Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Kura Sushi USA, Inc. Fiscal Fourth Quarter 2026 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 Hajime Uba. President and Chief Executive 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 fourth quarter and fiscal year 2026 earnings release. It can be found at www.crowsushi.com in the Investor Relations section. A copy of the earnings release has also been included in the AK 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 you should not put on your 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 is it a substitute for results prepared in accordance with GAAP. and the reconciliations to comparable gap measures are available in our earnings release. With that out of the way, I would like to turn the call over to Jimmy.

Thanks, Wayne, and thank you to everyone who's joining us on our call today. As we look back at our fiscal 2026, I'm proud of our efforts to protect the margin in spite of tax and consumer headwinds. While tariffs collectively increased our cost of goods sold and other costs by 180 basis points over fiscal 2025, we were able to offset these increases with labor leverage of 190 basis points over the prior year driven by the technological innovation that is core to our concept. Our continued commitment to G&A leverage is reflected in the 90 basis point improvement over the prior year, and we were also able to grow at a significant margin of dollars over the prior year. As we enter the new fiscal year, I would like to share how our priorities have evolved as Kura has matured over the last decade. What began as a local culture favorite brand is now the undisputed leader of the American sushi space. Prior to Kura Sushi, there have been no nationally successful chains, despite the increasingly broad popularity of sushi in the United States. Over the last two decades, we have addressed and solved each of these scaling challenges, and we are now in 25 states with over 100 restaurants right around the corner. Having completed our national BGH strategy, I would like to share our major new mid-term goal, We expect to generate qualitative free cash flow and become self-funding by 2031. This goal hinges on two factors, returning on our historical 20% restaurant-level operating profit margins over this time period and normalizing our annual unit growth strategy from a percentage-based one to a unit-based one where the annual unit opening count continues to increase each year. This normalization of our unit growth approach delivers two major expected benefits. The extension of our cash runway through self-funding status and the elimination of the need for future capital raise. Now, I would like to move on to discuss our recent results. Total sales for the fiscal fourth quarter were $88.9 million, representing comparable sales of negative 5.7%, with negative 11.5% of traffic, offset by positive 5.8% in price and mix, with effective pricing for the quarter of 4.2%. Over the last year, we have seen mix reach all-time highs, and this trend has only become more pronounced. Cost of goods sold as a percentage of sales were 29.7% as compared to 28.4% in the prior year quarter due to the impact of tariffs. Our full year costs came in exactly in line with our expectations of 30%. Labor as a percentage of sales improved by 70 basis points to 30.4% due to operational initiatives. One of our goals for FY26 was to improve labor by 100 basis points over the prior year and I'm incredibly pleased to share that our full-year labor leverage over FY25 nearly doubled our goal at 190 basis points of improvement. Turning to unit development, we opened four new restaurants in the fourth quarter, Tulsa, Oklahoma, Austin, Texas, Charlotte, North Carolina, and the Pacific in New Jersey. Oklahoma and North Carolina are both new markets for us, and initial guest response has met all of our expectations. Subsequent to quarter end, we opened three new restaurants, Glen Allen, Virginia, Des Moines, Iowa, and Denver, Colorado, which opened just yesterday. Iowa is another new market, and while it has only been open for a few weeks, it's off to a great start. In keeping with our mid-term strategy, our unit opening expectations for fiscal 2027 are 17 new units. We currently have seven restaurants under construction, but fiscal 2027 openings overall will be heavily backlogged, with current expectations of four openings in Q1. two openings in Q2, five openings in Q3, and six openings in Q4. I'm excited to share more of our fiscal 2027 IP pipeline. We're currently in our YOSHI campaign, which runs through November and December. Our Q1 comparable sales to date of negative 3.1% are a meaningful improvement on Q4. and we are excited for the YOSHI campaign we have slated for November and December. Following YOSHI, we have Hatsune Miku in January and Gazeera in February and March. We have four more IP collaborations for fiscal year 27 following Gazeera and I look forward to sharing more of our IP pipeline in our next funding school. On the note of our IP collaborations and big carbon prices, I'm pleased to share that We have fully rolled out our Ikura PON dessert voucher option at all of our restaurants. Now guests have an appealing price to look forward to regardless of their familiarity with a given IT campaign. We believe this will be a potential opportunity for reductions in other costs as we adjust Ikura PON price order volumes to reflect the revealed preferences of our guests. In other system development news, we closed the fiscal year slightly ahead of robot dishwasher retrofit schedule and with 33 retrofits completed today, we have just under 20 remaining. Starting midway in fiscal year 2027, all new openings will have robot dishwashers as a default feature. While we are pleased with the improvement in price and mix, traffic in the fourth quarter did not meet our expectations. We've implemented several initiatives primarily focused on value to improve traffic with the goal of achieving qualitatively comparable sales on a three-year basis. In order to further bolster our value proposition and in an effort to recapture traffic, We have made the decision to take no pricing to offset the 3.5% that rolled off at the beginning of November. While our pricing strategy will remain flexible, we believe that we will be able to continue to grow margin over the prior year without taking price, and that the tariff shock to sushi industry pricing is a major opportunity for us to capture a larger audience. Before moving on to our financials, I would like to thank all of our team members, also at our restaurants, at our support center, for the great work they have done to provide excellent guest experiences while protecting margin in a challenging environment. Now, I'll hand it over to Ben to discuss our financials and liquidity.

Thank you, Jimmy. For the fourth quarter, total sales were $88.9 million as compared to $79.4 million in the prior year period. Comparable restaurant sales growth compared to the prior year period was negative 5.7%, with negative 11.5% from traffic, offset by 5.8% of price mix. Comparable sales growth in our West Coast market was negative 4.9%, and negative 8.6% in our Southwest market. Effective pricing for the quarter was 4.2%. As a reminder, beginning with the first quarter of fiscal 2027, we will no longer provide regional breakdowns for comparable sales, as regional comps are largely determined by the timing of infills, and we do not believe they are indicative of overall company trends. Turning to costs, food and beverage costs as a percentage of sales were 29.7% compared to 28.4% in the prior year quarter due to kerosene imported ingredients partially offset by pricing. Labor and related costs as a percentage of sales were 30.4% as compared to 31.1% in the prior year quarter due to operational efficiencies in pricing partially offset by low single-digit wage inflation. Occupancy and related expenses as a percentage of sales were 7.8%, compared to the prior year quarter's 7.1%, due to sales deleverage. Depreciation and amortization expenses as a percentage of sales were 5.6%, as compared to prior year quarter's 4.9%, also due to sales deleverage. Other costs as a percentage of sales were 14.6%, as compared to the prior year quarter's 15%. due to a one-time tariff refund benefit of approximately $0.5 million for some of our promotional materials. General and administrative expenses as a percentage of sales were 11.2% as compared to 11.7% in the prior year quarter. Operating loss was $0.6 million, inclusive of $1.2 million in impairment and asset disposal costs compared to operating income of $1.5 million in the prior year quarter. Inc. tax expense was $86,000 as compared to $43,000 in the prior year quarter. Net loss was $0.3 million or negative 2 cents per share compared to net income of $2.3 million or 18 cents per share in the prior year quarter. Adjusted net income was $0.9 million or 8 cents per diluted share as compared to adjusted net income of $2.5 million or 20 cents per diluted share in the prior year quarter. Restaurant-level operating profit as a percentage of sales was 19.1% compared to 19.8% in the prior year quarter. Adjusted EBITDA was $7.7 million as compared to $7.4 million in the prior year quarter. And at the end of the fiscal fourth quarter, we had $28.4 million in cash-in-cash equivalents and $37.2 million in investments, totaling $65.6 million in no debt. I would like to provide the following guidance for fiscal year 2027. We expect total sales to be between $376 and $381 million. We expect to open 17 new units with average net capital expenditures per unit of approximately $2.6 million. We expect general and administrative expenses as a percentage of sales to be approximately 11.5%, and we expect full-year restaurant-level operating profit margins to be approximately 19%. This concludes our prepared remarks. We are now happy to answer any questions you have. As a reminder, during the Q&A session, Jimmy may answer in Japanese before his response is translated into English. Operator, please open the line for questions.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. And one moment while we pull for questions. Thank you. Our first question will come from Matt Curtis with DA Davidson. Please proceed with your question.

Hi, good evening. You know, I guess the first question is really on the traffic decline, which was Thank you, Max, for your first question. This question is probably the most critical question during this call, so please allow me to speak in Japanese and take time to give you enough explanation.

Hi Matt, this is Ben. So we were also, certainly we were also surprised by the traffic decline. This is meaningfully beyond our expectations, but the good news is that we've

We've been able to drill down into the day parts where we're seeing that traffic pressure, as well as the opportunities that we have to reverse it. And so we'd like to go through those with you now.

First of all, regarding the area, compared to Q3 and Q4, we've been able to drill down evenly. On the other hand, regarding daytime, we've been able to drill down quite a bit. Specifically, during the lunchtime on weekdays, we've been able to see that traffic has been lost. That's all I have to say.

In terms of geography, the traffic pressures that we saw in Q4 are very broad-based, really no meaningful differences between our markets. In terms of day part, it's pretty clear that where we're losing traffic are the weekday lunches.

Also, we did a consumer study in August. This is also common in broad-based, especially on weekdays, where there are opportunities for value. In August we performed a consumer study and one pretty clear through line that we saw was

Of course, in addition to quality and service and storytelling related to English,

As it relates to weekday lunches, we've certainly made sure that there are no issues with the quality of service or the quality of the ingredients that we're

making sure that we're doing the appropriate storytelling so the guests appreciate exactly how high quality our ingredients are. But what we really landed on as the major lever for driving traffic during the weekday lunches, especially, would be to provide undeniable value through value combos. And so we've been, in October, we did a three-day pilot where we piloted a $9.99 option and a $10.99 option, which gave you a bowl of noodles and two hand rolls. I'm sorry, $9.99 and $11.99. And for this three-day period, they were 5% of mix, and so they were a pretty big hit. But also critically, we saw no degradation in average check size. And so based off of those early results, we're very encouraged, and we're in the process of implementing a larger test with more of our restaurants.

Also, we expanded the test from next week, and as a result, we made some adjustments, and So we're, the test expansion actually begins next week.

Based off of how the test goes, we'll make some adjustments to make sure that from a COGS perspective, the value combos are margin neutral, and we expect to launch the system wide sometime in Q2.

Also, we're going to launch the bundle menu that focuses on value in the same way in Off-Premises, so we're going to launch these products in the near future. We're also leading into value for off-premises as well. We're in the process of developing some value bundles for our guests.

One very interesting thing that I neglected to mention about the three-day test in October is that the advertising there was extremely minimal. It was limited purely to rewards members, which makes that 5% mix all that much more remarkable. But as we develop the value bundle for off-premises and as we begin the system-wide push for the value combos in Q2, we expect to support that with paid advertisement. Really, the goal here is to capture first-time guests, so you know that We've done a great job with activating our rewards members, but we think that this sort of, you know, $11.99 value is really, it's pretty eye-catching, and we're very excited about what it means in terms of first-time guest capture.

We've done a great job with activating our rewards members, but we think that this sort of, you know, $11.99 value is really, it's pretty eye-catching, and we're very excited about what it means in terms of first-time guest capture. And so as it relates to fiscal 27 traffic, while Q4's performance came in below expectations, we feel that we've got a really strong lineup in terms of initiatives that will drive traffic force in fiscal 27. Our IP pipeline is very strong.

Beyond the quality of the individual properties, we also have a record number of IPs. The LTOs that we do, the current reserves, we're increasing from 9 to 12. Those are proven traffic movers, and so we're excited about that. We think that we're pretty unique in deciding to take 0% pricing, and that should make the value delta between ourselves and everybody else that's fighting for stomach share that much clearer. We also have value combos, which we're really – This is pretty new for us to put this much effort behind a value combo and to support it with marketing. And so we're really excited to see just how far we can bring this. And yeah, all of this is going to be supported by incremental spending on paid social, which we're really excited about.

Okay, understood.

Thanks for all of that context. So I got to just ask one more on the IT collaborations.

One of the big initiatives this year was to, as you said, improve the quality as well as increase the frequency of those collaborations. But the idea of essentially reducing quarterly same-store sales and traffic volatility, it seems like that hasn't really worked out to the extent that you probably hoped this year. With regard to IP collabs going forward, when you talk about them for 2027, are you talking about increasing the frequency of collaborations again or going back to retool your IP platform somehow?

So we have a total year IP platform, but we're also increasing the number of IPs that we're doing. So last year we had seven, this year we have eight. The bulk of the excitement is typically within the first month, and so having more first months gives us more comp opportunity, even with a full calendar in both years.

Okay, understood. Thanks very much. Thanks, Matt.

And next, we'll move to Todd Brooks with StoneX. Please go ahead.

Hey, thanks for taking my questions. Appreciate it. Ben or Jimmy, within the 27 guidance, what same restaurant sales assumption is in that 376 to 381 revenue guidance?

Hey, Todd, for the high end of the guide, that assumes flat to slightly positive comps, whereas the low end of the guide would assume negative comps.

How deep of a negative can that buffer, Ben, and still hit the 376? Just slightly.

If you could think of there being about a 1.5% comp spread between the high-end and low-end assumptions. Okay, great. Thank you. That's helpful.

Also, in addition to that, I would like to say that

And just as a couple other notes, given that we're on the topic of the revenue guidance, we are meaningfully backloaded this year in terms of the unit opening pace, and so we just thought it'd be probably most useful for us to share our expectation about operating months.

Currently, we expect 84 operating months from new openings in fiscal 27. As some other puts and takes for revenue, this will be the first year that we've decided to close for Christmas and Thanksgiving. We're happy that our team members will be able to spend time with their families, but it is two days of lost revenue.

Okay, fair enough. When we look at Q4 and we look at that traffic number, I know you talked about IP as a program across the whole year, but in the Q4 window, did the IP partnerships perform to plan? Was that any of the reason for just down double-digit traffic?

Of course, the Q4 IP was the main thing, but there were also things that went into the second month, and there were also things that didn't meet expectations, and there were also things that were affected by the World Cup. There were a lot of things.

Yeah, without calling out any specific IPs for not meeting our expectations, not all of them did meet our expectations. The other factor there for Q4 was the World Cup. One thing that really surprised us is that when the World Cup began, you could see traffic really turn on a dime. And so we expected that dynamic to reverse at the end of the World Cup, which is part of the reason for the guidance that we provided in July. What we saw in July and subsequently was that the dynamic did not reverse, which was very surprising, and really the difference between our expectations and the results we reported today.

On the other hand, Q1, in the middle of this midterm election, the traffic was greatly damaged, but even so, compared to Q1 and Q4, there have been significant improvements. Moreover, from now on, Yoshi's giveaway will begin, so there have been significant improvements.

And as it relates to Q1, we did see there was a lot of consumer uncertainty, especially with midterms. But now that we're past the midterms, now that we're into the Yoshi campaign, we're feeling very encouraged. Just looking at the comps to date, it's a meaningful improvement. We're about down negative three versus the negative five, seven that we'd We're doing in Q4, and so we're already on an upward trajectory. In terms of the full-year comps, we're expecting a meaningful step up in the back half, and so we're really excited to hit those quarters, so to speak.

Okay, and a final one, and then I'll jump back in if I can. You've long talked about the challenge of the current brand promise of communicating the value that you offer without kind of diminishing the quality. positioning that people perceive for the brand. And now we're moved to a place where we're looking to more broadly promote 999 and 1199 bundles. How are you, are you either looking at the consumer differently that they just have such a different focus around price point driven value now that you don't think it will diminish the perception of the brand or just walk me through what got you over the hump to be willing to communicate value so overtly? Thanks.

Yeah, just in terms of our decision to put energy behind the value combos, we wanted to meet consumers where they are. And us crowing about how high quality our ingredients are when everybody else is thinking about value, we didn't think was the right strategy. And so we are doing deep discounting on our sushi staples. It's really just on the noodles. What we've seen is that the average check size hasn't diminished on the days that we've done the value combos. And so our assumption presently is that the value combo is very eye-catching, and it gets people in the door. But once they see all the delicious-looking sushi spinning past them, they can't help themselves. And so if somebody only has $12, we want curry to be a great option. But if they can spend more, we want them to come as well.

And in the intervening months since the last call, we spent a lot of time studying our competitors' best practices as it relates to value presentation.

and the 5% mix that we're seeing is pretty in line with the best of class as it relates to value and so we're very encouraged there and we don't think that it's negatively impacting the value perception or the quality perception of career as a whole.

Okay, perfect. Thank you both. Thanks, Todd.

And next we'll move to Sharon Zakvia with William Blair. Please go ahead.

Hi, thanks for taking the question. I just wanted to clarify on the comp, because you alluded to negative three quarter to date, but you're just dropping the price off now, correct? So with that and with Thanksgiving and Christmas closed, I presume we should expect something worse for the quarter?

So, I mean, we're only four days, five days now into November. But we haven't really seen any changes in average check. And so we're really, really pleased to see mixed basically making up the price that we are not offsetting. As it relates to Thanksgiving, if we close a restaurant for a full day, we back those out of the comp base. And so that wouldn't impact our comps.

Okay, thank you. And then the decision to slow growth a little bit, I guess I had been thinking we were kind of in that 20% plus range and it's going to be a bit less than that this year. Can you kind of walk through the thought process? Are you seeing the unit economics hold up as expected or are you trying to kind of be more selective in this macro environment? I'd just be curious on the thought process.

This is the other major point that we were excited to discuss, and so we'd like to spend some time going over this. First of all, we have achieved our goal of first-mover advantage, which is 100 stores, 25 stores. and other major DMAs. We achieved our goal. This is a good time to moderate.

That's the first reason. So, Sharon, just before we go into the reasons that we decided to do this, I wanted to head off any concerns about unit economics. This has nothing to do, we have zero complaints with the unit economics of our recent openings. Fiscal 25, 26 have been great. The openings that we've had to date in fiscal 27 are great as well. really it has more to do with the maturation of Kura as a company and the competitive landscape and so coming out of the IPO we wanted to move very quickly given the fragmentation of the sushi space the lack of a dominant leader we wanted to make sure that we were able to be the first ones to plant our flag across our key DMAs and today we're in 25 states we're in every major metro every major DMA and we're about to close in on 100 restaurants and so the impetus behind and many others. This is the most important thing.

According to this strategic change, the achievement of free cash flow, such as the next capital growth, and the lifting of the debt, will not depend on this achievement. Last time, it was indicated that it would grow to $85 and become a size at that time, but with the current price evaluation, And then in terms of really the driving positive reason for us pursuing this strategy is our desire to generate free cash flow and become self-funding. This strategy of

This strategic moderation of our growth rate, this allows us to achieve that free cash flow, assuming no benefit from a tariff relief. When we think about our last capital raise, we assumed that it was going to be the last one. It was at $85. Certainly, we have no appetite to do a cash raise at these share prices. We think it would be a disservice to our investors. And we think that the stability of self-funding and the lack of need for a further capital raise are really the two things that I think our investor base would best appreciate. And so that's the driving force there.

And then in terms of the growth rate adjustments,

We're going from the historical 20%. This year we're still doing 18%, and so I really wouldn't call it much of a deceleration at all, especially given that we're increasing the number of absolute units. We expect to continue to do that in our forward years. It'll probably be the likeliest cadence would be something along the lines of 17, 18, 19, et cetera, although there might be some puts and takes in a given year.

Okay, thank you.

Thanks, Eric.

And next, I'll move to J.P. Wollum with Roth Capital.

Great. I appreciate you guys taking my questions. And I jumped late, so sorry. It's been covered a little bit. But just exploring the value conversation a little bit more, I just want to clarify, is it due to you guys kind of not seeing the trade down from more expensive mom-and-pop customers that you maybe would have expected in this environment. And at the same time, maybe your more value sensitive or low income cohort has kind of reduced their frequency. And so you haven't replenished that bucket per se. And that's why you want to be a little bit more aggressive with some of this messaging. Is that part of it? Or can you just kind of comment on that?

This is a great question. I think both of these are happening. I think our price mix is improving rapidly. I think our price mix is improving rapidly. I think our price mix is improving rapidly. I think our price mix is improving rapidly. I think our price mix is improving rapidly. I think our price mix is improving rapidly. This is Ben.

So in terms of trade-down, we think that we're actually, we are capturing a lot of trade-down, and the best demonstration would be the mix improvement, which is just consistently accelerated quarter after quarter. It doesn't really make sense unless were capturing a new guest cohort that's accustomed to much higher sushi prices. And so we think we're doing a really good job of capturing the trade down. That being said, our traffic opportunity is weekday lunches and twenty nine dollars for as an average check for a weekday lunch is it is certainly on the higher end. And so we just want to be more competitive for that day part. That's what's really driving the nine ninety nine eleven ninety nine offerings.

OK. That's helpful. And then just as we think about that restaurant level margin guide for next year, understanding that there's flat comps kind of baked in somewhere around the midpoint of the sales guide, can you just bridge what gets you to that restaurant level margin for next year? And then we've talked about kind of hitting that 20% target in the past, but Just kind of any puts and takes that would get you from that 19 back up to 20 beyond next year.

Sure.

So we're going to walk you through the line items, but starting with COGS, we expect that to be slightly up as a result of not taking price, but we believe that it's going to be offset by reductions in our other costs, so they should net out to be neutral.

So we're going to walk you through the line items, but starting with COGS, we expect that to be slightly up as a result of not taking price, but we believe that it's going to be offset by reductions in our other costs, so they should net out to be neutral. So we're going to walk you through the line items, but starting with COGS, we expect that to be slightly up as a result of not taking price, but we believe that it's going to be offset by reductions in our other costs, so they should net out to be neutral. So we're going to walk you through the line items, but starting with COGS, we expect that to be slightly up as a result of not taking price, but we believe that it's going to be offset by reductions in our

The bridge from 2018 to 2019 is really coming from labor improvement. We were able to do 190 basis points of leverage in fiscal 26, and we expect an additional 100 basis points of labor improvement in fiscal 27.

First of all, labor inflation is almost only at the minimum level. If we go full-year basis, it's about 15 basis points. That's because ATR is doing a good job, and I think it will be offset by the renewal of the workers' comp.

So looking at labor inflation, it's become extremely stable. Really, the only labor increases that we're expecting would be the statutory minimum wage increases on January 1st, which would translate to an impact of about 15 basis points on a full-year basis. But our HR team has done a phenomenal job, and by renegotiating some of our workers' comp rates, we expect that to be offset.

And to give you some additional context on the quarter to date, we're currently, quarter to date, we're doing about 70, 80 basis points better on labor than we did last year.

and this is with a negative 3% comp. So when you contemplate the back half of the year when we reach the easier comparisons and we expect comp acceleration, 100 basis points of leverage we think is extremely reasonable.

And so this would be the bridge to the 19% for fiscal 2017.

And as it relates to the dishwashers, given that we're still in the implementation process, we expect a complete full rollout in fiscal 27, meaning that fiscal 28 will be the first year that we have a full year benefit, and we would expect a 30 basis point improvement from the full year benefit versus fiscal 27.

And then with the savings from the Bikrapon

Desert Coupon Options. We would expect, once we're able to implement this in full and be able to adjust our bigger bond price order volumes based off of the demand that we're seeing from guests, we would expect that to be about a 20 basis point savings. We're also implementing all these different PM projects, improvements in our repair and maintenance approach, savings on small tools, utilities, which would be another 20 basis points of savings in the other cost line.

And for the remaining 50 basis points, this would be coming from better sales leverage on positive comps, and so that's

One of the reasons that we're really going full force behind all of our traffic initiatives this year, our overwhelming goal is to be able to wisely spend our cash runway and to get to free cash flow by fiscal 31. And the one thing that we really want to emphasize here is that none of this contemplates relief from tariffs. And that We would say it's conservative at this point. And so should that come, that would accelerate the timeline meaningfully. And so we think that we've got a pretty bright future. Great.

Appreciate the color and best of luck, guys. Thanks, JP. Thank you, JP.

And next we'll hear from Jeremy Hamblin with Craig Hallam Capital Group.

This is Will on for Jeremy. I also joined a little late, so apologies if this has been hit on, but it sounds like comp trends have honestly improved to your quarter to date. I guess, can you help break that out by traffic and check, and then maybe remind us what sort of lap you're facing here in November, and then what sort of lift you're anticipating from the Yoshi IP?

First of all, the mix is improved compared to Q4 and Q1, and the traffic is about the same level.

In terms of the quarterly data improvement, that's really coming from mix.

Traffic has been pretty much steady state since Q4.

And so if we're able to improve traffic, even if we were able to just get it to flat, that would put us in an incredible composition. And so that's really what we're putting all of our efforts behind. I'm sorry, what was our expectations for the Yoshi campaign? We expect it to be as strong as Kirby.

That being said, while our expectations for Yoshi are very high, we think everybody was pretty much holding their wallets until the midterm election results came out, and we're excited to

First of all, starting this year, 45 is existing, and new is 55.

But already,

In terms of the pipeline we have for fiscal 27, it would be 45% existing markets, 55% new markets, but the

Comp tailwind benefit that we expect from this pipeline mix really comes in the back half of fiscal 27 and into fiscal 28, just given that for cannibalization happening in fiscal 26, or fiscal 27, that would really be determined by our fiscal 26 openings. A couple ones come to mind in particular, the infills of San Diego and Austin, which are two of our top performing units, previously single unit markets, were infilled in the back half of fiscal 26. And so those pressures we expect to, you know, We don't expect any change there until we lap it, which would be in the back half of fiscal 27. But fiscal 28 would see continued improvement on the cannibalization headwind front. And I'm not sure if I mentioned it, but the cannibalization we experienced in fiscal 26 was 2%, and we expect a steady deceleration in headwinds as we progress through fiscal 27 and 28. Super helpful.

Thanks for taking the questions.

Of course.

There are no further questions at this time, and this will conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time.