Q1 2025 The ONE Group Hospitality Inc Earnings Call
Speaker Change: Greetings and welcome to the One Group First Quarter 2025 earnings conference call. At this time, all participants are in a listening room remote. A brief question and answer session will follow the formal presentation.
Speaker Change: Should you need assistance, please signal a conference specialist by pressing the start key followed by zero.
Speaker Change: to ask a question, please press star then one. As a reminder, this conference is being recorded. I would now like to turn the conference call over to Mr. Tyler Loy. Please go ahead.
Thank you, operator, and hello, everyone.
Speaker Change: Before we begin, our former remarks, let me remind you the part of our discussion today will include four looking statements.
Speaker Change: These four-looking statements are not guaranteeings as you took the form and you should not place on new lines on them.
Speaker Change: These statements are also subject to numerous recent uncertainties that could cause actual results different from what we expect.
Speaker Change: We also note that these four-looking statements reflect our opinion only as of the date of this call.
Speaker Change: We are undertaking no obligation to revise or publicly release any revisions of these four of looking to Daemon, considering new information or future events.
Speaker Change: We refer you to our recent SEC filings for a more detailed discussion of progress that could impact our future ocular results in financial condition.
Speaker Change: 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 an isolation or a substitute who results prepared in court with gap.
Speaker Change: for reconciliations of these measures, such as the Justin Ebert Duff.
Adjust the net income.
Speaker Change: Rest on EBITDA, Comparable Sales, and Total Food and Revert Sales at Company Owns, Manage, License and Franchise Units that GAAP measures along with the discussion of why we consider these measures useful.
Speaker Change: Please see our earnings release issued today. With that, I'd like to return the call over to Manny Hilario.
Manny Hilario: Thanks Tyler and hello everyone. Thank you for joining us today and for your continued interest in the One Group.
Speaker Change: Let me start by thinking out over 11,000 teammates across our SDK, Benihana, Samurai, Kona McGill, Rassushi, and Southwater Social Brands.
Speaker Change: Your dedication to creating unforgettable guest experiences is what truly differentiates our company and gives me tremendous confidence that we can achieve our vision of becoming the global leader in vibe dining.
Speaker Change: Let's review our first quarters highlights in our progress against our strategic initiatives.
Speaker Change: We were pleased that first quarter revenues, comparable sales and adjusted EBITDAH reach or exceeded the higher end of our guided ranges.
Speaker Change: We increase revenues by almost 150 percent to 211 million, fueled by a full quarter of any Hanna and Rassushi contributions and the strength of our new units.
Speaker Change: This was driven by another quarter of sequentially improvement in our combined comparable sales trend, positive comparable sales at our Benihana restaurants and strong positive transaction growth of 4.1% at our flagship SDK brand.
We grew rational level EBADOG to 16.4%
Speaker Change: representing a 50 basis point improvement year-over-year through strategic operational efficiencies across
Speaker Change: We also increased the adjusted EBITAB by over 230% to $25.2 million, meaningfully exceeding our top-line growth and demonstrating our ability to increase profitability through the execution of our initiatives.
Speaker Change: that cost management and our growing economies of scale. Our growth strategy gained momentum in March with the opening of a company owned by Nihana in San Mateo, California. Our first new Benihana restaurant since acquiring the brand last year.
Speaker Change: We then continued our expansion in April just after the quarters in by unveiling a new company own SDK restaurant to Panga, California, farther strengthening our presence in Los Angeles market.
Speaker Change: Now let me provide an update on our four strategic priorities. First, driving sales across our brands by executing our strategic pillars.
Speaker Change: Our mission is to create great guest memories by offering the best restaurants in every market that we operate by delivering exceptional and unforgettable guest experiences to every guest every time.
Our success is built on three fundamental pillars.
Operations
Speaker Change: Wallace Taylor execution in every location, culinary, masterful preparation and innovative menu development and marketing drive strategic guest engagement through thoughtful marketing
Speaker Change: Each element works together to ensure that we consistently exceed expectations and create the dining memories that our guests deserve.
Speaker Change: While we saw positive, comparable sales that are bathing on the restaurants, and strong positive transaction growth that our flagship SDK brand, we are still seeing some dining shifts across our restaurants because of the challenge and volatile economic environment.
Speaker Change: We see a growing preference for alternative date parts like Happy Hour and particularly in our Steakhouse business and an increase in guest sharing dishes and thoughtfully managing their average check.
Speaker Change: As a result, we continue to focus on our value-driven offerings while maintaining our premium positioning.
Speaker Change: Our strategic dual-tier approach features exciting happy hour menus with $3.00, $6.00 and $9.00 selections across our brands.
Speaker Change: We also offer a midweek, complete dining experiences with average parents at $69 for SDK and $39 for all our other brands, creating accessible, value-driven entry points.
Speaker Change: simultaneously we're elevating our culinary program with premium items for the certain guests, including Australian and Japanese Waikubes offerings at SDK and Venihano.
Speaker Change: We're also laser focused on improving throughput during our peak Friday and Saturday periods, leveraging our centralized logistics and reservation systems to enhance stable turn times and overall efficiency.
Speaker Change: We're also leveraging our $39 taste of Venihana menu in the bar to increase seating capacity so we can accommodate more guests during a peak dinner service hours of 6 to 9 p.m. on weekends.
How a day dining represents a consistent strength across our brand portfolio.
Speaker Change: Building on our Valentine's Day success, we capitalized on our specially curated Easter menus and are now gearing up for Mother's Day menus this week.
Speaker Change: The celebratory occasions truly showcase what makes our restaurant concept special.
Speaker Change: We continue to leverage our digital marking infrastructure to drive awareness of both our value propositions and exceptional offerings, creating targeted messaging that resonates with distinct customer segments.
Speaker Change: Our database currently consists of approximately 7 million contacts that we can strategically target.
Speaker Change: Additionally, we have soft launch, our Friends with Benefits Rewards program designed to enhance our guest dining experiences across all our restaurant concepts.
Speaker Change: This exciting new program will allow guests to earn points seamlessly through our family of restaurants with one point awarded for every dollar spent at SDK, Benihana, Samurai, Kronugro, Southwater Social, or Rassushi.
Speaker Change: These points can be converted into food and beverage offerings redeemable during future visits at any one of the one group press runs throughout the United States.
Speaker Change: The Special Touch, there will be exclusive rewards for both birthdays and half birthdays, giving guests even more reasons to celebrate special occasions with us.
Speaker Change: In other words, back in buying strategic pricing, culinary innovation, and targeted marketing with flawless execution, we are confident that we can navigate the current market challenges and drive sustainable, long-term sales growth.
Speaker Change: Our second key priority is the successful integration of Benihana and delivering on our cost initiatives.
Speaker Change: By uniting two premier entertainment brands, we have secured a key position as a global leader in vibe dining.
Speaker Change: Our integration efforts have already yield significant results with synergies realized from streamline operations at both the restaurant and support levels.
Speaker Change: with optimized workforce efficiency, consolidated professional services and insurance, centralized purchasing, and streamlined supply chain management with expected annual synergies of at least 20 million in 2026.
Speaker Change: Our enhanced scale has strengthened our negotiating power with suppliers across all brands.
Speaker Change: My main thing in the industry is most competitive cost structure while delivering exceptional customer experiences where a position to increase profit margins as traffic grows.
Speaker Change: And notably, our diversified product mix across brands also provides resilience against commodity fluctuations.
Speaker Change: We have also successfully applied our operational expertise, marking skills, and culinary innovation to strengthen Ben-Han and Rasushi.
Speaker Change: from Unified Reservation System to Enhanced Digital Strategies and many developed these improvements combined with streamlined back-office operations have created a powerful platform for continuous transaction growth and operational excellence across our dining portfolio.
Speaker Change: Third, we are focusing our next phase of growth, balancing company-owned development and asset-like growth.
Speaker Change: After opening six new restaurants last year, our 2025 expansion is off to a strong start. As I mentioned earlier, we celebrated a significant milestone in March with the opening of our San Mateo Benihana, the first Benihana restaurant opened under our ownership.
Speaker Change: This was followed by our successful April launch of the company own SDK at the Westfield to Pangamal in the San Fernando Valley for the strengthening our California presence. This is our second successful opening in the high end mall.
While early, both Russians are off to a strong start.
Speaker Change: We continue to develop company-owned locations while pursuing effort-light expansion with high margin royalty streams through managed and licensed properties.
Speaker Change: We plan to open a franchise Benihon Express at Bayside Marketplace in Miami, Florida as we have begun to accelerate our Benihon of franchising strategy.
Speaker Change: We have discovered strong interests from franchisees, seeking to enhance their portfolios with our established upscale and casual dining ground. In response, we have strengthened our franchising infrastructure and we are actively negotiating numerous development agreements.
This franchising initiative will be instrumental in driving Benihana's expansion.
Speaker Change: Looking ahead, we are on track to open a total of five to seven meeting venues in 2025 across our portfolio, with the remaining locations opening in the third and fourth quarters, including the Kona Grove and Seattle Washington.
Speaker Change: Benihana has a clear path to 400 locations through our dual strategy of property-owned and asset light expansion.
Speaker Change: SDK presents exceptional unit economics with new locations averaging over 11 million in revenue and 23% rational level EBITDA margins.
Speaker Change: SDK's remarkable cash on cash returns make it one of the most profitable expansion models in the restaurant industry, naturally positioning it as our priority for development with the target of 200 restaurants globally.
Speaker Change: Our approach to grow concepts will remain optimistic, allowing us to selectively pursue only the highest potential locations that meet our return thresholds.
Speaker Change: Lastly, our fourth priority is balance-cheap flexibility and returning value to our shareholders to share
Speaker Change: We finished the quarter with nearly $68 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.
Speaker Change: Under the current conditions, our term loan is not subject to a financial covenant.
Speaker Change: Wrapping up, we are excited for the future. We are laser focused on balance sheet flexibility, prioritizing cash flow generation and maximizing shareholder returns.
Speaker Change: We are building a path to $5 billion in system-wide sales by executing a strategy that encompasses multiple avenues for growth and will enable us to create long-term shareholder value.
I will now turn the call over to Tyler.
Tyler Loy: Thank you, Manning. As a reminder, beginning this year, we are reporting financial information on a fiscal quarter basis using four thirteen-leaf quarters with the addition of fifty-third a week when necessary.
Tyler Loy: For 2025, our fiscal calendar began on January 1st, 2025, and will end on December 28th, 2025, and our first quarter contains 89 days.
Tyler Loy: Let me start by discussing our first quarter financials in greater detail before providing our outlook for the second quarter and the current year.
Tyler Loy: Please note that the first quarter of 2025 has three months of contributions from Benihana and Ross Sushi, whereas the prior quarter excludes any contribution from the acquisition of Benihana which was on May 1, 2024.
Tyler Loy: Total consolidated gap revenues were 211 million, increasing 148.4% from 85 million for the same quarter last year.
Tyler Loy: Included in total revenues were our company-owned restaurant snap revenue of 207.4 million, which increased 154.5% from 81.5 million for the prior year quarter.
Tyler Loy: The increases due, primarily, to 128.3 million contributions from Fanny Hanna and Roger Shee, and to a lesser extent, contributions from the opening of six restaurants since the beginning of the first quarter of 2024.
Tyler Loy: These were partially offset by 3.2% reduction in consolidated comparable sales.
Tyler Loy: Manage, license and incentive revenues increased 7% to 3.7 million from 3.5 million to the prior year quarter.
Tyler Loy: Denihon, a franchise restaurant contributed 0.5 million in revenues in the first quarter of 2025, and was partially offset by decreased revenues that managed SDK restaurants in North America.
Tyler Loy: Company on Restaurant Coffin sailed as a percentage of company on the restaurant never revenue decreased. 220 bases pointed to 20.8% compared to 23% of prior year quarter.
Tyler Loy: This was primarily due to integration synergy and lower cost of sales for Benihana Restaurant and our existing business.
Tyler Loy: Company-owned restaurant operating expenses as a percentage of company-owned restaurant net revenue increased 120 basis points to 62.1% from 60.9% in the prior year quarter.
Tyler Loy: This is primarily due to fixed cost due leveraging driven by D-treason thanks to our sales, partially offset by integration synergies.
Tyler Loy: Restaurant Evidot increased 50 basis points to 16.4%, compared to 15.9% in the prior quarter. This included Restaurant Evidot's 20.1% for Benihon location and 17.7% at SDK locations.
and Emanuel Hilario.
Tyler Loy: On a total reported basis, general and administrative costs increased 5.6 million, or 73.8% to 13.1 million, from 7.5 million in the prior quarter, driven by the addition of the Veniana application.
Tyler Loy: One Adjusting for Stock-Based Commentation, Adjusted General and Administrative Expenses, For 11.5 and 6.2 million, First Quarter, 2025 and 2024, respectively.
Tyler Loy: As a percentage of revenues when adjusting for stock base compensation adjusted general administrative costs for 190 basic points to 5.4% compared to 7.3%.
Tyler Loy: The improvements do the sales lever to realize through the Fenihana acquisition and the implementation of cost savings and integration synergies.
Tyler Loy: Appreciation and amazation expense was $9.8 million compared to $5.3 million in the prior
Tyler Loy: The increase was primarily related to depreciation and amortization for the Fenihana and Ratsuzi restaurants.
Tyler Loy: Appreciation associated with the opening of six new company-owned restaurants since March 2024, and capital expenditures to maintain and enhance the guest experience in our restaurants.
Tyler Loy: Pre-opening expenses were $1.7 million, consisting primarily of payroll, training, and other costs for Benihana San Mateo and S.E. Kate Topanga, which opened in March 2025 and April 2025, respectively.
Tyler Loy: Carol and Travel Cots for the training team and pre-opening expenses for restaurants currently under development.
Pre-opening says we're 2.9 million in a prior year.
Tyler Loy: Interest expense was $9.8 million compared to $2.1 million in the prior quarter due to our higher level of outstanding debt post acquisition.
Tyler Loy: Provision for income taxes with 0.3 million compared to a benefit of 0.3 million in the prior
Tyler Loy: The effective income tax rate for the first quarter of 2025 was 31.4% compared to 9.9% for the first quarter of 2024, which was driven by the ratio of discrete items compared to pre-taxed income during the quarter.
Tyler Loy: Adjusted net income was 4.6 million or 14 cents adjusted net income per share compared to an adjusted net loss of 0.6 million or 2 cents adjusted net loss per share in a prior
Tyler Loy: Please note, we have redefined our definition of adjusting the income of this quarter. For additional information, please refer to our previously issued press release from earlier today.
Tyler Loy: Adjusted EBITDA, accruedable to the One Group Positality Inc. was 25.2 million compared to 7.6 million in the prior quarter, an increase of 233%.
Tyler Loy: We've included a reconciliation of a Justin Ned income, an historical adjustment income in the table of our first quarter, 2025 earnings released.
Tyler Loy: Turning to liquidity, we finished a quarter with 34.1 million in cash and short-term credit card receivables and 33.6 million available under our revolving credit facility which remains
Tyler Loy: Now I would like to provide some forth-looking commenter regarding our business.
Tyler Loy: This commentary is subject to personal uncertainties associated with poor looking statements as discussed in our SEC filing.
Tyler Loy: We always remind our investors the actual number and timing of being restaurant opening.
Tyler Loy: for any given period as subject to a number of factors outside the company's control, including macro economic conditions, weather, and factors on the control of landlords, contractors, licensees, and regulatory and licensing authorities.
Tyler Loy: Based on the information available now in the expectations of today, we are issuing the following financial target for the second quarter of 20.5.
Tyler Loy: and factors in a greater amount of uncertainty in the near-term background environment.
Tyler Loy: Manage, franchise, and licensee revenues are expected to meet between 3.9 million and 4.9 million.
Total GNA, excluding stock-based conversation of approximately 11 million.
Adjusted the EBITDA between 23 and 25 million.
Tyler Loy: The restaurant pre-opening starts with between 1.5 to 2 million and finally we plan to add 1 to 2 new venues.
Tyler Loy: Based on the information available now and the expectations of today, we are reiterating the following financial targets for 2025.
Tyler Loy: Please note this does not include the potential impact of tariffs on broader economic conditions.
Tyler Loy: 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%.
Tyler Loy: Manage franchise and licensee revenues are expected to be between 15 and 16 million.
Tyler Loy: Total company-owned operating expenses as a percentage of company owned restaurant that revenue from 83.5 to 82.2%.
Total GNA, excluding stock base compensation of approximately $47.000.
Adjusted EBITDA between 95 and 115 million.
restaurant pre-opening extensive of between seven and eight million.
An effective income tax rate of approximately 7.5%.
Tyler Loy: Total capital expenditures and net of allowances received from landmarks of the
Tyler Loy: And finally, we plan to add five to seven new venues.
I will now turn the call back to Manning.
Manny Hilario: Thank you, Tyler, and thank you all for your time today and interest in the One Group.
Manny Hilario: We remain confident in our plans and our portfolio of iconic high-volume brands and long-term vision to be the undisputed global leader in vibe dining.
in our company's journey, and we appreciate your continued support.
Manny Hilario: Tyler and I are happy to answer any questions they may have. Operator.
We will now begin the question and intercession.
Manny Hilario: Our first question today comes from Mark Smith of Lake Street Capital. Please go ahead.
Mark Smith: Hi, guys. First question for me, just big picture. Want to look at consumer behavior? It sounds like during the quarter, higher end consumers held up better than kind of real concepts, consumers. You know, is this right? And then can you speak to if you've seen any change in behavior of hearing Q2 thus far?
Hey Mark, this is Manny.
Mark Smith: I think the consumer trends that we continue to talk about is more about the check in the and in the SDK brand.
Mark Smith: If I look at the performance of SDK on traffic, I think that's more of a function of the strategy and the emphasis on value rather than just a pure demographic play on that. So I would say that I would attribute to the own performance more to...
Speaker Change: Okay, and as we think about grill concepts, can you just talk about kind of work that's being done in those brands to improve results and even longer term plans or options as we think about kind of those some of those non-core grill concepts units?
Speaker Change: I mean, I think the the bitch, you know, I don't know if it's to do difference, but we're clearly stepping up our marketing efforts, I think, particularly in the casual
Speaker Change: category. There's been a heavy emphasis on TV and obviously at our size.
Speaker Change: That's not really a viable alternative to us, so we have to compete.
Speaker Change: on the side of marketing when I look at the execution.
on the experience. I mean, they are ...
Speaker Change: Casar Brands are executing at a very high level, at least from what we see on our social metrics and on the in-store surveys and secret shock reports. So I think the quality of execution is strong, so our emphasis has been on the marking
and Emanuel Hilario.
Speaker Change: Okay, and last question for me, we haven't talked about it in a while, was just wanted to look at the restaurant labor costs and it changes the situation there, and also anything you can speak to on retention of, you know, in today's economy, or you guys having an easier time retaining, or, you know, you've seen difficulties around retention.
Speaker Change: I think retention, at least for us, retention is at parity with what we experienced in the second half of last year, so nothing really dramatically either worse or better, I think, actually for SDK and Vanihana, the retention has been very good, so nothing really noticeable there. And they're on the cross side.
Speaker Change: I think the inflation has been very moderate on the wage, so we haven't really seen any inflationary pressures on the labor line.
Excellent. Thank you.
Thanks, Mark.
Speaker Change: The next question comes from Anthony Liebidzinski of Siddode. Please go ahead.
Anthony Leibodzinski: Good afternoon and thank you for taking the questions. So first I just wanted to see if you guys could talk about the cadence of same-store sales during the quarter, how to January through March progress, would be curious to get your take on that.
I mean, I think generally, in the quarter.
Speaker Change: At least for us, I think February was probably the more challenge of the periods, although we did have a very good Valentine's holiday period, but in general that probably was the chopper of the periods, but I think that you know art probably was the
Speaker Change: The place where we were we were formed really well obviously with you know the Easter coming at the end of the quarter and everything else. So I would say that the toughest month would have been February .
Speaker Change: Thank you for that. In terms of the second quarter comp guidance, I know you touched on this a little bit but overall it does imply more of a decline than the first quarter so can you just maybe talk about what you're seeing so far in the second quarter, maybe just be a little bit more.
specific as to the trends that you're seeing thus far.
Speaker Change: Now I think for the second quarter is a little bit more about a little bit of weather at least for our portfolio of footprints.
Speaker Change: and the other item that's a little unique for us in the second quarter is a little bit of the convention scheduled there's less weeks between Easter and Mother's
Speaker Change: Day this year, so I think the Convention of Business schedule has shifted a little bit, so...
Speaker Change: So I think that gets changed a little bit. So I think that's part of what's implied in there. I just in general, I mean the second quarter
has been, you know, there's been a lot of...
Speaker Change: Environmental ups and downs with the tariffs on, tariffs off, all kinds of different activities that we think kind of sometimes causes the consumer.
Speaker Change: to change their behavior within the borders. I think that's probably the items that I was going out that caused our number or our guidance in the second quarter to be a little different from the first report of performance.
Speaker Change: That's very helpful. And the last question for me, just wondering if you've seen any notable changes from your competitors in regards to promotions and discounting anything to call out?
Speaker Change: Yeah, I mean, I think, as I mentioned on my previous answer to Mark's question, you know, TV is back and if you have scale and you have TV power, I think that's, you know, I think that this is the time post-COVID where we've seen a lot of the brands.
Speaker Change: particularly on the casual category going heavy on TV and obviously I don't have to call out who's been super successful with that, but there's been a significant amount of brands up there who really have leveraged.
Emanuel Hilario: of TV to get out in the head with their frankly very high value point promotion, so I think combination of high volume with, I mean high value with
Emanuel Hilario: TV is changed a little bit the game on the casual side. So we've seen that out there, and as I mentioned earlier, particularly on the casual side, for the size of our casual brands.
Emanuel Hilario: We've really had to up all our, you know, grassroots promoting and we've also had to add an emphasis with our loyalty, so that's how we went to offset some of that macro pressure from the discounting and the TV strategies.
Got it. Well, thank you a best of luck.
Thank you, sir.
Speaker Change: Our next question comes from Joe Gones of Mobile Capital. Please go ahead.
Good afternoon. Thanks for taking my questions.
Thanks for being on the call.
Speaker Change: So, first question is one of the, see if you could touch base a little bit on your franchising efforts. You know, if you see them picking up, I know you would talk in the past about your...
Speaker Change: Looking at developing more of a team on the franchising side to get that part of the business growing faster and wonder if he just gives a little update on that.
Speaker Change: Yeah, I mean, great question. So we have updated the infrastructure.
Speaker Change: In terms of internally, you know, people, everything else that's required to drive a franchising model. We've also expanded.
Speaker Change: Our participation in conventions and conferences where people talk about franchising. So we've really created, we've elevated the awareness.
Speaker Change: in the marketplace of that we are in the franchising business. So that's kind of like stage one is infrastructure. Stage two is building kind of the awareness and now currently we have a significant amount of people who.
Speaker Change: experience and their financial ability. So we've definitely have made a significant progress basically in about nine months or so because we started this probably in the middle of July last year. So I think we've moved fast and the demand has been there and we feel excited about
Speaker Change: You know, the progress that we've made there and as we have signed on development agreements we'll be communicating that out to everybody.
Speaker Change: Thank you for that. It just wanted to touch base also about pricing. Are you still holding off on taking pricing? Are you looking at a selectively increasing prices? Is kind of where where you are on that today?
Speaker Change: Yeah, I mean, overall strategy, frankly at this point, has to then to be conservative on pricing.
Speaker Change: and only take it what we have to take it, or if there's like significant gaps to market.
Speaker Change: But for the most part, we want to stay true to the value positioning and we want to stay true to building traffic.
Speaker Change: and so in the long-term traffic and market share are probably the more important part of our story. So we certainly weigh more on the side of playing on the traffic now and picking up.
Speaker Change: Mark and Cher at this point, so I would say we're super conservative.
Speaker Change: Okay. And the last one for me, maybe just kind of give us a little bit more your thinking of, you know, how you weigh, you know, opening more company-owned stores versus, you know, delivering the balance sheet, any additional color you can give there be greatly appreciated.
Speaker Change: Yeah, I mean, I think the balance is always about figuring out what the best return is for shareholders.
Speaker Change: So I think in the longer term, that's the most important part of our growth story. Right now, we do have a significant pipeline of really high quality real state, which I think would do a good job of. So.
Speaker Change: Developing, so our plan is to keep a healthy balance on the short term of the company owns and frankly, as I mentioned earlier, our emphasis on asset light is to build up the pipeline. So we're building the pipeline on franchising and on license deals.
Speaker Change: Okay, great, thank you very much for coming back to you.
Thank you sir.
Speaker Change: The next question comes from Jim Sanderson of North Coast Research. Please go ahead.
Speaker Change: Hey, thanks for the question. I just wanted to follow up a little bit more on the discussion on things to our sales trend in the first quarter and heading into the second quarter. Can you walk us through how the Easter calendar shift impacted first quarter and will impact second quarter across the major brands?
Speaker Change: I mean, Easter was definitely an impact, but I would not consider Easter to be a significant impact in terms of being a significant holiday for us, so they didn't have a little bit of an impact, but I wouldn't qualify that as a big impact to employers.
Speaker Change: Okay, so it would be maybe a slight benefit in the first or negative in the first quarter, maybe slight in the second is that the
Speaker Change: Yeah, I mean, that's because of a differential in the rounding not a lot. It's not a really big house for us.
I'm just wondering if you have any feedback on.
Speaker Change: Your Mother's Day bookings, if you think that's where it should be for this time of year.
Speaker Change: Yeah, I mean, I think that so far the books are...
drives us to think one way or the other and- [inaudible]
Speaker Change: And frankly, the big game for us for Mother's Day is such a big day. It's more about operational execution and throughput in the restaurants because there's always a significant amount of...
Speaker Change: Demand Full Reservations on the Friday and Saturday before Mother's Day, so our emphasis has been more on readiness.
and being able to take the walk-in.
Speaker Change: Traffic and managing the reservations on the two last days before the holiday so that's really been our emphasis and then you know more recently particularly with the proliferation of online. Thank you very much.
Reservations, People, that book early before Mother's Day.
tend to have a higher rates of no shows in the...
Speaker Change: on the actual holidays, so we're really putting a lot more stuff behind.
Speaker Change: Cleaning up our reservation books for anticipated note shows, etc. So we're just putting on more emphasis on it but I haven't really noticed any particular either bullish or not so good trends on the bookings at this point.
Speaker Change: All right. Any feedback on concern with tourism travel to the United States? Any exposure there? You mentioned conventions, for example.
Speaker Change: Yeah, I mean, I think it's probably, I mean, again, I think there's been a lot of, you know, sources, better sources of information on this than probably us, but we certainly believe that in markets like Vegas that has a significant influx of visitors from Canada and Mexico. I think it's, you know, um,
Speaker Change: of some level of decrease in their visits to the U.S. And so I think there has been some of that. Of course, it's a little bit more anecdotal to us because we don't just find studies on terrorism, but we certainly have noticed a little bit less.
People in the restaurants from those countries.
Speaker Change: And then just a follow-up question to the same store sales numbers you published for the first quarter. Can you break that out for us between traffic and check just so we can understand maybe what type of menu pricing you're carrying into 2025?
Speaker Change: Well, Tyler can give you the pricing or, you know, for the brands pricing is around three, four percent for the brands, Tyler. Yeah, average check with about four percent. Average check.
Speaker Change: Okay, so, how do we look at maybe some potential mix? You mentioned a little bit of leaning towards value for STK, is that...
Pressuring check a little bit.
Speaker Change: Yeah, I think overall mix is just kind of slightly down. I mean, you know, Benihon is now 55% of the revenue, so it didn't see a lot of mix there, and so the mix is slightly down across the portfolio.
Speaker Change: I mean, I think although we haven't provided a full guidance on this, at least internally we're talking, you know, somewhere in the 50% kind of portfolio balance between franchise and company on-stores for Venihana.
Bye.
Speaker Change: Very good. All right. Thank you very much. I'll pass it on. Thank you, sir.
Speaker Change: and has the best comps right now, the best comps and best margins of any of your brands, so it becomes pretty important.
Speaker Change: In terms of the improvement in comps you are assuming the rest of this year to get to that minus three to plus one for the year, obviously will require a stronger second AF. Does that come from...
Speaker Change: from sort of just Benihana's dominance, or are you figuring some improvement at SDK and even Kona in that improvement?
working with the team on throughput and
Speaker Change: Volume Inter restaurants, I think a big part of our thought is that, you know, Benihana should do very well, particularly during the holiday season this year and the fourth quarter. Last year was kind of our first.
Speaker Change: How are they seasoned with the brand? So we have a lot of learnings that we will clearly apply that we can help set out and I think just in general our lap.
Speaker Change: in the third and fourth quarter is more manageable for us than the lap in Q1 and Q2, so I think that's a great part of that their view on guidance, Tyler, and that's the one I had on that.
Speaker Change: Okay, and just before we move on to SDK for a moment, at Benihana, as I recall, the average volume domestically is about 6.5 million, is that, do I recall right? That's about right.
Speaker Change: And then if you had to guess what the what the hard course would be in terms of building a benign out of these days, what would be an approximate number?
Speaker Change: I mean, we just built ones just in fairness and disclosure. Some of the costs were already loaded up in
Speaker Change: You know, we are ex-sition of the company. I think probably a fair evaluation. That is after we open the next couple of them, but I figure that
Speaker Change: You know, on a net basis, we're looking somewhere between 400 and $500 a square foot, so I would just take the size of the box times.
Speaker Change: OK, and I'm going to rush this head large. Go ahead.
7,000 is kind of the sweet spot for Venihana.
A 20% margin on six and a half is...
The main three
Speaker Change: on three and a half, that's an interesting return on cash, return on investment. Going back to STK for a moment, the 17.7% margin is obviously a little lower than we're used to seeing.
Speaker Change: The subject probably because of the value orientation. Is there a prospect that that can improve the rest of the year? What would be your expectation in terms of the margin of SDK the rest of the year?
Speaker Change: Well, I mean, I think seasonally the fourth quarter is always the best quarter for margin, so I think there's a function of seasonality there.
and so I think it probably, you know, cue.
Speaker Change: for tends to be in the higher end of the margins, and then Q1 and Q3 usually are the tighter on the rest of the margins for the SDK brand. Again, you just take a look at the history of how we published.
Speaker Change: of the number, but that tends to be personality. So I wouldn't look at the seventh number that we published for Q1 as the ultimate number. So there's upside, particularly in the fourth quarter and possibly even the second quarter.
Okay. Okay, that's all for now. Thank you very much.
Thanks, Roger.
Speaker Change: This concludes our question and answer session. I would like to turn the conference back over to Mr. Hilario for any closing remarks.
Manny Hilario: Thank you all for your interest in the One Group. As I always do, I like to thank our teammates again for a significant work in driving results.
Manny Hilario: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.