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    STKS
    Earnings call· Jun 2026(Q2 FY26)

    ONE Group Hospitality Q2 FY26 earnings call STKS

    Aug 5, 2026 Source

    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

    5

    • 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

    5

    • 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

    18
    CategoryTargetConfidence
    Total GAAP revenue
    $176M-$180M
    high materiality
    High
    Consolidated comparable sales
    0%-2%
    high materiality
    High
    Managed franchise and license fee revenues
    approximately $3M
    medium materiality
    High
    Total company-owned operating expenses as a percentage of company-owned restaurant net revenue
    85%-87%
    medium materiality
    High
    Total general and administrative expenses, excluding stock-based compensation
    approximately $12.5M
    medium materiality
    High
    Adjusted EBITDA
    $12M-$15M
    high materiality
    High
    Restaurant preopening expenses
    $1M-$2M
    medium materiality
    High
    Total GAAP revenues
    $805M-$820M
    high materiality
    High
    Consolidated comparable sales
    1%-2%
    high materiality
    High
    Managed franchise and license fee revenues
    approximately $14M
    medium materiality
    High
    Total company-owned operating expenses as a percentage of company-owned restaurant net revenue
    approximately 82%
    medium materiality
    High
    Total general and administrative expenses, excluding stock-based compensation
    approximately $50M
    medium materiality
    High
    Adjusted EBITDA
    $95M-$105M
    high materiality
    High
    Restaurant preopening expenses
    $6.5M-$7.5M
    medium materiality
    High
    Interest expense net of interest income
    $38M-$39M
    medium materiality
    High
    Effective income tax rate
    approximately 10%-20%
    medium materiality
    High
    Total capital expenditures net of allowances received from landlords
    approximately $30M
    high materiality
    High
    New venue openings
    6-10
    high materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    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
    		————

    Operational metrics

    34
    Net capital expenditures
    down approximately 38%vs H1 2025
    H1 2026

    Reduction in net capital expenditures compared to the first half of 2025.

    Debt repayment on term loan facility
    over $4M
    H1 2026

    Amount repaid on the term loan facility using improved cash generation.

    Debt repayment on revolving facility
    $2M
    H1 2026

    Amount repaid on the revolving facility using improved cash generation.

    Cash and short-term credit card receivables
    $17M
    Q2 FY26

    Balance at the end of the second quarter.

    Availability under revolving credit facility
    $28.7M
    Q2 FY26

    Availability under the revolving credit facility, subject to certain conditions.

    Company-owned restaurant net revenues
    $197.3Mdecreased 3.2% from $203.9M YoY
    Q2 FY26

    Company-owned restaurant net revenues for the second quarter.

    Management license franchise and incentive fee revenues
    $3.2Mdecreased slightly from $3.5M YoY
    Q2 FY26

    Primarily due to the exit of a management agreement in Scottsdale, Arizona during Q2 2025.

    Company-owned restaurant cost of sales as percentage of net revenue
    19.5%improved 170 bps from 21.2% YoY
    Q2 FY26

    Cost of sales has improved for 6 consecutive years from 25.5% in 2021.

    Company-owned restaurant operating expenses as percentage of net revenue
    64%increased 50 bps to 64% from 63.5% YoY
    Q2 FY26

    Reflecting deliberate near-term investments.

    Total owned operating expenses (combined with cost of sales) as percentage of net revenue
    83.6%improved 110 bps from 84.7% YoY
    Q2 FY26

    Progress on cost of sales more than offset near-term investments in operating expenses.

    Restaurant operating profit
    $32.4Mimproving by 110 bps from 15.3% YoY
    Q2 FY26

    Restaurant operating profit for the second quarter.

    General and administrative costs (total reported)
    $14Mincreased $2.3M to $14M from $11.7M YoY
    Q2 FY26

    Increased G&A costs for the second quarter.

    Adjusted general and administrative expenses (excluding stock-based compensation)
    $12.9Mcompared to $10.2M YoY
    Q2 FY26

    Adjusted G&A expenses for the second quarter.

    Depreciation and amortization expense
    $11Mcompared to $10.9M YoY
    Q2 FY26

    Slight increase attributed to new restaurants opened during the previous 12 months.

    Lease termination and restaurant closure expenses
    $900K
    Q2 FY26

    Primarily related to Grill concept optimization and STK Downtown NY relocation.

    Preopening expenses
    $2.9Mincreased by $1.3M YoY
    Q2 FY26

    Preopening expenses for the second quarter.

    Transition and integration expenses
    $200Kdown from $3.9M YoY
    Q2 FY26

    As the integration of Benihana and RA acquisition nears completion.

    Operating income
    $6.6Mcompared to $700K YoY, an increase of $5.9M
    Q2 FY26

    Primarily due to improved restaurant operating profit and reduction in transition and integration costs.

    Interest expense
    $9.6Mcompared to $10.3M YoY
    Q2 FY26

    Interest expense for the second quarter.

    Weighted average interest rate
    10.1%compared to 10.8% YoY
    Q2 FY26

    Weighted average interest rate for the second quarter.

    Benefit for income taxes
    $700Kcompared to $700K expense YoY
    Q2 FY26

    Benefit for income taxes for the second quarter.

    Net loss attributable to The ONE Group Hospitality, Inc.
    $2.1Mcompared to a net loss of $10.1M YoY
    Q2 FY26

    Net loss for the second quarter.

    Net loss available to common stockholders
    $12Mcompared to $18.2M YoY
    Q2 FY26

    Net loss available to common stockholders for the second quarter.

    Adjusted EBITDA attributable to The ONE Group Hospitality
    $21.1Mdecreased 9.7% from $23.4M YoY
    Q2 FY26

    Adjusted EBITDA for the second quarter.

    Benihana Express prime margin
    over 50%
    current

    The 800 to 1,000 square foot box can deliver over 50% prime margin.

    Benihana Express cost of goods
    approximately 20%
    current

    Cost of goods for Benihana Express.

    Benihana Express labor margin
    approximately 25%
    current

    Labor margin for Benihana Express.

    Benihana Express annual revenues (prototype)
    greater than $1Mcloser to $1.2M
    annual

    The Brickell location (prototype) is already doing over $1 million in revenue.

    Benihana Express developed cost
    about $500
    current

    Anticipated developed cost per square foot for Benihana Express.

    Benihana franchise royalty rate
    6%
    current

    Royalty rate for Benihana franchises.

    Benihana franchise marketing contributions
    2%
    current

    Marketing contributions for Benihana franchises.

    STK Downtown NY relocation expected weekly revenue
    $150K-$200K
    weekly

    Expected weekly revenue for the relocated STK Downtown New York restaurant.

    STK Downtown NY relocation cost
    $1M or less
    project

    Cost for the relocation of STK Downtown New York.

    Kona Grill conversion cost
    $1M-$1.5M
    per conversion

    Budgeted cost for each Grill conversion into higher-performing STK and Benihana restaurants.

    Industry KPIs

    2
    MetricValueDetails
    Comparable sales comps0.9%%
    Net unit growth development pipeline6-10venues

    Product announcements

    3
    ProductTypeDetails
    New Wagyu cuts and top-shelf liquor cocktailslaunch
    New dishes built around fiber and whole grains (including quinoa option)launch
    New food and beverage menusupdate

    Deals & partnerships

    2
    Niagara Falls (Canada)License agreement to bring RA to Canada.

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

    Major U.S. airportContract 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

    6
    World Cup impact on comparable salesQ2 FY26

    modestly affected comparable sales

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

    Elevated temperatures affecting trafficQ2 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 delayQ2 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 backdropongoing

    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 investmentQ2 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 expensesQ2 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

    5

    Consolidated comparable sales growth

    Q3 FY26
    Current0.9% (Q2 FY26)
    Target0%-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%.

    Q&A highlights

    8

    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 read5 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    AI-generated summary of the company’s earnings call. Not investment advice.