ONE Group Hospitality, Inc. Q2 FY2024 earnings call

• Acquired Benihana and RA Sushi in May 2024, adding ~6,500 new teammates and 90 company-owned restaurants. - Realized ~$9 million in G&A synergies, with SG&A as % of revenue (adjusted for stock-based compensation) improving 290 basis points to 5.3%. - Key priorities: driving sales through execution/restaurant basics, improving restaurant level margins, self-funded growth plan (planning 8-11 new venues in 2024), successful integration of Benihana, and returning value to shareholders via share repurchases. - Benihana and RA Sushi added $88.7 million in company-owned revenue and $17.7 million in restaurant level profit in Q2.

Total consolidated GAAP revenues for the second quarter of 2024 were $172.5 million, an increase of 106.8% from $83.4 million in the prior year quarter. Owned restaurant net revenue was $169 million, up 111.5% from $79.9 million prior year, driven by $89.1 million contribution from Benihana and RA Sushi acquisition. Comparable sales decreased for STK (-10.6%), Kona Grill (-14%), Benihana (-1%), and RA Sushi (-10.3%). Restaurant operating margin was 17.7% for the quarter. Adjusted EBITDA for the second quarter was $23.9 million.

• Reaffirmed 2024 guidance: total GAAP revenues between $700 million and $740 million, managed franchise and license fee revenues between $17 million and $19 million, adjusted EBITDA between $95 million and $100 million, plan to open 8-11 new venues in 2024, total capital expenditures (net of landlord allowances) between $50 million and $60 million.

• Risks associated with forward-looking statements, including macroeconomic conditions, weather, landlord/contractor factors, regulatory/licensing issues, and competition. - Uncertainties in actual number and timing of new restaurant openings due to external factors beyond control.

Q: Could you provide the comp breakdown at Kona, via the pricing and mix that you saw there in traffic?

A: Sales were minus 14%, checks were relatively mellow, with traffic and mix factors contributing.

Q: Could you provide the commodity and labor inflation you saw in Q2 and shift in second half?

A: Labor and commodity inflation were low single digits, with some favorability in beef over the last month.

Q: Understanding of warrant registration, proceeds from warrant exercise?

A: Penny warrants have nominal impact, market warrants paid in cash, penny warrants would result in 1.9 million new shares outstanding.