Q4 2024 The ONE Group Hospitality Inc Earnings Call
Operator: Greetings and welcome to the One Group 4th Quarter and Full Year 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation.
Greetings and welcome to the one group fourth quarter and full year 'twenty 'twenty four earnings conference call.
At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation.
Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. To ask a question, you may press star, then one on a touch-tone phone. And to withdraw your question, please press star and then As a reminder, this event is being recorded.
Should you need assistance. Please signal a conference specialist by personal Starkey followed by zero.
To ask a question you May press Star then one on a touchtone phone to withdraw your question. Please press Star then two.
As a reminder, this event is being recorded.
Tyler Loy: I would now like to turn the conference over to Tyler Loy. Please go ahead. Thank you, Operator. And hello, everyone.
Speaker Change: I would now like to turn the conference over to Tyler Loy. Please go ahead.
Speaker Change: You, operator, and Hello, everyone.
Tyler Loy: Before we begin our formal remarks, let me remind you that part of our discussion today will include forward-looking statements. These four looking statements are not guarantees of future performance, and you should not place undue reliance on them. These statements are also subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. Please also note that these forward looking statements reflect our opinion only as the date of this call.
Speaker Change: Before we get into a formal remarks, let me remind you that part of our discussion today will include forward looking statements.
Speaker Change: Forward looking statements are not guarantees of future performance and you should not place undue reliance on them.
Speaker Change: These statements are also subject to numerous risks and uncertainties that could cause actual results.
Speaker Change: Materially from what we expect.
Speaker Change: We'd also note that these forward looking statements reflect our engine only as the date of this call.
Tyler Loy: We undertake no obligation to revise or publicly release any revisions of these forward looking statements, considering new information or future events.
Speaker Change: We undertake no obligation to revise or publicly release any revisions of these forward looking statements.
Speaker Change: Entering new information or future events.
Tyler Loy: We refer you to our recent SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial conditions.
Speaker Change: We refer you to our recent SEC filings for a more detailed discussion of risks that could impact our future operating results and financial condition.
Tyler Loy: During today's call, we will discuss certain non-GAAP financial measures which we believe can be useful in evaluating our performance. However, the presentation of these measures or other information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. For reconciliations of these measures, such as adjusted EBITDA, adjusted net income, restaurant operating profit, comparable sales, and total food and beverage sales at company-owned, managed, licensed, and franchised units to gap measures.
Speaker Change: During today's call, we will discuss certain non-GAAP financial measures, which we believe can be useful in evaluating our performance.
Speaker Change: However, the presentation of these measures or other information should not be considered in isolation or as a substitute results prepared in accordance with GAAP.
Speaker Change: Reconciliations of these measures such as adjusted EBITDA adjusted net income restaurant operating profit comparable sales and total food and beverage sales at company owned managed license and franchise units to GAAP measures.
Tyler Loy: Along with the discussion of why we consider these measures useful, please see our earnings release issued today.
Speaker Change: Along with a discussion of why we consider these measures useful please see our earnings release issued today with that I would like to turn the call over to Manny Hilario.
Manny Hilario: With that, I would like to turn the call over to Manny Hilario. Thank you, Tyler, and hello everyone. Thank you all for joining us today and for your continued interest in the One Group. I would like to begin this call by recognizing our amazing team members, their unwavering commitment to our mission, creating great guest experiences by operating the best restaurant in every market we're in, by delivering exceptional and unforgettable guest experiences to every guest every time is what gives me confidence that we can realize our vision of becoming the global leader in vibe dining. 2024 marked a transformative year for us with the strategic acquisition of Benihana and Rasushi last spring.
Manny Hilario: Thank you Tyler and Hello, everyone. Thank you all for joining us today and for your continued interest in the one group.
Manny Hilario: I would like to begin this call by recognizing our amazing team members.
Manny Hilario: Our unwavering commitment to our mission, creating great guest experiences by operating the best restaurant in every market and by delivering exceptional.
Manny Hilario: And forgettable guest experiences to every guest every time.
Manny Hilario: Is what gives me confidence that we can realize our vision of becoming the global leader in vibe dining.
Manny Hilario: 2024 marked a transformative year for us with the strategic acquisition of Benihana in raw Sushi last spring.
Manny Hilario: This milestone event expanded our portfolio of five dining venues and enabled us to achieve scale that would have taken us years to build organically. The acquisition also drove significant operational efficiencies, yielding significant run rate synergies during 2024. These savings came from streamlining restaurant operations and support functions, eliminating redundant costs, and leveraging our enhanced scale to secure more favorable supplier contracts. Looking ahead, we are targeting a total of $20 million in total cost savings by year-end 2026. Our annual financial performance certainly reflected the transformational change at our company. Full year revenue increased over 100% to $672 million and adjusted EBITDA increased almost 130% to $75.2 million.
Manny Hilario: This milestone event, expanding our portfolio of vibe dining venues and enabled us to achieve scale that would have taken us years to build organically.
Manny Hilario: The acquisition also drove significant operational efficiencies, yielding significant run rate synergies during 2024.
Manny Hilario: These savings came from streamlining restaurant operations and support functions, eliminating redundant cost and leveraging our enhanced scale to secure more favorable supplier contracts.
Manny Hilario: Looking ahead, we are targeting a total of $20 million in total cost savings by year end 2026.
Manny Hilario: Our annual financial performance, certainly reflected the transformational change at our company.
Manny Hilario: Full year revenue increased over 100% to $672 million and adjusted EBITDA increased almost 130% to $75 $2 million.
Manny Hilario: Both metrics obviously represent significant growth from the prior year, but also came in at the higher end of our 2024 guidance ranges.
Manny Hilario: Both metrics, obviously represents significant growth from the prior year, but also came in at the higher end of our 2024 guidance ranges.
Manny Hilario: Now let us share highlights from our recent fourth quarter. First, we increased revenues by almost 150% to a record $222 million. We had our best consolidated comparable sales of the year, including positive transactions at SDK and improved sales performance at Benihana due to our initiatives. The momentum seen in the fourth quarter has carried into the first quarter and we anticipate another quarter of sequential improvement in comparable sales. In addition, we increased our adjusted EBITDA by almost 150% to $30.3 million, led by strong restaurant-level margins of 16.4%. Next, we open three restaurants, including two company-owned units and one managed location end of the year with six new restaurants.
Manny Hilario: Now, let us share highlights from our recent fourth quarter.
Manny Hilario: First we increased revenues by almost 150% to a record $222 million.
Manny Hilario: We had our best consolidated comparable sales for the year, including positive transactions at SDK and improved sales performance at benihana due to our initiatives.
Manny Hilario: The momentum seen in the fourth quarter has carried into the first quarter and we anticipate another quarter of sequential improvement in comparable sales.
Manny Hilario: In addition, we increased our adjusted EBITDA by almost 150% to $33 million led by strong restaurant level margins of 16, 4%.
Manny Hilario: Next we opened three restaurants, including two company owned units and one managed location ended the year with this with six new restaurants.
Manny Hilario: And finally, we had over $71 million in liquid resources at year-end between cash on hand, short-term credit card receivables, and revolver availability, which is currently undrawn.
Manny Hilario: And finally, we had over $71 million in liquid resources at year end.
Manny Hilario: Between cash on hand short term credit card receivables and revolver availability, which is currently undrawn.
Manny Hilario: Looking ahead, let us review our priorities. First, driving sales across all brands by executing our strategic pillars. As I referenced earlier, we are determined to create great memories for our guests by operating the best restaurants across all our markets and delivering exceptional and unforgettable experiences to every guest every time. We do this through our focus on three strategic pillars. Operations, Culinary, and Marketing. While traffic generation across the industry remains challenging, we were encouraged by the positive transactions at SDK during the fourth quarter. Our focus is on maintaining guest frequency and brand engagement during this period.
Manny Hilario: Looking ahead, let US review our priorities first driving sales across all brands by executing our strategic pillars.
Manny Hilario: As I referenced earlier and we are determined to create great memories for our guests by operating the best fresh ins across our markets and delivering exceptional and unforgettable experiences to every guest every time we.
Manny Hilario: We do this through our focus on three strategic pillars.
Manny Hilario: Operations culinary and marketing.
Manny Hilario: While traffic generation across the industry remains challenging we were encouraged by the positive transactions at SDK during the fourth quarter.
Manny Hilario: Our focus is on maintaining guest frequency and brand engagement during this period.
Manny Hilario: And when the economic conditions improve, we expect these guests to return to traditional dining patterns. Our menu strategy balances accessibility with innovation. We offer complete dinner and beverage packages at $69 for STK and $39 for all other brands, and maintain strategic entry price points. For instance, like $50 premium steaks at STK and $39 bistro options at Benihana. We also refresh our offerings four to five times annually with new seasonal items. The Stuhl strategy of approachable pricing and regular menu innovation helps maintain guest engagement and loyalty, which is particularly important in today's promotion-driven environment. On Culinary Innovation, we launched a successful Wagyu program at Benihana as a premium offering with significant potential for further menu innovation ahead.
Manny Hilario: And when the economic conditions improve we expect these gas to return to traditional dining patterns.
Manny Hilario: Our menu strategy balances accessibility with innovation, we offer complete dinner and beverage packages at $69 for SDK and $39 for all other brands and maintain strategic entry price points for instance, like $50 premium steaks at SDK and $39.
Manny Hilario: Bistro options at Benihana.
Manny Hilario: Also refresh our offerings four to five times annually with new seasonal items.
Manny Hilario: This dual strategy of approachable pricing and regular menu innovation helps maintain guest engagement and loyalty, which is particularly important in today's promotion driven environment.
Manny Hilario: On culinary innovation, we launched a successful why good program at Benihana.
Manny Hilario: Premium offering with significant potential for further menu innovation ahead.
Manny Hilario: We also launched a new drink menu with three new margaritas. Moving on to marketing, we are prioritizing local store outreach within a four-block radius of each restroom, building strong relationships with local businesses, concierge, and hotels to drive traffic across our portfolio brands. Evolving our digital engagement and assets is critical across all our brands. We maintain active communication with our guests across digital platforms, consistently sharing fresh, compelling content that showcases our innovation and keeps guests connected to our brands through their mobile devices. At Benihana, we have updated our digital channels to showcase the brand as more than just a special location destination, highlighting our quality ingredients and everyday dining appeal.
Manny Hilario: We also launched a new drink menu with three new margaritas.
Manny Hilario: Moving on to marketing, we are prioritizing local store outreach within a four block radius of each restaurant builds.
Building strong relationships with local businesses, Lcs and hotels to drive traffic across our portfolio of brands.
Manny Hilario: Evolving our digital engagement and assets is critical across all of our brands, we maintain active communication with our guests across digital platforms consistently sharing fresh compelling content that showcases our innovation and keeps guests connected to our brands through their mobile devices.
At Benihana, we have updated our digital channels to showcase the brand as more than just a special location destination, highlighting our quality ingredients and everyday dining appeal.
Manny Hilario: Obviously, Benihana does well with celebrations, birthdays, and anniversaries. But one of our biggest learnings so far is that promotions and product innovation also bring people into our restaurants. And so there's tremendous opportunity to build frequency beyond milestone events and turn people into regular Monday through Thursday customers of the brand. On a related note, this year we plan to launch a new customer loyalty program across all our brands with a special emphasis on celebrating birthdays and rewarding our guests' milestone moments with personalized offerings. This is another strategy in how we show appreciation to our guests and represents a key step forward in our retention efforts because our underlying goal is to convert those who dine with us once or twice annually into more frequent visitors.
Manny Hilario: Obviously, benihana does well with celebrations birthdays and anniversaries.
Manny Hilario: One of our biggest learning so far is that promotions and product innovation also bring people into our restaurants.
Manny Hilario: And so there is tremendous opportunity to build frequency beyond milestone events and certain people into regular Monday to Thursday customers shopped the brand.
Manny Hilario: On a related note. This year, we plan to launch our new customer loyalty program across our brands with a special emphasis on celebrating birthdays and rewarding our guests milestone moments with personalized offerings.
Manny Hilario: This is another strategy and how we show appreciation to our guest and represents a key step forward in our retention efforts because our underlying goal is to convert those to dine with us once or twice annually into more frequent visitors.
Manny Hilario: Our second key priority is the successful integration of Benihana, delivering on our cost initiatives. Our post-acquisition integration efforts have delivered strong results this year. We have achieved significant synergies through streamlined operations at both the restaurant and support center levels. These savings came from consolidating contracts and eliminating redundant costs. Key areas of optimization include workforce efficiency, professional services consolidation, unified insurance coverage, centralized purchasing, and streamlined supply chain management. We expect to fully realize these benefits over the next 12 months. Looking ahead, we have identified additional opportunities for operational efficiency and expect to achieve annual synergies of at least $20 million from the acquisition.
Manny Hilario: Our second key priority is the successful integration of benihana delivering on our cost initiatives.
Manny Hilario: Our post acquisition integration efforts have delivered strong results. This year, we have achieved significant synergies through streamlined operations at both the restaurant and support center levels.
Manny Hilario: These savings came from consolidated contracts and eliminating redundant costs.
Manny Hilario: Key areas of amortization include workforce efficiency professional services consolidation unified insurance coverage centralized purchasing and streamline supply chain management.
Manny Hilario: We expect to fully realize these benefits over the next 12 months.
Manny Hilario: Looking ahead, we have identified additional opportunities for operational efficiency and expect to achieve annual synergies of at least $20 million from the acquisition.
Manny Hilario: Our company's larger scale and strength of supply chain team have helped us negotiate better prices from our suppliers across all our brands. We take pride in constantly pushing ourselves to maintain the most competitive cost structure in the industry. This focus on cost efficiency, combined with our commitment to delivering great customer experience, means that as we gain more traffic, we will be able to increase our profit margin. Notably, we're not overly dependent on any single product across any of our brands, and therefore are able to manage our product mix to keep the cost structure in line and manage through companies' fluctuations.
Manny Hilario: Our company's largest scale and strength of supply chain team have helped us negotiate better prices from our suppliers across our brands.
Manny Hilario: We take pride in constantly pushing ourselves to maintain the most competitive cost structure in the industry.
Manny Hilario: This focus on cost efficiency combined with our commitment to delivering great customer experience means that as we gain more traffic, we will be able to increase our profit margins.
Manny Hilario: Notably, we're not overly dependent on any single product.
Manny Hilario: Any of our brands and therefore are able to manage our product mix to keep the cost structure in line and manage through comedies fluctuations.
Manny Hilario: And finally, as part of our integration process, we have applied our core strengths to enhance both Benja and Rasushi. By sharing our expertise in operations, marketing, and culinary innovation, we are boosting sales and performance at both restaurant brands. This includes improvements in supply chain management, reservation systems, digital marketing strategies, and menu development. We have also streamlined our back office operations by implementing unified systems for HR, payroll, financial reporting, and employee training across all of our restaurants.
Manny Hilario: And finally as part of our integration process, we have applied our core strengths to enhance both anyhow and raw sushi.
Manny Hilario: By sharing our expertise in operations marketing and culinary innovation, we are boosting sales and performance at both restaurant brands. This includes improvements in supply chain management reservation systems digital marketing strategies and many of the Valkyrie.
Manny Hilario: We have also streamlined our back office operations by implementing unified systems for HR payroll financial reporting and employee training across all of our restaurants.
Manny Hilario: Third, we're focused on our next phase of growth, balancing company-owned development and asset-like growth. We ended 2024 with six new restaurants opening three units in the last 70 days of the year. In October, we opened an SDK in Aventura, Florida, our third SDK in the state of Florida. In November, we opened our new concept, Southwater Social, within the Cherry Creek neighborhood of Denver, Colorado. And in November, we opened a managed SDK in the Embassy Suites Niagara Falls Hotel on the Canadian side of the falls. Throughout 2025, we plan to open five to seven company-owned restaurants and we'll balance this with asset-light growth of managed and licensed SDK and Kuna Grills and franchise Benihanas.
Manny Hilario: Third we are focused on our next phase of growth balancing company owned development and asset light growth.
Manny Hilario: We ended 2024 with six new restaurants opening three units in the last 70 days of the year.
Manny Hilario: In October we opened an SDK in Aventura, Florida, our <unk> SDK in the state of Florida.
Manny Hilario: In November we opened our new concept saltwater social within the Cherry Creek neighborhood of Denver, Colorado.
Manny Hilario: And in November we opened our managed SDK and the embassy suites Niagara Falls hotel on the Canadian side of the falls.
Manny Hilario: Throughout 2025, we plan to open five to seven company owned restaurants, and we will balance this with asset light growth of managed and licensed SDK and Kona grills and franchised benihana.
Manny Hilario: In March, we will open a company-owned Benihana in San Mateo, California, at the Bridge Point Shopping Center, one of the premier power centers in the Bay Area. Next, we'll open a company-owned STK in Los Angeles, California in Westwood Village. This is a relocation of the existing STK in the W Hotel. We also plan to open a company-owned SDQ restaurant in the Westfield Topanga Shopping Center located in the heart of California's San Fernando Valley. The new Topanga location will extend our presence in the greater Los Angeles area. Also under construction is a corner grill on Lake Union in Seattle, Washington.
Manny Hilario: In March we will open a company owned benihana in San Mateo, California at the Bridgepoint shopping center, one of the Premier power centers in the Bay area.
Manny Hilario: Next we'll open a company owned SDK in Los Angeles, California in Westwood village. This is a relocation of the existing SDK and the W Hotel.
Manny Hilario: We also plan to open a company owned <unk> restaurant in the Westfield to Panga shopping center located in the heart of California's San Fernando Valley and <unk>.
Manny Hilario: Youtube angled location will extend our presence in the greater Los Angeles area.
Manny Hilario: Also under construction is the Kona grill, Unlike union in Seattle, Washington.
Manny Hilario: We are still in the early stages of our growth story with significant expansion potential across our portfolio.
Manny Hilario: We are still in the early stages of our growth story with significant expansion potential across our portfolio.
Manny Hilario: Looking ahead, we envision Benihana growing to 400 locations while SDK has a clear path to 200 restaurants and provide us with an exceptional return on investment, making it one of the most profitable expansion models in the restaurant industry and naturally positions SDK as our priority for development. We're also accelerating our franchising strategy for Benihana. We have discovered strong interest from franchisees looking to diversify their portfolios with an established upscale casual dining brand. In response, we have enhanced our franchising infrastructure, and we are currently negotiating numerous development agreements. These franchising initiatives will be instrumental in driving Benihana's expansion.
Manny Hilario: Looking ahead, we envision benihana growing to 400 locations, while SDK has a clear path to 200 restaurants and provide us with an exceptional return on investment.
Manny Hilario: Making it one of the most profitable expansion models in the restaurant industry and naturally positioned SDK is a priority for development.
Manny Hilario: We're also accelerating our franchising strategy for Benihana, we have discovered strong interest from franchisees looking to diversify their portfolios with an established upscale casual dining brand in response, we have enhanced our franchising infrastructure and we are currently negotiating numerous development agreements.
Manny Hilario: This franchising initiatives will be instrumental in driving Benihana's expansion.
Manny Hilario: Turning to our growth concepts, we'll be highly selective on growth opportunities for Kunagoro and raw sushi, depending on the circumstances. The demand for our concepts in non-traditional venues continues to grow. We are seeing significant opportunities in airports with both SDK and Benihana Express. Hotels are actively seeking to refresh their food and beverage programs post-COVID, while casinos represent another exciting channel building on our existing successful locations. We are also exploring retail opportunities for Benihana.
Manny Hilario: Turning to our grille concepts will be highly selective on growth opportunities for clinical ROE and Roc sushi, depending on the circumstances.
Manny Hilario: The demand for our concepts in non traditional venues continues to grow we are seeing significant opportunities in airports with both SDK and Benihana Express.
Manny Hilario: Well <unk> are actively seeking to refresh their food and beverage programs post COVID-19, while casinos represents another exciting channel building on our existing successful locations.
Manny Hilario: We are also exploring retail opportunities for benihana.
Manny Hilario: Lastly, our fourth key priority is balance sheet flexibility and returning value to our shareholders through share repurchases. We finished the quarter with over $71 million in liquid resources when combining our cash on hand, short-term credit card receivables, and the availability under the revolving credit facility, which remains undrawn. Under the current conditions, our total loan is not subject to a financial governance. During 2024, we returned approximately $3.2 million to shareholders through share repurchases, and we will continue to evaluate optimistic share repurchases under our board authorized program. We are laser focused on our balance sheet and our prioritizing cashflow generation, balance sheet flexibility, and maximizing shareholder returns.
Manny Hilario: Lastly, our fourth key priority is balance sheet flexibility and returning value to our shareholders through share repurchases.
Manny Hilario: We finished the quarter with over $71 million in liquid resources, when combining our cash on hand short term credit card receivables and the availability under the revolving credit facility, which remains undrawn.
Manny Hilario: Under the current conditions, our term loan is not subject to financial covenants.
Manny Hilario: During 2024, we returned approximately $3 $2 million to shareholders through share repurchases and we will continue to evaluate opportunistic share repurchases under our board authorized program.
Manny Hilario: We are laser focused on our balance sheet and are prioritizing cash flow generation balance sheet flexibility and maximizing shareholder returns.
Manny Hilario: As you can tell, we have been busy building up the path to $5 billion in system-wide sales. Our operating cash flow generation, complying with our disciplined pipeline of new locations, proven unit economics, and asset-like strategies provide us with multiple avenues for growth. We're excited for the future and will remain focused on executing our strategy and creating long-term shareholder value.
Manny Hilario: As you can tell we have been busy building our <unk>.
Manny Hilario: <unk> 5 billion of system sales, our operating cash flow generation complying with our disciplined pipeline of new locations proven unit economics in our satellite strategies provide us with multiple avenues for growth.
Manny Hilario: We're excited for the future and we will remain focused on executing our strategy and creating long term shareholder value.
Tyler Loy: I will now turn the call over to Tyler. Thank you, Manny. Let me start by discussing our fourth quarter financials in greater detail before providing our outlook for the first quarter and current year.
Tyler Loy: I will now turn the call over to Tyler.
Thank you Manny.
Tyler Loy: Let me start by discussing our fourth quarter financials in greater detail before providing our outlook for the first quarter and current year.
Tyler Loy: Please note that the fourth quarter of 2024 has three months of contributions from Benihana and Rasushi, whereas the prior year quarter excludes any contribution from the acquisition of Benihana, which closed on May 1st, 2024. Total consolidated GAAP revenues were $221.9 million, increasing 147% from $89.9 million for the same quarter last year. Included in total revenues were our company owned restaurants net revenue of $217.8 million, which increased 155.7% from $85.2 million for the prior year quarter. The increase was due primarily to $130.4 million in contributions from Benihana and Rob Sushi. And to a lesser extent, contributions from the opening of six SDKs, two Kona grills, and a saltwater social restaurant since the onset of the fourth quarter of 2023.
Tyler Loy: Please note that the fourth quarter of 2024 has three months of contribution from <unk> and <unk>.
Tyler Loy: In the prior year quarter excludes any contribution from the acquisition of Benihana, which closed on May one 2024.
Tyler Loy: Total consolidated GAAP revenues for $221 9 million, increasing 147% from $89 9 million for the same quarter last year.
Tyler Loy: Included in total revenues, where our company owned restaurant net revenue of $217 8 million, which increased 155, 7% from $85 2 million for the prior year quarter.
Tyler Loy: The increase was due primarily to $130 4 million in contributions from Benihana and Ross issue.
Tyler Loy: And to a lesser extent contributions from the opening of six SDK to Kona grill, and the saltwater social restaurant.
Tyler Loy: Onset of fourth quarter of 2023 of these.
Tyler Loy: These were partially offset by a 4.3% reduction in consolidated comparable sales. Management license and identity revenues decreased 14.5% to $4.1 million from $4.8 million for the prior year quarter. Benihana Franchise Restaurants contributed $0.5 million in revenues during the fourth quarter of 2024 but was offset by decreased revenues that managed SDK restaurants in North America and the prior termination of an F&B hospitality agreement in Florence, Italy. Company owned restaurant cost of sales as a percentage of company owned restaurant net revenue decreased 250 basis points to 20.4% compared to 22.8% in the prior year quarter. This was primarily due to the addition and strong performance of Benihana and Ras Sushi as they contributed positively to cost of sales as a percentage of company owned restaurant net revenue.
Tyler Loy: These were partially offset by a four 3% reduction in consolidated comparable sale.
Tyler Loy: Management license fee revenue decreased 14, 5% to $4 1 million from $4 8 million for the prior year quarter.
Tyler Loy: Danny Honda franchise restaurants contributed <unk> 5 million in revenues during the fourth quarter of 2024, well was offset by decreased revenues advantage SDK restaurants in North America and the prior termination of an F&B hospitality agreement or Italy.
Company owned restaurant cost of sales as a percentage of company owned restaurant net revenues decreased 250 basis points to 24% compared to 22, 8% in the prior year quarter. This was primarily due to the addition, and strong performance of Benihana raw sushi as they contributed positive related to cost.
Tyler Loy: A sale as a percentage of company owned restaurant net revenue.
Tyler Loy: Company owned restaurant operating expenses as a percentage of company owned restaurant net revenue increased 340 basis points to 61.2% from 57.8% in the prior year quarter. This was due to cost inflation and fixed operating costs, partially offset by operational cost reduction initiative and pricing at SDK Income Scroll. Notably, the addition of Benihana and Basushi contributed positively to operating expenses as a percentage of company-owned restaurant net revenue. Restaurant operating profit decreased 90 basis points to 18.4% compared to 19.3% in the prior year quarter. This included restaurant operating profit of 22.6% for Benihana brand locations, which improved approximately 300 basis points versus the prior year.
Tyler Loy: Company owned restaurant operating expenses as a percentage of comprehend restaurant net revenue increased 340 basis points to 61, 2% from 57, 8% in the prior year quarter. This was due to cost inflation and fixed operating costs, partially offset by operational cost reduction initiatives and pricing.
Tyler Loy: Carl.
Tyler Loy: Notably the addition of Benihana in Boston.
Tyler Loy: <unk> contributed positively to operating expenses as a percentage of company owned restaurant net revenue.
Restaurant operating profit decreased 90 basis points to 18, 4% compared to 19, 3% in the prior year quarter. This included restaurant operating profit of $22.
Tyler Loy: Sent for Benihana brand locations, which improved approximately 300 basis points versus the prior year.
Tyler Loy: On a total reported basis, general and administrative costs increased $5.3 million, or 66.5%, to $13.2 million, from $7.9 million in the prior quarter, driven by the addition of the Benihana Acquisition. When adjusting for stock-based compensation, adjusted general and administrative expenses were $11.6 million and $6.7 million in the fourth quarter of 2024 and 2023, respectively. As a percentage of revenues, adjusted general and administrative costs improved 230 basis points to 5.2% compared to 7.5%. The improvement is due to the sales leverage realized with the Benihana acquisition and the implementation of cost-saving and transaction-centered For more information visit www.benihana.com Depreciation and amortization expense was $11.4 million compared to $4.8 million in the prior year quarter.
Tyler Loy: On a total reported basis general and administrative costs increased $5 3 million or 66, 5% to $13 2 million from $7 9 million in the prior year quarter driven by the addition of the venue acquisition.
Tyler Loy: When adjusting for stock based compensation adjusted General and administrative expenses were $11 6 million and $6 7 billion in the fourth quarter of 2024 at 2023, respectively.
Tyler Loy: As a percentage of revenues adjusted general and administrative costs improved 230 basis points to five 2% compared to seven 5%.
Tyler Loy: The improvement is due to the sales leverage realized with any other acquisition and the implementation of cost saving and transaction synergies.
Tyler Loy: Depreciation and amortization expense was $11 4 million compared to $4 8 million in the prior year quarter. The increase was primarily related to depreciation and amortization for the benihana and process your restaurants.
Tyler Loy: The increase was primarily related to depreciation and amortization for the Benihana and Bras Sushi restaurants. Depreciation associated with the opening of a new company on venue since October 2023, and capital expenditures to maintain and enhance the guest experience in our restaurant. Pre-opening expenses were $2 million compared to $2.9 million in the prior year. Non-recurring costs of $3.7 million consisted of transition and integration costs of $3.6 million and transaction and exit costs of $0.1 million, both related to the acquisition. Interest expense was $10.5 million compared to $1.9 million in the prior quarter due to our higher level of outstanding debt post-acquisition.
Tyler Loy: Appreciation associated with the opening of new company owned venues at the October 2023, and capital expenditures to maintain and enhance the guest experience at our restaurants.
Tyler Loy: Preopening expenses were $2 million compared to $2 9 million in the prior year.
Tyler Loy: Nonrecurring costs of $3 7 million consisted of transition and integration costs of $3 6 million and transaction and exit cost of 0.1 billion both related to the acquisition.
Tyler Loy: Interest expense was $10 5 million compared to $1 9 million in the prior year quarter due to our higher level of outstanding debt post acquisition.
Tyler Loy: Provision for income taxes was $0.3 million, compared to a benefit of $1.5 million in the prior year quarter. Net loss available to common stockholders was $5.4 million or $0.18 net loss per share, compared to a net income available to common stockholders of $4.6 million in the fourth quarter of 2023, or $0.15 net income per share. Adjusted net loss available to common stockholders was $0.9 million, or $0.03 adjusted net loss per share, compared to an adjusted net income available to common stockholders of $5.3 million, or $0.17 adjusted net income per share in the prior year quarter.
Tyler Loy: Provision for income taxes was <unk> 3 million compared to a benefit of $1 5 million the prior year quarter.
Tyler Loy: Net loss available to common stockholders was $5 4 million or 18 net loss per share compared to a net income available to common stockholders of $4 6 million in the fourth quarter of 2023, <unk> <unk> net income per share.
Tyler Loy: Adjusted net loss available to common stockholders was <unk> 9 million or <unk> adjusted net loss per share compared to adjusted net income available to common stockholders of $5 3 million or.
Tyler Loy: <unk> adjusted net income per share in the prior year quarter.
Tyler Loy: Adjusted EBITDA attributable to the One Group Hospitality Inc. was $30.3 million, compared to $12.2 million in the prior year quarter.
Tyler Loy: Adjusted EBITDA attributable to the one group hospitality was $30 3 million compared to $12 2 million the prior year quarter. Please.
Tyler Loy: Please note in the third quarter of 2024, we updated our definition of adjusted EBITDA to no longer adjust for pre-opening expenses. Under the previous definition, adjusted EBITDA would have been $32.1 million versus $14.5 million in the fourth quarter of the prior year.
Tyler Loy: Please note in the third quarter of 2024, we updated our definition of adjusted EBITDA to no longer adjust for Preopening expenses.
Tyler Loy: Under the previous definition adjusted EBITDA would have been $32 1 million versus $14 5 million in the fourth quarter of the prior year.
Tyler Loy: We have included a reconciliation of adjusted EBITDA, adjusted net income, and historical adjusted EBITDA in the tables in our fourth quarter 2024 earnings release. Turning to liquidity, we finished the year with $38.1 million in cash and short-term credit card receivables, and $33.6 million under our revolving credit facility, which remains undrawn. Under the current conditions, our term loan does not have a financial covenant.
Tyler Loy: We have included a reconciliation of adjusted EBITDA adjusted net income and historical adjusted EBITDA in the table in our fourth quarter 2024 earnings release.
Tyler Loy: Turning to liquidity, we finished the year with $38 1 million in cash and short term credit card receivables and $33 6 million under our revolving credit facility, which remains undrawn.
Tyler Loy: Under the current conditions, our term loan does not have a financial covenant.
Tyler Loy: Now, I would like to provide some forward-looking commentary regarding our business. This commentary is subject to written uncertainties associated with forward-looking statements as discussed in our SEC filing. We as always remind our investors the actual number and timing of new restaurant openings for any given period is subject to a number of factors outside the company's control, including macroeconomic conditions, weather, and factors on the control of landlords, contractors, licensees, and regulatory and licensing authorities.
Tyler Loy: Now I would like to provide some forward looking commentary regarding our business. This commentary is subject to risks and uncertainties associated with forward looking statements as discussed in our SEC filings.
Tyler Loy: We as always remind our investors the actual number and timing of new restaurant openings for any given period is subject to a number of factors outside the company's control, including macroeconomic conditions weather and factors under control of landlords contractors licensees and regulatory and licensing authority.
Tyler Loy: Based on the information available now and the expectations of today, we are issuing the following financial targets for the first quarter of 2025. Beginning with top line, we project total gap revenues between $205 and $210 million, which reflects our anticipation of consolidated comparable sales of minus 4% to minus 3%, a sequential improvement from the fourth quarter of last year. Managed Franchise and Licensee Revenues are expected to be between $3.5 and $4 million. Total company owned operating expenses as a percentage of company owned restaurant net revenue of approximately 83%. Total GNA, excluding stock-based compensation, of approximately $11 million.
Tyler Loy: Based on the information available now and the expectations I look today, we are issuing the following financial targets for the first quarter of 2025.
Tyler Loy: Beginning with top line, we project total GAAP revenue of between $205 and $210 million, which reflects our anticipation of consolidated comparable sales of minus 4% to minus 3% a sequential improvement from the fourth quarter of last year.
Tyler Loy: Managed franchise and license fee revenues are expected to be between three five and $4 million.
Tyler Loy: Total company owned operating perspective, as a percentage of company owned restaurant net revenue of approximately 83%.
Tyler Loy: Total G&A, excluding stock based compensation of approximately $11 million.
Tyler Loy: Adjusted EBITDA between $24 and $26 million, restaurant pre-opening expenses of between $1.5 and $2 million, and finally, we plan to add $1 to $2 new stagnation.
Tyler Loy: Adjusted EBITDA of between 24 and $26 million.
Tyler Loy: Restaurant Preopening expenses of between one five and $2 million and finally, we plan to add one to two and a bad news.
Tyler Loy: And based on the information available now and the expectations as of today, we are issuing the following financial targets for 2025. We project total gap revenues of between $835 and $870 million, which reflects our anticipation of consolidated comparable sales of minus 3% to plus 1%. Managed Franchise and Licensee Revenues are expected to be between $15 and $16 million. total company owned operating expenses as a percentage of company owned restaurant net revenue at 83.5 to 82.2%. Total GNA, excluding stock-based compensation of approximately $47 million. Adjusted EBITDA between $95 and $115 million. restaurant pre opening expenses of between seven and eight million an effective income tax rate of approximately 7.5% Total capital expenditures, net of allowances received from landlords between 45 and 50 million.
Tyler Loy: And based on the information on El available now and the expectations as of today, we are issuing the following financial targets for 2025.
Tyler Loy: We project total GAAP revenue of between $835 $870 million, which reflects our anticipation of consolidated comparable sales of minus 3% to plus 1%.
Tyler Loy: Manage franchise and license fee revenues are expected to be between 15 and $16 million.
Tyler Loy: Total company owned operating expenses as a percentage of company owned restaurant net revenue of $83 five to 82, 2%.
Tyler Loy: Total G&A, excluding stock based compensation of approximately $47 million.
Tyler Loy: Adjusted EBITDA between 95 and $115 million.
Tyler Loy: Restaurant Preopening expenses of between seven and $8 million.
Tyler Loy: An effective income tax rate of approximately seven 5%.
Tyler Loy: Total capital expenditures net of allowances received from landlords of between $45 million to $50 million.
Tyler Loy: And finally, we plan to add five to seven new venues.
Tyler Loy: And finally, we plan to add five to seven years.
Tyler Loy: Lastly, beginning this year, we will report financial information on a fiscal quarter basis using four 13-week quarters with the addition of a 53rd week when necessary. For 2025, our fiscal calendar begins on January 1, 2025, and ends on December 28, 2025, and our first quarter will contain 89 days.
Tyler Loy: Lastly, beginning this year, we will more financial information on a fiscal quarter basis, using 413 week quarters with the addition of a 50 <unk> week when necessary. Our 2025, our fiscal calendar begins on January one 2025 and ends on December 28, 2025, and our first quarter will contain.
Tyler Loy: 89 days.
Manny Hilario: I will now turn the call back to Manny. Thank you, Tyler, and thank you all for your time today and interest in the One Group. We remain confident in our portfolio of iconic, high-volume brands and long-term vision to be the undisputed global leader in vibe dining. We are in the early stages of an exciting phase in our company's journey, and we appreciate your continued support.
Andy: I will now turn the call back to Andy.
Andy: Thank you Tyler and thank you all for your time today and interest into one group.
Andy: We remain confident in our portfolio of iconic high volume brands and long term vision to be the undisputed global leader in vibe dining.
Andy: We are in the early stages of an exciting phase in our company's journey and we appreciate your continued support.
Operator: Tyler and I are happy to answer any questions that you may have, operator. We will now begin the question and answer session.
Town are happy to answer any questions. They may have operator.
Andy: Thank you.
Speaker Change: We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.
Operator: To ask a question, you may press star, then one on your touchtone phone. If you are using a speaker phone, please pick up your handset before pressing the key.
Andy: If you are using a speakerphone please pick up your handset before pressing the keys.
Operator: If at any time your question has been addressed and you would like to withdraw your question, please press star and then At this time, we will pause momentarily to assemble our.
Andy: Anytime your question has been addressed and you would like to withdraw your question. Please press Star then two.
Andy: At this time, we will pause momentarily to assemble our roster.
James Salera: And your first question today will come from Jim Salera with Stevens, Inc. Please go ahead. Yes, good afternoon. Thanks for taking. Manny, I wanted to drill down a little bit on maybe the shape of the year, obviously some consumer uncertainty right now, but how can we think about the same store sales progression? Is it fair to say that it'll be expected to kind of get gradually better each quarter as the year progresses or? The other piece is what do you expect from kind of a traffic versus mix component as the year progresses? As we've heard, industry traffic is expected to be kind of flat to down for the year.
Speaker Change: And your first question today will come from Jim <unk> with Stephens Inc. Please go ahead.
Jim: Hey, guys. Good afternoon, thanks for taking my questions.
Jim: I wanted to drill down a little bit on maybe the shape of the year, obviously, some consumer uncertainty right now but.
Jim: How should we think about the same store sales progression as it is it fair to say that it will do you expect it to kind of get gradually better each quarter as the year progresses or in front of me.
Jim: Callout such work that.
Jim: Then the other pieces, what do you expect from kind of a traffic versus mix component as the year progresses as required industry graphical is expected to be flat to down for the year.
Manny Hilario: Yeah, Jim, thanks. So, as you can see from our guidance for the quarter, we're looking at a minus four to minus three income and same store sales for the first quarter, and then for the full year, we're looking at a minus three to plus one. So, obviously, you know, the progression has been sequentially better this quarter than, you know, it was on the fourth quarter last year. So, we've seen continued improvement in the fourth quarter was already an improvement over prior quarters. So, we're sequencing into a much better periods. And then going out into the year, we think that, you know, we'll continue the improvement in the second, third, and obviously, the fourth quarter is always a great quarter for us in terms of, you know, being able to go on sale.
Jim: Yes, Jim. Thanks, So as you can see from our guidance for the quarter were looking at a minus four to minus three.
Jim: And same store sales for the first quarter.
Jim: And then for the full year, we're looking at a minus three to plus one so obviously you know.
Jim: The progression has been sequentially better this quarter than it was in the fourth quarter last year. So we've seen continued improvement in the fourth quarter was already an improvement over prior quarters. So we're sequencing into a much better periods and then going out into the year, we think of that in our we'll continue the improvement.
Jim: And the second third and obviously the fourth quarter is always a great quarter for us in terms of being able to go on sale. So obviously.
Manny Hilario: So, you know, obviously, the environment is what the environment is, the challenges are still out there. But I think in total, we are making progress for all our brands in terms of traffic, as we mentioned earlier, in the prepared comments, SDK, traffic was positive in the fourth quarter, and we feel really good about the traffic for that brand for 2025. So, we feel really good about the strategies and initiatives that we've put in place there. And then for Benihana, obviously, we're now into our third quarter into working with the brands, and we have made significant amount of initiatives and improvements and changes to both marketing menu and operations, which we think will continue to yield transactions going forward.
Jim: The environment is what the environment is that the challenges are still out there but.
Jim: But I think in total we are we are making progress.
Jim: Our brands in terms of traffic as we mentioned earlier.
Jim: In the prepared comments SDK traffic was positive in the fourth quarter and we feel really good about the traffic for for that brand.
Jim: For 2025, so we feel really good about the strategies and initiatives that we've put in place there and then for Benihana, obviously, we're now into.
Jim: Our third quarter into working with the brands and.
Jim: We have made significant amount of initiatives and improvements and changes to both marketing.
Jim: Menu and operations, which we think will continue to yield.
Jim: Transactions going forward, so we feel good about.
Manny Hilario: So, we also feel good about the transaction outlook for the Benihana brand. In terms of the growth, that continues to be a challenged sector in general, but I think as you saw from the numbers, as we continue to make improvements there, and we do have a very solid leadership team in place and grow right now.
Jim: The transaction.
Jim: Outlook for the <unk> brand in terms of the growth that continues to be challenged.
Jim: Sector in general, but I think as you saw from the numbers we continue to make are.
Jim: Improvements there and we do have a very solid leadership team in place and grow right now so I feel pretty comfortable about our ability to get to better traffic in 2025.
Manny Hilario: So, I feel pretty comfortable about our ability to get to better traffic in 2025. Great.
Jim: Great and then maybe another question is on the kind of sequencing of the new unit openings.
Manny Hilario: And then maybe another question is on the kind of sequencing of the new unit openings. Is there anything we should factor in? In terms of equipment availability, I don't know if any of the tariffs impact your ability to get equipment set up for new restaurant openings and if that should be kind of even throughout the year, we should expect maybe more in the back half versus the front half. Yeah, I mean, so right now, from a sequencing of restaurants, we have, you know, three units that are pretty much in final stages. We have our Benihana in San Mateo, which is already in heavy, you know, pre-opening operations right now.
Jim: Is there anything we should factor in.
Jim: In terms of equipment availability I don't know if any of the tariffs impact.
Jim: Your ability to get equipment setup for new restaurant openings, and if that should be kind of even throughout the year. We can expect maybe more in the back half versus the front half.
Jim: Yes, I mean so.
Jim: Right now from a sequencing of restaurants, we have.
Jim: Three units that are pretty much in final stages, we have our benihana and.
Jim: And San Mateo, which is already in heavy.
Jim: Preopening operations right now so that one is very close to getting opened.
Manny Hilario: So that one is very close to getting opened. And then we also have two SDKs that will follow shortly thereafter. We have one in Tampanga, California, which is coming up very soon. And then we also have Westwood II in the very near future. So all those three restaurants are currently already in pre-opening operations. So those are very, will be very close to being opened here. And then we also have a franchise, Benihana Express, that will be opening here very shortly. And then expect the balance of the openings to be late third quarter, early fourth quarter, with probably the most likely one is the Kunuguru in Seattle.
Jim: And then we also have two SD case, they will follow shortly thereafter, we have won and some panga, California, which is coming up very soon we also have west with too.
Jim: The very near future. So all those three restaurants are currently already in Preopening operations.
Jim: Saar are very very well.
Jim: Close to being open here and then we also have.
Jim: The franchised benihana expressed that we'll be opening here very shortly.
Jim: And then I expect the balance of the of the openings to be late third quarter.
Jim: Early fourth quarter with.
Jim: Probably the most.
Jim: Likely one is the.
Jim: Kona Grill and Seattle, So so a bunch of them opening up now.
Manny Hilario: So a bunch of them opening up now, you know, one kind of middle of the year, and then the balance, late third quarter, early fourth quarter. In terms of equipment availability and stuff, of course, for those that are opening now, all the equipment is already in place. I think the Kunuguru equipment is pretty much sorted out. And then for the late end of the year openings, I think we also have a big part of that equipment also sorted out. So I wouldn't say we'd see any immediate impact in 2025 with anything to do with equipment.
Jim: One kind of middle of the year and the balance late third quarter early fourth quarter in terms of equipment availability and stuff of course for those that are opening now all the equipment is already in place I think the Kona grill equipment is pretty much sorted out and then for the late end of the year openings I think.
Jim: We also have a big part of that equipment also sort out so I wouldn't say, we'd see any immediate impact in 2025 with anything to do with equipment.
James Salera: Great. I appreciate all the detail, guys, so I'll hop back in the queue. Thank you.
Speaker Change: Okay, Great I appreciate all the detail guys I'll hop back thank you.
Jim: Thank you Jim.
Mark Smith: And your next question today will come from Mark Smith with Lake Street Capital. Please go ahead. Hi, guys. Similar question, just wanted to ask, you know, as we look at the tariff front, you know, any impact on commodities, you know, anything that you guys are seeing shifting out there on the commodity I mean, other than the more obvious ones that everybody speaks about today, like eggs and some of the stuff we see out there, we don't see any significant shifts. You know, obviously beef is a big one for us, and also frozen seafood, as we go through a lot of shrimp and prawns, etc.
Speaker Change: And your next question today will come from Mark Smith with Lake Street Capital. Please go ahead.
Mark Smith: Hi, guys.
Mark Smith: Similar question just wanted to ask you know as we look at the tariff fraud.
Mark Smith: Any impact on commodities.
Mark Smith: Anything that you guys are seeing shifting out there on the commodity front.
Mark Smith: I mean other than the more obvious ones that everybody speaks about today like AG soon some of the stuff we see out there.
Mark Smith: We don't see any significant shifts.
Mark Smith: Obviously beef is the big one for US and also frozen seafood as we go through a lot of shrimp and problems et cetera. So I think those two commodities at least from our perspective are pretty well solved for the remainder of the year. So we don't we don't see any.
Manny Hilario: So I think those two commodities, at least from our perspective, are pretty well solved for the remainder of the year. So we don't see any impact, particularly now on the second, third quarter, we don't see anything that would be significant, or even the first quarter. But yeah, the environment is a little bit more, you know, I guess more complex in terms of navigating it with all the, you know, the conversations about tariffs and the potential shifting in supply sources, etc. So it's a little bit more, you know, complex, but I think, as I mentioned in my prepared statements, one of our core strengths now is a really strong supply chain team, as well as A very strong supply chain process.
Mark Smith: Particularly now on the second and third quarter, we don't see anything that.
Mark Smith: That would be significant or even the first quarter, but.
Mark Smith: The environment is has a little bit more.
Mark Smith: No.
Mark Smith: I guess more complex in terms of navigating it with all the.
Mark Smith: The conversations about tariffs and the potential shifting and supply sources etcetera, So it's a little bit more.
Mark Smith: Complex, but I think as I mentioned in my prepared statements one of our core strengths now has a really strong supply chain team as well as <unk>.
Mark Smith: Strong supply chain.
Mark Smith: Process, why I feel pretty good that through the acquisition and integration process of Benihana, we've really gotten our our systems and practices in place for supply chain. So obviously there'll be.
Manny Hilario: I feel pretty good that through the acquisition and integration process of Benihana, we've really gotten our systems and our practices in place for supply chain. So obviously, there'll be, you know, some things happening in the environment, but I think that we've set ourselves up to be able to navigate through that environment really well with our systems. And then you already walked through kind of opening cadence and outlook there.
Mark Smith: Some things happening in the environment, but I think that we've set ourselves up to be able to navigate through that environment really well with our with our systems.
Mark Smith: Okay.
Mark Smith: And then you already walked through kind of opening cadence and outlook. There I'm curious this should we think about primarily Rob maybe with Kona.
Manny Hilario: I'm curious as we think about primarily Rob, maybe with Kona, are there any restaurants coming to end of lease terms or anything that maybe we should look for on the closure? I mean, as I said in the earlier calls, you know, obviously, portfolio management is really important for the growth side at this point. For RAH, we don't have any plans, as a matter of fact, we don't have any plan closures at this point, but, you know, obviously, we'll continue to evaluate that, but no RAH, you know, locations on our plan right now to close down.
Mark Smith: Are there any restaurants coming to.
Mark Smith: End of lease terms or anything that maybe we should look for on the closure.
Mark Smith: I mean as I've said in the earlier calls obviously portfolio.
Mark Smith: Management is really important for them.
Mark Smith: For the growth side.
Mark Smith: At this 0.4 right. We don't we don't have any plans as a matter of fact, we don't have any any plant closures at this point, but obviously, we will we will continue to evaluate that but but no rock.
Mark Smith: Our locations on a plan right now to close down.
Mark Smith: Okay.
Manny Hilario: And I think the last one for me, just trying to dig in a little bit more into kind of consumer behavior as we think about kind of traffic, ticket, mix, maybe talk about your, you know, ability to take price, you know, where necessary and what's maybe built into the guidance here. And then I'm also curious just in changes in behavior, maybe over the last few months, are you seeing anything significant, you know, like cut back on, you know, alcohol or drinks, desserts, anything to call out on consumer behavior would be great. Yeah, I mean, I think there were two questions in there.
Mark Smith: The last one for me just trying to dig in a little bit more on consumer behavior and should we think about kind of traffic ticket mix, maybe talk about your ability to take price where necessary and what's may be built into the guidance here and then I'm also curious just in changes in behavior.
Mark Smith: Maybe over the last few months are you seeing anything significant.
Mark Smith: Cutback on alcohol or drinks or anything to call out on consumer behavior would be great.
Mark Smith: Yes, I mean I.
Speaker Change: I think there were two questions in there one of them was the pricing.
Manny Hilario: One of them was the pricing and how we're looking at pricing. Obviously, we do want to be cautious on pricing, just because, you know, the consumer is paying close attention to tickets right now or what the prices are on the ticket. So, we have to be thoughtful and cautious about it. We do still have some opportunities. We've been very disciplined with SDK. We've been very thoughtful about not going too far ahead in that brand. So, we do have some firepower in pricing there if we wanted to. But for all intents and purposes, we'll only go to pricing if we get into a commodity or a situation here where we have to deal with inflation.
Speaker Change: And how we're looking at pricing obviously.
Speaker Change: We do we do want to be cautious on pricing just because.
Speaker Change: The consumer is paying close attention to tickets right now so or.
Speaker Change: Or what the prices are on the ticket so we have to be bought.
Speaker Change: <unk> been cautious Nevada, we do still have some opportunities we've been very disciplined with SDK, we've been very thoughtful about not going too far ahead in that brand. So we did have some some firepower and pricing there if we wanted to but for all intents and purposes.
Speaker Change: Only go to pricing, if we get into a commodity or.
Speaker Change: Situation here, where we have to deal with inflation. So we'll be very careful with that in terms of the consumer behaviors.
Manny Hilario: So, we'll be very careful with that. In terms of the consumer behaviors, I mean, I think I've reported earlier. I think that the bigger behavior that we've seen from consumers is them opting for, you know, alternative, you know, day parts such as happy hour. And we also see, particularly on the steakhouse side, we see more people sharing maybe some of the sides, but we haven't really seen anything other than those two mega trends, if you will, within the portfolio. Excellent. Thank you.
Speaker Change: I think I've reported earlier I think the bigger behavior that we've seen from consumers as them opting for alternative.
Speaker Change: All day parts, such as happy hour.
Speaker Change: We also see.
Speaker Change: Particularly on the Steakhouse side, we see more people sharing maybe some of the sides but.
Speaker Change: But we haven't really seen anything out other than those two.
Speaker Change: Two mega trends, if you will within the portfolio.
Speaker Change: Excellent. Thank you.
Speaker Change: Okay.
Nerses Setyan: And your next question today will come from Nick Setyan with Wedbush Securities. Please go ahead. Thank you.
Speaker Change: And your next question today will come from Nick <unk> with Wedbush Securities. Please go ahead.
Speaker Change: Thank you.
Manny Hilario: Can we just talk about some of the New Year openings and how they're doing, you know, if you're happy with sort of the sales trends, particularly, you know, the Kona and the raw sushi that opened this year. Yeah, I mean, I think the two openings, one was in plantation was the raw opening. I think that one is tracking in the $3.5, $4 million revenue range, which is for a rise is pretty much on brand. And then our second opening in that category was Tigard, which is in Oregon, fantastic shopping mall right by a fantastic Apple store.
Nick: Can we just talk about some of the newer openings and how theyre doing.
Nick: If you are happy with the sales trends, particularly.
Nick: The Kona in the raw sushi that opened this year.
Nick: Yes, I mean, I think the two openings one was implantation was the route opening.
Nick: That one is tracking in the 354 million dollar revenue range, which is for arise is pretty much on Brian and then our second opening in that category was <unk>, which is a.
Speaker Change: In Oregon, Fantastic shopping mall, whereby fantastic Apple store I think thats upcoming restaurant, it's done in a while it did really well during season during the holiday season, which as you would expect out of that shopping center. Obviously, the first quarter was a little slower because of the rains up in Oregon and <unk>.
Manny Hilario: I think that's up and coming restaurant. It's done, you know, it did really well during season, during the holiday season, which is you'd expect out of that shopping center, obviously, you know, the first quarter was a little slower because of the rains up in Oregon and the fact that we have a beautiful rooftop in that property. So, I'm actually been pretty pleased with the progress of both Tigard and Plantation.
Speaker Change: And the fact that we have a beautiful rooftop in that property. So I am actually been pretty pleased with the progress of both Tigard and foundation. So I would say that the check I mean, the other openings.
Manny Hilario: So, I would say that's a good check. I mean, the other openings that we've done are the SDKs, which continue to be above our model and continue to do extremely well. And then we also opened Southwater Social. You know, my view on that restaurant, that opening is was to be around 85 to 100,000 a week. We're in mid-hundreds, about 130, 140. So, that restaurant is actually, frankly, doing extremely, extremely well for a one-off concept.
Speaker Change: We've done our the SDK, which continue to be above our model and continue to do extremely well and then we also opened saltwater social.
Speaker Change: My view on that restaurant that opening is was to be around 85 to 100000, a week. We're in mid hundreds about 130, 140, so that restaurants actually frankly doing extremely extremely well.
Speaker Change: A one off asset so we I would say that I love.
Manny Hilario: So, I would say that I look at the 2024 class as a good class of openings. And the 2025 class is also a super exciting class of units. The quality of the real estate is super high on all the properties.
Speaker Change: Look at the 2024 classes as a good class.
Speaker Change: Openings in.
Speaker Change: 25 classes also super exciting.
Speaker Change: First of all.
Speaker Change: Units.
Speaker Change: The quality of the real estate is Super high and all of the property. So we are looking forward to.
Manny Hilario: So, we're looking forward to another strong year in real estate in 2025.
Speaker Change: Another strong year in real estate in 2025.
Manny Hilario: And just please update us on the construction costs and where they are across the concept, at least the ones that you're developing, like how much it costs to build a new unit. I mean, I think that the gross costs on concepts right now is, you know, in the high 600s to close 700 per square foot on the space. And then we're getting about $150 in TI, so call it in the mid-500s, you know, after TI. I mean, that's just kind of what the environment's been. If I look at, you know, throughout the last two years, obviously, you know, with labor having been an issue at some point, construction did go up and then equipment and some other stuff.
Speaker Change: And just quickly update us on the construction cost and where they are across the concepts.
Speaker Change: That you are developing like how much it cost to build the new units.
Speaker Change: Yes, I mean, I think that the gross costs on concepts right now is.
Speaker Change: In the high six hundreds.
Speaker Change: 700 per square foot on the space and then we're getting about $150 and.
Speaker Change: And Ti so call it in the mid five hundreds.
Speaker Change:
Speaker Change: After Ti I mean, thats, just kind of what <unk> environments manner.
Speaker Change: I look at the.
Throughout.
Speaker Change: The last two years obviously.
Speaker Change: With labor, having been an issue at some point construction did go up and down equipment and some other.
Manny Hilario: So, obviously, the big pressure point not to really watch out is for steel prices. Some of our properties, we use steel in it, so we obviously are managing through it. But again, I think as we've gotten bigger, the quality of our development team is really big, is really high. So, I have a very high-quality team that spends a significant amount of time on cost engineering just to make sure that we're getting the right specs and we're doing a good job of only spending what we need to spend on these projects.
The staff. So obviously, the the big pressure pointed out to really watch out for steel prices.
Speaker Change: Some of our properties, we use steel and so we obviously are managing through it but but again I think as we've gotten bigger or the quality of our development team is really there is really high so I have a very high quality team that spends a significant amount of amount of time on cost engineering just to make sure that we're getting the rights back.
Speaker Change: And we're doing a good job of only spending mode, we need to spend on these projects. So I think that.
Manny Hilario: So, I think that, again, our team and our process is very strong in that area right now.
Speaker Change: Again, our team and our process is very strong in that area right now.
Manny Hilario: Okay. And then just final question for me, you know, just given the down 20 bips for Benihana in Q4, you know, your comments around continued sequential progression, is it fair to assume that Benihana has turned positive in Q1? or we should think about it as positive within the overall guidance, the comp guidance. And I mean, I think in general, we didn't provide brand guidance for the quarter, but I would say that, you know, looking at the, you know, the progression, the progression holds well, right? So, I mean, obviously, our overall, you know, quarter for quarter, based on our guidance, I think the midpoint of our guidance is about minus three and a half, which is an improvement from the fourth quarter.
Speaker Change: Okay and then just final question for me.
Speaker Change: Just given the downlink 20 bps for benihana in Q4.
Speaker Change: But your comments around continued sequential progression is it fair to assume that benihana have turned positive in Q1.
Speaker Change: Or we should think about it as positive within the overall guidance and comp guidance.
Speaker Change: I mean, I think in general we didn't provide Brian guidance for the for the quarter, but I would say that looking at.
Speaker Change: The progression to progression Oh Wow right.
Speaker Change: Obviously, our overall.
Speaker Change: Quarter over quarter based on our guidance I think the midpoint of our guidance is about minus three and a half which is an improvement from the fourth quarter and.
Manny Hilario: And, you know, Benihana was relatively flat in the fourth quarter. I think you mentioned there minus 20 beats. I think that's correct. But I feel good about it. I think the thing I feel really good about Benihana has been the initiatives that we put in place and added emphasis on happy hour, which helps the Monday, Tuesday, Wednesday business. And I think the next big initiative has been our emphasis on throughput on Fridays and Saturdays because the restaurants do get jammed up on those days of the week. So, we've been working with operations and just really making sure that we put a lot of our know-how and how we do reservations and utilizing our central logistics process to really enhance throughput at the restaurants and table turn times.
Speaker Change: Benihana was relatively flat in the fourth quarter I think you mentioned them minus 20 bps I think thats correct.
Speaker Change: But I feel good about it I think the thing I feel really good about benihana has been the.
Speaker Change: The initiatives that we've put in place an added emphasis on happy hour, which.
Speaker Change: The Monday Tuesday, Wednesday business and I think the next Big initiative has been our emphasis on throughput on Fridays and Saturdays because the restaurants do get jammed up on those days of the week. So we've been working with operations in and just really making sure that we put a lot of our knowhow and how would you reservations.
Speaker Change: And utilizing our central logistics process to really.
Speaker Change: Enhance throughput that the restaurants since the end table turn times. So we're emphasizing that on the weekends and then the other thing that we're super excited about is we've been adding products.
Manny Hilario: So, we're emphasizing that on the weekends. And then the other thing that we're super excited about is we've been adding products and innovating with YGOO, for instance. And that's done very well in the windows that we put in. For instance, we featured a great YGOO steak offering, surf and turf, for Valentine's. And that was really well accepted by the consumer. So, I would say that I'm super pleased with the progress that we've done on sales with Benihana. And then the other thing that we did in the quarter for Benihana, and this is in our press releases, we've improved the margins of Benihana by 300 basis points quarter to quarter on the fourth quarter.
Speaker Change: Innovating with why Glu for instance, and Thats been very well.
Speaker Change: And the Windows that we put in that for instance, we featured a great why goose steak offering surf <unk> turf for the for Valentine's and that was really well accepted by the consumer side I would say that I'm Super pleased with the progress that we've done on sales with <unk> and then the other thing that.
Speaker Change: We didn't in the quarter for Benihana and this is in our press releases, we've improved the margins at benihana by 300 basis points quarter to quarter on the fourth quarter, Although we didn't own them last year with it honor. This year. So I think that really shows not only our ability to get to better sales with benihana, but we've made significant improvements in the store.
Manny Hilario: Although we didn't own them last year, we did own them this year. So, I think that really shows not only our ability to get to better sales with Benihana, but we've made significant improvements in the store-level economics of the brand.
Speaker Change: Level economics of the brand. So I would say that we had a very successful fourth quarter with benihana, Brian and I look forward to also want to emphasize that that's over 55% of our business now so it's.
Manny Hilario: So, I would say that we had a very successful fourth quarter with Benihana brand. And I look forward to it. I also want to emphasize that that's over 55% of our business now. So, it's really good to have a significant of a part of our business operating at a really high level. Right.
Speaker Change: Really good to have a significant.
Speaker Change: Significant of a part of our business operating at a really high level.
Speaker Change: Right. Okay. Thank you very much.
Nerses Setyan: Okay. Thanks very much. Thank you, Nick.
Nick: Thank you Nick.
Manny Hilario: This concludes our question and answer session. I would like to turn the conference back over to Manny Hilario for any closing remarks. Thank you, operator. And as I always say, thank you, One Group teammates, for living our mission every day. Only through your significant contributions can we be successful and do what we do. So I appreciate everyone's commitment and living that mission every day. And then also for all of you on the conference call, thank you very much for your interest in our company. And I always look forward to seeing you all in our restaurants.
Nick: This concludes our question and answer session I would like to turn the conference back over to Manny Hillary for any closing remarks.
Nick: Thank you operator, and as I always say, thank you one group teammates.
Nick: For living our mission every day only through your significant contributions can we be successful and do what we do so I appreciate everyones commitment and living our mission every day and then also for all of you on the conference call. Thank you very much for your interest in our company and I always look forward to seeing you all in our restaurants, everybody have a great day.
Operator: Everybody have a great day. Thank you.
Nick: Thank you.
Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Nick: Okay.
Nick: [music].