In eight years, from 2015 to mid-2023, Kura opened 37 new locations in North America. The chain now operates 45 of them, all owned: if the success of its concept is confirmed, an opportunity to develop via franchise networks could arise.

As it stands, the group is not yet profitable on a consolidated basis, although it is approaching breakeven. The average restaurant generates $3.8 million in sales, with an operating profit after depreciation of $0.2-0.3 million in 2022.

This performance is well below the best chains in the restaurant industry, which are generally concentrated in the fast food segment. It must be said that Kura's raw material - fish - is more expensive.

The business model is obviously based on the scale and operational leverage of the structure. The latter retains a more or less stable share of fixed costs as the business grows, which is gradually amortized as new restaurants are opened - provided, of course, that their operation is profitable.

On paper, the growth in sales per restaurant is excellent - +11% in the first half of 2023 compared to the previous fiscal year - but it is not enough to absorb the very high inflation. As a result, profitability per restaurant is declining by almost 50% compared to 2022.

This situation considerably depresses returns on investment for new restaurant openings: previously anchored at around 35% - in the high average of the sector - it is now declining in the 15%-20% range.

At more than x65 EBITDA, this unfavorable development is hardly reflected in the group's valuation - despite the sharp drop in the stock price.

The market capitalization of $660 million thus implies a valuation per restaurant of $14.6 million, i.e. more than four times their replacement value, and between x40 and x60 their average operating profit after depreciation (EBIT).

Such a multiple could only be justified by a huge addressable market and an uncommon profitability per restaurant. Kura, a priori, has neither, as the chain estimates its potential in the US at around 300 restaurants, six more than today.

Moreover, its comparables have had painful precedents in the U.S. market: Benihana and Wagamama are struggling to grow, while Kona Grill has gone out of business. Kura has done rather well, but at such levels the valuation of the moment is still very optimistic.