One Group (STKS) Q2 Revenue Rises 20%

One Group Hospitality (STKS 0.70%), operator of upscale and experiential dining brands like STK and Benihana, reported financial results for Q2 2025 on August 5, 2025. The most significant development was a 20.2% jump in GAAP revenue, reaching $207.4 million, largely thanks to the Benihana acquisition. However, this figure fell short of analyst expectations of $208.9 million in GAAP revenue, and the company posted a diluted non-GAAP earnings per share (EPS) of $0.05. Comparable sales (non-GAAP) decreased 4.1%, and GAAP net loss widened from the year-ago period. Overall, results matched internal expectations but highlight ongoing margin and cost pressures as the firm integrates new brands and pursues asset-light growth.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Business Overview and Strategic Focus

One Group Hospitality operates restaurant concepts targeting upscale and casual dining, including STK, Benihana, Kona Grill, and RA Sushi. Its brands emphasize high-energy, social experiences—sometimes called "vibe dining"—that distinguish it from traditional chains. Over the last year, acquiring Safflower Holdings brought Benihana and RA Sushi under the corporate umbrella, making Benihana the leading revenue contributor.

The company’s core focus has been expanding its reach while controlling costs and capital expenditure. It aims to open five to seven new venues in 2025, combining company-owned and franchised sites under a 'capital-light' strategy. By increasing franchise and management arrangements, it seeks growth with less direct investment, entering new markets while minimizing risk. The emphasis remains on operational efficiency, customer experience, and scaling the loyalty program to build engagement and repeat visits.

Quarterly Performance: Revenue, Costs, and Brand Results

The quarter’s standout figure was the significant GAAP revenue gain—a 20.2% increase driven by the integration of Benihana. Restaurant EBITDA—a measure of profit at the restaurant level before company-wide costs and one-time items—rose 8%, but Restaurant EBITDA margin (non-GAAP) declined to 15.7% from 17.5%. Adjusted EBITDA, which removes some one-time and integration-related expenses, edged up 7.3%. Results came just under analyst estimates, with GAAP revenue of $207.4 million, mainly because Comparable sales (non-GAAP) across existing locations decreased 4.1%.

Comparable sales—a widely used metric showing sales performance at ongoing locations—were down 4.1% (non-GAAP). Breaking it down, Benihana saw positive 0.4% same-store sales growth (non-GAAP), while the core STK brand posted a 4.9% drop in same store sales and the grill concepts suffered a 14.6% fall in same store sales. STK did record a 2.8% increase in customer transactions, helped by value-driven menu strategies, such as midweek dining bundles and happy hour promotions. Grill concepts continue to face tough competition from heavy television advertising by larger chains.

Cost pressures remained clear throughout the quarter. Operating expenses climbed to 84.7% of owned restaurant net revenue, up from 82.6% in Q2 2024. Restaurant operating costs grew as a share of net sales, hitting 63.5% versus 61.4% of owned restaurant net revenue for Q2 FY2025 and Q2 FY2024, respectively. General and administrative costs (GAAP) were $11.662 million. Interest expense (GAAP) was $10.295 million. as the company carried higher debt from its acquisitions. Lease exit costs and other one-time expenses, especially from shutting underperforming grill locations, also weighed on profitability—recorded at $5.6 million.

At the balance sheet level, long-term debt (GAAP) was $327.5 million as of June 29, 2025, and the company had $15.1 million in available cash and credit card receivables. While it maintains enough liquidity and no current debt covenants, costs tied to the acquisition strategy are visible in both margin deterioration and in the GAAP net loss. The company executed only modest share buybacks, totaling $0.6 million.

In terms of expansion, four new venues opened in the first half of FY2025, including owned Benihana restaurants and an STK relocation, plus the second franchised Benihana Express. Management, license, franchise and incentive fee revenue was $3.472 million. Management points to this segment as a key potential growth lever but acknowledges it will take time to ramp up.

Finally, new customer initiatives included the soft launch of the Friends With Benefits loyalty program, which is being introduced across all brands, with emphasis on bringing in the casual brands first. Management reported that customer experience and execution in casual units meet internal standards, but that pricing remains deliberately constrained to drive repeat visits and recover market share rather than short-term margin improvement.

Looking Ahead: Guidance and Key Watchpoints

The company provided guidance for the next quarter, projecting total GAAP revenue of $190–$195 million, consolidated comparable sales (non-GAAP) between (4%) and (2%), and Adjusted EBITDA guidance of $15–$18 million. For FY2025, GAAP guidance is for revenue between $835 and $870 million and adjusted EBITDA in the $95–$115 million range. Five to seven new venues are expected for the full year, with most openings weighted to the back half of the year. No dividend is currently paid on common stock.

Looking forward, investors will likely follow several evolving trends: progress in comparable sales (non-GAAP) recovery at Benihana and STK, margin development as integration efforts mature, and the ability to offset higher costs with operating efficiencies. Given the firm’s high leverage and expansion plans, close attention to free cash flow, liquidity, and debt levels will also remain essential in the coming quarters. STKS does not currently pay a dividend.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.