The ONE Group Hospitality(STKS) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - First quarter revenues increased by almost 150% to $211 million, driven by contributions from Benihana and Rasushi, as well as new unit openings [6][23] - Adjusted EBITDA rose over 230% to $25.2 million, significantly exceeding top line growth [7][30] - Restaurant level EBITDA improved to 16.4%, a 50 basis point year-over-year increase [6][25] - Net loss available to common stockholders was $6.6 million, or $0.21 per share, compared to a loss of $2.1 million, or $0.07 per share, in the prior year [29] Business Line Data and Key Metrics Changes - Benihana locations achieved a restaurant EBITDA margin of 20.1%, while STK locations had a margin of 17.7% [6][25] - Company-owned restaurant net revenue increased by 154.5% to $207.4 million, primarily due to contributions from Benihana and Rasushi [23] - Managed, license, and incentive fee revenues increased by 7% to $3.7 million [24] Market Data and Key Metrics Changes - The company experienced a 3.2% reduction in consolidated comparable sales, indicating some challenges in the market [23] - Positive transaction growth of 4.1% was noted at the STK brand, reflecting a shift in consumer preferences [6][9] Company Strategy and Development Direction - The company aims to become a global leader in vibe dining, focusing on operational efficiencies, culinary innovation, and strategic marketing [5][14] - Expansion plans include opening five to seven new venues in 2025, with a focus on both company-owned and franchised locations [18][34] - The integration of Benihana is expected to yield annual synergies of at least $20 million by 2026 [14] Management's Comments on Operating Environment and Future Outlook - Management noted a shift in consumer behavior towards value-driven offerings and alternative dining times, such as happy hours [9][10] - The company anticipates challenges in the second quarter due to macroeconomic factors and a shift in convention schedules [48] - Management remains optimistic about the long-term growth potential, targeting $5 billion in system-wide sales [20] Other Important Information - The company has launched a loyalty program called "Friends with Benefits" to enhance guest experiences and drive repeat visits [12] - The company ended the quarter with nearly $68 million in liquid resources, providing flexibility for future growth [20][31] Q&A Session Summary Question: Consumer behavior trends in Q2 - Management indicated that higher-end consumers are performing better, attributing this to strategic initiatives rather than demographics [37] Question: Improvements in grill concepts - Increased marketing efforts and the launch of the loyalty program are key focuses for improving results in casual dining brands [38][39] Question: Labor costs and retention - Retention rates are stable, with moderate inflation in labor costs observed [40][41] Question: Same store sales cadence - February was the most challenging month, while March showed strong performance, particularly due to Easter [46] Question: Competitor promotions and discounting - Competitors are leveraging TV advertising heavily, prompting the company to enhance grassroots marketing efforts [50] Question: Franchising efforts - The company has updated its franchising infrastructure and is actively negotiating development agreements with interested franchisees [56] Question: Pricing strategy - The company is conservative with pricing, focusing on maintaining value positioning and traffic growth [60] Question: Balancing company-owned vs. franchised stores - The company aims for a balanced portfolio of approximately 50% company-owned and 50% franchised stores for Benihana [77]