The One Group’s Transformative Year: Earnings Call Highlights

The One Group Hospitality ((STKS)) has held its Q4 earnings call. Read on for the main highlights of the call.

The earnings call for The One Group Hospitality reflects a transformative year marked by strategic acquisitions and record revenue growth. Despite challenges such as a decline in comparable sales and increased operating expenses, the company’s successful integration of acquisitions, strong financial position, and innovative culinary and marketing strategies contribute positively to the overall outlook.

Transformative Acquisition

The strategic acquisition of Benihana and RA Sushi has significantly expanded The One Group’s portfolio of vibe dining venues. This move is set to achieve scale and operational efficiencies, with the company targeting $20 million in cost savings by 2026.

Record Revenue Growth

The One Group reported a full-year revenue increase of over 100% to $672 million, with adjusted EBITDA rising almost 130% to $75.2 million. These figures are at the higher end of the 2024 guidance ranges, showcasing the company’s strong financial performance.

Strong Fourth Quarter Performance

In the fourth quarter, revenues increased by almost 150% to a record $222 million, with adjusted EBITDA also up by nearly 150% to $30.3 million. This robust performance underscores the company’s successful strategies.

Successful Restaurant Openings

The company opened three new restaurants, including two company-owned units and one managed location, ending the year with six new restaurants. This expansion is part of their growth strategy.

Solid Financial Position

The One Group ended the year with over $71 million in liquid resources and no drawn revolving credit facility, indicating a solid financial position to support future growth initiatives.

Culinary and Marketing Innovations

Innovative programs like the successful Wagyu program at Benihana and a new drink menu have been launched. Enhanced digital engagement and local store outreach are driving traffic and customer engagement.

Comparable Sales Decline

Despite overall growth, consolidated comparable sales saw a reduction, with a 4.3% decline noted in the fourth quarter, highlighting a challenge the company needs to address.

Increased Operating Expenses

Operating expenses for company-owned restaurants increased by 340 basis points as a percentage of net revenue due to cost inflation, impacting profitability.

Net Loss for the Quarter

The company reported a net loss available to common stockholders of $5.4 million or $0.18 per share, compared to a net income of $4.6 million in the prior year, reflecting increased expenses and challenges.

Interest Expense Increase

Interest expense rose to $10.5 million from $1.9 million in the prior year quarter due to higher outstanding debt post-acquisition, impacting the company’s financials.

Forward-Looking Guidance

Looking ahead, The One Group projects 2025 revenues between $835 million and $870 million, with adjusted EBITDA ranging from $95 million to $115 million. The company plans to open five to seven new venues and expects first-quarter 2025 revenues between $205 million and $210 million, with adjusted EBITDA of $24 million to $26 million. The company is focused on driving sales through strategic pillars of operations, culinary innovation, and marketing while maintaining cost efficiency and guest experience.

In summary, The One Group Hospitality’s earnings call highlights a year of transformative growth through strategic acquisitions and record revenue increases. Despite challenges like increased operating expenses and a decline in comparable sales, the company’s strong financial position and innovative strategies present a positive outlook for future growth.