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The ONE Group Hospitality Inc.

08/07/2026 | Press release | Distributed by Public on 08/07/2026 14:47

Quarterly Report for Quarter Ending June 28, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report on Form 10-Q and certain information incorporated herein by reference contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and Section 27A of the Securities Act of 1933, as amended (the "Securities Act"). Forward-looking statements speak only as of the date thereof and involve risks and uncertainties that may cause our actual results, performance or achievements to be materially different from the results, performance or achievements expressed or implied by the forward-looking statements. These risks and uncertainties include the risk factors discussed under Item 1A. "Risk Factors" of this Quarterly Report on Form 10-Q and the Company's Annual Report on Form 10-K for the year ended December 28, 2025. A number of factors could cause actual results or outcomes to differ materially from those indicated by such forward-looking statements, including but not limited to: (1) our ability to integrate the new or acquired restaurants into our operations without disruptions to operations; (2) our ability to capture anticipated synergies; (3) our ability to open new restaurants and food and beverage locations in current and additional markets, grow and manage growth profitably, maintain relationships with suppliers, obtain adequate supply of products and retain employees; (4) factors beyond our control that affect the number and timing of new restaurant openings, including weather conditions and factors under the control of landlords, contractors and regulatory and/or licensing authorities; (5) our ability to successfully improve performance and cost, realize the benefits of our marketing efforts and achieve improved results as we focus on developing new management and license deals; (6) changes in applicable laws or regulations; (7) the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors, including economic downturns; (8) the impact of actual and potential changes in immigration policies, including potential labor shortages; (9) the potential impact of the imposition of tariffs, including increases in food prices and inflation and any resulting negative impacts on the macro-economic environment; (10) the impact of international conflicts on macroeconomic conditions; (11) risks related to our development and franchise partners; and (12) other risks and uncertainties indicated from time to time in our filings with the Securities and Exchange Commission. We have attempted to identify forward-looking statements by terminology including "anticipates," "believes," "can," "continue," "ongoing," "could," "estimates," "expects," "intends," "may," "appears," "suggests," "future," "likely," "goal," "plans," "potential," "projects," "predicts," "should," "targets," "would," "will" and similar expressions that convey the uncertainty of future events or outcomes. You should not place undue reliance on any forward-looking statement. We do not undertake any obligation to update or revise any forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events, except as required under applicable law.

General

This information should be read in conjunction with the condensed consolidated financial statements and the notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes, and Management's Discussion and Analysis of Financial Condition and Results of Operations, contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 28, 2025.

As used in this report, the terms "Company," "we," "our," or "us," refer to The ONE Group Hospitality, Inc. and its consolidated subsidiaries, taken as a whole, unless the context otherwise indicates.

Business Summary

We are an international restaurant company that develops, owns and operates, manages, licenses and franchises upscale and polished casual, high-energy restaurants. Our vision is to be the undisputed global leader in VIBE dining by executing upon our mission of creating great guest memories by operating the best restaurant in every market that we operate in by delivering exceptional and unforgettable experiences to every guest, every time. We design all our restaurants, lounges and F&B services to create a social dining and high-energy entertainment experience within a destination location. We believe that this design and philosophy separates us from more traditional restaurant and foodservice competitors.

Our primary restaurant brands are as follows:

●

STK, a modern twist on the American steakhouse concept featuring premium steaks, seafood and specialty cocktails in an energetic upscale atmosphere;

●

Benihana, an interactive dining destination with highly skilled chefs preparing food in front of guests and served in an energetic atmosphere alongside fresh sushi and innovative cocktails;

●

Kona Grill, a polished casual bar-centric grill concept featuring American favorites, award-winning sushi, and specialty cocktails in an upscale casual atmosphere; and

●

RA, a Japanese cuisine concept that offers a fun-filled, bar-forward, upbeat, and vibrant dining atmosphere anchored by creative sushi, inventive drinks, and outstanding service.

We opened our first restaurant in January 2004 in New York, New York. We currently own, operate, manage, license or franchise 158 venues including 32 STKs, 86 Benihanas, 22 Kona Grills and 12 RAs in major cities in North America, Europe, Latin America and the Middle East and 6 F&B venues operated under ONE Hospitality in three hotels and casinos throughout the United States and Europe.

As our footprint increases, we expect to benefit by leveraging system-wide operating efficiencies and best practices through the management of our general and administrative expenses as a percentage of overall revenue.

We intend to open six to ten new venues in 2026. We have opened the following restaurants to date in 2026:

●

Owned Kona Grill restaurant in San Antonio, Texas (January 2026 - relocation of an existing Kona Grill restaurant)

●

Owned STK restaurant in Phoenix, Arizona (June 2026)

●

Owned STK restaurant in New York, New York (July 2026 - relocation of an existing STK restaurant)

●

Owned Benihana restaurant in Riverton, Utah (July 2026 - conversion of a former Kona Grill restaurant)

In February 2026, we converted a franchised Benihana restaurant to a Company-owned Benihana restaurant.

During the second quarter of 2026, we converted a franchised Benihana Express to a Company-owned Benihana Express restaurant and terminated an agreement for a franchised Benihana Express restaurant.

There are currently the following restaurants under construction:

●

Owned STK restaurant in Baltimore, Maryland (conversion of a temporarily closed Kona Grill restaurant)

●

Owned Kona Grill Bistro in Baltimore, Maryland

●

Owned Benihana Express restaurant in Denver, Colorado

In addition, the following asset-light restaurants are in development:

●

Franchised Benihana in the Florida Keys

●

Licensed Benihana Express in the Florida Keys

●

Two-venue agreement for licensed STKs in a major U.S. airport

●

Licensed RA Sushi at Niagara Falls

The table below reflects our current venues by restaurant brand and geographic location:


		Venues
		STK⁽¹⁾		Benihana		Grill Concepts⁽²⁾		ONE Hospitality⁽³⁾		Total
Domestic
Owned		22		73		34		1		130
Sports Arenas⁽⁴⁾		-		4		-		-		4
Managed		1		-		-		1		2
Licensed		1		-		-		-		1
Franchised		-		5		-		-		5
Total domestic		24		82		34		2		142
International
Owned		-		-		-		-		-
Sports Arenas⁽⁴⁾		-		-		-		-		-
Managed		4		-		-		4		8
Licensed		4		-		-		-		4
Franchised		-		4		-		-		4
Total international		8		4		-		4		16
Total venues		32		86		34		6		158

(1)	Locations with an STK and STK Rooftop are considered one venue location. This includes the STK Rooftop in San Diego, CA, which is a licensed location.

(2)	Includes four temporarily closed venues.

(3)	Includes concepts under the Company's F&B hospitality management agreements and other venue brands such as Salt Water Social, Heliot, Radio and Rivershore Bar & Grill.

(4)	Restaurants located within a sports arena that are included with the Company's owned restaurant net revenues, owned restaurant cost of sales and owned restaurant operating expenses that do not require a capital investment.

In 2025, we completed a comprehensive review of our Grill Concepts portfolio and made the strategic decision to close or convert several locations. As part of this initiative, we permanently closed one RA restaurant in January 2026. In addition, we temporarily closed three Kona Grill restaurants and two RA restaurants in January 2026 that will be converted into a Benihana or STK restaurant.

Our Growth Strategies and Outlook

Our growth model is primarily driven by the following:

●

Expansion of STK and Benihana restaurants by opening primarily franchised and licensed locations

●

From time to time, Company owned restaurants that may be under lease

●

Increase same store sales

●

Increase operating efficiency

●

Opportunistic acquisitions

Executive Summary

Three Periods Ended June 28, 2026 Compared to the Three Periods Ended June 29, 2025

Total revenue decreased $6.9 million, or 3.3% to $200.5 million for the three periods ended June 28, 2026 compared to $207.4 million for the three periods ended June 29, 2025. The change in revenue is attributable to the closures of certain restaurants pursuant to the Grill Concepts portfolio optimization discussed above.

Same store sales for 2026 compared to 2025 and 2025 compared to 2024 were as follows:


	2025 vs. 2024					2026 vs. 2025
	Q1	Q2	Q3	Q4	YTD	Q1	Q2	YTD
US STK Owned Restaurants	(2.3)%	(4.9)%	(6.2)%	(0.7)%	(3.4)%	(0.1)%	2.5%	1.1%
US STK Managed Restaurants	(12.7)%	(9.5)%	(4.7)%	4.2%	(4.6)%	8.1%	6.4%	7.3%
US STK Total Restaurants	(3.6)%	(6.0)%	(5.8)%	0.3%	(3.7)%	1.4%	3.2%	2.2%
Benihana Owned Restaurants	0.7%	0.4%	(4.0)%	(0.4)%	(0.8)%	-%	0.8%	0.4%
Grill Concepts Owned Restaurants	(13.7)%	(14.6)%	(11.8)%	(9.4)%	(12.5)%	(5.3)%	(2.9)%	(4.1)%
Combined Same Store Sales	(3.2)%	(4.1)%	(5.9)%	(1.8)%	(3.7)%	(0.3)%	0.9%	0.3%

Operating income increased $5.9 million to $6.6 million for the three periods ended June 28, 2026 compared to $0.7 million for the three periods ended June 29, 2025 primarily due to improved restaurant operating profit partly offset by higher general and administrative expenses coupled with the reduction in transition and integration costs related to the acquisition of the Benihana and RA restaurants and lower lease termination and restaurant closure expenses partly offset by higher general and administrative expenses.

Restaurant operating profit improved $1.2 million, or 3.8%, to $32.4 million for the three periods ended June 28, 2026, compared to $31.2 million for the three periods ended June 29, 2025. Restaurant operating profit as a percentage of owned restaurant net revenue was 16.4% in the second quarter of 2026 compared to 15.3% in the second quarter of 2025. See "Results of Operations" below for a reconciliation of Restaurant operating profit to Operating income, the most directly comparable GAAP measure.

Net loss attributable to The ONE Group Hospitality, Inc. was $2.1 million for the three periods ended June 28, 2026, compared to a net loss of $10.1 million for the three periods ended June 29, 2025, primarily due to improved restaurant operating profit coupled with the decrease in transition and integration costs related to the acquisition of the Benihana and RA restaurants.

Six Periods Ended June 28, 2026 Compared to the Six Periods Ended June 29, 2025

Total revenues decreased $5.2 million, or 1.2%, to $413.3 million for the six periods ended June 28, 2026 compared to $418.5 million for the six periods ended June 29, 2025. The change in revenue is attributable to the closures of certain restaurants pursuant to the Grill Concepts portfolio optimization discussed above.

Operating income increased $9.1 million to $20.5 million for the six periods ended June 28, 2026 compared to $11.4 million for the six periods ended June 29, 2025 primarily due to improved restaurant operating profit partly offset by higher general and administrative expenses coupled with the reduction in transition and integration costs related to the acquisition of Benihana and RA restaurants.

Restaurant operating profit increased $5.4 million or 8.1% to $72.1 million for the six periods ended June 28, 2026, compared to $66.7 million for the six periods ended June 29, 2025, primarily attributable to lower cost of sales due to menu optimization, integration synergies, supply chain initiatives and increased menu pricing. Restaurant operating profit as a percentage of owned restaurant net revenue was 17.7% for the six periods ended June 28, 2026, compared to 16.2% for the six periods ended June 29, 2025. See "Results of Operations" below for reconciliation of Restaurant operating profit to Operating income, the most directly comparable GAAP measure.

Net income attributable to The ONE Group Hospitality, Inc. was $1.1 million for the six periods ended June 28, 2026, compared to a net loss of $9.1 million for the six periods ended June 29, 2025, primarily due to improved Restaurant operating profit partly offset by higher general and administrative expenses coupled with the decrease in transition and integration costs related to the acquisition of the Benihana and RA restaurants.

Results of Operations

The following table sets forth certain statements of operations data for the periods indicated (in thousands):


		For the three periods ended June 28,			For the three periods ended June 29,			For the six periods ended June 28,			For the six periods ended June 29,
		2026			2025			2026			2025
Revenues:
Owned restaurant net revenue		$	197,284		$	203,907		$	406,576		$	411,305
Management, license, franchise and incentive fee revenue			3,193			3,472			6,717			7,203
Total revenues			200,477			207,379			413,293			418,508
Cost and expenses:
Owned operating expenses:
Owned restaurant cost of sales			38,544			43,190			79,078			86,310
Owned restaurant operating expenses			126,317			129,493			255,353			258,268
Total owned operating expenses			164,861			172,683			334,431			344,578
General and administrative (including stock-based compensation of $1,137 and $2,271 for the three and six periods ended June 28, 2026, respectively, and $1,470 and $3,102 for the three and six periods ended June 29, 2025, respectively)			14,008			11,662			29,030			24,753
Depreciation and amortization			11,020			10,870			21,425			20,699
Lease termination and restaurant closure expenses			919			5,635			2,884			5,706
Pre-opening expenses			2,859			1,579			4,330			3,260
Transition and integration expenses			193			3,949			659			7,668
Transaction costs			26			61			26			130
Other expenses			34			278			54			323
Total costs and expenses			193,920			206,717			392,839			407,117
Operating income			6,557			662			20,454			11,391
Other expenses, net:
Interest expense, net of interest income			9,623			10,295			19,369			20,117
Total other expenses, net			9,623			10,295			19,369			20,117
(Loss) income before (benefit) provision for income taxes			(3,066)			(9,633)			1,085			(8,726)
(Benefit) provision for income taxes			(716)			699			446			984
Net (loss) income			(2,350)			(10,332)			639			(9,710)
Less: net loss attributable to noncontrolling interest			(228)			(228)			(441)			(581)
Net (loss) income attributable to The ONE Group Hospitality, Inc.		$	(2,122)		$	(10,104)		$	1,080		$	(9,129)

The following table sets forth certain statements of operations data as a percentage of total revenues for the periods indicated. Certain percentage amounts may not sum to total due to rounding.


		For the three periods ended June 28,	For the three periods ended June 29,		For the six periods ended June 28,	For the six periods ended June 29,
		2026	2025		2026	2025
Revenues:
Owned restaurant net revenue		98.4%	98.3%		98.4%	98.3%
Management, license, franchise and incentive fee revenue		1.6%	1.7%		1.6%	1.7%
Total revenues		100.0%	100.0%		100.0%	100.0%
Cost and expenses:
Owned operating expenses:
Owned restaurant cost of sales ⁽¹⁾		19.5%	21.2%		19.4%	21.0%
Owned restaurant operating expenses ⁽¹⁾		64.0%	63.5%		62.8%	62.8%
Total owned operating expenses ⁽¹⁾		83.6%	84.7%		82.3%	83.8%
General and administrative (including stock-based compensation of 0.6% and 0.5% for the three and six periods ended June 28, 2026, respectively, and 0.7% for the three and six periods ended June 29, 2025, respectively)		7.0%	5.6%		7.0%	5.9%
Depreciation and amortization		5.5%	5.2%		5.2%	4.9%
Lease termination and restaurant closure expenses		0.5%	2.7%		0.7%	1.4%
Pre-opening expenses		1.4%	0.8%		1.0%	0.8%
Transition and integration expenses		0.1%	1.9%		0.2%	1.8%
Transaction costs		0.0%	0.0%		0.0%	0.0%
Other expenses		0.0%	0.1%		0.0%	0.1%
Total costs and expenses		96.7%	99.7%		95.1%	97.3%
Operating income		3.3%	0.3%		4.9%	2.7%
Other expenses, net:
Interest expense, net of interest income		4.8%	5.0%		4.7%	4.8%
Total other expenses, net		4.8%	5.0%		4.7%	4.8%
(Loss) income before (benefit) provision for income taxes		(1.5)%	(4.6)%		0.3%	(2.1)%
(Benefit) provision for income taxes		(0.4)%	0.3%		0.1%	0.2%
Net (loss) income		(1.2)%	(5.0)%		0.2%	(2.3)%
Less: net loss attributable to noncontrolling interest		(0.1)%	(0.1)%		(0.1)%	(0.1)%
Net (loss) income attributable to The ONE Group Hospitality, Inc.		(1.1)%	(4.9)%		0.3%	(2.2)%

(1)	These expenses are being shown as a percentage of owned restaurant net revenue.

EBITDA, Adjusted EBITDA, Restaurant operating profit and Restaurant EBITDA are presented in this Quarterly Report on Form 10-Q to supplement other measures of financial performance. EBITDA, Adjusted EBITDA, Restaurant operating profit and Restaurant EBITDA are not required by, or presented in accordance with, accounting principles generally accepted in the U.S. ("GAAP"). We define EBITDA as net income before interest expense, provision for income taxes and depreciation and amortization. We define Adjusted EBITDA as net income before interest expense, provision for income taxes, depreciation and amortization, stock-based compensation, lease termination and restaurant closure expenses, transition and integration expenses, transaction costs, non-cash rent, non-cash impairment loss, non-recurring gains and losses, certain transactional and exit costs and loss on early debt extinguishment. Not all the aforementioned items defining Adjusted EBITDA occur in each reporting period but have been included in our definitions of terms based on our historical activity. Adjusted EBITDA presented in this Quarterly Report on Form 10-Q is a supplemental measure of financial performance that is not required by, or presented in accordance with, GAAP. We define Restaurant operating profit as owned restaurant net revenue minus owned restaurant cost of sales and owned restaurant operating expenses. We define Restaurant EBITDA as owned restaurant net revenue minus owned restaurant cost of sales and owned restaurant operating expenses before non-cash rent.

We believe that EBITDA, Adjusted EBITDA, Restaurant operating profit and Restaurant EBITDA are appropriate measures of our operating performance because they eliminate non-cash or non-recurring expenses that do not reflect our underlying business performance. We believe Restaurant operating profit and Restaurant EBITDA are important components of financial results because they are widely used metrics within the restaurant industry to evaluate restaurant-level productivity, efficiency, and performance, and we use Restaurant operating profit and Restaurant EBITDA as a key metric to evaluate our restaurant financial performance compared to our competitors. We use these metrics to facilitate a comparison of our operating performance on a consistent basis from period to period, to analyze the factors and trends affecting our business and to evaluate the performance of our restaurants. Adjusted EBITDA has limitations as an analytical tool and our calculation of Adjusted EBITDA may not be comparable to that reported by other companies; accordingly, you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Adjusted EBITDA is a key measure used by management and is a metric used in our debt compliance calculation. Additionally, Adjusted EBITDA and Restaurant operating profit are frequently used by analysts, investors and other interested parties to evaluate companies in our industry. We use Adjusted EBITDA and Restaurant operating profit, alongside other GAAP measures such as net income, to measure profitability, as a key profitability target in our budgets, and to compare our performance against that of peer companies despite possible differences in calculation.

The following table presents a reconciliation of net loss to EBITDA and Adjusted EBITDA for the periods indicated (in thousands):


		For the three periods ended June 28,		For the three periods ended June 29,	For the six periods ended June 28,		For the six periods ended June 29,
		2026	2025		2026		2025
Net (loss) income attributable to The ONE Group Hospitality, Inc.	$	(2,122)	$	(10,104)	$	1,080	$	(9,129)
Net loss attributable to noncontrolling interest		(228)		(228)		(441)		(581)
Net (loss) income		(2,350)		(10,332)		639		(9,710)
Interest expense, net		9,623		10,295		19,369		20,117
(Benefit) provision for income taxes		(716)		699		446		984
Depreciation and amortization		11,020		10,870		21,425		20,699
EBITDA		17,577		11,532		41,879		32,090
Stock-based compensation		1,137		1,470		2,271		3,102
Lease termination and restaurant closure expenses⁽¹⁾		919		5,635		2,884		5,706
Transition and integration expenses		193		3,949		659		7,668
Transaction costs		26		61		26		130
Non-cash rent⁽²⁾		1,091		280		1,530		(857)
Other expenses		34		278		54		323
Adjusted EBITDA		20,977		23,205		49,303		48,162
Adjusted EBITDA attributable to noncontrolling interest		(120)		(156)		(402)		(396)
Adjusted EBITDA attributable to The ONE Group Hospitality, Inc.	$	21,097	$	23,361	$	49,705	$	48,558

(1)	Lease termination and restaurant closure expenses are costs associated with closed locations.

(2)	Non-cash rent expense is included in owned restaurant operating expenses, pre-opening expenses and general and administrative expense on the condensed consolidated statements of operations.

The following table presents a reconciliation of Owned restaurant net revenue for the six periods ended June 28, 2026 to the six periods ended June 29, 2025 (in thousands):


Owned restaurant net revenue for the six periods ended June 29, 2025	$	411,305
Decrease in sales for Grill Concepts restaurants closed⁽¹⁾		(15,539)
Decrease in sales due to the elimination of auto-gratuities⁽²⁾		(2,631)
Increase in sales due to fiscal calendar shift⁽³⁾		8,291
Other changes in sales⁽⁴⁾		5,150
Owned restaurant net revenue for the six periods ended June 28, 2026		406,576

(1)	Grill Concepts restaurants closed are comprised of Owned restaurant net revenue from Grill Concepts closed prior to June 28, 2026.

(2)	The elimination of auto-gratuities has no impact on net income attributable to The ONE Group Hospitality, Inc. or Adjusted EBITDA attributable to The ONE Group Hospitality, Inc. as the associated expense in Owned restaurant operating expenses was also eliminated.

(3)

On January 1, 2025, the Company transitioned from a calendar-based fiscal year to a 52/53-week fiscal year. The Company's first six periods of 2026 was the 182-day period of December 29, 2025 through June 28, 2026 compared to the first six periods of 2025 which was the 180-day period of January 1, 2025 through June 29, 2025. The first six periods of 2026 included New Year's Eve while the first six periods of 2025 did not include New Year's Eve.

(4)	Other changes in sales is comprised of sales generated by new restaurant openings and the change in same store sales of 0.3%.

The following table presents a reconciliation of Operating income to Restaurant operating profit for the periods indicated (in thousands):


	For the three periods ended June 28,			For the three periods ended June 29,			For the six periods ended June 28,			For the six periods ended June 29,
	2026			2025			2026			2025
Operating income as reported	$	6,557		$	662		$	20,454		$	11,391
Management, license and incentive fee revenue		(3,193)			(3,472)			(6,717)			(7,203)
General and administrative		14,008			11,662			29,030			24,753
Depreciation and amortization		11,020			10,870			21,425			20,699
Lease termination and restaurant closure expenses		919			5,635			2,884			5,706
Pre-opening expenses		2,859			1,579			4,330			3,260
Transition and integration expenses		193			3,949			659			7,668
Transaction costs		26			61			26			130
Other expenses		34			278			54			323
Restaurant operating profit	$	32,423		$	31,224		$	72,145		$	66,727
Restaurant operating profit as a percentage of owned restaurant net revenue		16.4%			15.3%			17.7%			16.2%
Non-cash rent		(114)			700			(218)			(852)
Restaurant EBITDA	$	32,309		$	31,924		$	71,927		$	65,875
Restaurant EBITDA as a percentage of owned restaurant net revenue		16.4%			15.7%			17.7%			16.0%

Restaurant operating profit by brand is as follows (in thousands):


	For the three periods ended June 28,			For the three periods ended June 29,			For the six periods ended June 28,			For the six periods ended June 29,
	2026			2025			2026			2025
STK restaurant operating profit (Company owned)	$	9,247		$	8,256		$	22,220		$	18,392
STK restaurant operating profit (Company owned) as a percentage of STK revenue (Company owned)		17.4%			16.1%			19.5%			17.3%
Benihana restaurant operating profit (Company owned)	$	21,874		$	20,772		$	47,261		$	43,658
Benihana restaurant operating profit (Company owned) as a percentage of Benihana revenue (Company owned)		18.9%			18.0%			20.0%			18.9%
Core Grill Concepts restaurant operating profit	$	1,315		$	2,580		$	2,973		$	5,634
Core Grill Concepts restaurant operating profit as a percentage of Core Grill Concepts revenue		4.9%			9.1%			5.6%			10.2%

Restaurant EBITDA by brand is as follows (in thousands):


	For the three periods ended June 28,			For the three periods ended June 29,			For the six periods ended June 28,			For the six periods ended June 29,
	2026			2025			2026			2025
STK restaurant EBITDA (Company owned)	$	8,848		$	8,148		$	21,359		$	17,843
STK restaurant EBITDA (Company owned) as a percentage of STK revenue (Company owned)		16.6%			15.9%			18.7%			16.8%
Benihana restaurant EBITDA (Company owned)	$	22,224		$	21,308		$	47,979		$	44,479
Benihana restaurant EBITDA (Company owned) as a percentage of Benihana revenue (Company owned)		19.2%			18.5%			20.3%			19.3%
Core Grill Concepts restaurant EBITDA	$	1,213		$	2,980		$	2,821		$	4,616
Core Grill Concepts restaurant EBITDA as a percentage of Core Grill Concepts revenue		4.5%			10.6%			5.3%			8.3%

Results of Operations for the Three Periods Ended June 28, 2026 Compared to the Three Periods Ended June 29, 2025

Revenues

Owned restaurant net revenue. Owned restaurant net revenue decreased $6.6 million, or 3.2%, to $197.3 million for the three periods ended June 28, 2026 from $203.9 million for the three periods ended June 29, 2025. The change was primarily attributable to a decrease in revenues from Grill Concepts restaurants either temporarily or permanently closed and the elimination of auto-gratuities, partially offset by an increase in comparable restaurant sales and sales from new restaurants opened since July 2025. Comparable restaurant sales increased 0.9% in the three periods ended June 28, 2026 compared to the three periods ended June 29, 2025.

Management, license, franchise and incentive fee revenue. Management, license, franchise and incentive fee revenues decreased $0.3 million to $3.2 million for the three periods ended June 28, 2026 compared to $3.5 million for the three periods ended June 29, 2025, primarily due to the exit of a management agreement in Scottsdale, Arizona in the second quarter of 2025.

Cost and Expenses

Owned restaurant cost of sales. Food and beverage costs for owned restaurants decreased $4.7 million, or 10.9%, to $38.5 million for the three periods ended June 28, 2026 from $43.2 million for the three periods ended June 29, 2025. As a percentage of owned restaurant net revenue, cost of sales improved by 170 basis points to 19.5% for the three periods ended June 28, 2026 compared to 21.2% for the three periods ended June 29, 2025 primarily due to menu optimization, integration synergies, supply chain initiatives and increased menu pricing.

Owned restaurant operating expenses. Owned restaurant operating expenses decreased $3.2 million, or 2.5% to $126.3 million for the three periods ended June 28, 2026 from $129.5 million for the three periods ended June 29, 2025. Owned restaurant operating costs as a percentage of owned restaurant net revenue increased 50 basis points from 63.5% in the three periods ended June 29, 2025 to 64.0% for the three periods ended June 28, 2026 primarily due to an increase in marketing expenses.

General and administrative. General and administrative costs increased $2.3 million, or 19.7%, to $14.0 million for the three periods ended June 28, 2026 from $11.7 million for the three periods ended June 29, 2025. The increase was attributable to inflation on salaries, higher bonus expense, planned investments in information technology, including AI-related technologies, and increased travel expenses. As a percentage of revenues, general and administrative costs were 7.0% for the three periods ended June 28, 2026 compared to 5.6% for the three periods ended June 29, 2025.

Depreciation and amortization. Depreciation and amortization expense was $11.0 million for the three periods ended June 28, 2026, compared to $10.9 million for the three periods ended June 29, 2025.

Lease termination and restaurant closure expenses. Lease termination and restaurant closure expenses were $0.9 million for the three periods ended June 28, 2026, which consisted primarily of expenses related to the Grill Concepts optimization and the relocation of an STK restaurant in New York, New York. Lease termination and restaurant closure expenses were $5.6 million for the three periods ended June 29, 2025 primarily related to accelerated depreciation as well as exit costs associated with five Grill Concept restaurants closed during the quarter and the termination of an operating agreement.

Pre-opening expenses. In the three periods ended June 28, 2026, we incurred $2.9 million of pre-opening expenses primarily comprised of payroll, training and other costs for STK Downtown Phoenix, which opened in June 2026, and STK Chelsea, which opened in July 2026, preopen rent for restaurants that the Company has possession of, which included $1.1 million in non-cash rent, and pre-opening expenses for restaurants currently under development. Pre-opening expenses for the three periods ended June 29, 2025 were $1.6 million. Details of pre-opening expenses by category are provided in the table below for the three periods ended June 28, 2026 and three periods ended June 29, 2025 (in thousands).


Three Periods Ended June 28, 2026		Preopen Expenses			Preopen Rent ⁽¹⁾		Total
Training Team		$	152		$	-	$	152
Restaurants			1,076			1,631		2,707
Total		$	1,228		$	1,631	$	2,859

Three Periods Ended June 29, 2025		Preopen Expenses			Preopen Rent ⁽¹⁾		Total
Training Team		$	353		$	-	$	353
Restaurants			834			392		1,226
Total		$	1,187		$	392	$	1,579

(1)

Cash rent paid was $0.5 million and $0.3 million for the three periods ended June 29, 2026 and the three periods ended June 29, 2025, respectively.

Transition and integration costs. In the three periods ended June 28, 2026, we incurred $0.2 million in transition and integration costs associated with the acquisition of the Benihana and RA restaurants for expenses related to temporary rentals of heating, ventilation and air conditioning equipment while we complete repairs and replacements of equipment acquired with the Benihana and RA restaurants. In the three periods ended June 29, 2025, we incurred $3.9 million of transition and integration costs associated with the acquisition of the Benihana and RA restaurants. Included in these costs are expenses related to duplicate professional service vendors, operations support offices, support positions, and maintenance expenses that have since been eliminated.

Interest expense, net of interest income. Interest expense, net of interest income, was $9.6 million for the three periods ended June 28, 2026 compared to $10.3 million for the three periods ended June 29, 2025. The weighted average interest rate for the three periods ended June 28, 2026 was 10.1% compared to 10.8% for the three periods ended June 29, 2025.

(Benefit) Provision for income taxes. The benefit for income taxes for the three periods ended June 28, 2026 was $0.7 million compared to $0.7 million of tax expense for the three periods ended June 29, 2025. The effective income tax rate for the second quarter of 2026 was 23.4% compared to 7.3% for the second quarter of 2025.

Results of Operations for the Six Periods Ended June 28, 2026 Compared to the Six Periods Ended June 29, 2025

Revenues

Owned restaurant net revenue. Owned restaurant net revenue decreased $4.7 million, or 1.1%, to $406.6 million for the six periods ended June 28, 2026, from $411.3 million for the six periods ended June 29, 2025. The change was primarily attributable to a decrease in revenues from Grill Concepts restaurants closed and the elimination of auto-gratuities, partially offset by an increase in comparable restaurant sales and sales from new restaurants opened since March 2025. Comparable restaurant sales increased 0.3% during the six periods ended June 28, 2026 compared to the six periods ended June 29, 2025.

Management, license and incentive fee revenue. Management, license and incentive fee revenues decreased $0.5 million, or 6.9%, to $6.7 million for the six periods ended June 28, 2026 from $7.2 million for the six periods ended June 29, 2025 primarily due to the exit of a management agreement in Scottsdale, Arizona in the second quarter of 2025.

Cost and Expenses

Owned restaurant cost of sales. Food and beverage costs for owned restaurants decreased $7.2 million, or 8.3%, to $79.1 million for the six periods ended June 28, 2026, from $86.3 million for the six periods ended June 29, 2025. As a percentage of owned restaurant net revenue, cost of sales improved 160 basis points to 19.4% for the six periods ended June 28, 2026 from 21.0% in the six periods ended June 29, 2025 primarily due to menu optimization, integration synergies, supply chain initiatives and increased menu pricing.

Owned restaurant operating expenses. Owned restaurant operating expenses decreased $2.9 million to $255.4 million for the six periods ended June 28, 2026, from $258.3 million for the six periods ended June 29, 2025. Owned restaurant operating costs as a percentage of owned restaurant net revenue was flat at 62.8% for both the six periods ended June 29, 2025 and June 28, 2026.

General and administrative. General and administrative costs increased $4.2 million, or 16.9%, to $29.0 million for the six periods ended June 28, 2026, compared to $24.8 million for the six periods ended June 29, 2025. The increase was attributable to inflation on salaries and planned investments in information technology, including AI-related technologies. As a percentage of revenues, general and administrative costs increased by 110 basis points to 7.0% for the six periods ended June 28, 2026 compared to 5.9% for the six periods ended June 29, 2025.

Depreciation and amortization. Depreciation and amortization expense increased $0.7 million to $21.4 million for the six periods ended June 28, 2026, compared to $20.7 million for the six periods ended June 29, 2025. The increase is attributed to new restaurants opened since June 2025.

Lease termination and restaurant closure expenses. Lease termination and restaurant closure expenses were $2.9 million for the six periods ended June 28, 2026, which consisted primarily of expenses related to the Grill Concepts optimization and included $0.4 million in non-cash expenses. Lease termination and restaurant closure expenses were $5.7 million for the six periods ended June 29, 2025.

Pre-opening expenses. In the six periods ended June 28, 2026, we incurred $4.3 million of pre-opening expenses primarily comprised of payroll, training and other costs for STK Downtown Phoenix, which opened in June 2026, and STK Chelsea, which opened in July 2026, preopen rent for restaurants that the Company has possession of, which included $1.6 million in non-cash rent, and pre-opening expenses for restaurants currently under development. Pre-opening expenses for the six periods ended June 29, 2025 were $3.3 million. Details of pre-opening expenses by category are provided in the table below for the six periods ended June 28, 2026 and June 28, 2025 (in thousands).


Six Periods Ended June 28, 2026		Preopen Expenses			Preopen Rent ⁽¹⁾		Total
Training Team		$	310		$	-	$	310
Restaurants			1,389			2,631		4,020
Total		$	1,699		$	2,631	$	4,330

Six Periods Ended June 29, 2025		Preopen Expenses			Preopen Rent ⁽¹⁾		Total
Training Team		$	845		$	-	$	845
Restaurants			1,511			904		2,415
Total		$	2,356		$	904	$	3,260

(1)

Cash rent paid was $1.0 million and $0.8 million for the six periods ended June 28, 2026 and the six periods ended June 29, 2025, respectively.

Transition and integration costs. In the six periods ended June 28, 2026, we incurred $0.7 million in transition and integration costs associated with the acquisition of Benihana and RA restaurants for expenses related to temporary rentals of heating, ventilation and air conditioning equipment while we complete repairs and replacement of equipment acquired with the Benihana and RA restaurants. In the six periods ended June 29, 2025, we incurred $7.7 million of transition and integration costs associated with the acquisition of the Benihana and RA restaurants. Included in these costs are expenses related to identified duplicate professional service vendors, operational support offices, support positions, and maintenance expenses that have since been eliminated.

Interest expense, net of interest income. Interest expense, net of interest income, was $19.4 million for the six periods ended June 28, 2026 compared to $20.1 million for the six periods ended June 29, 2025. The weighted average interest rate for the six periods ended June 28, 2026 was 10.2% compared to 10.9% for the six periods ended June 29, 2025.

(Benefit) provision for income taxes. The provision for income taxes for the six periods ended June 28, 2026 was $0.4 million, compared to $1.0 million for the six periods ended June 29, 2025. The effective income tax rate for the second quarter of 2026 was 41.1% compared to (11.3%) for the second quarter of 2025.

Liquidity and Capital Resources

Executive Summary

Our principal liquidity requirements are to meet our lease obligations, working capital and capital expenditure needs and to pay principal and interest on outstanding debt. Subject to our operating performance, which, if significantly adversely affected, would adversely affect the availability of funds, we expect to finance our operations for at least the next 12 months and the foreseeable future, including the costs of opening currently planned new restaurants, through cash provided by operations, construction allowances provided by landlords of certain locations and borrowings under our Credit Agreement. We also may borrow on our Revolving Facility or issue equity, including preferred stock, to support ongoing business operations. We believe these sources of financing are adequate to support our immediate business operations and plans. As of June 28, 2026, we had cash and cash equivalents of $6.4 million. Our credit card receivables as of June 28, 2026 were $10.7 million, which are typically collected within four days. We had $347.7 million in long-term debt, which primarily consisted of borrowings under our Credit Agreement as of June 28, 2026. As of June 28, 2026, the availability on our Revolving Facility was $28.7 million, subject to certain conditions.

For the six periods ended June 28, 2026, capital expenditures were $23.0 million, of which $15.4 million related to the construction of new STK, Benihana and Kona Grill restaurants, $2.5 related to remodels or major projects at existing restaurants and $4.7 million related to existing restaurants. We expect to receive between $1.0 million to $1.6 million in landlord contributions in the next three months.

Capital expenditures by type for the six periods ended June 28, 2026 and June 29, 2025, respectively, are provided below (in thousands).


Six Periods Ended June 28, 2026	STK		Benihana		Grill Concepts		Other ⁽¹⁾		Total
New Venues	$	11,012	$	3,477	$	838	$	38	$	15,365
Remodels		320		2,057		86		-		2,463
Maintenance		1,459		2,379		906		-		4,744
Other		-		-		-		437		437
Total	$	12,791	$	7,913	$	1,830	$	475	$	23,009
Tenant Improvement Allowance		3,179		1,420		-		-		4,599
Total Capital Expenditures, net of Tenant Improvement Allowance	$	9,612	$	6,493	$	1,830	$	475	$	18,410


Six Periods Ended June 29, 2025	STK		Benihana		Grill Concepts		Other ⁽¹⁾		Total
New Venues	$	12,849	$	4,729	$	2,105	$	218	$	19,901
Maintenance		4,060		4,673		3,066		-		11,799
Other		-		-		-		448		448
Total	$	16,909	$	9,402	$	5,171	$	666	$	32,148
Tenant Improvement Allowance		1,276		640		357		-		2,273
Total Capital Expenditures, net of Tenant Improvement Allowance	$	15,633	$	8,762	$	4,814	$	666	$	29,875

(1)

Includes inventory of restaurant equipment for venues under development.

Our operations have not required significant working capital, and, like many restaurant companies, we may have negative working capital during the year. Revenues are received primarily in credit card or cash receipts, and restaurant operations do not require significant receivables or inventories, other than our wine inventory. In addition, we receive trade credit for the purchase of food, beverages and supplies, thereby reducing the need for incremental working capital to support growth. Due to the seasonality of our business, we typically generate a greater proportion of our cash flow from operations during the fourth quarter.

Our future cash requirements will depend on many factors, including the pace of expansion, conditions in the retail property development market, construction costs, the nature of the specific sites selected for new restaurants, and the nature of the specific leases and associated tenant improvement allowances available, if any, as negotiated with landlords. We have made significant investments in our training and development teams to support new restaurants openings. We believe these investments are necessary to support the successful opening of our new restaurants. If we modify our growth plans, the personnel that comprise our training team could be deployed to operate existing restaurants.

To help manage future cash requirements, we intend to prioritize capital-efficient growth in 2026, significantly reducing discretionary capital expenditures. New-restaurant Company-owned development will focus on locations requiring $1.5 million or less, net of tenant improvement allowance, to open. We plan to convert up to an additional nine Company-owned Grill restaurants to Benihana or STK formats. These conversions are expected to require approximately $1.0 million in capital investment and are anticipated to be accretive to EBITDA.

Credit Agreement

Refer to Note 5 and Note 16 to our condensed consolidated financial statements set forth in Item 1 of this Quarterly Report on Form 10-Q for further information regarding our long-term debt arrangements and commitments and contingencies.

Capital Expenditures and Lease Arrangements

When we open new Company-owned restaurants, our capital expenditures for construction increase. For owned STK restaurants, where we build from a shell state, we have typically targeted a restaurant size of 8,000 square feet with a net cash investment of approximately $450 to $500 per square foot, made up of a gross cash investment of $600 to $650 per square foot and $150 per square foot in landlord contributions. STK restaurants opened in 2024 and 2025 had a gross cost per square foot of $689 and $119 per square foot in landlord contributions with an average size of 11,922 square feet. For owned Benihana restaurants, where we build from a shell state, we have typically targeted a restaurant size of 6,000 to 7,000 square feet. In situations where we add functional space and build a restaurant with a mezzanine, covered patio, or rooftop, costs per square foot will increase. Typical cash pre-opening costs are $0.6 million to $0.8 million, excluding the impact of cash and non-cash pre-opening rent. In addition, some of our existing restaurants will require capital improvements to either maintain or improve the facilities. We may add seating or provide enclosures for outdoor space in the next twelve months for some of our locations, when we believe that will increase revenues for those locations.

Our hospitality F&B services projects typically require limited capital investment from us. Capital expenditures for these projects are primarily funded by cash flows from operations and equipment financing, depending upon the timing of these expenditures and cash availability.

We typically seek to lease our restaurant locations for periods of 10 to 20 years under operating lease arrangements, with a limited number of renewal options. Our rent structure varies, but our leases generally provide for the payment of both minimum and contingent rent based on sales, as well as other expenses related to the leases such as our pro-rata share of common area maintenance, property tax and insurance expenses. Many of

our lease arrangements include the opportunity to secure tenant improvement allowances to partially offset the cost of developing and opening the related restaurants. Generally, landlords recover the cost of such allowances from increased minimum rents. However, there can be no assurance that such allowances will be available to us on each project that we select for development.

Cash Flows

The following table summarizes the statement of cash flows for the six periods ended June 28, 2026 and the six periods ended June 29, 2025 (in thousands):


		For the six periods ended June 28,			For the six periods ended June 29,
		2026			2025
Net cash provided by (used in):
Operating activities		$	32,965		$	11,333
Investing activities			(23,627)			(32,148)
Financing activities			(7,117)			(2,212)
Effect of exchange rate changes on cash			(26)			113
Net increase (decrease) in cash and cash equivalents		$	2,195		$	(22,914)

Operating Activities. Net cash provided by operating activities was $33.0 million for the six periods ended June 28, 2026, compared to $11.3 million for the six periods ended June 29, 2025. The increase was primarily attributable to increased net income and collections on credit card receivables, partially offset by the timing of payments of accrued expenses.

Investing Activities. Net cash used in investing activities for the six periods ended June 28, 2026, was $23.6 million, excluding tenant improvement allowances of $4.6 million, of which $15.4 million primarily related to the construction of new STK, Benihana and Kona Grill restaurants, $2.5 million related to remodels or major projects at existing restaurants and $4.7 million related to existing restaurants.

Net cash used in investing activities for the six periods ended June 29, 2025 was $32.1 million, of which $19.9 million consisted of capital expenditures primarily for the construction of three restaurants opened during the first half of 2025, as well as residual payments on the two restaurants that opened during the fourth quarter of 2024 and restaurants that were under development as of June 29, 2025, as well as capital expenditures for existing restaurants.

Financing Activities. Net cash used in financing activities for the six periods ended June 28, 2026 was $7.1 million, primarily comprised of $4.4 million of repayments under the Term Loan Facility and $2.0 million in the repayments net of borrowings on the Revolving Facility compared to net cash used in financing activities of $2.2 million for the six periods ended June 29, 2025.

Recent Accounting Pronouncements

See Note 1 to our condensed consolidated financial statements set forth in Item 1 of this Quarterly Report on Form 10-Q for a detailed description of recent accounting pronouncements. We do not expect the recent accounting pronouncements discussed in Note 1 to have a significant impact on our consolidated financial position or results of operations.

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