Q2 2024 Kura Sushi USA Inc Earnings Call

Presentation

A copy of the earnings release has also been included in the eight 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 to be useful in evaluating our performance 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.

For that out of the way, turn the call over to Jamie Center Bank and thank you to everyone for joining us today. I'm very pleased to report that the ongoing strength of our business as we progress throughout the course of his career. This will go into greater detail later. But for those of you who saw our earnings release, I'm sure you noticed that we have announced further raises in guidance. It was unprecedented for us when we announced our guidance rate sorry in the year with our first quarter call and being able to follow the next quarter with raises for each of our guidance items demonstrates our incredible confidence in the business. We've opened 10 restaurants to date, putting us well on track for our new unit guidance of 13 to 14 openings this fiscal year. We leveraged the G&A year over year by 190 basis points and grew adjusted EBITDA dollars by 23%. We've introduced big new projects and our operations teams have more than risen to the challenge of implementing them. I'm extremely proud of everyone's efforts, and I want to begin the call by acknowledging all of our team members and thanking them for creating so much scrutiny I get to share today. Total sales for the fiscal second quarter were $57.3 million, representing comparable sales growth of 3%. Traffic growth of 5.9% is a meaningful acceleration over the prior quarter's profit was up 3.3%. We are very pleased to have achieved these results in spite of the severe weather that impacted the entire industry. During our fiscal second quarter black boxes, restaurant industry traffic index was negative 3.5%, a spread of 940 basis points compared to the casual dining industry. Our profit outperformance was 1,180 basis points. It's clear that our Guest Love cooler and much as we love them as a reminder, 7% of pricing paid off during the first week of December, which we offset with only 1% in January for current effective pricing of 3%. We mentioned price mix tailwinds in January, and we are very pleased to see that continued through the quarter. Clearly has been a special quarter for Kura, and I'm proud that we provide the kind of guest experience, it keeps guests coming back to us during the second quarter, commodity costs continued to be low to where we want them at 29.6% of sales. Labor as a percentage of sales was 32.8% compared to 31.0% in the prior year quarter. In addition to meaningfully higher pre-opening costs due to accelerated openings, we experienced the same severe weather that impacted the rest of the restaurant industry. We are confident that this increase in labor cost is not perhaps as structural in nature, and we expect the same seasonal leveraging of labor. But we've always seen, as I previously mentioned, we are aggressively executing on one of our key strategic pillars to drive overall corporate profitability, leveraging G&A, we were able to bring G&A costs down to 14.3% as a percentage of sales as compared to last year at 16.2%. And as a result, we now expect to achieve even greater G&A leverage for the year, which Jeff will discuss later.
Our support center team has done a great job in managing impairment of headcount, and we expect further tailwinds in future years as we infill markets and the benefit from efficiencies in regional restaurant management.
In the fiscal second quarter, we opened five new restaurants, Kansas City, Missouri, Skokie, Illinois, Columbus, Ohio and the U.S. and the real estate in Texas. Subsequent to quarter end, we opened one more restaurants in Orlando, Florida. We also have fiber UNI-P currently under construction in the fiscal year to date alone, we've opened as many restaurants as we did during the first six years of Christmas Eve operations in the US. I'm incredibly proud of our brand has become and the for us to have established our footprint as Acuity has a lot of ground restaurants in 17 states. Today, we are also pleased with the performance of our new rewards program. U.s. members are now responsible for approximately a third of our sales as compared to less than a quarter with our prior program. Our recent analysis on average U.S. members spend 10% of mobile ticket, even after factoring in discounts and the visit 1.3 times per month for the last several calls, I've hinted up IP correlation that I was extremely excited about. And it's my pleasure to finally be able to share that our next IP partner is to have on board. I think this might be our first North American property that everybody on this call is already familiar with. We believe that one of the most exciting patent assets we've ever had, and I'm truly looking forward to seeing the results. I have a lot of great news to share regarding our tech pipeline as well. We have completed our first in the front desk of a robotic dishwasher in Japan and are the results have confirmed our expectations on how meaningful they will be for our operations where we don't have a timeline for sit further implementation. I'm very pleased with our flight momentum payable side of mobile ordering. Functional implementation is going smoothly as well. And I'm happy to be able to announce a new feature for people to say the mobile ordering that we are developing in parallel, the ability for guests to Ambika on prices through side on the new purchases that are done.
Yes, please proceed, please.
One more thing on the tech front. We have completed a new battery testing technology from Korea, Japan that we are currently getting certified for the U.S. because it is officially Frida. It puts our life both directly onto our cisapride and then takes them to each again, employee via converter Leading the call us. We can have a two to three employees spending half on half is our fifth pressing rice balls on the official rates and 100 of them to the next person on the migraine. So that operational upside here is obvious. Our expectation is that we'll be able to bring the freshest radar certified for testing this summer, and that will absolutely be able to retrofit some of our existing restaurant to accommodate it. As you can see, we've made a lot of progress in this last quarter.
Lastly, I'm pleased to announce that we were able to secure a very favorable deal with DoorDash, prompting our exclusive partnership and the rapid rollout of the program with ZD. two times, we are able to keep our menu prices the same as in-store dining and we expect the data sales to be beneficial to margins. We are very pleased with our partnership with DoorDash so far, and I'm looking forward to providing quantitative color in future calls, I would like to again thank all of our team members at our restaurants and our support center. Every department. Tom pointed to a remarkable achievement this quarter with our we are looking at some 10 restaurants set that we've already opened to incredible traffic auto performance of our restaurants generally of HR. 180 basis points. Our IP corroborates on pipeline and the success of new device program, progress in technology for a successful and rapid rollout of DoorDash. It's been an amazing quarter.
Thank you, everyone. And now I'll turn it over to you to discuss our financial results and liquidity.

Thanks, Jimmy. For the second quarter, total sales were $57.3 million as compared to 43.9 million in the prior year period. Comparable restaurant sales performance compared to the prior year period was positive 3% for the regional comps of 8.7% in our West Coast market and flat comparable sales in our Southwest markets.
Turning now to our costs. Food and beverage costs as a percentage of sales were 29.6% compared to 30.1% in the prior year quarter, largely due to pricing and supply chain initiatives. Labor and related costs as a percentage of sales were 32.8% as compared to 31.5% in the prior year quarter. This increase was largely due to adverse weather conditions, increased training costs associated with new store openings and general wage increases. Occupancy and related expenses as a percentage of sales were 6.9% compared to the prior year quarter 7%. Depreciation and amortization expenses as a percentage of sales increased to 4.7% compared to the prior year quarter's 4%, largely due to additional newly-opened units as well as the accelerated depreciation of assets that were being replaced due to planned remodels.
Other costs as a percentage of sales increased to 14.6% compared to 13.3% in the prior year quarter, due mainly to pre-opening costs associated with a greater number of store openings as well as an increase in marketing costs, repairs and maintenance and general cost inflation.
General and administrative expenses as a percentage of sales decreased to 14.3% compared to 16.2% in the prior year quarter due to greater sales leverage, which was partially offset by incremental public company costs and recruiting and travel costs associated with new unit openings.
Operating loss was 1.7 million compared to an operating loss of 1 million in the prior year quarter. Largely driven by incremental other costs associated with the greater number of unit openings and units under construction and depreciation and amortization. Income tax expense was $50,000 compared to $15,000 in the prior year quarter, net loss was $1 million, or $0.09 per diluted share compared to a net loss of $1 million or $0.1 per diluted share in the prior year quarter. Restaurant-level operating profit as a percentage of sales was 19.6% compared to 20.3% in the prior year quarter. Adjusted EBITDA was 2.9 million compared to two points, 3 million in the prior year quarter.
Now turning to our cash and liquidity. At the end of the fiscal second quarter we have $56.8 million in cash and cash equivalents and no debt.
And lastly, I'd like to update the following guidance. For fiscal year 2024. We now expect our total sales to be between 243 and 246 million. We now expect to open between 13 and 14 new units with average net capital expenditures per unit of approximately 2.5 million. And we now expect G&A expenses as a percentage of sales to be between 14% and 14.5% and without add-back, I'll turn the call back over to Jim.

And 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 for your attention.

Question and Answer Session

Operator

Thank you. We will now be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your lines in the question queue and you may press star two if you'd 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 keys. One moment, please while we poll for questions.

Thank you.

Operator

Our first question will come from the line of Jeffrey Bernstein with Barclays. Please proceed with your question.

On our of your.

Great.

Thank you very much for a couple of questions. The first one, just looking at the comps that you said 3%, just wondering if you can talk about maybe the trends through the quarter and what you've seen in the month of March does seem like the industry is perhaps talking about a little bit of a slowdown in March going into April, especially in the lower-income consumer.

So just trying to get your perspective on the consumer environment and what trends you've seen in recent months, a one week earlier this year and also another strong Class B or any other analyst, both clinically and muscular muscle. Some have looked at and we are learning with this on a global and domestic joint bidding, honestly, because marketing frequently, particularly for some of them, have materialized called multimodal labels or 30 for the promo, somebody portal. Once I suppose about the beginning of the some of the public Internet, but still the mobile single presents a perfect. And that is going to fuel on a lot of relative to execution on the Motherson, what are the impacts.

And in terms of the monthly cadence of the comps, obviously, we saw some pressure in January with the inclement weather that everybody else saw certainly were very warmed up. We think they're reported by remodels, especially the promotions that we are hosting as well.
One thing that we really you have tremendous pride on the pipeline, the traffic that we did, which is really going to have a 1,000 basis points spread between ourselves and because we're finding it created a tremendous amount of pent-up demand on underwriting.

I think you want to look at them, there are no safety, government and much, much more than 50% of E. ON momentum. Executive of simple protocol of one quality of the second home automation is quite.

We're incredibly pleased with how form and we're just April, but we're very happy with April's as well. And so it's great to see that we're maintaining positive momentum that we've seen as we've exited Q2 up, it's been really great now that's encouraging.

And then just secondly, on the new markets you're going into from a geography standpoint, any surprises in terms of the reception from the consumer, whether positive or negative. Just curious your learnings in your newest markets since that's such a big opportunity for you as iron ore coal, you would have no silver at this point.

If I turn to the matter under several anomalies when it comes to RFID, technology touches January now without the ferronickel going out over kind of the ethanol of adult division, not up very much on the gamma 14, up from the line of Corbin Coinmach and no matter what happens right in terms of geographic trends, we've seen the same trends as before in terms of new markets, every single one of them has been a hit yet.

So in other words, no surprises we've had, it could be the expected hits and we've gotten hits. And so that's really nice in terms of differences in geographic performance that would really just be associated with wherever the weather was for us.
We've got a lot of places in California.

And so when it rains in California, that that can have an impact on the correct value West Coast comps, yes, margin was pressured relative to at least street expectations on the labor line and the other line both being well above expectation, which drove pressure on the margin. But I get the feeling those aren't necessarily structural sounds like the labor was because of some accelerated new unit openings on the other costs that were some unusual. So just wondering as you think about the restaurant margin for the second half of fiscal 24, what your thoughts are there and maybe what line item you think has the greatest visibility versus the greatest level of uncertainty as we think about the back half of the year restaurant margins.
Thank you.

But my belief at almost any consumer out in order to have an impact on the tax front, Peter, in your comments, some of my initial to the pre-opening Butiaba, I'm sure you just put up another half on occupant a funnel, whatever it mostly vessel has an acute importance of the normal European public employees are going to open imminently McConnell margin pressure from the minute. They tend to run a program did not. He can you hire, say the figure, but it's coupled with if that wasn't there contracting update and after looking at our intermodal peak at Columbus McKinnon currently unaddressed, and I'm not necessarily with a magic answer for you on e-commerce you actually diminishing auto for us on this, but we're very confident that the restaurant level operating profit margins for the second half of the year, as you know, we've already opened the bulk of the units for this fiscal year.

And so those our pre-opening labor related headwinds are largely behind us.
The other factors that we're going to see the same seasonality to seed sales leverage that we've seen every year. We also have a number of promotions that are in the pipeline that we could not be more excited about. As Jimmy mentioned, we've got Dragon Ball. We think that's literally that had the biggest promotion ever giving. And I are super, super proud and pleased to have that there. And so we've got a lot of tailwinds and even the sites that we've got, the tech stuff we've got Florida, there are a lot of things to look for to for restaurant level operating profit margin other than a few untreated ultrasonic to implement UnumProvident until equal activities have contributed.

One thing that you don't necessarily know that it never got to send out the transition and the other would be the first ones to open a restaurant.

It's typically not profitable, and we're over the hump for all those restaurants. They're operating at full capacity, but it's going to be tailwinds for the back half of the year.
So yes, where we're best that we're really excited and just do it all out is, as we talked about the restaurant level margins, which are really excited about all these new things we have in the pipeline. We also really wanted to point out the G&A reduction and leverage we're getting out of the total adjusted EBITDA line of the G&A.

I mean, we have for 15.8 2022 to 15 and 2023.
And with our new guidance, if we hit the midpoint, that's another 80 basis points above peers is something very proud or very excited about.

Absolutely. Thank you guys, very much.

Sure. Thanks, Joe.

Operator

Our next question comes from the line of John tower with Citigroup. Please proceed with your question.

Great.

Thanks.
Thanks for taking the questions. Maybe starting off with the the comps in specifically during the period, it's great to see the traffic growth.
That's awesome. But the price mix implications behind that, you guys moved into negative territory. I know there's not a ton of history here, but I'm curious that would seem to indicate that consumers are perhaps managing their check a little bit differently than in years past. So how is that manifesting or people just getting fewer plates are they pulling less off of the ordering less off of the tablets and pulling more off of the belts. I'm just curious to see how it's showing up in your business.

So London operator archival.
Okay, great. And then if I can address the cotton market in from the continent and alternate able to sell some of our on-site luminaries, Tacoma landfill down and obviously that affects our product there and our co-development at managed telecom, even documents that I'm not going to get covered already had a question to guide therapy for personal accident because I was looking at looking at pro forma domestic, particularly for putting that money finishing at two. I am finishing are going up. You're talking about the triple combo potential today and all quite indicator towards if that's what you might have.
Another camera and very mosquito together with Telenor and or mobile was?
I'm sorry, I don't because of the function that we get about two to three gigawatt sensitive. Nobody wants new multimodal network opening probably quicker. And so but I can tell you about journey, whatever in a personal comment upon what the succession process in terms of mix for quite some time.

Our purpose and plate consumption has stayed flat at 6.3 points year over year. And so really no difference there the delta would be in sight, the new orders are people trading down from soft drinks to water in terms of mix, we're actually we're very pleased at I don't know if you caught what we mentioned at ICR in January. But as of December, mix had gone from negative high-single digits, negative mid single digits. And as you can see from our comp rate can feed back into from traffic. That strength has helped. And so the consumer is showing greater strength in the most recent quarter relative to the last couple of quarters where we mentioned mixing negative high single digits. I'm we're exceptionally proud again of the 6% traffic. And if there is mix pressure, we're very proud to have been able to offset that with incremental traffic growth. We do have a number of things that we expect in terms of opportunities for site maneuvering, namely the biggest one being our guests being able to order from their phones instead of having to reach over there their bodies sitting closer to the date closer to the conveyor belt. They've got the tablet people can just use their smartphones and their menu. But the bigger thing is that now is the Stage two for that our guests will be able to earn prizes fiber inside menu items, which had never been a consideration before. So we've got a lot of things to look forward to in addition to the fact that mix has already been improving.
Got it.
Thank you. Appreciate that.
Color maybe jumping around a little bit on the DoorDash partnership that you've got. I think, Jimmy, you had mentioned the idea that this is going to be margin neutral to the relative to in-store transactions while keeping the prices the same, if I understood that correctly. So are effectively this just getting passed along to consumers and the higher in the form of higher delivery fees. I'm just curious how you guys manage that.
So our expectation is that it's going to be margin neutral to margin accretive. We're really excited about the partnership with DoorDash. And in terms of passing along costs, I guess we're actually what are the reasons that we're partnering with DoorDash is because we can offer a better guest experience than ever before we're on DASH pass. So if you have a dash pass membership, you can now get delivery for free where before it cost seven or $8. And so to be able to offer the same prices as in our restaurants and give guests free delivery and be margin accretive. It was really a no-brainer for us, but this really came down to the deal terms, we were able to secure with DoorDash. And as Jimmy mentioned in the prepared remarks, if we hadn't been able to arrive at these terms, this wasn't something that we are entertaining. The fact that we got to these terms is really what triggered our decision to move forward with this.
Got it. In terms of I mean, maybe it's early days for it. But I'm curious either what you're seeing and seeing in stores that were maybe it was deployed already in terms of how it's mixed in or what your internal expectations are? And then separately, but related, how are you managing this within the store? Because obviously your kitchens are super busy already. You've got a lot of traffic running through how are you handling these delivery orders versus the in-store transactions that are taking place?
Yes. The operations team has done an amazing job in terms of implementing and integrating it into their operations, we're able to throttle orders. And so we are busy in our kitchens are at capacity. We're always going to prioritize the guests that are already in our restaurants. And so we've just slowed down or shut down our off-premises orders and it really hasn't been an issue.
Got it off some of the I'll pass it along and maybe hop back in the queue. Thank you.

Thanks, John.

Operator

Our next question comes from the line of Mark Smith with Lake Street Capital. Please proceed with your question.
I guess first off, just wanted to dig into margins a little bit more on the labor expense up here. Can you break down at all how much of that was due to the higher openings here versus just kind of pure labor inflation?

And then I'm also curious, any impact that you guys are seeing in California restaurants on labor with a higher faster to minimum wage there so much runoff reopening, but also quarter on quarter sales-oriented tunnel combined that you threw out and I think kind of Q2 to grow that, to my knowledge, not you could rather than asking and PetroBakken Maserati, non-luxury, IgA and renewable portion of the market was not going to have like 30% to the promotional multimodal number on our preopening labor turnover of intangible assets for the sort of the impact of casino provocative chemicals almost better or reverse it in the volatility. Did I miss a single data? And what about I mean, Grace on that in a bit more of the economics of the Macquarie Asset Management, you name it you want to take on certain markets are stable, but you don't notice it on the profitability something I must congratulate you were going to have a methodical. I came up with a very good quarter given the maturity and I won't get copies of our company. So they don't have a home and the covenant. And based on what I have understood lot the stuff kind of continuing to extend credit terms and geopolitical issues continue into that. And that's mainly for Yamana.
Finally, negative goodwill assumptions.

So if you look at our Q, you can see that our preopening costs for Q2 are $700,000 higher than pre-opening costs in the prior year's Q2 and the bulk of that $700,000, that's about 1.3% of sales, the bulk of that product, $1,000 labor. So you can see immediately just how big of an impact that the accelerated pre-opening labor did.
In terms of the full year, we expect mid-single digit labor inflation, which is what we've said in past quarters, the change in labor is really again, it's really driven by that preopening preopening labor that's compounded by the weather that we saw across our markets. We really were very pleased with the margins that we put up in spite of that. And we have zero concerns in terms of returning to normalcy as we enter Q3, as we've mentioned we have a lot of tailwinds and we think we know that the elevated labor from the last first due to things that were either out of our control, whether or we're pleased with, which is that we were able to open our restaurants here. And so yes, we're pretty happy.

I don't know if you look at a ton of it, not quite collaborative, whatever it was. If you connect motion audio content at Rumo and ALL put simply America putting a bit more detail on some of you again, I think it, I think we're very comfortable.
I'm going to answer sticking on profitability for quality when it comes to unique architectures, you don't kill me, but what I indicated, I could if I could paraphrase I mean putting some kind of an aggregator and all of it putting in accordance, of course, with aggregators that are in the federal government side in terms of the FAST Act as I'm sure you're aware, we're not as the legislation stands.

We're not under that umbrella of a lot of that casual dining restaurants or restaurants generally have been impacted by regardless of whether or not they're directly under that umbrella, just continuing to maintain competitive wages in California, our employees in the back of the house are eligible for temps. And so they're already making very competitive wages. And we just don't see a scenario where they're going to leave our heavily automated restaurants, so do more work for less pay. And so this really hasn't been a wage pressure for us where we are and all within top, I've spent a lot of time in California live in California. So we've seen we've seen price go up, sometimes high-single digits, sometimes double digits and at the restaurants and cafes that we always go through. And so the fact that we're keeping pricing where we are we think is that it's a strategic and meaningful advantage. We think that this is an opportunity to really grow our audience when everything else seems more expensive than ever in Korea, is that affordable luxury, which is really what so many guests love about the brand. We think this is an opportunity to bring that experience to constantly people, especially when our price point is getting closer and closer and closer to QSR as a greater price to maintain margins.
And Mark, one of the things we've always said is that we thought that with the FAST Act or maybe fell 28 came in. And we thought that would really increase the value proposition for Kura Sushi. And I will tell you that yesterday I ordered a salad for lunch from a chain to the unnamed customer, but I had to pick an entity proven and it was even for delivery fees or anything.
It was almost $20.
And you can go to courses a fireplace decision, and I sort of heard about that. Maybe just tiny bit more than that. So our guess on what people were going to do with pricing on April first and how that increases our value proposition seems to be proven true, at least in the early stages of this new act.
Actually, one other question for me. Is just looking at the opening cadence here. You guys did a good job getting restaurants open here in the first half with five under construction, the guidance of 13 to 14 Are you just being a little conservative on those openings? Or do you think you can get these five opened by the end of the year, whether or not we're going to see the Shukla.

I put it in another category, I don't know, going into a holiday month, Amazon, Q2, Q3 to Q4.

And even that, Greg, with your question, Tom, in terms of the cadence, we just broke down, broke ground on one of them. So it's very early on in terms of the construction life cycle, the remaining units, we expect about an even split between Q3 and Q4, we think 30 to 14 units is a reasonable expectation, which is why that we gave guidance guidance.

That's fair.

Operator

Thank you, guys think about restaurants Your next question comes from the line of Matt Curtis with William Blair. Please proceed with your question.

Hi, good afternoon. You guys ran a promotion for your rewards members, but I think with two visits in December, you've got to give them a 20% coupon valve in January. I was just wondering if you could tell us about how much of the traffic benefit of that one that's delivering for you or what redemption rates were like? And then I guess, relatedly, whether you're planning to run anything like this regularly going forward?

So but I know Mike McCarthy, definitive clinical data getting scheduled one about Phase I clinic in parallel, although the development in earnings because of Mantra you did have was on its own but by that time, the Netherlands, I think if you could just give them a fully committed 100% that isn't going to cause you are there any sort of a whole voted up or not.

In particular, I'm focusing on in terms of the Q4 came in without getting to the snuff where overall, we were very pleased, obviously with January, we had some noise from weather, which maybe U.S. resulted in less traffic than there would have been otherwise. But we still the 5.9% traffic for the quarter. Our comps were 3%. We were really pleased of. So yes, overall, we view this.
Okay. Got it.

Would you mind telling us what the weather penalty was for the quarter?

I'm sorry, could you repeat that?

Sorry, would you mind telling us what the weather penalty was for the quarter?

Mental capacity, if he'd like to add that?
I have you gotten your cost you nothing about Booker, happy to come.
And also, can you give us a lot of credit, like I know on October 14th out of the gate? Because if I go into the unlocking of going out and one-off, and it can cause significant amount of impact on a particular arrangement.

Late October, January and February, we had about four operating days each that were very heavily impacted January, largely Texas, the Midwest and some of these coastal California was hit during February, but yes, about eight days.

Okay, got it.

Thank you. And then you talked about Dragon Ball being the promotion that's coming out of this spring. I guess you have spice family that's been in place since I think March first. Could you remind us what promotions are happening over this timeframe and how successful they were last year.

But then somebody passed on 100 facilities now. And you've I think about another a number of other product because it's very professional, if you have any perspective and a follow-up and it recorded its 30 month specifically Mexico. So that's 500 in oh one and oh two in the analog and EIP. collaboration?
Megan, I think it will be it motor because interoperable on sorry, is on a one-off or a refresh in Muscat, Oman RESTORE-1.

Okay.

We'll take it over, but you don't need a hybrid anymore. It is unimportant.

And so as we discussed earlier, we're really pleased with March results. We think in no small part was a spike than what has been a very successful campaign in terms of what we've been lapping, I believe it was digital, Cai said last year for April and May. So I have a pretty strong one, but not it was not the strongest, but we were in. So we're very pleased to be talking with the way that we are our Dragon Ball again, is really I mean, it's huge. It's just huge. It's really hard to predict what the impact is going to be. But we are super super excited for me.

First Okay, understood. Thanks very much.

Operator

And I think if I think you as a reminder, if you would like to ask a question, please press star one on your telephone keypad. Our next question comes from the line of CJD. Paulino with Craig Hallum Capital Group. Please proceed with your question.

Hi, everyone. It's CJ on for Jeremy Hamblin. I wanted to touch on labor costs one more time on just see if you were able to give a little more color kind of quantify on the penalty from adverse adverse weather.

And I know, Dave and impact of penal with aggregate of those are going to continue to come up now and a significant amount of cash that went out on day one of focusing on something I think you might think are applicable in ideal because Infineon Fortitech, if the equivalent of a couple of cycles of reopening the different kinds of securities under the hemostatic project was equal to rescue restaurant and one on the current scope of resource nationalism.

And so as we mentioned earlier, we had about $700,000 in incremental pre-opening costs as compared to the prior year. The majority of those of those costs are in labor. And then we had about eight days of weather impact. And if you can just you can change the schedule in real time to deal with weather. So yes, that that would be the that would be the impact if the eight days impacted was for payroll in there.

Yes.

Okay.

Thank you.

And then on the other cost line item on P and L, I know you said you negotiated the DoorDash on really favorable terms. Are you seeing any incremental expense that's being added to that line item?
No. Doordash launched in February on a rolling basis. And so the impact in Q2 was not super meaningful, but in either case, we do expect DoorDash to be margin neutral or actually Our expectation is market accretive, worst case, it would be margin neutral.
And the other costs to our impacted also by the pre-opening costs, the two biggest lines that are impacting our P&L are labor and the other cost line. So when you look at other cost lines, whenever there's a greater number of store opening answers, travel and other costs associated with moving people around for those opening. So the other cost line is impacted as well.
Okay, right. Thank you. And then one more quick one, if you don't mind. Sorry if you just touched on it, but then once you break ground on a new restaurant, how long how long does it take?

What's the typical time to open from that point, decent opening because you guys must be verified, they go delinquent is typically about five months. I'll put it up a couple of I guess the question is, I know that's one of the spectrum of tumors and you take your targeted strategy that territories in whatever environment is obviously, can you bucket the hematin So it's been about five months historically for the last couple of quarters, we've seen that tighten a little bit with inspections at the end of construction going a little smoother.

And so it's been closer to four months and five months, but our base expectation is five months.

Okay.

Got it.

Thank you.

Very helpful.
You actually.

Yes.

Operator

Our next question comes from the line of George Kelly with Roth. Please proceed with your question.

Clearly, thanks for taking my questions. So first one is about Dragon Ball. And clearly you guys seem super excited about that partnership. And I understand big brand, but I guess the question is, are you also you've done so many of these now, I'm curious if your strategy around monetizing big partnerships like that if that's changed at all? And basically like what are you kind of given the history and what you've seen with these big deals before? Is there at a sort of an ability now to be more aggressive in your monetization plan?

Yes.

So our strategy on this is always evolving. As we mentioned, one of the reasons that we're so pleased that April so far is that we just did our giveaway campaign that spike family where he crosses certain spending thresholds. You got T-shirts. I was actually I was at lunch today it occur. And I saw lots of people trying to get those T-shirts. And so clearly it's working. This is what we realized just how meaningful an opportunity is, as you said, this is a very meaningful driver in terms of getting people into the door. And these are brands that people are very passionate about. And so we have a lot of things in the pipeline on can't discuss them just yet. Part of them are enabled by the new capacity capabilities of the rewards program. Some of them are new ideas that we have that are completely separate from that. But we're always looking for new ways to engage our guests in new ways. I think the brands are one of the most fun things about her coming into current. And so we're always looking new ways to leverage that.
Okay.

Understood. And then second question on the unit growth and taking your guidance up again. I guess at the midpoint for expected openings this year. Is it all about permitting or are there any other factors that explain you raising that a couple of times now and then the second part of that question is, if you look out beyond this year, is it fair to assume that the 20% growth target that you've put out in the past is that is that still a good number to use? And those are my questions.

Thank you.

Another Unocal's forecasting of what money you put into the market at the moment, whatever it forever in a very manageable percent could actually have a material premium upward follicular lymphoma complement what I'm going to say, I mean, if it was or not, but any manufacturing assets chemical market, apparently macro for the company that did not qualify some of in terms of growth.

What we've said in the past and what we've achieved with the of 20% as a floor typically coming in closer to 25%. And that's what we've been doing. That's what we expect to do. Our organization has demonstrated that's more than capable of meeting that challenge year after year. We're excited to keep delivering on that.

Now put us in the customer margin Tympany, Michael Temple, and you can calculate them if any, you can put on a hemoglobin under a holdover for quality document was identical number. I know you might have already upgraded the guidance that I know you don't even see them for the taking on of Moderna. I'm not showing any verticals. I'm not going to be able to set up when it comes in.

I think given that we've already opened 10 shorts and we have five under construction, just looking at historical patterns in terms of permitting, how construction goes, we think that 13 to 14 reserve I really care about. Obviously there's opportunity potential to go beyond that at this point with obviously you have six months left in the year. That's the 13 to 14 where we feel good about.
And also to your point George, about the question about the acceleration of the team and really what drove that. Germany did get a little bit easier this year, obviously compared to last year and the year before.
I think the other piece that really helped is that while our management pipeline has always been strong, one of the things that I committed to when I came to the Company was to reinvest back in the Company in areas where we're going to get a very good return.

And one of those was recruiting candidates.
We've invested heavily into recruiting and making sure that we have internal candidates ready to come in and external candidates out there that we can hire as well. And because of that, our management pipeline couldn't be better and we are still able to get, like I said, if we hit the midpoint this year and G&A will still get an 80 basis point leverage even with that reinvestment back into things like recruiting and construction and operations. So the formula and the model is working right now in terms of those things, helping us get restaurants open even faster than we imagine.

Excellent.

Thank you.

Thanks, George.

Operator

And I just think here we have reached the end of our question-and-answer session. And with that, this will conclude today's teleconference. You may disconnect your lines at this time.
Thank you for your participation.

No, no, no, no, no, no, no, no reason to move from moving forward.

Okay.

We'll move to the phone number. We forward No, we'll pass back on to the sorry.

Okay.

It may be too early. The paper may move to move through two.