STKS Q1 Earnings Call: Acquisition Integration Drives Growth Amid Shifting Consumer Trends

Upscale restaurant company The One Group Hospitality (NASDAQ:STKS) reported Q1 CY2025 results beating Wall Street’s revenue expectations, with sales up 148% year on year to $211.1 million. Revenue guidance for the full year exceeded analysts’ estimates, but next quarter’s guidance of $207.5 million was less impressive, coming in 2.3% below expectations. Its non-GAAP profit of $0.14 per share was significantly above analysts’ consensus estimates.

Is now the time to buy STKS? Find out in our full research report (it’s free).

StockStory’s Take

The ONE Group’s first quarter results reflected the full impact of its recently acquired Benihana and RA Sushi brands, which significantly expanded the company’s revenue base. Management emphasized that positive comparable sales at Benihana and transaction growth at the flagship STK brand were key performance contributors, alongside operational efficiencies that improved restaurant-level margins. CEO Emanuel Hilario highlighted that cost synergies from integration efforts supported profit expansion, noting, “We grew restaurant-level EBITDA to 16.4%, representing a 50-basis point improvement year over year through strategic operational efficiencies.” The company’s new unit openings, particularly in California, further bolstered results by extending its presence in premium dining markets.

Looking ahead, management’s guidance is shaped by expectations for continued contributions from the Benihana integration, careful balancing of value-oriented offerings with premium positioning, and a strategic push into franchising. CEO Emanuel Hilario described a dual focus on expanding company-owned locations and accelerating asset-light growth through franchising, stating, “We have discovered strong interest from franchisees seeking to enhance their portfolios with our established upscale and casual dining brand.” The company also plans to leverage its new loyalty program and digital marketing strategies to strengthen guest engagement, while remaining cautious about macroeconomic uncertainties, including consumer spending patterns and convention-driven demand fluctuations.

Key Insights from Management’s Remarks

Management attributed the quarter’s growth to Benihana and RA Sushi’s integration, increased operating efficiency, and targeted marketing, while acknowledging consumer shifts toward value and alternative dining times.

• Benihana and RA Sushi integration: The full-quarter performance of these newly acquired brands was a primary growth driver, contributing both higher sales and improved restaurant-level margins. Management credited operational synergies, such as unified reservation systems and consolidated purchasing, for enhancing profitability and efficiency across the portfolio.
• Shifting guest behavior: The company observed a trend toward value-oriented dining, with guests increasingly opting for happy hour offerings and sharing dishes, especially at STK. Management responded by introducing tiered pricing menus and midweek value-focused experiences to attract and retain traffic amid economic uncertainty.
• Marketing and loyalty initiatives: The soft launch of the Friends with Benefits rewards program aims to increase repeat visits and cross-brand engagement. CEO Emanuel Hilario highlighted the company’s strategic use of its seven-million-member database and grassroots marketing to offset competitors’ high-value TV promotions, particularly in the casual dining segment.
• Franchising momentum: The expansion of franchising infrastructure has led to heightened interest from potential partners, especially for Benihana Express concepts. Management is negotiating multiple development agreements and expects franchising to play a larger role in future growth, supported by dedicated internal resources and increased industry visibility.
• Labor and cost control: Wage inflation was described as moderate, and retention levels remained stable, particularly at STK and Benihana. The company continues to prioritize traffic and market share over aggressive pricing, opting for a conservative approach to price increases to sustain long-term growth.

Drivers of Future Performance

Management expects that Benihana’s growing contribution, expanded franchising, and targeted marketing will drive results, but macroeconomic headwinds and evolving consumer preferences may limit near-term upside.

• Benihana’s holiday and seasonal strength: Management believes Benihana will outperform during key holiday periods, especially in the second half of the year, based on learnings from last year’s integration and efforts to optimize throughput during peak times. This is expected to help offset softer trends in other brands.
• Franchising and asset-light expansion: The company plans to accelerate its dual-track strategy, combining company-owned growth with a greater emphasis on managed and licensed venues. CEO Emanuel Hilario indicated that franchising could account for roughly half of Benihana’s eventual U.S. footprint, and the company is actively negotiating development deals.
• Ongoing consumer and competitive pressures: Management cited unpredictable convention schedules, potential impacts from tariffs, and increased promotional activity by larger competitors as sources of risk. The company aims to mitigate these challenges through localized marketing, loyalty programs, and selective pricing adjustments.

Catalysts in Upcoming Quarters

Looking forward, the StockStory team will be watching (1) the pace and quality of new unit openings and franchise deal signings, (2) signs of stabilization or improvement in same-store sales trends, particularly at legacy brands, and (3) evidence that marketing and loyalty initiatives are driving increased guest frequency. Execution in integrating Benihana and managing competitive pressures will also be important indicators.

The ONE Group currently trades at a forward EV-to-EBITDA ratio of 1.1×. At this valuation, is it a buy or sell post earnings? Find out in our full research report (it’s free).

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