The ONE Group Hospitality, Inc.

Greetings and welcome to the one group first quarter 2025 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. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. 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. Before we begin our formal remarks, let me remind you that part of our discussion today will include forward-looking statements. These forward-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 of the date of this call. We undertake no obligation to revise or publicly release any revisions of these forward-looking statements, considering new information or future events. We refer you to our recent SEC filings for a more detailed discussion of the risks that could impact our future option results and financial conditions. 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 EBITDA, comparable sales, and total food and beverage sales at company-owned, managed, licensed, and franchised units, the GAAP measures, along with the discussion of why we consider these measures useful, Please see our earnings release issued today. With that, I'd like to turn the call over to Manny Hilario.

Thanks, Tyler, and hello, everyone. Thank you for joining us today and for your continued interest in the one group. Let me start by thanking our over 11,000 teammates across our SDK, Benihana, Samurai, Kona Grill, Rasushi, and Southwater Social Brands. 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. Let's review our first quarters highlights and our progress against our strategic initiatives. We were pleased that first quarter revenues comparable sales and adjusted EBITDA reach or exceeded the higher end of our guided ranges. We increased revenues by almost 150% to $211 million, fueled by a full quarter of Benihana and Rasushi contributions and the strength of our new units. This was driven by another quarter of sequential 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 restaurant-level EBITDA to 16.4%, representing a 50 basis point improvement year over year through strategic operational efficiencies across our portfolio. Notably, both our Benihana and STK concepts achieved industry-leading restaurant-level EBITDA margins at 20.1% and 17.7%, respectively, for the quarter. We also increased adjusted EBITDA 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, tight cost management, and our growing economies of scale. Our growth strategy gained momentum in March with the opening of a company-owned Benihana in San Mateo, California, our first new Benihana restaurant since acquiring the brand last year. We then continued our expansion in April, just after the quarter's end, by unveiling a new company-owned SDK restaurant in Topanga, California, further strengthening our presence in the Los Angeles market. Now let me provide an update on our four strategic priorities. First, driving sales across our brands by executing our strategic pillars. 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, flawless daily execution in every location, culinary, masterful preparation and innovative menu development, and marketing, drive strategic guest engagement through thoughtful marketing that creates meaningful connections. Each element works together to ensure that we consistently exceed expectations and create the dining memories that our guests deserve. While we saw positive, comfortable sales at our Benihana restaurants, and strong positive transaction growth at our flagship SDK brand, we are still seeing some dining shifts across our restaurants because of the challenge and volatile economic environment. We see a growing preference for alternative day parts like happy hour, and particularly in our steakhouse business, and an increase in guests sharing dishes and thoughtfully managing their average check. As a result, we continue to focus on our value-driven offerings while maintaining our premium positioning. Our strategic dual-tier approach features exciting happy hour menus with $3, $6, and $9 selections across all brands. We also offer midweek complete dining experiences with beverage pairings at $69 for SDK and $39 for all our other brands. creating accessible, value-driven entry points. Simultaneously, we're elevating our culinary program with premium items for discerning guests, including Australian and Japanese Wagyu offerings at SDK and Benihana. We're also laser-focused on improving throughput during our peak Friday and Saturday periods, leveraging our centralized logistics and reservation systems to enhance table turn times and overall efficiency. We're also leveraging our $39 taste of Benihana menu in the bar to increase seating capacity so we can accommodate more guests during our peak dinner service hours of 6 to 9 p.m. on weekends. Holiday dining represents a consistent strength across our brand portfolio. 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. These celebratory occasions truly showcase what makes our restaurant concept special. We continue to leverage our digital marketing infrastructure to drive awareness of both our value propositions and exceptional offerings, creating targeted messaging that resonates with distinct customer segments. Our database currently consists of approximately 7 million contacts that we can strategically target. Additionally, we have soft launch our Friends with Benefits rewards program designed to enhance our guest dining experiences across all our restaurant concepts. 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, Kona Grill, Topwater Social, or Rasushi. These points can be converted into food and beverage offerings redeemable during future visits at any one of the one group restaurants throughout the United States. As a special touch, there will be exclusive rewards for both birthdays and half birthdays, giving guests even more reasons to celebrate special occasions with us. In other words, by combining 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. Our second key priority is the successful integration of Benihana and delivering on our cost initiatives. By uniting two premier entertainment brands, we have secured a key position as a global leader in vibe dining. Our integration efforts have already yielded significant results with synergies realized from streamlined operations at both the restaurant and support levels. We've 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. Our enhanced scale has strengthened our negotiating power with suppliers across all brands. Maintaining the industry's most competitive cost structure while delivering exceptional customer experiences, we're positioned to increase profit margins as traffic grows. And notably, our diversified product mix across brands also provides resilience against commodity fluctuations. We have also successfully applied our operational expertise marketing skills, and culinary innovation to strengthen Benihana and Rasushi. From unified reservation system to enhanced digital strategies and menu development, these improvements combined with streamlined back office operations have created a powerful platform for continued transaction growth and operational excellence across our dining portfolio. Third, we are focused on our next phase of growth, balancing company-owned development and asset-like growth. 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. This was followed by our successful April launch of the company-owned SDK at the Westfield Topanga Mall in the San Fernando Valley, further strengthening our California presence. This is our second successful opening in a high-end mall. While early, both restaurants are off to a strong start. We continue to develop company-owned locations while pursuing asset-light expansion with high-margin royalty streams through managed and licensed properties. We plan to open a franchise Benihana Express at Bayside Marketplace in Miami, Florida, as we have begun to accelerate our Benihana franchising strategy. We have discovered strong interest from franchisees seeking to enhance their portfolios with our established upscale and casual dining brand. 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. Looking ahead, we are on track to open a total of five to seven new venues in 2025 across our portfolio, with the remaining locations opening in the third and fourth quarters, including a Kona Grill in Seattle, Washington. Even with all this activity, it is important to remember that we are still in the early stages of our growth story, with significant expansion potential across our portfolio. Benihana has a clear path to 400 locations through our dual strategy of company-owned and asset-light expansion. SDK presents exceptional unit economics with new locations averaging over $11 million in revenue and 23% Russian-level EBITDA margins. 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 a target of 200 restaurants globally. Our approach to grill concepts will remain optimistic, allowing us to selectively pursue only the highest potential locations that meet our return thresholds. Lastly, our fourth priority is balance sheet flexibility and returning value to our shareholders to share repurchases. 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. Under the current conditions, our term loan is not subject to a financial covenant. Wrapping up, we are excited for the future. We are laser focused on balance sheet flexibility, prioritizing cash flow generation, and maximizing shareholder returns. 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.