The ONE Group Hospitality, Inc.

Hello and welcome everyone joining today's the one group third quarter 2025 earnings conference call. At this time all participants are in a listen only mode. Later you will have an opportunity to ask questions during the question and answer session. To register to ask a question at any time please press star 1 on your telephone keypad. Please note this call is being recorded and I am standing by should you need any assistance. It is now my pleasure to turn the meeting over to CFO, Nicole Tong. 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 guaranteed with 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 operating 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 GAP. FOR RECONCILIATIONS OF THESE MEASURES, SUCH AS ADJUSTED EBITDA, RESTAURANT OPERATING PROFIT, COMPARABLE SALES, AND FOOD AND BEVERAGE SALES AT COMPANY-OWNED, MANAGED, LICENSED, AND FRANCHISED UNITS TO GAP MEASURES, ALONG WITH A DISCUSSION OF WHY WE CONSIDER THESE MEASURES USEFUL, PLEASE SEE OUR EARNINGS RELEASE ISSUES TODAY. With that, I would like to turn the call over to Manny Hilario.

Thank you, Nicole, and good afternoon, everyone. I appreciate you joining us today for our third quarter earnings call. Before reviewing our results, I would like to welcome Nicole Thong as our new chief financial officer. Nicole joined us through the Benihana acquisition in May 2024, where she served as CFO and has over 15 years of financial leadership experience. She has been instrumental in the integration of Benihana, and her deep business understanding and proven financial expertise position us well as we execute our strategic priorities. Now turning to our financial results. Our third quarter faced headwinds from external factors that temporarily affected gas traffic in key markets. We saw shifts in consumer behavior including beverage consumption within our core demographics, which created additional revenue pressures. We had initially planned to implement our annual pricing increases in the middle of the third quarter. However, given the traffic environment, we made the strategic decision to defer these adjustments to the fourth quarter, where there's less guest sensitivity due to the celebratory nature of the holiday season. These price increases have been implemented as of the beginning of November. In total, revenue declined 7% to $180 million, while adjusted EBITDA decreased to $10.6 million. It is worth noting that the third quarter is historically our smallest revenue period, which can make performance trends more difficult to predict. The positive news is that we already are seeing an improvement in our business trends across our portfolio, and we are cautiously optimistic about the momentum building into our strongest seasonal period. Our teams are well prepared to deliver exceptional guest experiences during this historically busy and critically important upcoming holiday period, and we are pleased to have robust advanced bookings already in place. Moving forward, our focus centers on four strategic priorities. Number one, accelerating same-store sales through operational excellence, culinary innovation, and target marketing. Number two, pursuing capital, efficient growth with discipline expansion. Number three, optimizing our portfolio for maximum returns. Number four, maintaining balance sheet strength and financial flexibility. Let me walk through our progress on each priority. Priority one, accelerating same-store sales. While our same-store sales were negative across the portfolio in the third quarter, as I said a moment ago, we are seeing sequential improvement as we move through the fourth quarter, demonstrating that our strategic initiatives are gaining traction. Our barbell strategy is driving momentum. Accessible offerings such as our $3, $6, $9 happy hour and our $39 and $69 pre-fee menus attract value-seeking guests while our premium selections reinforce our upscale position. At SDK, we are introducing a new premium holiday menu focused on Wagyu and premium seafood aligning with today's selective diners who are more intentional about what they choose to dine. At Kona Grill, we are strategically expanding our menu to reduce reliance on categories facing current market pressures. The brand has historically been centered around seafood, sushi, and our distinctive bar experience, but we are seeing headwinds across those core areas. Our menu diversification introduces broader culinary options that appeal to more frequent dining occasions and are less sensitive to economic fluctuations. Our Friends with Benefits loyalty program continues to gain momentum with over 6.5 million members. During the quarter, we added over 200,000 new members. Newly enrolled guests are showing the most repeat participation in the program. We are focused on growing a best-in-class program that fuels long-term business growth. Our key objectives of the Friends with Benefits Loyalty Program are, one, maximize membership size by converting members from other TOG marketing programs. Number two, drive organic sign-ups through increased awareness and engagement. And number three, increase member engagement within the program to strengthen brand connection and repeat visits. We have also upgraded our brand websites. Benihana, SDK, Kona Grill, and Rasushi now feature fresh, mobile-optimized designs that are increasing both traffic and conversion rates. These digital enhancements, combined with our loyalty platform, position us to compete effectively as national chains ramp up promotional activity. Priority two, capital efficient growth. The newly redesigned Benihana location we opened in San Mateo, California earlier this year has become the top performing restaurant opening in the brand's 60-year history. This outstanding start validates the effectiveness of our redesigned restaurant format. In this redesign, we made several meaningful changes to the Benihana footprint. We relocated the sushi station to the back of the house to create more teppanyaki table capacity expanded the bar seating area, modernized interior with a brighter, more contemporary look, and created a dedicated takeout station that improves overall restaurant flow. We are now implementing these learnings system-wide, adding two to three techni-active tables per restaurant to create meaningful capacity increases that directly boost revenue potential. This success gives us confidence that future locations can achieve $8 million in annual sales with restaurant-level profit margin in the mid-20% range. Franchise momentum continues to accelerate. We opened our second Bennehan Express location in Miami in the second quarter with more in development. The express format offers the full menu without teppanyaki tables, generating strong franchise interests while enabling asset-light expansion. Over time, we expect franchise license and managed locations to represent over 60% of our total footprint. We are also expanding Benihana into more non-traditional venues. We currently operate in three professional sports stadiums, generating 9 million fan impressions annually, with additional airport and arena opportunities under discussion. Across our portfolio, we have opened four company-owned venues and one franchise location year-to-date, with additional fourth quarter openings planned, bringing our total 20-25 openings to five to seven new venues. In the fourth quarter, we already opened an SDK in Scottsdale, Arizona, and plan to open a company-owned SDK in Oakbrook, Illinois, and our Corner Grill San Antonio relocation. Relocations remain a key strategy to unlock strong returns in existing markets. By prioritizing nearby high-quality real estate opportunities in areas that already embrace our brands, we can increase capacity, optimize traffic, and better position our brands for long-term success. For example, our recently relocated Westwood SDK has delivered margin improvement over the previous location. Remodels are also showing promise and success. During the third quarter, we remodeled our dated Tampa Bay Kona grill. With modest capital investment, it has delivered a significant turnaround in same store sales performance. Priority three, portfolio optimization. We have taken decisive action to strengthen our portfolio quality through strategic location optimization. After conducting a thorough evaluation of our World Concepts portfolio, we closed six underperforming locations in the second quarter and one additional location in the third quarter within challenging trade areas. These were primarily older units which would have required substantial capital investments. Looking ahead, we have identified up to nine additional grow locations to convert to either Benihana or SDK formats through the end of 2026. These conversions represent an excellent capital allocation opportunity. They require about $1 million in capital investments, and the average SDK generates over $1 million in annual EBITDA. Our first conversion of a raw sushi location to an SDK location has already happened in Scottsdale, Arizona, which opened at the end of October. After completing all planned conversions, we will operate all profitable relocations that we expect to generate approximately $10 million in restaurant-level EBITDA and over $100 million in revenue, with all units maintaining positive cash flow. Priority four, balance sheet strength. With approximately $45 million in liquidity, we have the means to invest in growth while maintaining discipline. Our board authorized a $5 million share repurchase program last year, and we view our stock as an attractive investment. Additionally, we expect to further reduce discretionary capital expenditures in the coming year across all of our brands, allowing us to strengthen our balance sheets while enhancing financial flexibility. Finally, I'm optimistic about our fourth quarter. This is historically our strongest period, and we are better positioned than ever to capitalize on that strength. 2024 marked our first holiday season with Benihana in the portfolio, and we set records across every holiday with exceptional demand. This year we have made target investments to capture even greater holiday demand. Our enhanced reservation technology, streamlined operational flow, and comprehensive team training initiatives position us to execute flawlessly during our busiest periods. A key operational focus is optimizing Benihana table efficiency. We are targeting a reduction from 120 minutes to 90 minutes table turns throughout the fourth quarter which will significantly expand our capacity to serve more guests during the busy dinner periods. The items that I have outlined today are fundamentally execution-driven and within our direct control. We are not relying on macroeconomic recovery or waiting for consumer sentiment shifts. Instead, we are focused on strategic initiatives that position us to deliver strong results regardless of broader economic trends. Before I turn it over to Nicole for the financial details, I want to thank our teammates. Every day, they live our mission of creating great guest memories by operating the best restaurants in every market that we operate by delivering exceptional and unforgettable guest experiences to every guest, every time. They are the foundation of everything we do. With that, I'll turn it over to Nicole.