When you think of fast-growing restaurant chain stocks, you probably think of coffee sensation Dutch Bros or chicken wing specialist Wingstop. It's true that these brands have been expanding rapidly. Dutch Bros already has more than 1,000 locations, and Wingstop has more than 2,500.
But because those franchises have grown so much, eager investors have already bid up their share prices. What if you could have bought these companies in their infancy, when they only had a handful of locations?
My favorite restaurant chain stock currently has just 81 locations, but also a proven concept and big expansion plans. Here's why I'm picking Kura Sushi USA (KRUS 2.16%) as my ultimate growth stock.
Image source: Getty Images.
A Japanese hit crosses the ocean
Much like anime or Hello Kitty, Kura Sushi was already a massive success in Japan before it made the jump to the U.S.
Kura Sushi is a revolving sushi restaurant, where sushi rolls and other food items are sent from the kitchen on a conveyor belt that snakes around the entire restaurant, allowing diners to pick the dishes they want. Kura Sushi debuted in 1995 and has since grown to become the second-largest sushi restaurant chain in Japan, with more than 400 locations.
Kura Sushi has introduced additional technology to its restaurants in the form of refrigerated and covered conveyor belt dishes for food safety, robotic drink servers, touchscreen ordering, and a gamified rewards system that dispenses prizes from brands like Hello Kitty and DC Comics to diners. The prizes resemble Happy Meal toys from McDonald's.
Kura Sushi USA was established in 2008 as a separate company to operate Kura Sushi restaurants in the U.S. It opened its first restaurant in Irvine, California in 2009 and had its IPO in 2019. It's now the largest revolving sushi chain in the U.S.
The stock is volatile, but the growth isn't
Kura Sushi USA's five-year stock chart almost looks like a readout from a heart monitor.
The stock's ups and downs have been extreme. Nervous investors have questioned how macroeconomic events like supply chain disruptions, labor costs in California, and a potential pullback in consumer spending might affect Kura's growth trajectory.
Through it all, however, Kura Sushi USA has been quietly accelerating its growth. The number of restaurants in the chain jumped from 40 in 2022 to 50 in 2023, 63 in 2024, and 81 today. Annual revenue is up more than 250% over the last five years, and although operating margins have slipped slightly -- due in large part to increased labor costs in California, where more than 25% of Kura Sushi USA's restaurants are located -- they're still at a very strong 18.2%.
Why buy now?
Concerns about a pullback in consumer spending have caused an industrywide stock sell-off, and Kura Sushi USA hasn't been spared. Its stock is now down nearly 50% from its highs, and its market capitalization has fallen below $1 billion.
Meanwhile, the company's price-to-sales ratio has fallen nearly 80% since 2021. Shares now trade at just 2.7x trailing sales. That's a much better price-to-sales ratio than Dutch Bros (4.3x), Wingstop (10.9x), or even McDonald's (8.4x).
There's reason to believe that a potential industry slump might not hit Kura Sushi as badly as other chains. Kura Sushi is an inherently family-friendly experience, with anime-style cartoons, robotic waitstaff, a gamified dining experience, and prizes. In other words, it could turn into an alternate "family fun" mini-vacation destination for cash-strapped families, like Build-a-Bear Workshop has become.
But even if restaurant traffic declines over the short term, Kura Sushi USA seems poised for long-term growth at a very attractive price.
