Owned operating expenses declined year-over-year to 83.6%, but were above the 81%-82% guidance. Why the difference?

The majority of the expense differential was due to higher marketing expenses, specifically for the World Cup, which had unexpected success as a TV event, requiring more marketing spend than anticipated. “Yes. I mean most of the expense differential was all marketing expenses. Obviously, going into the World Cup, we never anticipated the success that the World Cup was going to have as a TV event, particularly around prime time games. And so we had to, frankly, spend a lot more marketing dollars in the quarter than we had to expect.”

How is demand through July, given the economy and past impacts from summer heat and World Cup? Is higher marketing spend continuing?

Momentum has continued into Q3, and the World Cup being over is a net positive for the company's trajectory. All segments had positive traffic in Q2. “Yes. I mean I want to reemphasize, we were positive traffic in every single one of our segments. So meaning STK, Benihana and the Grills were all positive. So every single one of our segments had positive traffic in the quarter. And then coming into the third quarter, I think the momentum has continued. I think that the World Cup not being on TV is actually a net plus for us right now.”

Can you provide an update on franchisee interest in Benihana Express and the potential for larger agreements?

The company has worked on branding and design since acquiring the Miami location. They have a prototype and designs for future locations, making it marketable. Economics are strong with low food/labor costs, high prime margins, and proven revenues over $1 million in a small footprint. They have one licensed location and growing interest. “So we've done a lot of work in terms of the branding and the design elements of it. So because we have to obviously have a prototype and a buildup for it. If you go to the website, www.benihanaexpress.com, you can see exactly what we're doing with the brand. So there's a lot of the branding elements that we've worked on already there.”

STKS

ONE Group Hospitality (STKS) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Consumer Discretionary· Aug 5, 2026

Source: earnings call transcript

Executive summary

The ONE Group Q2 FY26 — Strong Margin Expansion and Capital-Efficient Growth

The ONE Group Hospitality delivered strong Q2 FY26 results, marked by significant restaurant-level margin expansion and robust operating cash flow generation, which was used for debt reduction. Despite a slight revenue decline due to portfolio optimization and temporary headwinds from the World Cup and weather, the company maintained positive transaction growth across all segments. Management is prioritizing capital-efficient growth and asset-light expansion, particularly for the Benihana Express brand, while continuing to optimize its portfolio.

Highlights

Consolidated restaurant level operating profit margin increased 110 basis points to 16.4% compared to 15.3% a year ago.
Operating cash flow for the first 6 months of 2026 reached $32 million, nearly triple the $11 million generated over the same period last year.
Net capital expenditures were reduced by approximately 38% compared to the first half of 2025.
Consolidated comparable sales grew 0.9% for the quarter, with positive transaction growth across all segments.
Company-owned restaurant cost of sales improved 170 basis points to 19.5% from 21.2%.

Concerns

Total revenue was approximately $200 million, down 3.2% from a year ago, primarily due to planned Grill concept optimization and delayed STK Downtown New York relocation.
The STK Downtown New York relocation was delayed until July, causing revenue loss of $150,000-$200,000 per week and loaded costs in Q2.
Comparable sales were modestly affected by World Cup impacts and elevated temperatures in select markets.
Adjusted EBITDA attributable to The ONE Group Hospitality was $21.1 million, a decrease of 9.7% from $23.4 million in the prior year quarter, primarily due to increased marketing investment and G&A expenses.
Q2 Adjusted EBITDA of $21.1 million was below guidance of $24 million-$26 million, with 40% attributed to the NY relocation delay and 60% to marketing spend.

Guidance & targets

Category	Target	Timeline	Confidence
Total GAAP revenue	$176M-$180M high materiality	Q3 · FY26	High
Consolidated comparable sales	0%-2% high materiality	Q3 · FY26	High
Managed franchise and license fee revenues	approximately $3M medium materiality	Q3 · FY26	High
Total company-owned operating expenses as a percentage of company-owned restaurant net revenue	85%-87% medium materiality	Q3 · FY26	High
Total general and administrative expenses, excluding stock-based compensation	approximately $12.5M medium materiality	Q3 · FY26	High
Adjusted EBITDA	$12M-$15M high materiality	Q3 · FY26	High
Restaurant preopening expenses	$1M-$2M medium materiality	Q3 · FY26	High
Total GAAP revenues	$805M-$820M high materiality	FY26	High
Consolidated comparable sales	1%-2% high materiality	FY26	High
Managed franchise and license fee revenues	approximately $14M medium materiality	FY26	High
Total company-owned operating expenses as a percentage of company-owned restaurant net revenue	approximately 82% medium materiality	FY26	High
Total general and administrative expenses, excluding stock-based compensation	approximately $50M medium materiality	FY26	High
Adjusted EBITDA	$95M-$105M high materiality	FY26	High
Restaurant preopening expenses	$6.5M-$7.5M medium materiality	FY26	High
Interest expense net of interest income	$38M-$39M medium materiality	FY26	High
Effective income tax rate	approximately 10%-20% medium materiality	FY26	High
Total capital expenditures net of allowances received from landlords	approximately $30M high materiality	FY26	High
New venue openings	6-10 high materiality	FY26	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Consolidated Total consolidated GAAP revenues decreased primarily due to planned optimization of Grill concepts and delayed STK Downtown NY relocation. Restaurant level operating profit margin improved due to operational discipline. Restaurant level operating profit margin: 16.4% (up 110 bps from 15.3% YoY)Comparable sales growth: 0.9%Positive transaction growth	$200.5M	-3.3%	—	16.4%
STK Demonstrated strong margin expansion and comparable sales growth, reinforcing the effectiveness of the strategy. Margin expansion: 130 bps to 17.4%U.S. comparable sales growth: 3.2%Positive transaction growth	—	—	—	17.4%
Benihana Demonstrated solid growth and remains the strongest margin segment. Impacted by elevated temperatures in select markets. Margin expansion: 90 bps to 18.9%Comparable sales growth: 0.8%Positive transaction growth	—	—	—	18.9%
Grill concepts Portfolio optimization led to a decline in total revenue, but remaining locations are healthy and profitable. Conversions continue to be assessed as leases expire. Positive transaction growth	—	—	—	—

Product announcements

Product	Type	Timeline
New Wagyu cuts and top-shelf liquor cocktails	launch	Q2 FY26
New dishes built around fiber and whole grains (including quinoa option)	launch	Q2 FY26
New food and beverage menus	update	4 times a year

Deals & partnerships

Niagara Falls (Canada) License agreement to bring RA to Canada.

RA opening expected by year-end in Niagara Falls, Canada.

Major U.S. airport Contract for 2 asset-light licensed STK locations.

STK signed a contract for two asset-light licensed locations at a major U.S. airport.

Risks & headwinds

World Cup impact on comparable sales Q2 FY26

modestly affected comparable sales

Mitigation:Temporary headwind that has passed and should not persist into Q3.

Elevated temperatures affecting traffic Q2 FY26

affected traffic

Mitigation:Temporary headwind that has passed and should not persist into Q3; additional repair and maintenance spend to expand AC capacities at Benihana.

STK Downtown New York relocation delay Q2 FY26

expected revenues of $150,000-$200,000 a week were lost; costs were loaded

Mitigation:Relocation completed in July; primary reason for delay was difficulty getting inspections done.

Mixed consumer backdrop ongoing

consumers are very discreet about where they spend their money; trade downs observed

Mitigation:Barbell strategy (value programming + premium offerings) to capture both ends of the spending spectrum.

Increased marketing investment Q2 FY26

majority of cost differential in Q2

Mitigation:Strategic adjustment to drive traffic during World Cup; World Cup being over is a net positive for Q3.

Increased general and administrative expenses Q2 FY26

increased $2.3M to $14M from $11.7M YoY

Mitigation:Driven by inflation on salaries, higher bonus expense, planned IT investment (including AI), and increased travel expenses (fuel prices).

What to watch in Q3 FY26

Consolidated comparable sales growth

Q3 FY26

Current 0.9% (Q2 FY26)

Target 0%-2% (Q3 FY26 guidance)

Why it matters

Indicates core business strength and consumer demand in a mixed environment, especially after temporary Q2 headwinds.

Beginning with the top line, we project total GAAP revenue between $176 million and $180 million, which reflects our anticipation of consolidated comparable sales of 0% to 2%.

Find out whether STKS delivers this. Inve re-checks your case every morning.

Q&A highlights

Can you provide more color on the impact of the New York City relocation on the top line for the quarter?

The relocation was expected to generate $150,000-$200,000 in weekly revenue and open in Q2, but was delayed until July due to inspection challenges. This resulted in lost revenue for the quarter while costs were already loaded.

“I mean I think the restaurant relo, we're expecting revenues to be somewhere between $150,000 and $200,000 a week, and we were expecting it to open right at the beginning of the quarter in Q2 and we ended up opening in July.”

asked by Joe Gomes · answered by Emanuel Hilario

2 min read 5 chapters

Detailed narrative

Operational Discipline & Margin Expansion

The company demonstrated strong operational discipline, leading to a 110 basis point increase in consolidated restaurant level operating profit margin, reaching 16.4% compared to 15.3% a year ago. The STK segment showed a 130 bps margin expansion to 17.4%, while the Benihana segment expanded 90 bps to 18.9%, remaining the strongest margin segment.

This improvement was significantly driven by a 170 bps enhancement in company-owned restaurant cost of sales, which improved to 19.5% from 21.2%, attributed to integration synergies, supply chain initiatives, menu optimization, and increased menu pricing.

Strategic Priority: Accelerating Comparable Sales

The ONE Group achieved 0.9% consolidated comparable sales growth for the quarter, with U.S. STK restaurants delivering 3.2% growth and Benihana restaurants growing 0.8%. All segments posted positive transaction growth, reinforcing the effectiveness of their strategy. The 'Barbell strategy,' which balances value programming during the week with premium offerings on weekends and for celebrations, continues to perform strongly.

The 'Friends with Benefits' loyalty program is also gaining momentum, with newly enrolled guests showing strong repeat participation and higher spend per visit.

Strategic Priority: Capital-Efficient Growth

The company is making meaningful progress on its capital-efficient growth initiatives. Two new company-owned restaurants were opened: STK Downtown Phoenix in June and the relocated STK Chelsea in July, each costing $1 million or less after tenant improvements. Additionally, a Kona Grill location in Riverton, Utah, was converted into a Benihana restaurant.

The development pipeline for 2026 targets 6 to 10 new venues, with a strong emphasis on asset-light models that require $1.5 million or less in net capital investment, prioritizing existing lease pipelines over new commitments.

Benihana Express Expansion

The Benihana Express brand is identified as a key growth driver with significant long-term potential. This concept offers a premium to-go experience in a small footprint (800-1,000 square feet), delivering over 50% prime margin and annual revenues greater than $1 million (with one prototype already doing $1.2 million).

Developed costs are estimated at $500 per square foot, promising substantial returns. The company is actively developing a company-owned Benihana Express in Denver and a licensed location in the Florida Keys, both expected to open by year-end, and is marketing the concept to franchisees.

Strategic Priority: Portfolio Optimization & Balance Sheet

The company continues its portfolio optimization efforts by converting certain Grill locations into higher-performing STK and Benihana restaurants, with each conversion budgeted between $1 million and $1.5 million and expected to be EBITDA accretive. Operating cash flow for the first six months of 2026 reached $32 million, a significant increase from $11 million a year ago.

This cash generation was used to repay over $4 million on the term loan facility and $2 million on the revolving facility, alongside a 38% reduction in net capital expenditures compared to H1 2025, demonstrating a focus on debt reduction and financial flexibility.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.