back to the inflation topic from a slightly different angle. I kind of appreciate the current environment, and I know that we've -- you've got an entire team. And just relatively new to the role here, but one of the things we had talked about was just maybe some supply chain optimization or just opportunities there. And I was curious if you could, again, high level, talk about any sort of initiatives you're working on there, leveraging the core brand strength and the broad basket you have. But also maybe any sort of near-term wins or opportunities around where there's room to optimize or maybe drive some efficiency over time as you just get things in line to help scale the brand?

One of the things that I really want to look at is getting more of our basket into a broad liner. I think that, that will really help us. I think there's some opportunity there. One of the things that we've had trouble with over the last year was having to buy some of our fish that we buy from suppliers that were not our regular suppliers. And because during the pandemic, some of our regular suppliers had to throw out a lot, and they weren't able to fulfill some of the orders that we needed. So we had to go to these smaller houses and didn't get us greater prices. So I'm hoping that, that starts to come back. And it has actually in fiscal 2023, has started to come back in our favor. But between that and shifting to broad liner and really just looking at all of our contracts, and this is something that I'm doing with G&A, but also I'm asking the purchasing department to do it for our food purchases as well, and I think that there's opportunities to go back to our suppliers and leverage the growth that we're going to be seeing over the next few years. And if we can maybe get into some a little bit longer contracts with some people, where we promise them the growth -- same sort of growth that we're promising out to the street right now, and they can see that there's an opportunity for them to make a lot of money in the future, I think we can leverage some better pricing. And don't know how well we've done that in the past because I am still relatively new, but I really want to push those types of initiatives to see if we can reduce those costs and get our COGS down somewhat. Even in an inflationary environment, I think that's possible.

Just to add on that. We do have a number of things that we're looking forward to in the back half of the year, such as improved supply lines for select items, which means that there's no compromising in quality, but we'll see a certain amount of savings. And those are savings here and there, they're not going to be enough to really move the needle. What's tricky about our basket is that, we've got over 100 inputs, and it's one of the reasons we were so resilient. In the past year in terms of our COGS, we had our all-time best. But it also makes it trickier to -- there's never just one big thing that you can address. And so like Jeff mentioned, being able to move to a broad liner is going to be a tremendous opportunity for us.

That's very helpful. I appreciate that. And one more kind of housekeeping item for me. In terms of just we think about the price that you're running now, you mentioned taking an incremental pricing window here in December. Can you provide us when and how and at what pace you would think about more pricing in the future or just kind of what the philosophy of the approach is there? And yes. Thank you.

Given that we just took price in December, I think it's a little bit early to discuss future pricing decisions, but I think the philosophy is going to remain largely the same. Historically, we've taken price about twice a year, typically to offset minimum wage increases, which we've already done, and then we'll adjust based off of inflation. But given that it's impossible to predict when inflation is going to end or what degree it's going to look like, it's hard for us to give any numbers at this point. But that being said, it's really clear that the traffic here is being driven by the value proposition, and so that's certainly something that we don't want to compromise.

Understood. Thank you.

Our next question comes from the line of George Kelly with ROTH Capital Partners. Please proceed with your questions.

Hi everybody. Thanks for taking my question. So just a couple, most of my questions have been asked and answered, but a couple for you. The first one, you mentioned on last quarter's conference call about potentially sourcing from Japan. So I was wondering if that's something you're still contemplating. And how meaningful could that be to your gross margin?

Yes, that's something that we're still looking forward to. We're in the process of exhausting the inventory we have with our existing vendors and the agreements that we have in place. But that's something that we continue to look forward to. I think even in the last call, you mentioned that we don't expect to benefit from that until the back half of the year. And the benefit is going to be dependent on ForEx. But right now, I mean the American dollars is so strong that the benefit seems meaningful.

And some of that challenge, too, will be making sure that if we do find a supplier that we're happy with in Japan that we can get with -- I'd really like to get that into the broad line distribution once we get that a little bit more streamlined, too, and that will really help as well. But a lot of the suppliers in Japan, from my understanding, won't be able to distribute through a broad liner. So we may have some challenges there, but that's something that the team is really working through now to figure out the best path to take.

Okay, okay. And then second question for me is on just your staffing levels right now. Curious if you're seeing much change if it's becoming easier to find people, what kind of wage pressure there is, et cetera. Just if you could expand on any of those. Thank you.

[Foreign Language] [interrupted] In the past earnings call, we mentioned that our hourly -- for our hourly positions, we are about 95% filled. I'd say that today, we're at 95% to 100% at all of our restaurants. We're in an extremely good position. We're not seeing any quarantining. Not net -- no quarantining that's impacting operations. Last year during the time, we had seating limits or shortened hours. It's certainly not the case now. We're exceptionally happy with the staffing situation. And we're very proud of the work that's being done by our recruiting team, our ops team training, HR. And just on that note about staffing, I know that there's -- the FAST Act is probably top of mind for a lot of people on this call, especially because we have -- California is our largest market. I just want to reassure everybody that's listening that as the legislation is written, it does not impact us. We're -- it simply does not apply to us. I've heard some people say that look, if everybody's wages are going up, then your wages are going to go up, too, whether or not your impact -- whether or not you're legally falling under that category. And to that, I'd say, if that were the case, then you wouldn't have any people working in, say, Texas or New Jersey for $2.13 as a server because they can get a guaranteed $8 elsewhere, people clearly go for the server positions because they're very lucrative with tips. And with our tips, we're one of the best paying employers in the sector. And so the FAST Act for us it's not a concern, I think it makes us more competitive, if anything. And then in past calls, we've mentioned how the management pipeline is one of our key considerations in terms of our unit growth rate. We're happy to say that the management pipeline is exceptionally strong. The opening delays that we've seen to date are because of permitting issues or inspections. They're certainly not because we don't have management. And in fact, those delays have allowed our management trainees to get that much more training, and so we have a very strong class for this year and next. We're -- it's not a concern for us, and so that's certainly not a gating factor for continued aggressive growth.

Okay. Understood. Thank you.