8-K: ONE Group Reports Preliminary Q4, Full Year 2025 Sales

The ONE Group Hospitality, Inc. announced preliminary Q4 and full year 2025 sales results, showing full-year revenue growth driven by acquisition but comparable sales declines, alongside strategic development updates.

Summary

• Preliminary total GAAP revenues for the full year 2025 are expected to be approximately $805 million, a 20% increase from the prior year's $673 million, primarily driven by the acquisition of Benihana in May 2024.
• Full year 2025 comparable sales are expected to decrease by approximately 3.7%.
• Preliminary total GAAP revenues for the fourth quarter of 2025 are expected to be approximately $207 million, a 6.8% decrease from $222 million in the same quarter of 2024.
• The Q4 2025 revenue decline was primarily driven by RA Sushi and Kona Grill closures (reducing total GAAP revenues by approximately 2.4%) and the shift of the New Year's Eve holiday due to a fiscal calendar change (impacting total GAAP revenues by approximately 2.5%).
• Fourth quarter 2025 comparable sales are expected to decrease by approximately 1.8%.
• STK is expected to report positive comparable sales for Q4 2025 of approximately 0.3%, marking its first quarter of positive comparable sales since 2023.
• Benihana is expected to report flat comparable sales for Q4 2025.
• Consolidated comparable sales showed sequential improvement of approximately 4 points from the third quarter, driven by all brands.
• The first conversion of a RA Sushi to an STK in Scottsdale, Arizona, is off to a strong start, and five Grills were temporarily closed in January 2026 for future conversion to Benihana and STK restaurants.
• The company will present at the 28th Annual ICR Conference on January 13, 2026.

Sentiment

Score: 6

Explanation: While preliminary Q4 and full-year comparable sales show declines, the company highlights sequential improvements, positive STK performance, flat Benihana, and strong strategic initiatives like the Benihana acquisition, conversions, and asset-light development agreements. Management's tone is cautiously optimistic about future growth despite acknowledging industry headwinds and lower-than-anticipated Q4 sales. The focus on cash conservation and balance sheet optimization is a positive strategic move.

Positives

• Full year 2025 GAAP revenues are expected to increase by 20% to approximately $805 million, primarily due to the Benihana acquisition.
• STK brand is expected to report positive comparable sales of approximately 0.3% for Q4 2025, its first positive quarter since 2023.
• Benihana is expected to report flat comparable sales for Q4 2025.
• Consolidated comparable sales showed sequential improvement of approximately 4 points from Q3, driven by all brands.
• The successful conversion of a RA Sushi to an STK in Scottsdale, Arizona, is performing strongly.
• The company signed its largest asset-light development agreement in history for ten Benihana or Benihana Express locations in the Greater San Francisco Bay Area.
• Strengthened presence in professional sports and entertainment stadiums with renewed and new concession agreements (Mortgage Matchup Center, UBS Arena).
• The company plans capital-efficient growth in 2026, prioritizing conversions and working through an existing lease pipeline.
• Up to nine additional Kona Grill and RA Sushi locations are identified for conversion to Benihana or STK through the end of 2026, expected to be accretive to EBITDA.

Negatives

• Full year 2025 comparable sales are expected to decrease by approximately 3.7%.
• Q4 2025 total GAAP revenues are expected to decrease by 6.8% to approximately $207 million from the same quarter in 2024.
• Q4 2025 comparable sales are expected to decrease by approximately 1.8%.
• The Q4 revenue decline was primarily driven by RA Sushi and Kona Grill closures (2.4% impact) and the shift of the New Year's Eve holiday due to a fiscal calendar change (2.5% impact).
• Management noted that "Headwinds continue to be strong," resulting in lower-than-anticipated sales during the fourth quarter.

Risks

• Factors beyond the company's control that affect the number and timing of new restaurant openings, including weather conditions and factors under the control of landlords, contractors, and regulatory and/or licensing authorities.
• Changes in applicable laws or regulations.
• The possibility that the company may be adversely affected by other economic, business, and/or competitive factors, including economic downturns.
• The impact of actual and potential changes in immigration policies, including potential labor shortages.
• The potential impact of the imposition of tariffs, including increases in food prices and inflation, and any resulting negative impacts on the macro-economic environment.
• Other risks and uncertainties indicated from time to time in filings with the Securities and Exchange Commission, including the Annual Report on Form 10-K for the year ended December 31, 2024, and Quarterly Reports on Form 10-Q.

Future Outlook

The company's number one priority for the new year is to conserve cash with the intent of optimizing its balance sheet. Development efforts will focus on converting RA Sushi and Kona Grill locations to STK and Benihana restaurants, pursuing other asset-light opportunities, and working through an existing pipeline of approximately twelve leases rather than signing new agreements. The company has identified up to nine additional Kona Grill and RA Sushi locations for conversion to Benihana or STK formats through the end of 2026, with each conversion expected to require approximately $1 million in capital investment and be accretive to EBITDA.

Management Comments

• "We were pleased to see sequential improvement in our comparable sales at all brands, with STK expected to end the quarter positive and Benihana essentially flat. We are seeing this momentum continue into the new year."
• "We attribute this success to a robust holiday season and the strength of our operations initiatives."
• "Headwinds continue to be strong, which we expect to result in lower-than-anticipated sales during the fourth quarter."
• "With challenges still impacting the industry, we attribute our traction to execution-driven initiatives within our direct control, including our targeted investments in reservation technology, streamlined operational flow, and comprehensive training initiatives."
• "These efforts enabled us to capture even greater demand during our busiest periods by optimizing Benihana table efficiency while delivering exceptional and unforgettable experiences to our guests."
• "Looking to the new year, our number one priority is to conserve cash with the intent of optimizing our balance sheet."
• "From a development perspective, we are focused on the RA Sushi and Kona Grill conversions to STK and Benihana restaurants and pursuing other asset-light opportunities to drive shareholder value."
• "The recent signing of our Benihana development agreement is a game-changer, demonstrating the strong demand for our iconic brand."
• "We believe our future is bright, and we are well-equipped to capture the significant opportunities ahead of us."

Industry Context

The company acknowledges that "challenges still impacting the industry" and "headwinds continue to be strong," indicating a difficult operating environment for the restaurant sector. Despite these broader industry pressures, The ONE Group highlights its ability to achieve sequential comparable sales improvement and strategic growth through "execution-driven initiatives" and a focus on "capital-efficient growth," suggesting a strategy to leverage internal controls and strategic brand positioning to navigate market difficulties.

Comparison to Industry Standards

• The filing does not provide specific comparable companies, projects, or results to assess against global benchmarks.

Stakeholder Impact

• Shareholders: Potential for long-term value creation through capital-efficient growth, brand conversions, and asset-light development agreements, despite short-term comparable sales declines. The focus on balance sheet optimization aims to strengthen the financial position.
• Employees: Conversions of RA Sushi and Kona Grill to STK and Benihana may lead to changes in staffing or roles, but also potential for growth in new/converted locations.
• Customers: Continued expansion of STK and Benihana brands, including new locations and conversions, offers more dining options. Portfolio optimization (closures) might reduce options in some areas.
• Suppliers: Continued operations and development imply ongoing demand for supplies, though specific impacts are not detailed.
• Creditors: The focus on cash conservation and balance sheet optimization aims to improve financial health, potentially reducing credit risk.

Next Steps

• Management will present at the 28th Annual ICR Conference on January 13, 2026.
• Management will meet with institutional investors in-person on January 12-13, 2026.
• Prioritize cash conservation and balance sheet optimization in 2026.
• Focus on converting RA Sushi and Kona Grill locations to STK and Benihana restaurants.
• Pursue other asset-light opportunities to drive shareholder value.
• Work through the existing pipeline of approximately twelve leases rather than signing new lease agreements.
• Identify up to nine additional Kona Grill and RA Sushi locations for conversion to Benihana or STK formats through the end of 2026.

Key Dates

Recommendation

While the preliminary Q4 and full-year 2025 comparable sales declines are a concern, the company's strategic initiatives, including the successful Benihana acquisition, sequential sales improvements in Q4, positive STK performance, and a clear focus on capital-efficient growth through conversions and asset-light development, suggest a path to future improvement. The commitment to cash conservation and balance sheet optimization is prudent in the current challenging industry environment. Investors should hold to observe the execution of these strategies and their impact on future financial performance.

Keywords

Restaurant, Hospitality, STK, Benihana, Kona Grill, RA Sushi, Sales Results, Preliminary Earnings, Restaurant Development, Capital-Efficient Growth, SEC Filing, 8-K, Nasdaq: STKS, Vibe Dining