The ONE Group Hospitality, Inc. Q1 FY2026 earnings call

Emanuel Hilario thanked teammates for their work in creating memorable guest experiences. He provided an overview of first quarter performance, discussed strategic priorities including accelerating comparable sales through execution (Valentine’s Day and Easter were strong, gearing up for Mother’s Day and graduation season, Friends with Benefits loyalty program gaining momentum, seasonal innovation, expanding off-premises business), capital efficient growth with disciplined expansion (two company-owned STK restaurants and one company-owned Benihana restaurant under construction, prioritizing locations with low net capital investment, franchise progress), portfolio optimization to improve returns (converting growth locations to higher-performing STKs and Benihanas, exited some locations, remaining growth locations are healthy, profitable, conversions expected to be EBITDA accretive), and maintaining balance sheet strength and flexibility (reducing discretionary capital expenditures, working through lease pipeline, finished quarter with $6.6 million in cash, etc.). Nicole Thaung discussed first quarter financials in detail, including revenues, expenses, operating income, net income, adjusted EBITDA, and cash position.

Total GAAP revenues grew year over year. Comparable sales were relatively flat at negative 0.3%. U.S. STK total comparable sales were 1.4%, Benihana comparable sales were flat, growth concept comparable sales were down 4.9% but were the strongest quarterly performance since early 2023. Company-owned restaurant cost of sales improved to 19.4% from 20.8% in prior-year quarter. Restaurant operating profit increased 11% to $40 million with margins expanding 100 basis points to 19%. Adjusted EBITDA increased 12.1%. Total GAAP revenues for first quarter were $212.8 million, increasing 0.8% from the same quarter last year. Management, license, franchise and incentive fee revenues decreased slightly to $3.5 million from $3.7 million in prior-year quarter. Company-owned restaurant net revenues were $209.3 million, increasing 0.9% from prior-year quarter. Company-owned restaurant cost of sales as a percentage of company-owned restaurant net revenue improved 140 basis points to 19.4%. Company-owned restaurant operating expenses as a percentage of company-owned restaurant net revenue improved 40 basis points to 61.7%. Restaurant operating profit, excluding growth concepts restaurants closed, was $39.9 million, or 19.1% of owned restaurant net revenue. Operating income was $13.9 million compared to $10.7 million in 2025. Adjusted EBITDA attributable to The ONE Group Hospitality, Inc. was $28.8 million compared to $25.7 million in prior-year quarter.

Projected total GAAP revenues for 2026 between [inaudible] and [inaudible] reflecting consolidated comparable sales of 1% to 2%. Management, license, franchise and incentive fee revenue expected to be approximately $3 million to $4 million. Total company-owned operating expenses as a percentage of company-owned restaurant net revenue between 81%–82%. Total G&A, excluding stock-based compensation, between $13 million and $14 million. Adjusted EBITDA between $24 million and $26 million. Restaurant preopening expenses between $1 million and $2 million. Reiterated total GAAP revenues for fiscal year 2026 between $840 million and $850 million reflecting consolidated comparable sales of 1% to 3%. Management, license, franchise and incentive fee revenues between $14 million and $15 million. Total company-owned operating expenses as a percentage of company-owned net revenue approximately 82% to 83%. Total G&A, excluding stock-based compensation, approximately $53 million. Adjusted EBITDA between $100 million and $110 million. Restaurant preopening expense between $5 million and $6 million. Effective income tax rate approximately 10% to 20%. Total capital expenditures, net of allowances received from landlords, between $38 million and $42 million. Plan to open six to ten new venues.

Q: Revenues were a little below guide for first quarter and comps a little off, what transpired?

A: Seasonality of mall STKs was different than expected, also spring break changes and earlier Easter cadence.

Q: Conversions originally hoped to be done by mid-July now end of year?

A: It's about pacing and resources to reopen properly, ensuring proper training cycles.

Q: Any new on franchising front?

A: Still lots of interest, actively talking to people, progress is good, especially for Benihana.

Q: Notable regional differences in same-store sales?

A: Texas, specifically Dallas, had a little more softness due to competitive landscape.

Q: Breakdown of second quarter same-store sales traffic vs ticket?

A: Traffic is up, initiatives around value, happy hour, lunch and dinner price points are resonating, Benihana launched power lunch.

Q: Benihana cost synergies?

A: Beef contracts combining brands, also synergies from other contracts like linens and operating supplies.

Q: Capital allocation priorities with revolver paid down, balancing debt reduction, conversion investments, share repurchases?

A: Focus on debt reduction and cost-effective growth portfolio, board is always looking at shareholder value creation.

Q: Benihana Express long-term opportunity and what franchisees find attractive?

A: Franchisees are attracted to the product offering, price point positioning, beneficial labor equation, small footprint, affordable development cost.

Q: Bookings for Mother’s Day and graduation events?

A: Bookings are solid.

Q: Store margin progression over year?

A: Third quarter is lowest-volume quarter, causing margin compression seasonally, but overall margin outlook is solid.

Q: Beef visibility and holiday quarter?

A: In active dialogue about beef, focusing on alternative cuts and promotional windows.

Q: Weighted average interest rate down, what's driving it and outlook?

A: Fed rates came down, focus is on bringing debt down with free cash flow.

Q: Off-premises mix in first quarter?

A: Very low double digits, more delivery than pickup, focus on building up pickup.

Q: Store-level margin and full-year guidance?

A: Third quarter is a factor, being cautious about margin guidance due to challenging environment.

Q: Scottsdale conversion new economics?

A: Restaurant was doing $3 - $4 million in revenues, now north of $7 million, grew revenues by about $4 million, spent about $1 million, ROI is very high.