The ONE Group Hospitality, Inc. (STKS) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals several negative factors: a significant net loss, decreased EBITDA, and missed revenue targets due to operational inefficiencies. Despite some positive guidance on same-store sales and cost synergies, the Q&A highlighted concerns about traffic impacts and lack of clear guidance on gas price effects. The strategic priorities and marketing efforts are positive, but the overall financial performance and uncertain future impacts outweigh them, leading to a negative sentiment.
Key Financial Performance
Total GAAP revenue for the full year 2025 $805 million, representing approximately 20% growth year-over-year, driven primarily by the inclusion of Benihana for all 12 periods.
Full year 2025 comparable sales Declined approximately 3.7%, reflecting continued pressure across the full-service dining segment.
Fourth quarter total GAAP revenue $207 million compared to $222 million in the prior year quarter, a decrease of 6.7%. Approximately 35% of the year-over-year revenue decline was due to portfolio optimization actions, including the closure of underperforming RA Sushi and Kona Grill locations. Additionally, the fiscal calendar shift resulted in a fiscal year of only 362 days, with one fewer operating day in the fourth quarter.
Fourth quarter consolidated comparable sales Declined approximately 1.8%, representing about 4 points of sequential improvement from the third quarter. All brands demonstrated sequential improvement in comparable sales during the quarter.
Company-owned restaurant net revenue for Q4 2025 $203 million, a decrease of 6.8% from $218 million in the prior year quarter. The decrease was primarily due to the fiscal calendar shift and the closure of underperforming restaurants.
Management licensed franchise and incentive fee revenues for Q4 2025 $4 million, a slight decrease from $4.1 million in the prior year quarter, primarily due to lower management license and incentive fee revenue at managed STK restaurants in North America.
Company-owned restaurant cost of sales as a percentage of net revenue Improved 80 basis points to 19.6% from 20.4%, primarily due to additional integration synergies from the Benihana acquisition and strategic cost management, including beef pricing.
Restaurant operating profit excluding closed Grill Concepts restaurants $38.9 million or 19.5% of owned restaurant net revenue, improving by 10 basis points from 19.4% in the prior year quarter.
Adjusted EBITDA for Q4 2025 $28.1 million, a decrease of 9.5% from $31 million in the prior year quarter.
Net loss attributable to The ONE Group Hospitality, Inc. for Q4 2025 $6.4 million compared to net income of $1.6 million in the fourth quarter of 2024. The increase in net loss was primarily driven by noncash impairment charges of $7.2 million and exit costs associated with the Grill Concepts portfolio optimization.
You have reached the limit. Sign up to access full content
Get started
Operating Highlights
Benihana Branded Crispy Chicken Chips: Launched through a third-party partnership to extend the brand beyond the restaurant, increase awareness, and test new channels without significant capital or operational complexity.
Asset-light development agreements: Secured development rights for 10 Benihana and Benihana Express locations in California and additional franchise/licensed locations in Florida East. These agreements allow for growth in high-quality markets with minimal capital investment.
Nontraditional venue expansion: Expanded presence in professional sports and entertainment stadiums, including a new Benihana concession at UBS Arena in New York and renewal at Mortgage Matchup Center in Phoenix.
Operational excellence: Improved table efficiency, reservation management, and throughput at Benihana, leading to better guest satisfaction and record-breaking performance on Valentine's Day 2026.
Cost predictability: Shifted protein sourcing and contracted beef pricing through September 2026, reducing exposure to volatile markets and improving margins.
Portfolio optimization: Exited underperforming RA Sushi and Kona Grill locations, converted some to Benihana or STK, and identified additional locations for conversion by 2026 to improve returns.
Capital-efficient growth: Focused on projects with build-out costs of $1.5 million or less, leveraging second-generation strategies for rapid returns.
You have reached the limit. Sign up to access full content
Get started
Risk or Challenges
Comparable Sales Decline: Full year 2025 comparable sales declined approximately 3.7%, reflecting continued pressure across the full-service dining segment. Fourth quarter consolidated comparable sales declined approximately 1.8%, indicating challenges in maintaining customer traffic and revenue.
Closure of Underperforming Locations: The company closed underperforming RA Sushi and Kona Grill locations, which reduced near-term revenue. While these closures aim to improve portfolio quality, they represent a risk of revenue loss and potential customer dissatisfaction in affected areas.
Economic Environment: Consumer confidence sits at historical lows, which could impact dining frequency and overall revenue.
Cost Management Challenges: Increased marketing expenses and general cost inflation have pressured margins. Adjusted general and administrative costs increased as a percentage of revenues, reflecting challenges in maintaining cost efficiency.
Impairment Charges: A noncash impairment charge of $7.2 million was recorded, primarily related to the Kona Grill trade name and underperforming locations, indicating challenges in asset performance and portfolio optimization.
Debt and Financial Flexibility: The company has $7 million outstanding on its revolving credit facility and limited cash reserves, which could constrain financial flexibility in an uncertain environment.
Regulatory and Operational Risks: The company faces risks related to regulatory and licensing authorities, as well as factors outside its control, such as macroeconomic conditions and weather, which could impact new restaurant openings and operations.
You have reached the limit. Sign up to access full content
Get started
Guidance & Outlook
Revenue Projections: The company projects total GAAP revenues between $840 million and $855 million for fiscal year 2026, reflecting an anticipated consolidated comparable sales increase of 1% to 3%.
Management Franchise and License Revenues: Expected to be between $14 million and $15 million for fiscal year 2026.
Operating Expenses: Total company-owned operating expenses as a percentage of company-owned restaurant net revenue are projected to be approximately 82% to 83%.
General and Administrative Costs: Excluding stock-based compensation, total general and administration costs are expected to be approximately $53 million.
Adjusted EBITDA: Projected to be between $100 million and $110 million for fiscal year 2026.
Restaurant Preopening Expenses: Expected to range between $5 million and $6 million.
Effective Income Tax Rate: Projected to be approximately 10%.
Capital Expenditures: Total capital expenditures, net of allowances received from landlords, are expected to be between $38 million and $42 million.
New Venues: The company plans to open 6 to 10 new venues in fiscal year 2026.
You have reached the limit. Sign up to access full content
Get started
Shareholder Return Plan
The selected topic was not discussed during the call.
You have reached the limit. Sign up to access full content
Get started
Key Q&A
Q:What are the strategic priorities for Benihana for the balance of this year?
A:The priorities include marketing, digital initiatives, the 'friends with benefits' program, downsizing the menu, improving table turn times, and enhancing the overall guest experience.
Q:Why did the fourth quarter revenue come in lower than expected despite improved consolidated comp sales?
A:The lower revenue was attributed to not achieving the desired table turn times at Benihana, which were closer to 100-105 minutes instead of the targeted 90 minutes. This was due to prioritizing guest experience over operational efficiency.
Q:What cost synergies remain from the Benihana acquisition?
A:Remaining synergies include beef purchasing power, rice and linen supply consolidation, and chemical supply efficiencies. Some benefits are expected to materialize in 2026, particularly from beef contracting and tenderloin utilization.
Q:Have recent increases in gas prices impacted traffic?
A:No impact has been observed yet, but the situation is being monitored as it depends on how long the gas price increases last.
Q:Were there any notable regional differences in traffic?
A:Regional differences narrowed in the fourth quarter compared to the third quarter. Las Vegas performed well due to a shift in marketing strategy towards the suburbs.
Q:What is the expected same-store sales guidance for the full year, and how is it being achieved?
A:The guidance is for positive same-store sales, driven by value-focused initiatives, operational improvements, and marketing efforts. No immediate price increases are planned, with the next action expected in the fourth quarter.
Q:How are other protein costs being managed?
A:Frozen seafood costs are expected to improve due to favorable tariff conditions. Other commodity costs will follow market trends.
Q:What is the timeline for restaurant conversions?
A:Five restaurants are in conversion mode, with plans to reopen by July 2026. Construction cycles are expected to take 6-8 weeks, with potential delays due to electrical upgrades.
Q:Are the positive results from initial conversions repeatable?
A:Management believes the results are repeatable due to the high quality of the real estate selected for conversions, though risks remain.
Q:What is driving the positive comp sales momentum into Q1?
A:The momentum is attributed to traffic increases, value-focused initiatives, and operational improvements, particularly at Benihana.
Q:How does management plan to improve targeted traffic with product innovation and loyalty programs?
A:Plans include enhancing takeout and delivery, introducing new products like Benihana Burritos, expanding loyalty programs, and focusing on seasonal menus and group events.
Q:What is the current sales mix for delivery or off-premises, and what is the target?
A:The current mix is in the low double digits, with a target of 20%. Efforts are focused on improving curbside services and reducing dependency on third-party delivery.
Q:What is the pricing baked into the same-store sales guidance?
A:Pricing is around 5-6% for the year, primarily from actions taken in the fourth quarter of 2025.
Q:What is driving the expected 100-200 basis points improvement in store margins?
A:Improvements are driven by portfolio optimization, purchasing synergies, and reduced frozen seafood costs.
Q:Is further pruning of Grill Concepts expected?
A:No significant pruning is expected, as most of the heavy lifting has been completed. Future evaluations will occur as leases come up for renewal.
Q:What is driving the increase in G&A expenses to $53 million?
A:The increase is due to anticipated bonuses tied to meeting guidance and objectives for the year.
Q:What are the plans for refinancing debt?
A:Management is focused on improving the balance sheet and creating shareholder value. The company has paid off its revolver balance and has a strong EBITDA base for refinancing opportunities.
Q:Review of Unclear Management Responses
A:Management avoided providing a clear answer on the potential long-term impact of gas price increases on traffic, stating that it depends on the duration of the price hike. Additionally, while discussing the repeatability of conversion results, management acknowledged risks but did not provide specific details on potential challenges.
You have reached the limit. Sign up to access full content
Get started
Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Grill portfolio
Guests
New
Priority
Today
assessment
asset light
beef pricing
beef tenderloin
celebration
closure
commitment
concept traffic
concession
consistency guest
conversion STK
cost certainty
date sale
decline portfolio
destination
discipline
excellence
exposure beef
impairment charge
light development
location conversion
location decision
loss Group
measure
noncash impairment
offering
opportunity
portfolio optimization
premise
scalability
score
staffing
term quality
STKS Transcript
The ONE Group Hospitality, Inc. (STKS) Q1 2026 Earnings Call Transcript
Positive5-7
The earnings call highlighted strong operational improvements, including expanded profit margins and increased cash flow. Despite a slight revenue miss due to seasonality, the company demonstrated robust same-store sales growth and effective cost management. The Q&A session revealed positive franchise interest and strategic debt reduction, which supports a positive outlook. While some uncertainties remain, the overall sentiment is positive, suggesting a potential stock price increase of 2% to 8% over the next two weeks.
The ONE Group Hospitality, Inc. (STKS) Q4 2025 Earnings Call Transcript
Unknown3-13
The earnings call reveals several negative factors: a significant net loss, decreased EBITDA, and missed revenue targets due to operational inefficiencies. Despite some positive guidance on same-store sales and cost synergies, the Q&A highlighted concerns about traffic impacts and lack of clear guidance on gas price effects. The strategic priorities and marketing efforts are positive, but the overall financial performance and uncertain future impacts outweigh them, leading to a negative sentiment.
The ONE Group Hospitality, Inc. (STKS) Q3 2025 Earnings Call Transcript
Unknown11-7
The earnings call reveals mixed signals: while there are positive aspects like improved traffic trends, franchising efforts, and loyalty program growth, there are concerns over declining same-store sales and cash flow limitations. The Q&A section highlights management's optimism but lacks concrete details, and the market strategy is unclear. Despite potential growth from new venues and conversions, the financial health and guidance appear weak, leading to a neutral sentiment. The stock price is likely to remain stable, with no strong catalysts for significant movement.
The ONE Group Hospitality, Inc. (STKS) Q2 2025 Earnings Call Transcript
Positive8-6
The earnings call summary reflects strong financial performance with significant revenue and EBITDA growth, driven by strategic initiatives like new venue openings and franchising efforts. The Q&A section highlights proactive measures to address past challenges, strong market strategies, and confident guidance despite economic uncertainties. The company also plans to enhance shareholder returns through strategic capital allocation. Overall, the positive sentiment from effective management strategies and optimistic future guidance outweighs any concerns, suggesting a positive stock price movement.
STKS Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
