Your time today. You know, Manny, for investors that are new to your story, can you provide a high-level overview of The ONE Group Hospitality? Maybe just go over the main restaurant brands and the number of locations for each brand.
Sure, Anthony. And thank you for hosting us today. We're really happy to be here with you today and for the first time participate in your conference. Obviously, when I start talking about the ONE Group and what makes us, you know, who we are, we always start off with this concept of being a leader in vibe dining. I think that's where I always start the conversation. What I mean by that is we're a restaurant company, but in our framework of dining, we believe that dining that is differentiated is really the long-term winner in the dining category. If you think of vibe dining, we're thinking about, you know, environment, showmanship, music, really great food, great cocktail program. It's an elevated, you know, experiences in our restaurant.
It's experiential, entertaining dining. When you go to our properties, it feels different and it's like very memorable, and you wanna do it again. You'll think of that when you think of The ONE Group. You know, obviously, our long-term vision is to become a dominant player in vibe dining. The way that we're getting there is through executing great guest experiences every time in our restaurants. We want our guests to have great memories of coming to our property. You'll notice that we talk a lot about experience. We talk a lot about operations in the restaurants. We talk about marketing. We talk about culinary and beverage programs having to be highly differentiated. It's really important to us that everything starts with the guest experience.
We believe that those three pillars, operations, marketing, and culinary, are things that we do better than anybody in the restaurant space. Brands, we like iconic brands. We don't like just great brands. We like brands that have stood the test of time. That's why, you know, brands like Benihana, STK, and Kona Grill make a lot of sense in our portfolio, is that they've been around for a long time, and they have tremendous amount of consumer acceptance and consumer feeling good about our brands. It's not just brands, it's we've always underlined the word iconic. In terms of our footprint today, you know, we're about 160 restaurants. We're in 31 states in the U.S., and then we also have businesses in 11 countries.
Our two primary brands are Benihana and STK, the steakhouse, both the significant leaders from their categories. Obviously, STK is in the steakhouse category. Benihana is in the teppanyaki entertainment side of dining. We also have Kona Grill, which is our way of delivering vibe dining at a lower price point. We have that part of our business is our same commitment to having highly differentiated and experiential dining but at a lower price point. In the Kona Grill category, we think bars is really the significant difference and what creates that niche and vibe. You'll see that we spend a lot of time working on small plates and creating some really compelling cocktails and utilizing that as our springboard for vibe dining in the Kona Grill category.
Got you. Got it. If we were to take a step back and look at the Benihana acquisition, obviously an iconic brand, but the other than that being such a strong brand, what else attracted you to that brand when you acquired it almost two years ago? Maybe just talk about the synergies that you've achieved thus far and what additional synergies we should expect from the acquisition.
Yeah. I mean, that's a great question. You know, obviously, you know, we as a company always been very interested in terms of what brands really resonate with consumers in the vibe category. Like, these brands that consumers have a super special connection with that they see as, you know, really different in dining. It was very interesting that if I think about maybe the top five brands, you know, every time we went out and did the research and did consumer research on this, it was pretty clear that Benihana, STK, I think Fogo was another brand that gets mentioned a lot, and Nobu and maybe even Tao is kinda like in that really high-quality vibe dining category. We already had one, which was STK.
When the opportunity came to gain scale in vibe dining, it just made a lot of sense that one of the top brands in that vibe space would get together with us. It was really the combination of one, two of the top five brands that consumers really thought of when it came to highly differentiated, highly different, you know, experiential brands. We took that as an opportunity for us to bring both brands together. The other thing that was very appealing to us is we liked, you know, the fact that Benihana uses a lot of beef.
We use a lot of beef, so it seemed to be like a lot of really natural synergies between what the both brands you know really focused on from supply chain. There's a lot of synergies, not to mention then the corporate opportunities of bringing two companies under the same you know G&A structure and the same backbone operation. There was a lot of very compelling synergies and opportunities that we saw bringing those brands together.
You know, I think to a little bit of a lesser degree, we also, because we're an operations-intensive company, we like operations, and we thought that, you know, Benihana was a very nice fit for us in terms of, you know what that would do for us in terms of scaling up our operation and really being able to bring in value to the business. Because if they're operations intensive and we're a really good operations company, I think that there was just a lot of sense that, you know, we could see bringing them together. We liked that. You know, the people and the Benihana brand were also very good.
As we've gotten to know the team and we got to benchmark and work with the team even before we even acquired them, it was pretty clear to us they had a really strong bench and a really high quality level of operators in the brand. We liked that. Last but not least, we got it at a multiple that just made a lot of sense to us. I always tell people that, you know, we paid $365 million for an iconic brand with 60-year history.
Even if you look at our economics today, I always remind everybody that in 2023, which was like the last year before we acquired Benihana, our EBITDA as a company that we report outside was about $33 million-ish. As you look at 2025 coming out of the year, our EBITDA is around $92-$93 million. We were able to add $60 million into our portfolio with an acquisition that was $365 million. I think just from a value creation and the multiple that we get out of that transaction, it just was a tremendous opportunity for us to create shareholder value by bringing them in.
as I mentioned earlier, really adding on to our strategic footprint and really to our strategy of being the ultimate big leaders in fine dining. Lots of really good reasons why, you know, that acquisition made a lot of sense and why we were so excited from a shareholder value creation to bring mine.
Got you. Sticking to the Benihana theme, you made progress on, as you talked on your conference call last week. You reduced your table turns at Benihana. Your goal, though, is 90 minutes. Kind of talk about, like when should we expect for you guys to get to that 90-minute timeframe and what implications would that have on your results if you're able to get to those 90-minute table turns?
Yeah. I mean, this is both an operations answer and a little bit of a math question. If you really think about our Benihana footprints, we typically have 20 teppanyaki tables in our restaurants. They each sit about 8 people, so we have a capacity at peak of about 160 people sitting around our tables. You know, one of the opportunities that we saw when we acquired the brand is that particularly in December, and I'm not gonna narrow it down to just one month, because I think that's an easy month to really conceptualize, is that you know, during that timeframe, you know, say, you know, between 6:00 P.M. and 9:00 P.M., which is prime dining time in the holiday season, there's like 20 days that are super busy, right?
You know, the way that, you know, we saw the brand utilizing their tables with a 120-minute sit time means that they were turning the tables only, you know, 1.5x during that timeframe. You just do the quick math on that and you know, all of our research shows that customers have a stress level of about 75-90 minutes in terms of how long they like to be at dining. Certainly there's a little bit of a gap between the service times and the table turn times at those peak periods versus what we think the consumer really wants.
This is more about really driving, you know, the guest experience by bringing down a little bit of that time because the guests, you know, obviously like the 45-50-minute chef experience, but then they're sitting around the table just for too long without really the chef at the table. You know, we did the math on 90 minutes versus, you know, 120 minutes on the sitting at the table. If you just do that pure math, I think that it's easy to see that, you know, if you do the two turns versus a turn and a half, you're able to bring in about 80 more customers, you know, in the peak time during those 20 days of December alone.
If you start doing just the pure math on what that looks like is if we were able to capture all 80 transactions at $60 a person, that's a lot of money, right? So there's a really compelling, you know, reason economically as to why the 90-minute turn times not only makes sense from a customer experience, but just from the pure economics of the business model. Now roll the tape forward to 2025, we did have a stated goal of going to the 90 minutes. As we went through the transformation of the table turns, you always have to be careful that you're balancing the guest experience with what your operational capabilities are.
We decided that for 2025 being in the middle, meaning around 105 minutes probably was our sweet spot because we still need to do some more changes to, you know, how we bring our cocktails to the table and some other small operational, you know, details that we still haven't totally figured out yet. I think there's gonna be another bite of that apple, whereas we go forward, particularly in the really heavy volume holidays, we're gonna continue to make tweaks to our operating model to try to bring it all the way down to the 90-minute timeframe. We made progress.
We went from 120 - 105 in 2025, and I think as we continue to gain experience with the brand, I think we'll figure out all the pieces then that will really allow us to bring it down to 90 minutes turn times during the holiday season.
That's very helpful. Switching gears to STK, you had a positive comp for the brand in Q4, which was the first positive comp in a while. What were the reasons for the previous negative comp sales, and what's driving the recent improvements? Maybe you can touch on pricing and traffic trends, along with your barbell strategy for STK.
I can take the current trends on that. Really the purpose of the barbell strategy is to offer multiple dining opportunities for our guests. Through the barbell, we can offer, you know, both the value side through our happy hour, the three-six-nine offerings, the fixed price dinners, to kind of get that value-driven guest. Meanwhile still maintaining the upper-end guests with our Wagyu offering, and our higher-end wines and price points, so that we're making sure that we're really creating an environment where we are capturing and sustaining the traffic that we have, really with a long-term goal in mind.
Got it.
Yeah. I would just because I have a lot of history with the brand. I would also, you know, having been through, you know, the COVID period with the brand as one of the. You know, if I look at the history, it's, you know, we had COVID in 2020 and then 2021, 2022 and even 2023. We just picked up disproportionate market share to everybody in the space. If you look at our 2023 AOV versus pre-COVID in 2019, we made significant progress in same-store sales during that time period. Obviously, a natural reaction from everybody was, well, you know, they picked up during COVID, what they call the honeymoon of COVID. We picked up a significant amount of sales in that condensed time period.
The majority of that pickup was actually volume and traffic. If you look at our, you know, call it 70% kind of, you know, pickup in that time period in AOV, 60% of that had to do with traffic. Everybody's always going, "Okay, that was a significant impact." Then we did that faster, at a faster rate than the majority of the restaurant industry. I think 2024 and 2025 was a little bit of giving back some of that. Then if I look at 2024/2025 compared with pre/post, we're still probably 60% higher in AOV and probably 40+ in traffic. If I look at us relative to the industry, we just benefited from a much faster recovery and actually market share gain during that time period.
Yeah, we've given some of that up, but now we're back into positive sales, positive traffic in some instances in the brand. Actually, I now can say that it's really not a honeymoon, right? Because we now are back on track with positive same-store sales and positive traffic. We're now in a really good position where we could say, "Hey, it is not a honeymoon." That real expansion in AOV was real. We did it differently than a lot of our competitors because a lot of our competitors were slower and steady over time. We just were way faster.
Again, that speaks well to our operational execution and how you know how we view ourselves as a high core you know high you know really high-quality operations company where we're able to pick up a huge amount of volume in a short amount of time. Now I feel really good that we're back on track. I think Nicole mentioned really well that we have the barbell strategy and a lot of you know marketing and product initiatives. I think we're winners over the whole horizon of time, and now we're back on track to be more in line with what you're seeing with a progressive restaurant you know steady growth over time.
Got it. You know, looking at the grill concept locations, you know, which are Kona Grill and RA Sushi, you have closed some underperforming locations and also are in the process of converting some of those to either STK or Benihana. Can you provide an update on this initiative?
Yeah. I mean, right now, as we stand right now, we have five restaurants. Five restaurants that are temporarily closed, and this is actually on our investor deck, so you can go out there and kind of see what we're actually doing from a unit level. We have five units that we're ready to convert right now. In 2025, and actually also in 2024, there were some other locations that just really didn't meet our real estate prototype today because we, you know, over time, real estate models change and so we were looking at, you know, footprint of space and location and rent structure and everything else. There was just a, you know, a bunch of grills that just didn't really make sense to keep around in our portfolio.
We took the opportunity to basically clean up all the portfolio. We're now left with around, you know, 30 grills in our portfolio, five of them temporarily closed. That's actually 35, but five of them are gonna get converted out. Our plan now is just to let natural, you know, lease terms as they expire, not gonna go through back to the regular cycle with those. We ended up basically with a very healthy portfolio of grills that, you know, are doing well on sales and doing well on profitability. I think we kind of, you know, had to trim the tree a little bit. I always remind people that, you know, Kona Grill has been around and RA for a long time. They've been, you know, they're 20-year-old plus brands.
They've been around for a long time. A lot of the real estate decisions that were made initially in that brand really placed those brands in the middle of shopping malls and also by movie theaters. Frankly, since COVID, it's very clear that both those, you know, real estate criteria are no longer really the best decision criteria for restaurants. Some of the real estate had gotten a little bit away from what we really wanna do with the Grill. We kind of cleaned up the real estate portfolio. I think the brand's doing really well. I think all our consumer research now on how consumers look at the brand is very positive.
We got the real estate where we wanna be, and now, it's just really moving it forward, and I think that really helps our EBITDA going forward, as well as our operator focus. Because our operators now are really focused on the healthy restaurants that can really make a difference on our company trajectory. I feel really good that it's been a really good strategy, both from a rationalization on the real estate side, as well as really creating a much more viable long-term platform for the Grill concept.
Mm-hmm. Can you also talk about your loyalty program and give us some information on the number of members you have? If you have any data on frequency of members versus non-members, the average ticket, anything like that, if you can share.
Our history with loyalty. We had a loyalty program called Carnivore with Kona Grill. We've been in the loyalty business for a while, but it was a single brand platform. Actually, going back to why we really liked the Benihana acquisitions, we always thought that companies that have multiple brands under the loyalty umbrella really maximize the benefit and scale of having you know, you can go to Italian, you can go to Benihana, you can go to STK. You can go to different concepts and still get your points 'cause a lot of the hook in the program is really the points and getting dollars return on that.
We launched in April, late April, early May of last year, our Friends with Benefits, and we brought everybody under the loyalty platform. We had about 6 million members in our email databases 'cause we had several emails that we now use. You know, in those programs you would get things like birthday certificates and some other offers. We put them all under the Friends with Benefits library. Those guests, we've since we've launched the new programs, over 65% of those legacy guests have engaged with the new program. We've had a really good transference of engagement from email programs into the loyalty program. Since we've launched, you know, Friends with Benefits, we've been signing over 8,000 new organic members into the program a week. That's been a really sustained growth rate.
What we've noticed on people who are in Friends with Benefits programs is they tend to spend more money on check than our other guests do. We've seen kind of an improvement on check all around maybe $10 per visit to our restaurants. That's a significant nice bump up on check. Then over time, I think we'll obviously have a lot better metrics to share with everybody about frequency, 'cause we wanna take it through about a year cycle, so we can really understand on how it impacted, you know, people's movements and as well as how our thesis around having multiple brands really work. Just for the record, I mentioned Italian. We do not have Italian on our portfolio, except in some of our hotel properties.
It was just for—you know, illustration purposes that I spoke about Italian. Anyhow, that's kinda how loyalty's been going. I think the initial results from it has been very, very positive.
As we think about the guidance provided for 1Q and for the full year, you're off to a good start. You had positive same-store sales, as you mentioned, so far quarter-to-date. And you expect those to accelerate during the course of the year. What's driving the improvement? If you could just go over that. And then what gives you the confidence that you'll be able to accelerate those same-store sales as the year progresses?
Sure.
Sure. I can take it. Yep, I got this one. You know, I think, Anthony, a lot of it has to do with a lot of things we've already spoken about. You know, the barbell strategy is something that's really good in terms of like sustaining traffic through, you know, times it might be a little bit slower as we experience through 2025. Also the marketing initiatives, the loyalty program that Manny just spoke about. You know, these are all things that are gonna continue to engage and really enhance our guest experience. We expect that to continue to ramp throughout the year. That's kind of focusing on Q1 and where we are now.
As we go further into the year, I just wanna remind you that in Q3 of last year, we did have a pricing action mismatch with Benihana, where we went a couple of months where we did not have pricing in the menus that was in there the prior year. The plan for this year is, of course, to align that. We kind of have a little bit of a lower hurdle in Q3 that we'll certainly get the benefit of this year from that as well. There's really a number of factors that are gonna continue to keep our same-store sales strong and really good momentum throughout the year.
Gotcha. Okay. You know, in terms of your profitability outlook, you also expect that to improve as well. It sounds like the combination of the same-store sales improvements as well as a better handle on costs. Is there anything else to add to that as far as what's driving the profitability improvements that you foresee?
Yeah. I mean, it's sales is always the top line, and that's really one of the bigger drivers. New Year's Eve that we spoke about earlier in this call is another factor. From a cost standpoint, you know, we really didn't talk about it much today yet, but our beef pricing is in a really good place. We're locked in through September of 2026, and we're gonna really continue to see the benefit of that. Beef is such a big portion of our COGS. Between that and then, you know, we're anticipating some more labor improvement just as we're really getting better and more focused on scheduling management and really making sure that we have the right staffing for the level of sales that we have.
There's a number of ongoing initiatives that we have in place to make sure that we're gonna continue to grow our margins.
Gotcha. I think on your last call, you also mentioned that when it comes to frozen seafood, I think you should be in better shape as it relates to the cost there as well, right?
Correct. That's another item under the COGS bucket as well.
Gotcha. Got it. Okay. We only have a few minutes here left, so I'll try to squeeze in a couple of more questions if possible here. You know, as we look at the unit growth opportunities, how should we think about the white space opportunity and what are you doing differently this year in terms of deploying your own capital?
I think the biggest change in focus this year is really gonna be on the asset-light opportunities. We're really targeting restaurant spaces that were previously a restaurant space as opposed to a new build. That really gives us a lot of cost-saving opportunities. We're also focusing on franchising and different licensing opportunities as well. We did sign the 10-restaurant deal in the Bay Area for Benihana, which is the biggest franchising agreement that we've had in our company's history. Plus, we have a two-restaurant deal or commitment in the Keys, in the Florida Keys as well. Really, those are opportunities to provide new restaurant growth with minimal capital investment.
Mm-hmm. On your last call, you also talked about expanding more into off-premises, which is something that you hadn't talked about too much previously. Maybe if you could just quickly touch base about these initiatives and how would the margins compare to your core business that's in the restaurants.
Yeah. I think in our last earnings call, we talked about how our off-premises business was a low double single digits, call it around 10% of our total sales, if you will. I think our focus this year on that business is really on curbside. I think relative to competitors, you know, I think we have a really good opportunity here to gain market share on that business. I think, and curbside is also an opportunity for us to deliver, you know, our products at a reasonable value to guests. Initiatives that we've done, like we've really upped our product lines. At Benihana, we rolled out our fried rice burritos.
If you haven't tried those, you actually should try because they're a really good product, and we've seen a significant amount of guest engagement with that product. We're really going hard on curbside, both by product innovation as well as marketing for that. From a margin profile, curbside is pretty good because you don't have to pay third-party fees when you have that business model, so it's a very high profit incremental margin when you're doing curbside. We're motivated to do that. Interestingly enough, we've also built a significant takeout business with STK, particularly with our side dishes and some of our handheld products like steak sandwiches and burgers.
We're excited about that, and we've built a team, we've built capabilities, and we have a fantastic team in place now to really drive that. Then it's also an execution business. You gotta make sure that people, you know, we have the food ready to go and that you're delighting and satisfying guests with that experience. Stay tuned, and I think that's gonna be a whole new level of business platform that we can build off for the next, you know, two years to five years.
Mm-hmm. With the more capital efficient growth that you're looking to do, you are looking to conserve cash and improve the balance sheet, it sounds like. You know, in terms of just looking at your debt quickly, you know, I know it's not due until 2029, but how should we think about your ability to refinance that debt, and what that could mean for interest expense?
Yeah, I mean, very quickly, balanced growth with free cash flow utilization to pay down the facility. A really balanced approach to both growth and balance sheet management. I think that we'll have free cash flow in 2026 when you look at our guidance for the year, so we feel really good about that. Our goal here is to take advantage of interest rates and interest rate markets as the markets get better.
Mm-hmm. Is there anything else that we missed that you feel is important to highlight to investors before we wrap it up here?
Just come visit us, have burritos at Benihana. Come in, have a chef experience. We appreciate everyone taking the time today and following our story. We appreciate being invited to the conference this year.
Sounds great. Well, thank you again, Manny and Nicole, for sharing the STK's story, and thank you also everyone listening in to the presentation. With that, we'll wrap it up, and enjoy the rest of your day. Thank you very much.
Thank you, Anthony.
Thank you, guys.
Take care. Thank you.