ONE Group Hospitality, Inc. Q4 FY2024 earnings call

• 2024 was transformative with the acquisition of Benihana and RA Sushi, expanding the portfolio and driving operational efficiencies. - Opened 3 restaurants in the fourth quarter, ending the year with 6 new restaurants. - Priorities include: driving sales via operations, culinary, and marketing pillars; successful integration of Benihana with focus on cost initiatives; growth via company-owned and asset-light models; and balance sheet flexibility with shareholder returns. - Menu strategy balances approachable pricing and innovation, with initiatives like Wagyu program at Benihana and new drink menus. - Marketing focuses on local outreach and digital engagement to drive traffic.

Full year revenue increased over 100% to $672 million, with adjusted EBITDA increasing almost 130% to $75.2 million. Fourth quarter revenues were a record $222 million, up almost 150%, and adjusted EBITDA was $30.3 million, up almost 150%. Company-owned restaurant net revenue for the fourth quarter was $217.8 million, a 155.7% increase from the prior year quarter. Benihana and RA Sushi contributed significantly to revenues. Company-owned restaurant cost of sales as a percentage of net revenue decreased, but operating expenses increased. Benihana brand locations had a restaurant operating profit of 22.6%, improving approximately 300 basis points versus the prior year.

• Q1 2025: Projected total GAAP revenues between $205 million and $210 million, consolidated comparable sales minus 4% to minus 3%, adjusted EBITDA between $24 million and $26 million, and plans to add 1-2 new venues. - 2025: Projected total GAAP revenues between $835 million and $870 million, consolidated comparable sales minus 3% to plus 1%, adjusted EBITDA between $95 million and $115 million, and plans to add 5-7 new venues.

• Macroeconomic conditions, weather, and factors outside the company's control impacting new restaurant openings. - Commodity shifts (e.g., beef, frozen seafood) affecting costs. - Equipment availability and steel prices potentially impacting construction costs.

Q: How can we think about the same-store sales progression?

A: Sequentially better each quarter, with Q1 2025 expecting minus 4% to minus 3% consolidated comparable sales, and full year 2025 expecting minus 3% to plus 1%. STK traffic was positive in Q4, and strategies for Benihana expected to yield better transactions.

Q: Any impact on equipment availability for new restaurant openings?

A: No immediate impact, with openings in various stages (some in pre-opening, others planned for late third/early fourth quarter). Equipment for current and upcoming openings is mostly sorted out.

Q: Are there any RA or Kona Grill restaurants coming to end of lease terms or closures?

A: No plant closures planned for RA at this point; portfolio management is ongoing but no RA locations scheduled for closure.

Q: Talk about consumer behavior and pricing ability.

A: Consumers are opting for alternative dayparts like happy hour. Pricing is cautious but there are opportunities; will only increase prices if necessary due to inflation concerns.