The ONE Group Hospitality(US:STKS)2025-03-10 20:22Revenue and Growth - Total revenue increased by $340.6 million, or 102.3%, to $673.3 million for 2024 compared to $332.8 million for 2023, primarily due to the addition of Benihana and RA Sushi restaurants [167]. - Owned restaurant net revenues increased to $658.9 million in 2024 from $317.4 million in 2023, representing a growth of 107.5% [203]. - Total revenues for 2024 reached $673.3 million, compared to $332.8 million in 2023, marking a 102.2% increase [203]. - Owned restaurant net revenue increased by $341.5 million, or 107.6%, to $658.9 million for 2024 from $317.4 million for 2023, primarily due to the acquisition of Benihana and RA Sushi restaurants [209]. Profitability and Expenses - Restaurant operating profit increased by $57.9 million, or 114.9%, to $108.3 million for 2024, with a profit margin of 16.4% compared to 15.9% in 2023 [170]. - Net loss attributable to The ONE Group Hospitality, Inc. was $15.8 million in 2024, compared to net income of $4.7 million in 2023, mainly due to transaction and integration costs [171]. - Owned restaurant cost of sales was $138.8 million in 2024, which is 21.1% of owned restaurant net revenues, down from 23.9% in 2023 [203][205]. - Owned restaurant operating expenses totaled $411.8 million in 2024, accounting for 62.5% of owned restaurant net revenues, compared to 60.3% in 2023 [203][205]. - General and administrative expenses rose to $44.2 million in 2024, representing 6.6% of total revenues, up from 9.2% in 2023 [203][205]. - Interest expense increased significantly to $31.1 million in 2024 from $7.0 million in 2023 [203]. - Depreciation and amortization expense increased by $18.4 million to $34.1 million for 2024, primarily due to the acquisition of Benihana and RA Sushi restaurants [214]. Sales Performance - Same store sales for STK decreased by 8.7%, Benihana by 1.8%, and Grill Concepts by 13.2% for 2024 compared to the prior year [179]. - Average check per person at STK was $127 for 2024, down from $130 in 2023 [182]. - Average transaction for comparable Benihana restaurants was $111, while Grill Concepts had an average transaction of $64 in 2024 [183]. - Average comparable STK restaurant revenues were $15.5 million for 2024, down from $17.3 million in 2023 [184]. - Comparable restaurant sales decreased by 6.2% in 2024 compared to 2023 [209]. Acquisitions and Expansion Plans - The company acquired Safflower Holdings Corp. for $365.0 million, which owns most Benihana and RA Sushi restaurants in the U.S. [162]. - The company plans to expand STK to 200 restaurants globally, with an expected opening of four to six new locations annually [172]. - The company expects to grow the Benihana brand to 400 restaurants, with plans to open one to three new locations annually [174]. - Transition and integration expenses related to the Benihana acquisition amounted to $13.7 million in 2024 [203]. Cash Flow and Financing - Net cash provided by operating activities increased to $44.19 million in 2024 from $30.78 million in 2023, primarily due to cash generated from acquired restaurants [238]. - Net cash used in investing activities for 2024 was $441.39 million, including $369.8 million for the Benihana acquisition and $71.6 million for new restaurant construction [240]. - Net cash provided by financing activities was $404.34 million in 2024, primarily from borrowings under the Credit Agreement [241]. - A credit agreement was established providing a $350.0 million senior secured term loan facility and a $40.0 million revolving credit facility [165]. Market and Operational Risks - The Company is exposed to market price fluctuations in beef, seafood, produce, and other food products, which can materially impact food and beverage costs [259]. - The Company does not enter into long-term agreements for the purchase of food supplies, leading to potential unforeseen supply and cost fluctuations [259]. - Inflation impacts labor, food, operating supplies, and occupancy costs, which could significantly affect operations [260]. - The Company has maintained food costs as a percentage of revenues through procurement efficiencies and menu price increases, although future stability is uncertain [260]. - The Company does not currently use financial instruments to hedge against market price fluctuations in food products [259]. - Foreign currency exchange risk exists for operations in the UK, Europe, Canada, Mexico, and the Middle East, but exposure is not material to consolidated financial statements [262]. - The Company’s strategy includes maintaining operating margins through menu price increases and cost controls to address inflation [260]. - The Company has qualified multiple suppliers to mitigate risks associated with food product price fluctuations [259].