Yoshiharu Reports Third Quarter 2024 Financial Results

Third Quarter 2024 Revenues Increase 49% to $3.0 Million

9M 2024 Revenues Increase 36% to $9.2 Million

Strategic Partnerships in Sichuan and Liaoning Provinces in China Anchor International Expansion Plans, Entry into Growing Korean BBQ Segment Expands Presence and Cuisine

BUENA PARK, Calif., Nov. 19, 2024 (GLOBE NEWSWIRE) -- Yoshiharu Global Co. (NASDAQ: YOSH) ("Yoshiharu" or the "Company"), a restaurant operator specializing in authentic Japanese ramen & rolls, today reported results for the third quarter ended September 30, 2024.

Third Quarter 2024 and Recent Operational Highlights

• Grand opening of a new restaurant in San Clemente, CA, bringing the number of locations to 15 with 2 additional locations under construction.
• Entered into a non-binding Memorandum of Understanding (“MoU”) with Chengdu Octaday Entertainment Group through a Master License Agreement (“MLA”) for the Sichuan Province in China to introduce Yoshiharu Global’s Expanding Cuisine in Sichuan Province, China, with a rich and diverse culture and home to over 83 million people.
• Entered into a non-binding MoU with Xing Sheng Group through a MLA for the Liaoning Province in China to introduce a new flagship Yoshiharu restaurant in Shenyang, China, home to over 43 million people.
• Announced the planned entry into the lucrative and growing Korean BBQ (“KBBQ”) category, with synergies with existing ramen business expected to drive expanding market opportunity and footprint in high growth category.
• Closed a non-brokered $1.0 million private placement investment from an accredited investor and intends to use these proceeds for the expansion into the KBBQ segment.
• Nine months 2024 revenue increased 36.3% to $9.2 million.
• Restaurant-level contribution increased to $1.0 million for the nine-months ended September 30, 2024 from $543,000 in the same period last year.
  
  

Management Commentary

“The third quarter of 2024 was highlighted by strong revenue growth, the grand opening of our 15^th location, and new partnerships and initiatives, all positioning us to grow the brand and move us steadily towards profitability,” said James Chae, Yoshiharu’s President, CEO and Chairman of the Board. “In the quarter, revenue growth was driven by our restaurant service across Southern California, Las Vegas and diversified mix of service channels, including takeout and delivery. We have successfully optimized operating expenses while maintaining a strong Average Unit Volume (“AUV”) comparable to previous periods, despite continued headwinds from input costs, consumer price sensitivity, and higher cost of capital.

“We continued to expand our presence and cuisine in both the US and international dining scenes in the third quarter. We celebrated the grand opening of our newest US location in San Clemente, CA, a classic beach town destination known for its beaches, world class surfing and vibrant dining scene. The new location benefits from excellent access and high visibility to I-5, drawing an estimated 8,300 visits a day and over 3 million visits a year, surrounded by an affluent population of more than 69,000 with an average household income of over $145,000 within a 3-mile radius.

“In China, two new strategic non-binding Memorandum of Understandings (“MoU”) through Master License Agreements (“MLA”) will enable us to open locations across China. With Chengdu Octaday Entertainment Group, we are aiming to introduce Yoshiharu Global’s expanding cuisine in Sichuan Province, China, home to over 83 million people. The partnership presents multiple opportunities to open locations within Chengdu Octaday’s 30 corporate owned and managed hotels, theme parks and other destination attractions. We also partnered with Xing Sheng Group to introduce a new flagship Yoshiharu restaurant in Shenyang, China, home to over 43 million people. Xing Sheng Group’s real estate arm specializes in developing tourist attraction centers in Shenyang and is currently constructing China’s largest water park. This partnership offers us a prime opportunity to develop a flagship location within the water park, catering to both local residents and visiting tourists.

“Recently we announced a new initiative to enter the lucrative and growing Korean BBQ (“KBBQ”) category, a highly complementary addition to our ramen business. Demand for KBBQ cuisine in the US has grown along with the popularity of Korean street food and the interest in new international flavors. The communal and interactive nature of KBBQ, with its extensive menus and relatively affordable prices, is a large part of this appeal. Armed with a $1.0 investment for this initiative, we believe we can capitalize on the resource and ingredient synergies between our existing offerings and KBBQ concept to enhance purchasing power, attract a wider audience, and explore cross-promotion opportunities to further solidify and expand the Yoshiharu brand. We also plan to explore further collaborative opportunities with Xing Sheng Group.

“Looking ahead, we are expanding our US geographic footprint with two more locations currently under construction and expected to open in Menifee, CA in December 2024 and Ontario, CA in January 2025. We continue to focus on the bottom-line as we remain keen on reaching profitability in the near future, supported by new initiatives such as adding kiosks across our stores and utilizing cooking robots to reduce labor costs. We are poised for additional growth with two new partnerships in China and expansion into the Korean BBQ segment. Taken together, we believe our multi-dimensional growth strategy will expand the Yoshiharu brand and build long-term shareholder value,” concluded Chae.

Third Quarter 2024 Financial Results

Revenues increased 48.9% to $3.0 million compared to $2.0 million in the prior year period. The increase was primarily driven by the three new Las Vegas restaurants acquired in April 2024.

Total restaurant operating expenses were $3.1 million compared to $2.2 million in the prior year period. The increase was primarily driven by increases in revenues from the three new Las Vegas restaurants acquired.

Operating loss increased to ($1.0) million compared to a loss of ($0.8) million in the prior year period as a result of higher general and administrative driven by the acquisition of Las Vegas entities.

Adjusted EBITDA, a non-GAAP measure defined below, was $(0.7) million compared to $(0.6) million in the prior year period.

Net loss was ($1.2) million compared to a net loss of ($0.9) million in the prior year period primarily due to an increase in expenses following the acquisition of Las Vegas.

Nine Months 2024 Financial Results

Revenues increased 36.3% to $9.2 million compared to $6.7 million in the prior year period. The increase was primarily driven by three new Las Vegas restaurants acquired in April 2024.

Restaurant-level contribution margin was 11.0% compared to 8.1% in the prior period with the increase in revenue from the LV acquisition and the management efforts to control the costs.

Total restaurant operating expenses were $8.7 million compared to $6.6 million in the prior year period. The increase was due to increases in in revenue. As a percentage of the revenue, the operating expenses were 96% compared to 98% in the prior period.

Operating loss improved to ($2.8) million compared to a loss of $(2.9) million in the prior year period.

Adjusted EBITDA, a non-GAAP measure defined below, was $(1.9) million compared to $(2.0) million in the prior year period.

Net loss was $3.2 million compared to a net loss of $3.0 million in the prior year period. The increase was primarily due to an increase in expenses following the acquisition of Las Vegas.

The Company’s cash balance totaled $1.7 million on September 30, 2024, compared to $1.4 million on December 31, 2023.

For more information regarding Yoshiharu’s financial results, including financial tables, please see our Form 10-Q for quarter ended September 30, 2024 filed with the U.S. Securities and Exchange Commission (the “SEC"). The Company’s SEC filings can be found on the SEC’s website at www.sec.gov or the Company’s investor relations site at ir.yoshiharuramen.com.

About Yoshiharu Global Co.

Yoshiharu is a fast-growing restaurant operator and was born out of the idea of introducing the modernized Japanese dining experience to customers all over the world. Specializing in Japanese ramen, Yoshiharu gained recognition as a leading ramen restaurant in Southern California within six months of its 2016 debut and has continued to expand its top-notch restaurant service across Southern California and Las Vegas, currently owning and operating 14 restaurants.

For more information, please visit www.yoshiharuramen.com.

Non-GAAP Financial Measures

EBITDA is defined as net income (loss) before interest, income taxes and depreciation and amortization. Adjusted EBITDA is defined as EBITDA plus stock-based compensation expense, non-cash lease expense and asset disposals, closure costs and restaurant impairments, as well as certain items, such as employee retention credit, litigation accrual, and certain executive transition costs, that we believe are not indicative of our core operating results. Adjusted EBITDA margin is defined as Adjusted EBITDA divided by sales. EBITDA, and Adjusted EBITDA are non-GAAP measures which are intended as supplemental measures of our performance and are neither required by, nor presented in accordance with, GAAP. The Company believes that EBITDA, and Adjusted EBITDA provide useful information to management and investors regarding certain financial and business trends relating to its financial condition and operating results. However, these measures may not provide a complete understanding of the operating results of the Company as a whole and such measures should be reviewed in conjunction with its GAAP financial results.

The Company believes that the use of EBITDA, and Adjusted EBITDA provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing its financial measures with those of comparable companies, which may present similar non-GAAP financial measures to investors. However, you should be aware when evaluating EBITDA, and Adjusted EBITDA that in the future the Company may incur expenses similar to those excluded when calculating these measures. In addition, the Company’s presentation of these measures should not be construed as an inference that its future results will be unaffected by unusual or non-recurring items. The Company’s computation of Adjusted EBITDA may not be comparable to other similarly titled measures computed by other companies, because all companies may not calculate Adjusted EBITDA in the same fashion.

Because of these limitations, EBITDA, and Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. The Company compensates for these limitations by relying primarily on its GAAP results and using EBITDA, and Adjusted EBITDA on a supplemental basis. You should review the reconciliation of net loss to EBITDA, and Adjusted EBITDA in the Company’s SEC filings and not rely on any single financial measure to evaluate its business.

The full reconciliation of net loss to EBITDA and Adjusted EBITDA is set forth in our Form 10-Q for the quarter ended September 30, 2024 which can be found on the SEC ‘s website at www.sec.gov or the Company’s investor relations site at ir.yoshiharuramen.com.

Forward Looking Statements

This press release includes certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation, statements regarding our position to execute on our growth strategy, and our ability to expand our leadership position. These forward-looking statements include, but are not limited to, the Company's beliefs, plans, goals, objectives, expectations, assumptions, estimates, intentions, future performance, other statements that are not historical facts and statements identified by words such as "expects", "anticipates", "intends", "plans", "believes", "seeks", "estimates" or words of similar meaning. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in, or suggested by, these forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved. Forward-looking statements involve inherent risks and uncertainties which could cause actual results to differ materially from those in the forward-looking statements, as a result of various factors including those risks and uncertainties described in the Risk Factors and Management's Discussion and Analysis of Financial Condition and Results of Operations sections of our filings with the SEC including our Form 10-K for the year ended December 31, 2023, and subsequent reports we file with the SEC from time to time, which can be found on the SEC's website at www.sec.gov. Such risks, uncertainties, and other factors include, but are not limited to: the risk that our plans to maintain and increase liquidity may not be successful to remediate our past operating losses; the risk that we may not be able to successfully implement our growth strategy if we are unable to identify appropriate sites for restaurant locations, expand in existing and new markets, obtain favorable lease terms, attract guests to our restaurants or hire and retain personnel; that our operating results and growth strategies will be closely tied to the success of our future franchise partners and we will have limited control with respect to their operations; the risk that we may face negative publicity or damage to our reputation, which could arise from concerns regarding food safety and foodborne illness or other matters; the risk that that minimum wage increases and mandated employee benefits could cause a significant increase in our labor costs; and the risk that our marketing programs may not be successful, and our new menu items, advertising campaigns and restaurant designs and remodels may not generate increased sales or profits. We urge you to consider those risks and uncertainties in evaluating our forward-looking statements. We caution readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. The Company undertakes no obligation to update these statements for revisions or changes after the date of this release, except as required by law.

Investor Relations Contact:
Larry W Holub
Director
MZ North America
YOSH@mzgroup.us  
312-261-6412

Released November 19, 2024