The ONE Group Hospitality(STKS) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Full year revenue increased over 100% to $672 million and adjusted EBITDA increased almost 130% to $75.2 million, reflecting significant growth from the prior year [11][12] - Fourth quarter revenues increased by almost 150% to a record $222 million, with adjusted EBITDA rising almost 150% to $30.3 million [12][46] - Company-owned restaurant cost of sales as a percentage of net revenue decreased by 250 basis points to 20.4% compared to 22.8% in the prior year quarter [40] Business Line Data and Key Metrics Changes - Company-owned restaurants' net revenue increased by 155.7% to $217.8 million, primarily due to contributions from Benihana and RA Sushi [38] - Restaurant operating profit decreased by 90 basis points to 18.4%, with Benihana locations achieving a restaurant operating profit of 22.6%, improving approximately 300 basis points versus the prior year [41][95] Market Data and Key Metrics Changes - Consolidated comparable sales decreased by 4.3%, with management license and franchise revenue decreasing by 14.5% to $4.1 million [39] - The company anticipates consolidated comparable sales for the first quarter of 2025 to be between -4% to -3%, with a full year expectation of -3% to +1% [50][58] Company Strategy and Development Direction - The company aims to become the global leader in vibe dining, with a focus on operational efficiencies and cost savings of $20 million by the end of 2026 [10][30] - Plans to open five to seven new company-owned restaurants in 2025, balancing this with asset-light growth through managed and licensed units [28][52] - The company is enhancing its franchising strategy for Benihana, responding to strong interest from franchisees [31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to improve traffic and sales, particularly for STK and Benihana, despite ongoing consumer uncertainty [60][92] - The company is focused on maintaining guest frequency and brand engagement, with a strategy to innovate menus and pricing carefully [15][78] - Management highlighted the importance of a strong supply chain to navigate commodity price fluctuations and tariffs [71] Other Important Information - The company ended 2024 with over $71 million in liquid resources, including cash and undrawn credit [34] - Adjusted net loss available to common stockholders was $0.9 million, compared to adjusted net income of $5.3 million in the prior year quarter [46] Q&A Session Summary Question: What is the expected progression of same-store sales throughout the year? - Management expects gradual improvement in same-store sales, projecting a sequentially better performance in the second, third, and fourth quarters [58][60] Question: Are there any impacts from equipment availability or tariffs on new restaurant openings? - Management indicated that equipment for current openings is in place and does not foresee immediate impacts from tariffs on equipment availability [66][70] Question: How is consumer behavior affecting traffic and pricing? - Management noted cautious pricing strategies due to consumer sensitivity, with trends showing a shift towards alternative dining times like happy hour [78][79] Question: How are the new openings performing? - New openings, particularly for RA Sushi and STK, are performing well, with sales tracking positively [82][85] Question: What are the construction costs for new units? - Current construction costs are in the high $600s to close to $700 per square foot, with efforts to manage costs effectively [87][89]