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 [7][22] - Adjusted EBITDA rose over 230% to $25.2 million, significantly exceeding top line growth [8][29] - Restaurant level EBITDA improved to 16.4%, a 50 basis point year-over-year increase [7][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 [28] Business Line Data and Key Metrics Changes - Benihana and STK achieved restaurant EBITDA margins of 20.1% and 17.7%, respectively [7][25] - Company-owned restaurant net revenue increased by 154.5% to $207.4 million, primarily due to contributions from Benihana and Rasushi [22] - Managed, license, and incentive fee revenues increased by 7% to $3.7 million [23] Market Data and Key Metrics Changes - The company experienced a 3.2% reduction in consolidated comparable sales [22] - Positive transaction growth of 4.1% was noted at the STK brand [7] 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 [6][9] - Expansion plans include opening five to seven new venues in 2025, with a focus on both company-owned and franchised locations [17][33] - The company is pursuing a dual strategy of company-owned and asset-light growth, with a target of 400 Benihana locations in the U.S. [18][79] Management's Comments on Operating Environment and Future Outlook - Management noted challenges in the dining environment due to economic volatility, but remains optimistic about long-term growth [9][34] - The second quarter is expected to reflect a decline in comparable sales, influenced by weather and convention schedules [31][48] - Management emphasized the importance of operational execution and throughput, especially during peak dining periods [71] Other Important Information - The company has launched a loyalty program called "Friends with Benefits" to enhance guest experiences and drive repeat visits [12][13] - The company finished the quarter with nearly $68 million in liquid resources, indicating strong liquidity [19][30] Q&A Session Summary Question: Consumer behavior trends and changes in Q2 - Management indicated that higher-end consumers are performing better, attributing this to strategic initiatives rather than demographics [36] Question: Same store sales cadence during the quarter - February was noted as the most challenging month, while March showed strong performance, particularly due to Easter [45][46] Question: Changes in labor costs and retention - Retention rates are stable, with moderate inflation observed in labor costs [39][40] Question: Franchising efforts and infrastructure updates - The company has updated its franchising infrastructure and is actively negotiating development agreements with interested franchisees [55][57] Question: Pricing strategy and market share - The company is conservative on pricing, focusing on traffic and market share rather than aggressive price increases [60] Question: Balancing company-owned stores versus deleveraging - Management is focused on maintaining a balance between company-owned and franchised locations while managing business risks [62] Question: Impact of Easter on sales and bookings - Easter had a slight impact, but management does not consider it a significant holiday for the brand [68] Question: Tourism and convention impacts on sales - There has been a noticeable decrease in visitors from Canada and Mexico, affecting sales in markets with high tourist traffic [74]