ONE Group Hospitality, Inc. Annual Report - How They Did This Year

Let's see how ONE Group Hospitality, Inc. (the company behind STK, Benihana, and Kona Grill) performed last year. Their fiscal year ended on December 28, 2025. We'll cover what they do, what's new, and what investors should watch.

What Does ONE Group Hospitality Do?

ONE Group Hospitality owns, operates, and licenses several well-known restaurant brands. It is an international company. They focus on upscale and polished casual dining. These restaurants offer a high-energy atmosphere. Their business model includes company-owned, managed, and licensed locations. This creates diverse ways to earn money.

Their main restaurant brands include:

• STK: STK is a modern steakhouse. It offers premium steaks, fresh seafood, and signature cocktails. Guests enjoy a lively Vibe Dining® atmosphere.
• Benihana: Benihana is famous for its interactive teppanyaki dining. Chefs cook right in front of guests. It also serves sushi and has a full bar.
• Kona Grill: Kona Grill is a relaxed, bar-centric grill. It serves American favorites, award-winning sushi, and specialty cocktails.
• RA Sushi: RA Sushi is a Japanese concept. It offers creative sushi rolls and inventive drinks. Guests enjoy a fun, upbeat dining experience.

They operate widely across the U.S. States include Texas, Pennsylvania, New York, Minnesota, Massachusetts, Florida, Tennessee, and Illinois. They also have a growing international presence.

What Happened This Past Year (Fiscal Year 2025)?

Here's what we know from their latest report:

• A Big Change in Past Reporting: Investors should note a critical point. The company corrected errors in its past financial reports. These errors were for 2024 and possibly earlier years. They call this a "revision of prior period error correction adjustment." This means investors should carefully check these errors. Were they accounting mistakes or internal control problems? This helps assess how reliable past financial data is. It can reduce investor confidence. It might also lead to changing past reported results.
• Business Growth: Beyond restaurant sales, the company grows its income. It uses third-party delivery services like DoorDash and Uber Eats. This reaches more customers. They also have management and licensing deals with hotels and other partners. This growth strategy needs less capital. It lets them earn fees and expand their brand. They avoid big direct investments. This diversifies their income beyond just restaurant sales.
• Acquisition Activity: In May 2024, ONE Group Hospitality bought Safflower Holdings Corp. This was a significant deal. This purchase helped them expand their brands. It brought in Benihana and RA Sushi restaurants. These are now core parts of their offerings. The deal included franchised and company-operated restaurants. Franchised units bring in regular royalty and fee income. Company-operated units add directly to sales and profit. This move greatly increased their market reach and brand variety.
• Employee Incentives: The company still uses various stock-based pay plans. These include stock options, restricted stock units (RSUs), and performance-based stock units (PSUs). They give these incentives to employees and executives, including the CEO and directors. The rewards become theirs over time. This often depends on continued service or reaching certain goals. This plan aims to align employee and management interests with shareholders. It encourages creating long-long-term value.
• Gift Cards & Loyalty: They track money from gift cards and advanced party deposits. They count this money as income when the gift card is used or the event happens. It's first recorded as deferred revenue (money received but not yet earned). The company also runs a "Friends and Benefits Rewards Program." This loyalty program aims to boost customer engagement. It encourages repeat visits. It also gathers customer data for targeted marketing. This builds future sales potential.

Financial Health Snapshot (What We Know So Far)

• Market Value: As of their last second fiscal quarter, the company's public shares were worth about $92.65 million. This is called the "public float." This amount shows the shares available for public trading. It indicates how easily shares can be bought or sold. It also shows investor interest.
• Shares Outstanding: As of February 28, 2026, ONE Group Hospitality had about 31.25 million shares of common stock. This is the total number of shares held by all owners. This includes company insiders and the public.
• Debt Structure: The company uses different types of debt to fund its operations and growth. This includes term loans (long-term loans with set payments). It also has a revolving credit facility (flexible, short-term cash for daily needs). Equipment security notes are also used, backed by specific assets. They also have a credit agreement with Goldman Sachs Bank USA. This shows a strong banking relationship. Using debt lets the company use its assets more effectively. It can also be cheaper than raising money by selling more shares.
• Preferred Stock: Besides common stock, the company has issued Series A Preferred Stock. This is a special type of stock. It usually has advantages over common stock. For example, it gets paid dividends first. It also gets paid first if the company closes. Preferred stock is another way to raise money. Its terms, like dividend rate or conversion to common stock, can affect common shareholders. If converted, it means more shares issued, reducing your ownership percentage.

What Could Go Wrong? (Risk Factors)

The company identified several key risks. These could significantly affect its business, finances, and results. Investors should consider them carefully.

• Economic Swings: The restaurant industry is very sensitive to the economy. An economic downturn, rising prices, or less consumer spending could hurt them. This might mean fewer customers. It could also mean smaller bills and lower sales across all their brands.
• Rising Costs: Restaurant profits are directly affected by costs. Big increases in food costs (like beef or seafood) could hurt. Higher labor costs (wages, staff competition) and utility bills also matter. If they can't raise prices or become more efficient, profit margins will shrink.
• Competition: The restaurant industry is very competitive. Many established and new restaurants compete for customers' money. ONE Group Hospitality competes with other upscale and casual restaurants. They also face fast-casual places and growing delivery-only services. If they don't innovate or keep their brands relevant, they could lose market share. Not delivering great customer experiences could also hurt.
• Opening/Closing Restaurants: The company's growth depends on opening new restaurants well. Existing locations must also perform consistently. Building new restaurants costs a lot of money and has risks. Poorly performing or closed locations can lead to write-offs. They also incur lease break fees. This can drag down overall profit.
• Government Rules: Changes in government rules can greatly affect restaurant operations. This includes new minimum wage laws, health codes, and liquor licenses. Environmental rules and labor laws (like overtime) also apply. Following these rules can raise costs. It can also limit how they operate.
• Legal Issues: The company faces various legal risks. These include potential lawsuits over labor, food safety, or intellectual property. Contract disputes are also a risk. These legal issues can mean big fines and legal fees. They can also harm the company's reputation. This distracts management and uses up resources.
• Tax Audits: Federal authorities can examine the company's tax filings for 2021-2024. State and local authorities can check 2020-2023. If auditors find errors or reject deductions, the company could owe more taxes. This means penalties and interest. This would hurt its financial results and cash flow.

What's Next? (Future Outlook)

The company highlights its "growth strategy." This strategy could make actual results differ from expectations. This suggests they plan to keep expanding. In the restaurant industry, this usually means:

• New Unit Development: Opening more company-owned or franchised restaurants. This includes existing or new markets, both in the U.S. and abroad.
• Brand Enhancement: Constantly improving menus and adopting new technology. This includes better online ordering and reservation systems. Loyalty programs and marketing also keep brands appealing and draw customers.
• Strategic Acquisitions: Buying more restaurant brands or concepts that fit well. This expands their offerings and market reach. It would be similar to the Safflower Holdings Corp. deal.

Successfully carrying out these growth plans is crucial. It requires smart use of money and excellent operations. They must also adapt to changing customer tastes and market trends.

Overall, ONE Group Hospitality is a dynamic, international restaurant company. It has many distinct brands. Investors should note the recent correction of past financial errors. However, the company has diverse income streams. These include third-party delivery and management deals. Strategic acquisitions also show a proactive growth approach in a competitive industry.