10q10k10q10k.net

What changed in ONE Group Hospitality, Inc.'s 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of ONE Group Hospitality, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+240 added−238 removedSource: 10-K (2024-03-14) vs 10-K (2023-03-09)

Top changes in ONE Group Hospitality, Inc.'s 2023 10-K

240 paragraphs added · 238 removed · 192 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

33 edited+5 added−4 removed28 unchanged
Biggest changeBrands and Locations The table below reflects our venues by restaurant brand and geographic location: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Venues ​ STK (1) Kona Grill ONE Hospitality (2) Total Domestic Owned 13 25 2 40 Managed 2 — 1 3 Licensed 1 — 3 4 Total domestic 16 25 6 47 International Owned — — — — Managed 5 — 7 12 Licensed 4 — — 4 Total international 9 — 7 16 Total venues 25 25 13 63 (1) Locations with an STK and STK Rooftop are considered one venue location.
Biggest changeIn March 2024, we opened the following: ● Owned STK restaurant in Washington DC There is currently one Company-owned STK restaurant, one Company-owned Kona Grill restaurant, and one Company-owned Salt Water Social restaurant under construction in the following cities: ● Owned STK restaurant in Aventura, Florida ● Owned Kona Grill restaurant Tigard, Oregon ● Owned Salt Water Social restaurant in Denver, Colorado ​ 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. ​ Brands and Locations The table below reflects our venues by restaurant brand and geographic location: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Venues ​ STK (1) Kona Grill ONE Hospitality (2) Total Domestic Owned 17 ​ 27 ​ 2 46 Managed 2 ​ — ​ 1 3 Licensed 1 ​ — ​ — 1 Total domestic 20 ​ 27 ​ 3 50 International ​ ​ Owned — ​ — ​ 1 1 Managed 4 ​ — ​ 4 8 Licensed 4 ​ — ​ — 4 Total international 8 — 5 13 Total venues 28 27 8 63 (1) Locations with an STK and STK Rooftop are considered one venue location.
Our fee-based hospitality food and beverage solutions include developing, managing and operating restaurants, bars, rooftops, pools, banquet and catering services, private dining rooms, in-room dining services and mini bars on a contract basis. Currently, we operate five venues pursuant to F&B hospitality management agreements with hotels and casinos in the United States and in Europe.
Our fee-based hospitality food and beverage solutions include developing, managing and operating restaurants, bars, rooftops, pools, banquet and catering services, private dining rooms, in-room dining services and mini bars on a contract basis. Currently, we operate three venues pursuant to F&B hospitality management agreements with hotels and casinos in the United States and in Europe.
We also make available on our website and in print to any stockholder who requests it, our Audit, Compensation, and Nominating and Corporate Governance Committee charters, as well as the Code of Conduct that applies to all directors, officers and associates of the Company.
We also make available on our website and in print to any stockholder who requests it, our Audit, Compensation, and Nominating and Corporate Governance Committee charters, as well as the Code of Conduct that applies to all directors, officers and employees of the Company.
To the extent that we operate lounges and similar venues in hotels and resorts, we are subject to our host venues being able to compete effectively in attracting customers who would frequent our establishments. Seasonality Our business is subject to fluctuations due to seasonality and adverse weather.
To the extent that we operate lounges and similar venues in hotels and resorts, we are subject to our host venues being able to compete effectively in attracting customers to frequent our establishments. Seasonality Our business is subject to fluctuations due to seasonality and adverse weather.
We typically target F&B hospitality service opportunities where we believe we can generate at least $500,000 of annual pre-tax income. 4 Table of Contents We expect our F&B hospitality services business to be an important driver of our growth and profitability, enabling us to generate leads to develop managed STK restaurants and management fee income with minimal capital expenditures.
We typically target F&B hospitality service opportunities where we believe we can generate at least $500,000 of annual pre-tax income. We expect our F&B hospitality services business to be an important driver of our growth and profitability, enabling us to generate leads to develop managed STK restaurants and management fee income with minimal capital expenditures.
We periodically review supplier consistency and satisfaction with our location chefs and continually research and evaluate products and supplies to ensure the meat, seafood and other menu ingredients that we purchase comply with our high-quality specifications.
We periodically review supplier consistency and satisfaction with our restaurant chefs and continually research and evaluate products and supplies to ensure the meat, seafood and other menu ingredients that we purchase comply with our high-quality specifications.
We also consider factors such as traffic patterns, proximity to high-end shopping areas and office buildings, hotels and convention centers, 3 Table of Contents area restaurant competition, accessibility and visibility. We have identified over 75 additional major metropolitan areas across the globe where we could grow our STK brand to 200 restaurants over the foreseeable future.
We also consider factors such as traffic patterns, proximity to high-end shopping areas and office buildings, hotels and convention centers, area restaurant competition, accessibility and visibility. We have identified over 75 additional major metropolitan areas across the globe where we could grow our STK brand to 200 restaurants over the foreseeable future.
The diverse menu is complemented by a full-service bar offering a broad assortment of wines, craft cocktails, and beers. We believe that the Kona Grill brand is complementary to our STK brand and enables us to capture market share in the Vibe Dining segment. We own and operate 25 Kona Grill restaurants within 17 states in the United States.
The diverse menu is complemented by a full-service bar offering a broad assortment of wines, craft cocktails, and beers. We believe that the Kona Grill brand is complementary to our STK brand and enables us to capture market share in the Vibe Dining segment. We own and operate 27 Kona Grill restaurants within 18 states in the United States.
Item 1. Business Description of the Business We are a global restaurant company that develops, owns and operates, manages and licenses upscale and polished casual, high-energy restaurants and lounges and provides turn-key food and beverage (“F&B”) services and consulting service for hospitality venues including hotels, casinos and other high-end locations.
Item 1. Business Description of the Business We are an international restaurant company that develops, owns and operates, manages and licenses upscale and polished casual, high-energy restaurants and lounges and provides turn-key food and beverage (“F&B”) services and consulting service for hospitality venues including hotels, casinos and other high-end locations.
We experience competition from a variety of sources, including upscale steakhouse chains such as Ruth Chris, Del Frisco’s, Fleming’s, Mastro’s and The Capital Grille, local upscale 5 Table of Contents steakhouses and polished casual chains, such as The Cheesecake Factory, Bonefish and BJ’s.
We experience competition from a variety of sources, including upscale steakhouse chains such as Ruth Chris, Del Frisco’s, Fleming’s, Mastro’s and The Capital Grille, local upscale steakhouses and polished casual chains, such as The Cheesecake Factory, Bonefish and BJ’s.
On a company-wide basis, no supplier of food accounts for more than 35% of our total food and beverage purchases and no brand of alcohol accounts for more than 25% of our alcohol purchases.
On a company-wide basis, no supplier of food accounts for more than 30% of our total food and beverage purchases and no brand of alcohol accounts for more than 25% of our alcohol purchases.
We believe we have strong relationships with national and regional foodservice distributors who can continue to supply us with our products on a consistent basis. Products are shipped directly to the restaurants from our suppliers. Our corporate beverage program establishes guidelines for ordering beverage products at our properties.
We believe we have strong relationships with national and regional foodservice 5 Table of Contents distributors who can continue to supply us with our products on a consistent basis. Products are shipped directly to the restaurants from our suppliers. Our corporate beverage program establishes guidelines for ordering beverage products at our properties.
Our menu provides a variety of portion sizes and signature options to appeal to a broad customer demographic. We operate thirteen owned, seven managed and five licensed STK restaurants in North America, Europe and the Middle East. Our STK restaurants average approximately 10,000 square feet, and we typically target locations that range in size from 8,000 to 10,000 square feet.
Our menu provides a variety of portion sizes and signature options to appeal to a broad customer demographic. We operate seventeen owned, six managed and five licensed STK restaurants in North America, Europe and the Middle East. Our STK restaurants average 10,000 square feet, and we typically target locations that range in size from 8,000 to 10,000 square feet.
There is also competition from other Vibe Dining restaurants such as Nobu, Lavo and Tao and other high-end hospitality services companies such as the Gerber Group, Lettuce Entertain You and ESquared Hospitality.
There is also competition from other Vibe Dining restaurants such as Nobu, Catch, Lavo, Zuma and Tao and other high-end hospitality services companies such as the Gerber Group and Lettuce Entertain You.
We also have an equity incentive compensation plan to provide certain management-level or other key employees with stock-based awards. We have implemented programs to attract and retain both restaurant managers and hourly employees.
We provide our employees with cash-based performance bonuses. We also have an equity incentive compensation plan to provide certain management-level or other key employees with stock-based awards. We have implemented programs to attract and retain both restaurant managers and hourly employees.
Our Kona Grill restaurants average approximately 7,000 to 8,000 square feet. In 2022, the average restaurant revenues were $5.3 million and average spend per transaction was $61. We believe we can grow the Kona Grill brand to 200 restaurants over the foreseeable future. We expect to open three to five Kona Grills annually.
Our Kona Grill restaurants average approximately 7,000 to 8,000 square feet. In 2023, the average restaurant revenues were $5.2 million and average spend per transaction was $63. We believe we can grow the Kona Grill brand to 200 restaurants over the foreseeable future. We expect to open three to five Kona Grills annually.
Human Capital Resources As of December 31, 2022, we employed 51 employees within our support center, 32 employees in multi-unit leadership and an aggregate of 262 full-time, salaried employees at our venues. We rely on hourly-wage employees for kitchen staff, servers, bussers, runners, polishers, hosts, bartenders, barbacks, reservationists, administrative support, and interns.
Human Capital Resources As of December 31, 2023, we employed 60 employees within our support center, 27 employees in multi-unit leadership and an aggregate of 257 full-time, salaried employees at our venues. We rely on hourly-wage employees for kitchen staff, servers, bussers, runners, polishers, hosts, bartenders, barbacks, reservationists, administrative support, and interns.
In 2022, the average domestic restaurant revenues and average domestic check per person for owned and managed STK restaurants that have been open at least 18 months at December 31, 2022 were $19.1 million and $131, respectively. We are focused on expanding our global STK footprint.
In 2023, the average domestic restaurant revenues and average domestic check per person for owned and managed STK restaurants that have been open at least 18 months at December 31, 2023 were $17.3 million and $130, respectively. We are focused on expanding our global STK footprint.
We currently own, operate, manage or license 63 venues including 25 STKs and 25 Kona Grills in major metropolitan cities in North America, Europe and the Middle East and 13 F&B venues in six hotels and casinos in the United States and Europe.
We currently own, operate, manage or license 63 venues including 28 STKs and 27 Kona Grills in major metropolitan cities in North America, Europe and the Middle East and 8 F&B venues in four hotels and casinos in the United States and Europe.
We provide beverage managers at each location with national guidelines for standardized products. Our concepts emphasize the bar as a driver of activity in the restaurants and in 2022, the sale of beverages accounted for approximately 24% of restaurant revenues.
We provide beverage managers at each restaurant with national guidelines for standardized products. Our concepts emphasize the bar as a key driver of activity in our restaurants. In 2023, the sale of beverages accounted for approximately 23% of restaurant revenues.
STK artfully blends the modern steakhouse and a chic lounge, offering a high-energy, fine dining experience in a social atmosphere with the quality and service of a traditional upscale steakhouse.
STK STK is a global steakhouse restaurant concept with locations in major metropolitan cities. STK artfully blends the modern steakhouse and a chic lounge, offering a high-energy, fine dining experience in a social atmosphere with the quality and service of a traditional upscale steakhouse.
We continue to receive inbound inquiries regarding new opportunities globally, and we continue to work with existing hospitality clients to identify and develop additional opportunities in their venues. We expect to enter into one to two new F&B hospitality agreements annually.
We continue to receive inbound inquiries regarding new opportunities globally, and we continue to work with existing hospitality clients to identify and develop additional opportunities in their venues. We expect to enter into one to two new F&B hospitality agreements annually. We exercised our option to renew the management agreement with ME London to manage STK.
We refer to our licensing and management strategy as our “capital light strategy” because it requires significantly less capital than expansion through owned restaurants only. Refer to Item 2 – Properties for additional details regarding the domestic and international locations in which we operate. STK STK is a global steakhouse restaurant concept with locations in major metropolitan cities.
We refer to our licensing and management strategy as our “capital light strategy” because it requires significantly less capital than expansion through 3 Table of Contents owned restaurants only. Refer to Item 2 – Properties for additional details regarding the domestic and international locations in which we operate.
The SEC maintains a website that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov . 6 Table of Contents We maintain a website at www.togrp.com, including an investor relations section at ir.togrp.com, on which we routinely post information, such as webcasts of quarterly earnings calls and other investor events in which we participate and any related material.
We maintain a website at www.togrp.com, including an investor relations section at ir.togrp.com, on which we routinely post information, such as webcasts of quarterly earnings calls and other investor events in which we participate and any related material.
Sourcing and Supply Chain We seek to ensure that consistently high-quality food and beverages are served at all of our venues through the coordination and cooperation of our purchasing and culinary teams.
In December 2023, our agreement with ANGEL at the Hotel Calimala in Florence, Italy terminated. In February 2024, we terminated our agreement with REEF Kitchens. Sourcing and Supply Chain We seek to ensure that consistently high-quality food and beverages are served at all of our venues through the coordination and cooperation of our purchasing and culinary teams.
Our human capital objectives include attracting, developing, rewarding, and retaining our existing and new employees. We offer our employees online training courses and on-the-job training. Restaurant management trainees undergo training in order to understand all aspects of our restaurant operations. We provide our employees with cash-based performance bonuses.
We have never experienced a work stoppage, and none of our employees are represented by a labor organization. Our human capital objectives include attracting, developing, rewarding, and retaining our existing and new employees. We offer our employees online training courses and on-the-job training. Restaurant management trainees undergo training in order to understand all aspects of our restaurant operations.
Our F&B hospitality clients operate global hospitality brands such as the W Hotel, ME Hotel, Hippodrome Casino, and Curio Collection by Hilton. ​ 2 Table of Contents We opened our first restaurant in January 2004 in New York, New York.
Our F&B hospitality clients operate global hospitality brands such as the W Hotel, ME Hotel, Hippodrome Casino, and Curio Collection by Hilton.
Heliot Steak House is an award-winning steakhouse and bar within the Hippodrome Casino in London that offers impressive views of the main casino gambling floor. ​ ● Hideout .
Bao Yum serves breakfast, lunch, dinner and dessert bao along with a variety of salads, soups, sandwiches and snacks. Bao Yum currently operates in London. ​ ● Heliot . Heliot Steak House is an award-winning steakhouse and bar within the Hippodrome Casino in London that offers impressive views of the main casino gambling floor. ​ ● Hideout .
The average headcount for employees in our domestic restaurants is 90. Combining full-time and part-time employees, we employ and manage directly approximately 3,700 persons and through ONE Hospitality we manage approximately 500 employees worldwide. We have never experienced a work stoppage, and none of our employees are represented by a labor organization.
The average headcount for employees in our domestic restaurants is 90. Combining full-time and part-time 6 Table of Contents employees, we employ and manage directly approximately 4,500 persons and through ONE Hospitality we manage approximately 500 employees for a total of approximately 5,000 employees worldwide.
We exercised our option to renew the management agreement with ME London to manage STK, Radio, Marconi and in-room dining. Effective January 1, 2023, ME London elected not to renew Radio, Marconi and in-room dining per the agreement. Therefore, we will continue to manage the STK restaurant at ME London.
Effective January 1, 2023, ME London elected not to renew Radio, Marconi and in-room dining per the agreement. Therefore, we only continue to manage the STK restaurant at ME London. In October 2023, we consolidated STK operations in London, United Kingdom to STK Strand and STK Stratford which resulted in the closure of our operations within the Westminster London Hotel.
Historically, our clients have provided the majority of the capital required for the development of the facilities we manage on their behalf. ​ ● ANGEL .
Historically, our clients have provided the majority of the capital required for the development of the facilities we manage on their behalf. ​ 4 Table of Contents ● Bao Yum . A fast-casual concept that offers a whimsical twist on classic bao.
Rivershore Bar & Grill celebrates the end of the Oregon Trail with a beautiful river view, American favorites and friendly, professional service in Oregon City, Oregon. ​ Our F&B hospitality contracts generate revenues for us through management fees, which are typically calculated as a percentage of the operation’s revenues, and we earn additional milestone and incentive fees based on the operation’s profitability.
Salt Water Social is a seafood concept which artfully blends the classic seafood restaurant and a chic lounge into a high-energy, fine dining experience. ​ Our F&B hospitality contracts generate revenues for us through management fees, which are typically calculated as a percentage of the operation’s revenues, and we earn additional milestone and incentive fees based on the operation’s profitability.
This includes the STK Rooftop in San Diego, CA, which is a licensed location. (2) Includes concepts under the Company’s F&B hospitality management agreements and other venue brands such as ANGEL, Bao Yum, Heliot, Hideout, Radio and Rivershore Bar & Grill.
(2) Includes concepts under the Company’s F&B hospitality management agreements and other venue brands such as Bao Yum, Heliot, Hideout, Radio and Rivershore Bar & Grill. ​ We expect to continue expanding our operations domestically and internationally primarily through a mix of owned, licensed and managed restaurants using a disciplined and targeted site selection process.
Removed
We intend to open eight to twelve new venues in 2023, including a Kona Grill restaurant in Columbus, OH which opened in January 2023. There are currently three Company-owned STK restaurants (Charlotte, NC, Boston, MA and Washington D.C.) and two Company-owned Kona Grill restaurants (Riverton, UT and Phoenix, AZ) under construction.
Added
For those restaurants and venues that are managed or licensed, we generate management fee revenue based on top-line revenues and incentive fee revenue based on a percentage of the location’s revenues and net profits. 2 Table of Contents We opened our first restaurant in January 2004 in New York, New York.
Removed
Effective January 1, 2022, our agreement with the Hippodrome Casino was amended and extended for five years whereby the Company changed from manager to consultant for the Heliot ­­­­Steak House and F&B Hospitality services for the casino. ​ We expect to continue expanding our operations domestically and internationally primarily through a mix of owned, licensed and managed restaurants using a disciplined and targeted site selection process.
Added
We opened the following eight new venues in 2023: ● Owned STK restaurant in Charlotte, North Carolina ● Owned STK restaurant in Boston, Massachusetts ● Owned STK restaurant in Salt Lake City, Utah ● Owned Kona Grill restaurant in Columbus, Ohio ● Owned Kona Grill restaurant in Riverton, Utah ● Owned Kona Grill restaurant in Phoenix, Arizona ● Two Bao Yum venues through a licensing agreement with Reef Kitchens ​ Recently the Company exited its licensing agreement with REEF Kitchens and has no venues operating pursuant to that agreement. ​ We intend to add six to eight new venues in 2024.
Removed
ANGEL Rooftop bar and Dining is a sophisticated Southern-Mediterranean restaurant with two indoor and outdoor bars, a floral garden patio, and a plunge pool located within the Hotel Calimala in Florence, Italy. ​ ● Bao Yum . A fast-casual concept that offers a whimsical twist on classic bao.
Added
This includes the STK Rooftop in San Diego, CA, which is a licensed location.
Removed
Bao Yum serves breakfast, lunch, dinner and dessert bao along with a variety of salads, soups, sandwiches and snacks. Bao Yum currently operates within the Westminster Curio Hotel in London and in Austin, Texas through a licensing agreement with Reef Kitchens. ​ ● Heliot .
Added
Rivershore Bar & Grill celebrates the end of the Oregon Trail with a beautiful river view, American favorites and friendly, professional service in Oregon City, Oregon. ​ ● Salt Water Social.
Added
The SEC maintains a website that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov .

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

64 edited+19 added−18 removed81 unchanged
Biggest changeWe may also need to evolve our concepts to compete with popular new restaurant or F&B hospitality services operation formats, concepts or trends that emerge from time to time, and we cannot provide any assurance that any changes we make to any of our concepts in response will be successful or not adversely affect our profitability.
Biggest changeOur inability to compete successfully with other restaurants, other F&B hospitality services operations and other segments of the industry may harm our ability to maintain acceptable levels of revenue growth, limit our development of new restaurants or concepts, or force us to close one or more of our restaurants or F&B hospitality services operations. 8 Table of Contents We may also need to evolve our concepts to compete with popular new restaurant or F&B hospitality services operation formats, concepts or trends that emerge from time to time, and we cannot provide any assurance that any changes we make to any of our concepts in response will be successful or not adversely affect our profitability.
The United States and other countries have experienced, or may experience in the future, outbreaks of viruses, such as coronavirus, norovirus, Avian Flu or “SARS,” and H1N1 or “swine flu,” or other diseases such as bovine spongiform encephalopathy, commonly known as “mad cow disease.” If a virus is transmitted by human contact, our employees or customers may become infected, or may choose, or be advised, to avoid gathering in public places, any of which may adversely affect the guest traffic at our restaurants and the ability to adequately staff our restaurants, receive deliveries on a timely basis or perform functions at the corporate level.
The United States and other countries have experienced, or may experience in the future, outbreaks of viruses, such as coronavirus, norovirus, Avian Flu or “SARS,” H1N1 or “swine flu,” or other diseases such as bovine spongiform encephalopathy, commonly known as “mad cow disease.” If a virus is transmitted by human contact, our employees or customers may become infected, or may choose, or be advised, to avoid gathering in public places, any of which may adversely affect the guest traffic at our restaurants and the ability to adequately staff our restaurants, receive deliveries on a timely basis or perform functions at the corporate level.
This could reduce the number of high-quality locations available that we would consider for our new operations or cause the quality of the sites in which the restaurants and food and beverage hospitality services operations are located to deteriorate. Any of these developments could have an adverse effect on our existing businesses or cause us to curtail new projects.
This could reduce the number of high-quality locations available that we would consider for new restaurants or cause the quality of the sites in which the restaurants and food and beverage hospitality services operations are located to deteriorate. Any of these developments could have an adverse effect on our existing businesses or cause us to curtail new projects.
If there were any shortages, interruptions or significant price fluctuations in beef or seafood or if our suppliers were unable to perform adequately or fail to distribute products or supplies to our restaurants, or terminate or refuse to renew any contract with us, this could cause a short-term increase of our costs or cause us to remove certain items from our menu, increase the price of certain offerings or temporarily close a location, which could adversely affect our business and results of operations.
If there were any shortages, interruptions or significant price fluctuations in beef or seafood or if our suppliers were unable to perform adequately or fail to distribute products or supplies to our restaurants, or terminate or refuse to renew any contract with us, this could cause a short-term increase in our costs or cause us to remove certain items from our menu, increase the price of certain offerings or temporarily close a location, which could adversely affect our business and results of operations.
However, since we do not have day-to-day control over all of these restaurants, we cannot give assurance that there will not be differences in product and service quality, operations, labor law enforcement, marketing or profitability or that there will be adherence to all of our guidelines and applicable laws.
However, since we do not have day-to-day control over these restaurants, we cannot give assurance that there will not be differences in product and service quality, operations, labor law enforcement, marketing or profitability or that there will be adherence to all of our guidelines and applicable laws.
Failure of licensed restaurants to operate effectively could adversely affect our cash flows from those operations or have a negative impact on our reputation and our business. The success of our licensed operations depends on our ability to establish and maintain good relationships with our licensees.
Failure of licensed restaurants to operate effectively could adversely affect our cash flows from those operations or have a negative impact on our reputation and our business. The success of our licensed restaurants depends on our ability to establish and maintain good relationships with our licensees.
New locations may not be profitable, and their sales performance may not follow historical or projected patterns. If we are forced to close any new operations, we will incur losses for certain buildout costs and pre-opening expenses incurred in connection with opening such operations. We face a variety of risks associated with doing business with licensees.
New locations may not be profitable, and their sales performance may not follow historical or projected patterns. If we are forced to close any new restaurants, we will incur losses for certain buildout costs and pre-opening expenses incurred in connection with opening such operations. We face a variety of risks associated with doing business with licensees.
A significant increase in the number of these claims or in the number of such claims that are successful could materially adversely affect our brand, financial condition or operating results. Like most employee practices liability insurance policies, our policy does not provide protection against hour and wage claims, and therefore litigation in the area could adversely impact our financial condition.
A significant increase in the number of these claims or in the number of such claims that are successful could materially adversely affect our brand, financial condition or operating results. Like most employee practices liability insurance policies, our policy does not provide protection against wage and hour claims, and therefore litigation in this area could adversely impact our financial condition.
In addition, a labor dispute involving some or all of our employees could harm our reputation, disrupt our operations and reduce our revenues and resolution of disputes may increase our costs. The loss of key personnel or difficulties recruiting and retaining qualified personnel could adversely affect our business and financial results.
In addition, a labor dispute involving some or all of our employees could harm our reputation, disrupt our operations and reduce our revenues and resolution of such disputes may increase our costs. The loss of key personnel or difficulties recruiting and retaining qualified personnel could adversely affect our business and financial results.
Regardless of whether any claims against us are valid or whether we are liable, claims may be expensive to defend and may divert time and money away from our operations. In addition, they may generate negative publicity, which could reduce customer traffic and sales.
Regardless of whether any claims against us are valid or whether we are liable, such claims may be expensive to defend and may divert time and money away from our operations. In addition, they may generate negative publicity, which could reduce customer traffic and sales.
Most of our restaurants and some of our food and beverage hospitality operations are located in premises that we lease. Many of our current leases are non-cancelable and typically have terms ranging from 10 to 15 years with renewal options for terms ranging from 1 to 5 years.
Most of our restaurants and some of our food and beverage hospitality operations are located in premises that we lease. Many of our current leases are non-cancelable and typically have terms ranging from 10 to 15 years with renewal options for terms ranging from 5 to 10 years.
To the extent that our restaurants and F&B hospitality services operations are in hotels, casinos, resorts and similar client locations, we are subject to competition in the broader lodging and hospitality markets that could draw potential customers away from our locations.
To the extent that our restaurants and F&B hospitality services operations are in hotels, casinos, resorts and similar locations, we are subject to competition in the broader lodging and hospitality markets that could draw potential customers away from our locations.
Alcoholic beverage control regulations govern various aspects of our locations’ daily operations, including the minimum age of patrons and employees, hours of operation, advertising, wholesale purchasing and inventory control, handling and storage. Typically, our locations’ licenses to sell alcoholic beverages must be renewed annually and may be suspended or revoked at any time for cause.
Alcoholic beverage control regulations govern various aspects of our restaurants’ daily operations, including the minimum age of patrons and employees, hours of operation, advertising, wholesale purchasing and inventory control, handling and storage. Typically, our restaurants’ licenses to sell alcoholic beverages must be renewed annually and may be suspended or revoked at any time for cause.
Security breaches, loss of data and other disruptions could compromise sensitive information related to our business, prevent us from accessing critical information or expose us to liability, which could adversely affect our business and our reputation We utilize information technology systems and networks to process, transmit and store electronic information in connection with our business activities.
Cybersecurity and IT Systems Security breaches, loss of data and other disruptions could compromise sensitive information related to our business, prevent us from accessing critical information or expose us to liability, which could adversely affect our business and our reputation. We utilize information technology systems and networks to process, transmit and store electronic information in connection with our business activities.
Our success in growing our business through the opening of new restaurants and F&B hospitality locations is dependent upon a number of factors, including our ability to: cost-effectively operate in markets that we are not familiar with, find suitable license and food and beverage partners, find suitable locations, reach acceptable lease terms, have adequate capital, find acceptable contractors, obtain licenses and permits, manage construction and development costs, recruit and train appropriate staff and properly manage the new venue.
Our success in growing our business through the opening of new restaurants and F&B hospitality locations is dependent upon a number of factors, including our ability to: cost-effectively operate in markets that we are not familiar with, find suitable license and food and beverage partners, find suitable locations, reach acceptable lease terms, maintain adequate capital, find qualified contractors, obtain licenses and permits, manage construction and development costs, recruit and train appropriate staff and properly manage the new venue.
Energy prices can also affect our operating results because increased energy prices may cause increased transportation costs for beef and other commodities and supplies, and increased costs for the utilities required to run each location. Historically we have passed increased commodity and other costs on to our customers by increasing the prices of our menu items.
Energy prices can also affect our operating results because increased energy prices may cause increased transportation costs for beef and other commodities and supplies, and increased costs for the utilities required to run each restaurant. Historically we have passed increased commodity and other costs on to our customers by increasing the prices of our menu items.
If our business does not generate sufficient cash flow from operating activities and sufficient funds are not otherwise available to us from borrowings under our credit facility or other sources, we may not be able to meet our operating lease and management agreement obligations, grow our business, respond to competitive challenges or fund our other liquidity and capital needs, which could adversely affect our business and results of operations.
If our business does not generate sufficient cash flow from operating activities and sufficient funds are not otherwise available to us from borrowings under our credit facility or other sources, we may not be able to meet our operating lease and 10 Table of Contents management agreement obligations, grow our business, respond to competitive challenges or fund our other liquidity and capital needs, which could adversely affect our business and results of operations.
We are subject to the actions and business decisions of our clients and third parties, in which we may have little or no influence in the overall operation of the applicable venue and such actions and decisions could have an adverse effect on our business and operations.
We are subject to the actions and business decisions of our partners and third parties, in which we may have little or no influence in the overall operation of the applicable venue and such actions and decisions could have an adverse effect on our business and operations.
Additionally, a government audit could result in a disruption to our workforce or adverse publicity that could negatively impact our brand and our use of E-Verify and/or potential for receipt of letters from the Social Security Administration requesting 9 Table of Contents information (commonly referred to as no-match letters) could make it more difficult to recruit and/or retain qualified employees.
Additionally, a government audit could result in a disruption to our workforce or adverse publicity that could negatively impact our brand and our use of E-Verify and/or potential for receipt of letters from the Social Security Administration requesting information (commonly referred to as no-match letters) could make it more difficult to recruit and/or retain qualified employees.
Our obligation to continue making rental payments and fulfilling other lease obligations in respect of leases for closed or unopened restaurants could have a material adverse effect on our business and results of operations.
Our obligation to continue making rent payments and fulfilling other lease obligations in respect of leases for closed or unopened restaurants could have a material adverse effect on our business and results of operations.
Our profitability depends in part on our ability to anticipate and react to changes in commodity costs, which have a substantial effect on our total costs. The purchase of beef represents approximately 23% of our food and beverage costs.
Our profitability depends in part on our ability to anticipate and react to changes in commodity costs, which have a substantial effect on our total costs. The purchase of beef represents approximately 25% of our food and beverage costs.
Specifically, some of the factors that adversely affect the cost and time associated with the development and construction of our restaurants include: labor disputes, shortages of materials or skilled labor, adverse weather conditions, unforeseen engineering 11 Table of Contents problems, environmental problems, construction or zoning problems, local government regulations, modifications in design, and other unanticipated increases in cost.
Specifically, some of the factors that adversely affect the cost and time associated with the development and construction of our restaurants include: labor disputes, shortages of materials or skilled labor, adverse weather conditions, unforeseen engineering problems, environmental problems, construction or zoning problems, local government regulations, modifications in design, and other unanticipated increases in cost.
We rely in part on our licensees and the manner in which they operate the STK restaurants to develop and promote our business. As of December 31, 2022, we had five licensed STK restaurants.
We rely in part on our licensees and the manner in which they operate the STK restaurants to develop and promote our business. As of December 31, 2023, we had five licensed STK restaurants.
The restaurant and hospitality industry is intensely competitive with respect to price, quality of service, location, ambiance of facilities and type and quality of food. The industry is also characterized by the continual introduction of new concepts and is subject to rapidly changing consumer preferences, tastes, trends and eating and purchasing habits.
Competition in the restaurant industry is intense. The restaurant and hospitality industry is intensely competitive with respect to price, quality of service, location, ambiance of facilities and type and quality of food. The industry is also characterized by the continual introduction of new concepts and is subject to rapidly changing consumer preferences, tastes, trends and eating and purchasing habits.
If we were to close or fail to open a restaurant or other venue at a location we lease, we would generally remain committed to perform our obligations under the applicable lease, which could include, among other things, payment of the base rent for the balance of the lease term.
If we were to close or fail to open a restaurant, we would generally remain committed to perform our obligations under the applicable lease, which could include, among other things, payment of the base rent for the balance of the lease term.
Additionally, our venues are expensive to build, and we, our managed unit partners and our licensees incur significant capital and pre-opening expense. Our business and profitability may be adversely affected if the “ramp-up” period for a new location lasts longer than we expect or if the profitability of a new location dips after our initial “ramp-up” marketing program ends.
Additionally, our restaurants are expensive to build, and we, our managed unit partners and our licensees incur significant capital and pre-opening expenses. Our business and profitability may be adversely affected if the “ramp-up” period for a new location lasts longer than we expect or if the profitability of a new location dips after our initial “ramp-up” marketing program ends.
In addition, we purchase beer, wine and spirits from distributors who own the exclusive rights to sell such alcoholic beverage products in the geographic areas in which our locations reside. Our continued ability to purchase certain brands of alcoholic beverages depends upon maintaining our relationships with those distributors, of which there can be no assurance.
In addition, we purchase beer, wine and spirits from distributors who own the exclusive rights to sell such alcoholic beverage products in the geographic areas in which our restaurants operate. Our continued ability to purchase certain brands of alcoholic beverages depends upon maintaining our relationships with those distributors, of which there can be no assurance.
Economic Conditions and Competition Our business is dependent on discretionary spending patterns, business travel and general economic conditions. We depend on consumer discretionary spending, business travel and the overall economic environment. Disruptions in the economy, including recessions, high unemployment, foreclosures, bankruptcies, inflation and other economic impacts, could affect consumers’ ability and willingness to spend discretionary dollars.
Economic Conditions and Competition 7 Table of Contents Our business is dependent on discretionary spending patterns, business travel and general economic conditions. We depend on consumer discretionary spending, business travel and the overall economic environment. Disruptions in the economy, including recessions, high unemployment, foreclosures, bankruptcies, inflation and other economic impacts, could affect consumers’ ability and willingness to spend discretionary dollars.
Litigation and Brand Risk We face the risk of adverse publicity in connection with our operations, including as a result of increased social media usage. The quality of our food and our facilities are two of our competitive strengths.
Litigation and Brand Risk We face the risk of adverse publicity in connection with our operations, including as a result of increased social media usage. The quality of our food and ambiance of our restaurants are two of our competitive strengths.
Refer to Part II —Item 9A, “Controls and Procedures” of this Annual Report on Form 10-K for management’s assessment as of December 31, 2022. Any failure to maintain an effective system of internal control over financial 15 Table of Contents reporting could limit our ability to report our financial results accurately and timely or to detect and prevent fraud.
Refer to Part II —Item 9A, “Controls and Procedures” of this Annual Report on Form 10-K for management’s assessment as of December 31, 2023. Any failure to maintain an effective system of internal control over financial reporting could limit our ability to report our financial results accurately and timely or to detect and prevent fraud.
In addition, others may assert rights in our trademarks, service marks and other proprietary rights or may assert that we are infringing rights they have in their trademarks, service marks, patents or other proprietary rights. Any such disputes could force us to incur costs related to enforcing our rights.
In addition, others may assert rights 13 Table of Contents in our trademarks, service marks and other proprietary rights or may assert that we are infringing rights they have in their trademarks, service marks, patents or other proprietary rights. Any such disputes could force us to incur costs related to enforcing our rights.
Our development of new locations may also be adversely affected by the negative financial situations of potential developers, landlords and host sites. Such parties may delay or cancel development projects or renovations of existing projects due to the instability in 10 Table of Contents the credit markets and economic uncertainty.
Our development of new restaurants may also be adversely affected by the negative financial situations of potential developers, landlords and host sites. Such parties may delay or cancel development projects or renovations of existing projects due to the instability in the credit markets and economic uncertainty.
In addition, the stock market itself is subject to extreme price and volume fluctuations. This volatility has had a significant effect on the market price of securities issued by many companies for reasons related and unrelated to their operating performance and could have the same effect on our common stock.
In addition, the stock market itself is subject to extreme price and volume fluctuations. This volatility has had a significant effect on the market price of securities issued by many companies for reasons related and unrelated to their operating performance and could have the same effect on our common stock. Item 1B. Unresolved Staff Comments None.
Continued uncertainty in or a worsening of the economy, generally or in a number of our markets, and our customers’ reactions to these trends could adversely affect our business and cause us to, among other things, reduce the number and frequency of new location openings, close locations and delay any re-modeling of existing locations.
Continued uncertainty in or a worsening of the economy, generally or in a number of our markets, and our customers’ reactions to these trends could adversely affect our business and cause us to, among other things, reduce the number and frequency of new restaurant openings, close locations and delay any remodeling of existing restaurants.
Any regional occurrences such as local labor strikes, natural disasters, prolonged inclement weather, acts of terrorism or other national emergencies, accidents, energy shortages, system failures or other unforeseen events in or around these cities could result in temporary or permanent closings of our venues, which could have a material adverse effect on our business, financial condition and results of operations as a whole. 7 Table of Contents Competition in the restaurant industry is intense.
Any regional occurrences such as local labor strikes, natural disasters, prolonged inclement weather, acts of terrorism or other national emergencies, accidents, energy shortages, system failures or other unforeseen events in or around these cities could result in temporary or permanent closings of our venues, which could have a material adverse effect on our business, financial condition and results of operations as a whole.
As of December 31, 2022, approximately 34% of our employees earn this lower minimum wage in their respective locations since tips constitute a substantial part of their income.
As of December 31, 2023, approximately 33% of our employees earn this lower minimum wage in their respective locations since tips constitute a substantial part of their income.
Failure to comply with any such legal requirements could subject us to monetary liabilities and other sanctions, which could harm our business, results of operations and financial condition. We may not be able to comply with certain debt covenants on our debt.
Any new regulatory or trade initiatives could impact our operations in certain countries. Failure to comply with any such legal requirements could subject us to monetary liabilities and other sanctions, which could harm our business, results of operations and financial condition. We may not be able to comply with certain debt covenants on our debt.
Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of financial reporting for external purposes in accordance with accounting principles generally accepted in the United States.
Our management is responsible for establishing and maintaining effective internal control over financial reporting. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of financial reporting for external purposes in accordance with accounting principles generally accepted in the United States.
A failure to comply with one or more regulations could result in the imposition of sanctions, including the closing of 14 Table of Contents venues for an indeterminate period of time, or third-party litigation, any of which could have a material adverse effect on us and our results of operations. Government regulation can also affect customer traffic at our locations.
A failure to comply with one or more regulations could result in the imposition of sanctions, including the closing of venues for an indeterminate period of time, or third-party litigation, any of which could have a material adverse effect on us and our results of operations.
As a result, at a given annual meeting, only a minority of the Board may be considered for election. Since our staggered Board may prevent our stockholders from replacing a majority of our Board at any given annual meeting, it may entrench management and discourage unsolicited stockholder proposals that may be in the best interests of stockholders.
Since our staggered Board may prevent our stockholders from replacing a majority of our Board at any 16 Table of Contents given annual meeting, it may entrench management and discourage unsolicited stockholder proposals that may be in the best interests of stockholders.
We may in the future become subject to claims for purportedly fraudulent transactions arising out of the actual or alleged theft of credit or debit card information, and we may also be subject to lawsuits or other proceedings relating to these types of incidents.
We may in the future become subject to claims for purportedly fraudulent transactions arising out of the actual or alleged theft of credit or debit card information, and we may also be subject to lawsuits or other proceedings relating to these types of incidents. The scope and severity of risks posed to our systems from cyber threats has increased.
We believe there are opportunities to open approximately seven to twelve new locations (restaurants and/or hospitality services operations) annually, with a focus on operating under licensing or management agreements (referred to as our “capital light strategy”).
One key element of our growth strategy is opening new restaurants and F&B hospitality services locations. We believe there are opportunities to add approximately seven to twelve new locations (restaurants and/or hospitality services operations) annually, with a focus on operating under licensing or management agreements (referred to as our “capital light strategy”).
To the extent that our operations are located in hotels, casinos or similar destinations, our results of operations and growth are subject to the risks facing such venues. Our ability to grow and realize profits from our operations in hotels, casinos and other branded or destination venues are dependent on the success of such venues’ business.
Our ability to grow and realize profits from our operations in hotels, casinos and other branded or destination venues are dependent on the success of such venues’ business.
Although we have developed criteria to evaluate and screen prospective developers and licensees, we cannot be certain that the developers and licensees we select will have the business acumen necessary to open and operate successful licensed restaurants in their licensing areas, or that the licensees, once selected, will be able to negotiate acceptable lease or purchase terms for prospective sites or to obtain the necessary approvals for such sites, or that financing will be available to construct and open new venues.
Although we have developed criteria to evaluate and screen prospective developers and licensees, we cannot be certain that the developers and licensees we select will have the business acumen necessary to open and operate successful licensed restaurants in their licensed areas, or that the licensees, once selected, will be able to negotiate acceptable lease or purchase terms for prospective sites or to obtain the necessary approvals for such sites, or that financing will be available to construct and open new venues. 12 Table of Contents To the extent that our operations are located in hotels, casinos or similar destinations, our results of operations and growth are subject to the risks facing such venues.
Our foreign operations are subject to all of the same risks as our domestic restaurants and food and beverage hospitality services operations, and additional risks that include, among others, international economic and political conditions and the possibility of instability and unrest, differing cultures and consumer preferences, diverse government regulations and tax systems, the ability to source fresh ingredients and other commodities in a cost-effective manner and the availability of experienced management.
Our foreign operations are subject to all of the same risks as our domestic restaurants and food and beverage hospitality services operations, and additional risks that include, among others, international economic and political conditions and the possibility of instability and unrest, differing cultures and consumer preferences, diverse government regulations and tax systems, the ability to source fresh ingredients and other commodities in a cost-effective manner and the availability of experienced management. 15 Table of Contents We are subject to governmental regulation in the domestic and international jurisdictions where we operate, including antitrust and tax requirements, anti-boycott regulations, import/export/customs regulations and other international trade regulations, the USA PATRIOT Act and the Foreign Corrupt Practices Act.
We are subject to numerous and changing U.S. federal and foreign government regulations. Failure to comply with or substantial changes in government regulations could negatively affect our sales, increase our costs or result in fines or other penalties against us.
Failure to comply with or substantial changes in government regulations could negatively affect our sales, increase our costs or result in fines or other penalties against us.
Terrorism, including cyber-terrorism or efforts to tamper with food supplies, could have an adverse impact on our brand and results of operations.
Terrorism, including cyber-terrorism or efforts to tamper with food supplies, could have an adverse impact on our brand and results of operations. We are subject to numerous and changing U.S. federal and foreign government regulations.
We utilize the federal FICA tip credit to reduce our federal income tax expense. Changes in the tax law could reduce or eliminate the FICA tip credit, which could negatively impact our results of operations and cash flows in future periods. Further, the U.S.
Changes in the tax law could reduce or eliminate the FICA tip credit, which could negatively impact our results of operations and cash flows in future periods. Further, the U.S. Congress and Department of Homeland Security may implement changes to federal immigration laws, regulations or enforcement programs.
If we are not able to borrow under our revolving credit facility to bridge losses we incur while our operations are affected by the COVID-19 pandemic, and if alternative financing is not available to us on acceptable terms or at all, our business and results of operations would be adversely affected.
If we are not able to borrow under our revolving credit facility and if alternative financing is not available to us on acceptable terms or at all, our business and results of operations would be adversely affected. Failure of our internal controls over financial reporting could harm our business and financial results.
Information concerning our company may be posted on such platforms at any time. If customers perceive or experience a reduction in our food quality, service or ambiance or in any way believe we have failed to deliver a consistently positive experience, this information can be immediately and broadly disseminated.
If customers perceive or experience a reduction in our food quality, service or ambiance or in any way believe we have failed to deliver a consistently positive experience, this information can be immediately and broadly disseminated. This information may be adverse to our interests or may be inaccurate, each of which may harm our performance, prospects or business.
Default under these agreements could enable Goldman Sachs to sell (at auction or otherwise) our trademarks, which would have a material adverse effect on our ability to continue our business. Other Risks Our operations may be negatively impacted by seasonality, adverse weather conditions, natural disasters or acts of terror.
Default under these agreements could enable Goldman Sachs to sell (at auction or otherwise) our trademarks, which would have a material adverse effect on our ability to continue our business.
Any shifts in consumer preferences away from the kinds of food we offer, particularly beef, whether because of dietary or health concerns or otherwise, would make our locations less appealing and could reduce customer traffic and/or impose practical limits on pricing. 12 Table of Contents The use of social media platforms allows individuals to access a broad audience of consumers and other interested persons.
Any shifts in consumer preferences away from the kinds of food we offer, particularly beef, whether because of dietary or health reasons, sustainability concerns or otherwise, would make our restaurants less appealing and could reduce customer traffic and/or impose practical limits on pricing.
Even if such measures are not implemented and a virus or other disease does not spread significantly, the perceived risk of infection or significant health risk may adversely affect our business. 8 Table of Contents To the extent that a virus or disease is food-borne, or perceived to be food-borne, future outbreaks may adversely affect the price and availability of certain food products and cause our customers to eat less of a product.
To the extent that a virus or disease is food-borne, or perceived to be food-borne, future outbreaks may adversely affect the price and availability of certain food products and cause our customers to eat less of such products.
As a result of the seasonality of our business due to weather, holiday events and other factors, our quarterly results for any one quarter or fiscal year may not be indicative of results to be expected for any other quarter or for any year. 13 Table of Contents In addition, if adverse weather conditions or natural disasters such as fires and hurricanes affect our restaurants, we could experience closures, repair and restoration costs, food spoilage, and other significant reopening costs, any of which would adversely affect our business.
In addition, if adverse weather conditions or natural disasters such as fires and hurricanes affect our restaurants, we could experience closures, repair and restoration costs, food spoilage, and other significant reopening costs, any of which would adversely affect our business.
Congress and Department of Homeland Security may implement changes to federal immigration laws, regulations or enforcement programs. Some of these changes may increase our obligations for compliance and oversight, which could subject us to additional costs and make our hiring process more cumbersome or reduce the availability of potential employees.
Some of these changes may increase our obligations for compliance and oversight, which could subject us to additional costs and make our hiring process more cumbersome or reduce the availability of potential employees. Even if we operate our restaurants in strict compliance with U.S.
We are, from time to time, the subject of complaints or litigation from our consumers alleging, among other things, illness, injury or other food quality, health or operational concerns. The inappropriate use of social media by our employees or customers could lead to litigation and result in negative publicity that could damage our reputation.
The inappropriate use of social media by our employees or customers could lead to litigation and result in negative publicity that could damage our reputation.
Consumers value readily available information concerning goods and services that they have or plan to purchase and may act on such information without further investigation or authentication. Many social media platforms immediately publish content from their subscribers and participants, often without filters or checks on the accuracy of the content posted.
The use of social media platforms allows individuals to access a broad audience of consumers and other interested persons. Consumers value readily available information concerning goods and services that they have or plan to purchase and may act on such information without further investigation or authentication.
We may be unable or unwilling to increase our prices to pass these increased labor costs on to our customers, in which case, our business and results of operations could be adversely affected. A restaurant company employer may claim a credit against the company’s federal income taxes for FICA taxes paid on certain tip wages (the “FICA tip credit”).
We may be unable or 9 Table of Contents unwilling to increase our prices to pass these increased labor costs on to our customers, in which case, our business and results of operations could be adversely affected.
Although we require all of our new employees to provide us with the government-specified documentation evidencing their employment eligibility, some of our employees may, without our knowledge, be unauthorized workers. Unauthorized workers are subject to seizure and deportation and may subject us to fines, penalties or loss of our business license in certain jurisdictions.
Immigration and Customs Enforcement and state requirements, some of our employees may not meet federal work eligibility or residency requirements, which could lead to a disruption in our work force. Although we require all of our new employees to provide us with the government-specified documentation evidencing their employment eligibility, some of our employees may, without our knowledge, be unauthorized workers.
While we believe these price increases have historically not affected customer traffic, there can be no assurance that additional price increases would not affect future customer traffic. If prices increase in the future and we are unable to anticipate or mitigate these increases, or if there are shortages for beef, our business and results of operations would be adversely affected.
While we believe these price increases have historically not affected customer traffic, there can be no assurance that additional price increases would not affect future customer traffic.
If we were to default under our covenants and such default were not cured or waived, our indebtedness could become immediately due and payable. If we breach these covenants and fail to comply with the credit agreement, and the lenders accelerate the amounts outstanding, our business and results of operations would be adversely affected.
Our credit agreement requires us to achieve specified financial and operating results and maintain compliance with specified financial ratios. Our ability to comply with these provisions may be affected by events beyond our control. If we were to default under our covenants and such default were not cured or waived, our indebtedness could become immediately due and payable.
In addition, our ability to borrow under our revolving credit facility depends on several factors, including compliance with specified leverage incurrence ratios.
If we breach these covenants and fail to comply with the credit agreement, and the lenders accelerate the amounts outstanding, our business and results of operations would be adversely affected. In addition, our ability to borrow under our revolving credit facility depends on several factors, including compliance with specified leverage incurrence ratios.
We also may be adversely affected if jurisdictions in which we have restaurants impose mandatory closures, seek voluntary closures or impose restrictions on operations.
We also may be adversely affected if jurisdictions in which we have restaurants impose mandatory closures, seek voluntary closures or impose restrictions on operations. Even if such measures are not implemented and a virus or other disease does not spread significantly, the perceived risk of infection or significant health risk may adversely affect our business.
Strategy and Operations Unsuccessful implementation of any or all of the initiatives of our business strategy, including opening new restaurants and attracting new F&B hospitality service opportunities, could negatively impact our operations. One key element of our growth strategy is opening new restaurants and F&B hospitality services locations.
If prices increase in the future and we are unable to anticipate or mitigate these increases, or if there are shortages for beef, our business and results of operations would be adversely affected. 11 Table of Contents Strategy and Operations Unsuccessful implementation of any or all of the initiatives of our business strategy, including opening new restaurants and attracting new F&B hospitality service opportunities, could negatively impact our operations.
Removed
Our inability to compete successfully with other restaurants, other F&B hospitality services operations and other segments of the industry may harm our ability to maintain acceptable levels of revenue growth, limit our development of new restaurants or concepts, or force us to close one or more of our restaurants or F&B hospitality services operations.
Added
Health and Safety Health concerns arising from outbreaks of flu viruses or other diseases, or regional or global health pandemics could severely affect our business.
Removed
Health and Safety The COVID-19 pandemic has had a significant effect on our restaurant traffic and our business, financial condition and results of operations. ​ The COVID-19 pandemic significantly affected our business and results. We incurred COVID-19 related costs of $2.5 million and $5.8 million in 2022 and 2021, respectively.
Added
A restaurant company employer may claim a credit against the company’s federal income taxes for FICA taxes paid on certain tip wages (the “FICA tip credit”). We utilize the federal FICA tip credit to reduce our federal income tax expense.
Removed
We have made operational changes to adhere to government requirements on safety and sanitation in our restaurants. However, we cannot guarantee that changes to our operational policies and training will be effective to keep our employees and customers safe from COVID-19. COVID-19 may impact the willingness of customers to dine outside of the home.
Added
Unauthorized workers are subject to seizure and deportation and may subject us to fines, penalties or loss of our business license in certain jurisdictions.
Removed
While it is not possible at this time to estimate the full impact that COVID-19 could have on our business going forward, the spread of the virus and the measures taken by governments or by us in response could adversely impact our business, financial condition and results of operations. ​ Health concerns arising from outbreaks of flu viruses or other diseases, or regional or global health pandemic could severely affect our business.
Added
Many social media platforms immediately publish content from their subscribers and participants, often without filters or checks on the accuracy of the content posted. Information concerning our company may be posted on such platforms at any time.
Removed
Even if we operate our restaurants in strict compliance with U.S. Immigration and Customs Enforcement and state requirements, some of our employees may not meet federal work eligibility or residency requirements, which could lead to a disruption in our work force.
Added
We face the risk of litigation in connection with our operations. We are, from time to time, the subject of complaints or litigation from our consumers alleging, among other things, illness, injury or other food quality, health or operational concerns.
Removed
This information may be adverse to our interests or may be inaccurate, each of which may harm our performance, prospects or business. We face the risk of litigation in connection with our operations.
Added
Many of our information technology systems, including those used for our point-of-sale, delivery services and administrative functions, contain personal, financial or other information that is entrusted to us by our guests, vendors and employees. Many of our information technology systems also contain confidential information about our business, such as business strategies, development initiatives and designs.
Removed
Further, in 2015, the major credit card networks shifted the liability associated with EMV (Europay/Mastercard/Visa) chip card technology to the merchants. With this liability shift, any restaurant or merchant that is not using an approved chip-and-pin point-of-sale device would be liable for counterfeit or fraudulent charges.
Added
To date, these attacks have not had a material impact on our operations, but we cannot provide assurance that they will not have an impact in the future. ​ Our third-party providers’ information technology systems and databases are likewise subject to such risks.
Removed
Despite the implementation of security measures (such as the employment of internal resources and external consultants to conduct auditing and testing for weaknesses in our informational technology environment), our internal computer systems and those of our third-party contractors and consultants are vulnerable to damage or disruption from hacking, computer viruses, software bugs, unauthorized access or disclosure, natural disasters, terrorism, war, and telecommunication, equipment and electrical failures.
Added
We provide some guest and employee data, as well as confidential information important to our business, to third parties to conduct our business. Individuals performing work for us and these third parties also may access some of this data, including on personally owned digital devices.

… 21 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed1 unchanged
Biggest change(2) Ownership in location is 64.81%. ​ 17 Table of Contents Our Kona Grill locations are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Type of Venue ​ Location ​ Interest Kona Grill Alpharetta ​ Alpharetta, Georgia ​ Owned Kona Grill Baltimore ​ Baltimore, Maryland ​ Owned Kona Grill Boca Park ​ Las Vegas, Nevada ​ Owned Kona Grill Boise ​ Meridian, Idaho ​ Owned Kona Grill Carmel ​ Carmel, Indiana ​ Owned Kona Grill Cincinnati ​ Cincinnati, Ohio ​ Owned Kona Grill Columbus ​ Columbus, Ohio ​ Owned Kona Grill Dallas ​ Dallas, Texas ​ Owned Kona Grill Denver ​ Denver, Colorado ​ Owned Kona Grill Eden Prairie ​ Eden Prairie, Minnesota ​ Owned Kona Grill El Paso ​ El Paso, Texas ​ Owned Kona Grill Gilbert ​ Gilbert, Arizona ​ Owned Kona Grill Huntsville ​ Huntsville, Alabama ​ Owned Kona Grill Kansas City ​ Kansas City, Missouri ​ Owned Kona Grill Minnetonka ​ Minnetonka, Minnesota ​ Owned Kona Grill North Star ​ San Antonio, Texas ​ Owned Kona Grill Oak Brook ​ Oak Brook, Illinois ​ Owned Kona Grill Omaha ​ Omaha, Nebraska ​ Owned Kona Grill Plano ​ Plano, Texas ​ Owned Kona Grill San Antonio ​ San Antonio, Texas ​ Owned Kona Grill Sarasota ​ Sarasota, Florida ​ Owned Kona Grill Scottsdale ​ Scottsdale, Arizona ​ Owned Kona Grill Tampa ​ Tampa, Florida ​ Owned Kona Grill Troy ​ Troy, Michigan ​ Owned Kona Grill Woodbridge ​ Iselin, New Jersey ​ Owned ​ Our ONE Hospitality brands and F&B services locations are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Type of Venue ​ Hotel/Casino/Special Venue ​ Location ​ Interest ANGEL ​ Hotel Calimala ​ Florence, Italy ​ Managed Bao Yum ​ The Westminster London ​ London, England ​ Managed F&B Services - Westminster London ​ The Westminster London ​ London, England ​ Managed F&B Services - Hippodrome ​ Hippodrome Casino ​ London, England ​ Managed F&B Services - ME Milan ​ ME Milan ​ Milan, Italy ​ Managed F&B Services - W Hotel ​ W Hotel ​ Los Angeles, California ​ Owned Heliot ​ Hippodrome Casino ​ London, England ​ Managed Hideout ​ W Hotel ​ Los Angeles, California ​ Owned Radio Rooftop Bar ​ ME Milan ​ Milan, Italy ​ Managed Reef Kitchens (3 venues) ​ — ​ Austin, Texas ​ Licensed Rivershore Bar & Grill ​ Rivershore BW Plus ​ Oregon City, Oregon ​ Managed ​ In addition to the locations above, we lease office space for support offices in Denver, Colorado; New York, New York; Scottsdale, Arizona; and London, England. ​ ​ 18 Table of Contents
Biggest change(2) Ownership in location is 64.81%. ​ 18 Table of Contents Our Kona Grill locations are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Type of Venue ​ Location ​ Interest Kona Grill Alpharetta ​ Alpharetta, Georgia ​ Owned Kona Grill Baltimore ​ Baltimore, Maryland ​ Owned Kona Grill Boca Park ​ Las Vegas, Nevada ​ Owned Kona Grill Boise ​ Meridian, Idaho ​ Owned Kona Grill Carmel ​ Carmel, Indiana ​ Owned Kona Grill Cincinnati ​ Cincinnati, Ohio ​ Owned Kona Grill Columbus ​ Columbus, Ohio ​ Owned Kona Grill Dallas ​ Dallas, Texas ​ Owned Kona Grill Denver ​ Denver, Colorado ​ Owned Kona Grill Eden Prairie ​ Eden Prairie, Minnesota ​ Owned Kona Grill El Paso ​ El Paso, Texas ​ Owned Kona Grill Gilbert ​ Gilbert, Arizona ​ Owned Kona Grill Huntsville ​ Huntsville, Alabama ​ Owned Kona Grill Kansas City ​ Kansas City, Missouri ​ Owned Kona Grill Minnetonka ​ Minnetonka, Minnesota ​ Owned Kona Grill North Star ​ San Antonio, Texas ​ Owned Kona Grill Oak Brook ​ Oak Brook, Illinois ​ Owned Kona Grill Omaha ​ Omaha, Nebraska ​ Owned Kona Grill Phoenix ​ Phoenix, Arizona ​ Owned Kona Grill Plano ​ Plano, Texas ​ Owned Kona Grill Riverton ​ Riverton, Utah ​ Owned Kona Grill San Antonio ​ San Antonio, Texas ​ Owned Kona Grill Sarasota ​ Sarasota, Florida ​ Owned Kona Grill Scottsdale ​ Scottsdale, Arizona ​ Owned Kona Grill Tampa ​ Tampa, Florida ​ Owned Kona Grill Troy ​ Troy, Michigan ​ Owned Kona Grill Woodbridge ​ Iselin, New Jersey ​ Owned ​ Our ONE Hospitality brands and F&B services locations are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Type of Venue ​ Hotel/Casino/Special Venue ​ Location ​ Interest F&B Services - Hippodrome ​ Hippodrome Casino ​ London, England ​ Managed F&B Services - ME Milan ​ ME Milan ​ Milan, Italy ​ Managed F&B Services - W Hotel ​ W Hotel ​ Los Angeles, California ​ Owned Heliot ​ Hippodrome Casino ​ London, England ​ Managed Hideout ​ W Hotel ​ Los Angeles, California ​ Owned Radio Rooftop Bar ​ ME Milan ​ Milan, Italy ​ Managed Rivershore Bar & Grill ​ Rivershore BW Plus ​ Oregon City, Oregon ​ Managed Bao Yum (1) ​ — ​ London, England ​ Owned (1) Temporary location ​ In addition to the locations above, we lease office space for support offices in Denver, Colorado; New York, New York; Scottsdale, Arizona; and London, England. ​ ​ 19 Table of Contents
Our STK locations are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Type of Venue ​ Hotel/Casino/Special Venue ​ Location ​ Interest STK Atlanta ​ — ​ Atlanta, Georgia ​ Owned STK Bellevue ​ — ​ Bellevue, Washington ​ Owned STK Chicago ​ — ​ Chicago, Illinois ​ Owned STK Dallas ​ — ​ Dallas, Texas ​ Owned STK Denver ​ — ​ Denver, Colorado ​ Owned STK Doha ​ The Ritz-Carlton ​ Doha, Qatar ​ Licensed STK Downtown (1) ​ — ​ New York, New York ​ Owned (2) STK Dubai ​ Jumeirah Beach Residence ​ Dubai, United Arab Emirates ​ Licensed STK Ibiza ​ Ibiza Corso Hotel & Spa ​ Illes Balears, Spain ​ Licensed STK Las Vegas ​ The Cosmopolitan ​ Las Vegas, Nevada ​ Managed STK London ​ ME London ​ London, England ​ Managed STK Los Cabos ​ Los Cabos Airport ​ Cabo San Lucas, Mexico ​ Licensed STK Miami Beach ​ — ​ Miami Beach, Florida ​ Owned STK Midtown ​ — ​ New York, New York ​ Owned STK Milan ​ ME Milan ​ Milan, Italy ​ Managed STK Nashville ​ — ​ Nashville, Tennessee ​ Owned STK Orlando (1) ​ Disney Springs ​ Orlando, Florida ​ Owned STK San Diego (1) ​ Andaz Hotel ​ San Diego, California ​ Owned STK San Juan ​ Condado Vanderbilt Hotel ​ San Juan, Puerto Rico ​ Licensed STK San Francisco ​ — ​ San Francisco, California ​ Owned STK Scottsdale ​ — ​ Scottsdale, Arizona ​ Managed STK Stratford ​ The Gantry London ​ London, England ​ Managed STK Toronto ​ — ​ Toronto, Canada ​ Managed STK Westminster ​ The Westminster London ​ London, England ​ Managed STK Westwood ​ W Hotel ​ Los Angeles, California ​ Owned (1) Location includes an owned rooftop lounge, except for the STK Rooftop San Diego which is a licensed location.
Our STK locations are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Type of Venue ​ Hotel/Casino/Special Venue ​ Location ​ Interest STK Atlanta ​ — ​ Atlanta, Georgia ​ Owned STK Bellevue ​ — ​ Bellevue, Washington ​ Owned STK Boston ​ — ​ Boston, Massachusetts ​ Owned STK Charlotte ​ — ​ Charlotte, North Carolina ​ Owned STK Chicago ​ — ​ Chicago, Illinois ​ Owned STK Dallas ​ — ​ Dallas, Texas ​ Owned STK Denver ​ — ​ Denver, Colorado ​ Owned STK Doha ​ The Ritz-Carlton ​ Doha, Qatar ​ Licensed STK Downtown (1) ​ — ​ New York, New York ​ Owned (2) STK Dubai ​ Jumeirah Beach Residence ​ Dubai, United Arab Emirates ​ Licensed STK Ibiza ​ Ibiza Corso Hotel & Spa ​ Illes Balears, Spain ​ Licensed STK Las Vegas ​ The Cosmopolitan ​ Las Vegas, Nevada ​ Managed STK London ​ ME London ​ London, England ​ Managed STK Los Cabos ​ Los Cabos Airport ​ Cabo San Lucas, Mexico ​ Licensed STK Miami Beach ​ — ​ Miami Beach, Florida ​ Owned STK Midtown ​ — ​ New York, New York ​ Owned STK Milan ​ ME Milan ​ Milan, Italy ​ Managed STK Nashville ​ — ​ Nashville, Tennessee ​ Owned STK Orlando (1) ​ Disney Springs ​ Orlando, Florida ​ Owned STK Salt Lake City ​ — ​ Salt Lake City, Utah ​ Owned STK San Diego (1) ​ Andaz Hotel ​ San Diego, California ​ Owned STK San Juan ​ Condado Vanderbilt Hotel ​ San Juan, Puerto Rico ​ Licensed STK San Francisco ​ — ​ San Francisco, California ​ Owned STK Scottsdale (1) ​ — ​ Scottsdale, Arizona ​ Managed STK Stratford ​ The Gantry London ​ London, England ​ Managed STK Toronto ​ — ​ Toronto, Canada ​ Managed STK Westwood ​ W Hotel ​ Los Angeles, California ​ Owned STK Washington DC ​ Marriot Marquis ​ Washington, D.C. ​ Owned (1) Location includes an owned rooftop lounge, except for the STK Rooftop San Diego which is a licensed location and STK Rooftop Scottsdale which is a managed location.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

2 edited+0 added−0 removed3 unchanged
Biggest change“Financial Statements and Supplementary Data.” For more information about the impact of legal proceedings in our business, see Item 1A. “Risk Factors”. Item 4. Mine Safety Disclosures Not applicable ​ 19 Table of Contents PART II ​
Biggest change“Financial Statements and Supplementary Data.” For more information about the impact of legal proceedings in our business, see Item 1A. “Risk Factors”. Item 4. Mine Safety Disclosures Not applicable. ​ 20 Table of Contents PART II ​
A significant increase in the number of these claims, or one or more successful claims under which we incur greater liabilities than is currently anticipated, could materially and adversely affect our consolidated financial statements. For information regarding litigation refer to Note 15. “Commitments and Contingencies” in our consolidated financial statements included in Item 8.
A significant increase in the number of these claims, or one or more successful claims under which we incur greater liabilities than is currently anticipated, could materially and adversely affect our consolidated financial statements. For information regarding litigation refer to Note 14. “Commitments and Contingencies” in our consolidated financial statements included in Item 8.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

2 edited+0 added−0 removed0 unchanged
Biggest changeFinancial Statements and Supplementary Data 37 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 37 Item 9A. Controls and Procedures 38
Biggest changeFinancial Statements and Supplementary Data 38 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 38 Item 9A. Controls and Procedures 39 Item 9B. Other Information 41
Item 4. Mine Safety Disclosures 19 ​ PART II ​ Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 20 Item 6. [Reserved] 20 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 21 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 37 Item 8.
Item 4. Mine Safety Disclosures 20 ​ PART II ​ Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 21 Item 6. [Reserved] 21 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 22 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 38 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+2 added−1 removed2 unchanged
Biggest changeWe purchased an additional 118,085 shares totaling $0.7 million during the first two months of 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ Period ​ Total number of shares purchased ​ Average price paid per share ​ Total number of shares purchased as part of publicly announced plan ​ Maximum dollar value of shares that may yet be purchased under the plan October 1-31, 2022 ​ 16,224 ​ $ 6.50 ​ 16,224 ​ $ 6,391,022 November 1-30, 2022 ​ 245,688 ​ $ 6.09 ​ 245,688 ​ $ 4,887,917 December 1-31, 2022 ​ 320,026 ​ $ 6.28 ​ 320,026 ​ $ 2,867,788 ​ Recent Sales of Unregistered Securities None ​
Biggest changeThe table below sets forth information with respect to share repurchases under the program for each day during the fourth quarter of 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ Period ​ Total number of shares purchased ​ Average price paid per share ​ Total number of shares purchased as part of publicly announced plan ​ Maximum dollar value of shares that may yet be purchased under the plan October 1-31, 2023 ​ 35,739 ​ $ 5.39 ​ 35,739 ​ — November 1-30, 2023 ​ — ​ — ​ — ​ — December 1-31, 2023 ​ — ​ — ​ — ​ — ​ Recent Sales of Unregistered Securities None. ​
As of February 28, 2023, there were 76 holders of record of our common stock. ​ Dividends We have not declared or paid any cash dividends on our common stock and do not intend to declare or pay any cash dividend in the foreseeable future.
As of February 29, 2024, there were 70 holders of record of our common stock. ​ Dividends We have not declared or paid any cash dividends on our common stock and do not intend to declare or pay any cash dividend in the foreseeable future.
We currently intend to retain our earnings to finance our growth. Issuer Purchases of Equity Securities On September 7, 2022, the Company announced a repurchase program of up to $10.0 million of outstanding common stock, which program terminates in September 2024.
We currently intend to retain our earnings to finance our growth. Issuer Purchases of Equity Securities In September 2022, the Company’s Board of Directors authorized a repurchase program of up to $10.0 million of outstanding common stock. In May 2023, the Company’s Board of Directors authorized an additional $5.0 million to this program.
Removed
The table below sets forth information with respect to share repurchases under the program in the fourth quarter of 2022.
Added
During the years ended December 31, 2023 and 2022, the Company purchased 1.2 million and 1.1 million shares for aggregate consideration of $7.9 million and $7.1 million, respectively. As of December 31, 2023, the Company had repurchased 2.3 million shares for $15.0 million under the program.
Added
The repurchase program was completed in October 2023 with the repurchase of $0.2 million in shares.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

83 edited+22 added−22 removed56 unchanged
Biggest change(2) Non-cash rent expense is included in owned restaurant operating expenses and general and administrative expense on the consolidated statements of operations and comprehensive income. ​ The following table presents a reconciliation of Operating income to Restaurant Operating Profit for the periods indicated (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ 2022 2021 Operating income as reported ​ $ 16,306 ​ $ 19,385 Management, license and incentive fee revenue ​ (15,779) ​ (12,774) General and administrative ​ 29,081 ​ 25,573 Depreciation and amortization ​ 12,134 ​ 10,790 COVID-19 related expenses ​ ​ 2,534 ​ ​ 5,821 Agreement restructuring expenses ​ ​ — ​ ​ 503 Pre-opening expenses ​ ​ 5,519 ​ ​ 1,037 Lease termination expense ​ 257 ​ 1,912 Transaction costs ​ ​ 123 ​ ​ 160 Write-off of trademark costs and other ​ 630 ​ — Restaurant Operating Profit ​ $ 50,805 ​ $ 52,407 Restaurant Operating Profit as a percentage of owned restaurant net revenue ​ ​ 16.9% ​ ​ 19.8% ​ Restaurant Operating Profit by brand is as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ 2022 2021 STK restaurant operating profit (Company owned) ​ $ 37,259 ​ $ 34,598 STK restaurant operating profit (Company owned) as a percentage of STK revenue (Company owned) ​ ​ 21.5% ​ ​ 24.7% Kona Grill restaurant operating profit ​ $ 13,695 ​ $ 17,785 Kona Grill restaurant operating profit as a percentage of Kona Grill revenue ​ ​ 10.8% ​ ​ 14.4% ​ 29 Table of Contents The following tables show our operating results by segment for the periods indicated (in thousands).
Biggest change(2) Non-cash rent expense is included in owned restaurant operating expenses and general and administrative expense on the consolidated statements of operations and comprehensive income. ​ The following table presents a reconciliation of Operating income to Restaurant Operating Profit for the periods indicated (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ 2023 2022 Operating income as reported ​ $ 9,294 ​ $ 16,306 Management, license and incentive fee revenue ​ (15,403) ​ (15,779) General and administrative ​ 30,751 ​ 29,081 Depreciation and amortization ​ 15,664 ​ 12,134 COVID-19 related expenses ​ ​ — ​ ​ 2,534 Pre-opening expenses ​ ​ 8,855 ​ ​ 5,519 Lease termination expense ​ — ​ 257 Transaction costs ​ ​ 207 ​ ​ 123 Other expenses ​ 1,021 ​ 630 Restaurant Operating Profit ​ $ 50,389 ​ $ 50,805 Restaurant Operating Profit as a percentage of owned restaurant net revenue ​ ​ 15.9% ​ ​ 16.9% ​ Restaurant Operating Profit by brand is as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ 2023 2022 STK restaurant operating profit (Company owned) ​ $ 38,531 ​ $ 37,259 STK restaurant operating profit (Company owned) as a percentage of STK revenue (Company owned) ​ ​ 20.9% ​ ​ 21.5% Kona Grill restaurant operating profit ​ $ 12,305 ​ $ 13,695 Kona Grill restaurant operating profit as a percentage of Kona Grill revenue ​ ​ 9.3% ​ ​ 10.8% ​ 30 Table of Contents The following tables show our operating results by segment for the periods indicated (in thousands). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ STK Kona Grill ONE Hospitality Corporate Total For the year ended December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total revenues $ 198,679 $ 131,716 $ 1,999 $ 375 ​ $ 332,769 Operating income (loss) ​ ​ 38,890 ​ ​ 2,189 ​ ​ 187 ​ ​ (31,972) ​ ​ 9,294 Capital asset additions ​ $ 28,426 ​ $ 21,450 ​ $ 123 ​ $ 3,551 ​ $ 53,550 As of December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total assets ​ $ 153,769 ​ $ 97,840 ​ $ 5,868 ​ $ 59,768 ​ $ 317,245 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ STK Kona Grill ONE Hospitality Corporate Total For the year ended December 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total revenues ​ $ 187,402 ​ $ 126,341 ​ $ 2,344 ​ $ 551 ​ $ 316,638 Operating income (loss) ​ ​ 40,343 ​ ​ 7,217 ​ ​ 1,282 ​ ​ (32,536) ​ ​ 16,306 Capital asset additions ​ $ 19,116 ​ $ 10,496 ​ $ 139 ​ $ 2,878 ​ $ 32,629 As of December 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total assets ​ $ 113,911 ​ $ 78,691 ​ $ 5,746 ​ $ 92,676 ​ $ 291,024 ​ Results of Operations for the Years Ended December 31, 2023 and December 31, 2022 Revenues Owned restaurant net revenue .
We believe that our operating margins will improve through growth in same store sales, as defined below in Key Performance Indicators, and a reduction of store-level operating expenses. Acquisitions . We will continue to evaluate potential acquisition opportunities.
We believe that our operating margins will improve through growth in same store sales, as defined below in Key Performance Indicators, and a reduction of store-level operating expenses. Acquisitions . We continue to evaluate potential acquisition opportunities.
Our income taxes are impacted by the enactment of the Tax Cuts and Job Act in December 2017 (the “TCJA”), which, amongst other things, enacted global intangible low-taxed income provisions that do not allow us to defer the earnings of our U.K. and Italy subsidiaries.
Our income taxes are impacted by the enactment of the Tax Cuts and Job Act in December 2017 (the “TCJA”), which, amongst other things, enacted global intangible low-taxed income provisions that do not allow us to defer the earnings of our subsidiaries in the U.K. and Italy.
For STK SSS, this measure includes total revenue from our owned and managed STK locations, excluding revenues from our owned STK restaurant located in the W Hotel in Los Angeles, California due to the impact of the F&B hospitality management agreement with the hotel.
For STK SSS, this measure includes total revenue from our owned and managed domestic STK locations, excluding revenues from our owned STK restaurant located in the W Hotel in Los Angeles, California due to the impact of the F&B hospitality management agreement with the hotel.
Based on current projections, we believe that we will continue to comply with the covenants in the Credit Agreement, as amended, throughout the twelve months following the issuance of the financial statements. ​ See Note 5 and Note 15 to our consolidated financial statements for further information on our long-term debt and commitments and contingencies.
Based on current projections, we believe that we will continue to comply with the covenants in the Credit Agreement, as amended, throughout the twelve months following the issuance of the financial statements. ​ See Note 5 and Note 14 to our consolidated financial statements for further information on our long-term debt and commitments and contingencies.
Pre-opening expenses have varied from location to location depending on a number of factors, including the proximity of our existing restaurants; the amount of rent expensed during the construction and in-restaurant training periods; the size and physical layout of each location; the number of management and hourly employees required to operate each restaurant; the relative difficulty of the restaurant staffing process; the cost of travel and lodging for different metropolitan areas; the timing of the restaurant opening; and the extent of unexpected delays, if any, in obtaining necessary licenses and permits to open the restaurant.
Pre-opening expenses have varied from location to location depending on a number of factors, including the proximity to our existing restaurants; the amount of rent expensed during the construction and in-restaurant training periods; the size and physical layout of each location; the number of management and hourly employees required to operate each restaurant; the relative difficulty of the restaurant staffing process; the cost of travel and lodging for 26 Table of Contents different metropolitan areas; the timing of the restaurant opening; and the extent of unexpected delays, if any, in obtaining necessary licenses and permits to open the restaurant.
Revenues from locations where we do not directly control the event sales force are excluded from this measure. We have presented three-year comparable sales to illustrate how sales at our restaurant base before the COVID-19 pandemic compare to sales post COVID-19 restrictions.
Revenues from locations where we do not directly control the event sales force are excluded from this measure. We have presented four-year comparable sales to illustrate how sales at our restaurant base before the COVID-19 pandemic compare to sales post COVID-19 restrictions.
As of December 31, 2022, we had a valuation allowance of $0.6 million that relates to foreign tax credits we do not expect to utilize as a result of generating income in a jurisdiction with a higher income tax rate than the U.S.
As of December 31, 2023, we had a valuation allowance of $0.6 million that relates to foreign tax credits we do not expect to utilize as a result of generating income in a jurisdiction with a higher income tax rate than the U.S.
For the years ended December 31, 2022 and 2021, we did not identify any event or changes in circumstances that indicated that the carrying values of our restaurant long-lived assets were impaired and therefore, no impairment loss related to long-lived assets has been recognized. 35 Table of Contents Impairment of Indefinite-Lived Intangible Assets Indefinite-lived intangible assets are tested for impairment annually or on an interim basis if events or changes in circumstances between annual tests indicate a potential impairment.
For the years ended December 31, 2023 and 2022, we did not identify any event or changes in circumstances that indicated that the carrying values of our restaurant long-lived assets were impaired and therefore, no impairment loss related to long-lived assets has been recognized. 36 Table of Contents Impairment of Indefinite-Lived Intangible Assets Indefinite-lived intangible assets are tested for impairment annually or on an interim basis if events or changes in circumstances between annual tests indicate a potential impairment.
These judgments may produce materially different amounts of depreciation, amortization and rent expense and materially different lease liabilities and right-of-use assets than would be reported if different assumed lease terms were used. ​ 36 Table of Contents
These judgments may produce materially different amounts of depreciation, amortization and rent expense and materially different lease liabilities and right-of-use assets than would be reported if different assumed lease terms were used. ​ 37 Table of Contents
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. 22 Table of Contents Key Performance Indicators We use the following key performance indicators in evaluating our restaurants and assessing our business: Same Store Sales (“SSS”) .
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. Key Performance Indicators We use the following key performance indicators in evaluating our restaurants and assessing our business: Same Store Sales (“SSS”) .
Not all of the items defining Adjusted EBITDA occur in each reporting period but have been included in our definitions of these terms based on our historical activity . We define Restaurant 25 Table of Contents Operating Profit as owned restaurant net revenue minus owned restaurant cost of sales and owned restaurant operating expenses.
Not all of the items defining Adjusted EBITDA occur in each reporting period but have been included in our definitions of these terms based on our historical activity . We define Restaurant Operating Profit as owned restaurant net revenue minus owned restaurant cost of sales and owned restaurant operating expenses.
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.
We may add seating or provide 34 Table of Contents 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.
We believe that our significant accounting estimates involve a higher degree of judgment and/or complexity for the reasons discussed below: 34 Table of Contents ​ Income Taxes We recognize deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the respective tax bases of our assets and liabilities.
We believe that our significant accounting estimates involve a higher degree of judgment and/or complexity for the reasons discussed below: Income Taxes We recognize deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the respective tax bases of our assets and liabilities.
Capital expenditures for these projects are primarily be funded by cash flows from operations and equipment financing, depending upon the timing of these expenditures and cash availability. 33 Table of Contents 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.
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.
Risk Factors — Increases in commodity prices would adversely affect our results of operations.” Owned restaurant operating expenses . We measure owned restaurant operating expenses as a percentage of owned restaurant net revenues. Owned restaurant operating expenses include the following: ● Payroll and related expenses.
See “Item 1A. Risk Factors — Increases in commodity prices would adversely affect our results of operations.” Owned restaurant operating expenses . We measure owned restaurant operating expenses as a percentage of owned restaurant net revenues. Owned restaurant operating expenses include the following: ● Payroll and related expenses.
The Kona Grill segment includes the results of operations of Kona Grill restaurant locations and pre-opening expenses associated with new restaurants under development. ● ONE Hospitality .
The Kona Grill segment includes the results of operations of Kona Grill restaurant locations and pre-opening expenses associated with new restaurants. ​ ● ONE Hospitality .
We base our estimates on historical experience and various assumptions that we believe to be reasonable under the circumstances and we evaluate those estimates on an ongoing basis. Actual results may differ from these estimates under different assumptions or conditions.
We base our estimates on historical experience and various assumptions that we believe to be reasonable under the circumstances and we evaluate those estimates on an ongoing basis. Actual results may differ from these 35 Table of Contents estimates under different assumptions or conditions.
Owned restaurant net revenues consist of food and beverage sales by owned restaurants net of any discounts associated with each sale and of any ancillary F&B hospitality services at owned locations. Additionally, revenues from offsite banquets, our major off-site events group, and our gift card programs are included in owned restaurant net revenues.
Revenues Owned restaurant net revenues . Owned restaurant net revenues consist of food and beverage sales by owned restaurants net of any discounts associated with each sale and of any ancillary F&B hospitality services at owned locations. Additionally, revenues from offsite banquets and our gift card programs are included in owned restaurant net revenues.
We also may borrow on our revolving credit facility or issue equity to support ongoing business and fund additional expansion. We believe these sources of financing are adequate to support our immediate business operations and plans. As of December 31, 2022, we had cash and cash equivalents of $55.1 million.
We also may borrow on our revolving credit facility or issue equity to support ongoing business and fund additional expansion. We believe these sources of financing are adequate to support our immediate business operations and plans. As of December 31, 2023, we had cash and cash equivalents of $21.0 million.
We opened the first Kona Grill since the Company acquired the Kona Grill brand in Columbus, Ohio in January 2023 and have two restaurants under construction in Riverton, Utah and Phoenix, Arizona. Expansion through New F&B Hospitality Projects .
We opened the first Kona Grill since the Company acquired the Kona Grill brand in Columbus, Ohio in January 2023 and also opened two additional Kona Grill restaurants in Riverton, Utah and Phoenix, Arizona in 2023. Expansion through New F&B Hospitality Projects .
The STK segment consists of the results of operations from STK restaurant locations, competing in the full-service dining industry, as well as management, license and incentive fee revenue generated from the STK brand and pre-opening expenses associated with new restaurants under development. ● Kona Grill .
The STK segment consists of the results of operations from company-owned STK restaurant locations, competing in the full-service dining category, as well as management, license and incentive fee revenue generated from the STK brand and pre-opening expenses associated with new restaurants. ​ ● Kona Grill .
We spent $10.0 million on maintenance capital expenditures for existing restaurants which included additional furniture, fixtures and equipment commensurate with the higher sales volumes at our restaurants. In addition, we spent approximately $2.3 million for furniture, fixtures and equipment for restaurants that we plan to open in the future.
We spent $8.4 million on maintenance capital expenditures for existing restaurants which included additional furniture, fixtures and equipment commensurate with the higher sales volumes at our restaurants. In addition, we spent approximately $2.9 million for furniture, fixtures and equipment for restaurants that we plan to open in the future.
For the year ended December 31, 2022, beverage sales comprised 24% of food and beverage sales, and food sales comprised the remaining 76%. This indicator assists management in understanding the trends in gross margins of the restaurants. Our primary owned restaurant brands are STK and Kona Grill.
For the year ended December 31, 2023, beverage sales comprised 23% of food and beverage sales, and food sales comprised the remaining 77%. This indicator assists management in understanding the trends in gross margins of the restaurants. Our primary owned restaurant brands are STK and Kona Grill.
The term loan is payable in quarterly installments of $0.1 million, with the final payment due in August 2026. ​ On December 13, 2022, we entered into the Fourth Amendment to the Credit Agreement that: ​ ● Allows for a new $50.0 million delayed draw term facility, available to draw for twelve months and subject to a 1.75x Net Leverage Ratio incurrence test (as defined in the Credit Agreement) for permitted acquisitions, stock repurchases and new restaurant capital expenditures; 32 Table of Contents ● Allows the Company to redeem, repurchase or otherwise acquire its own capital stock in an aggregate amount of up to $50.0 million subject to a 1.75x Net Leverage Ratio incurrence test and no default or event of default; ● Changes the interest rate from London Interbank Offered Rate (“LIBOR“) plus a margin to Secured Overnight Financing Rate (“SOFR”) plus an applicable margin; and ● Requires the Company to pay interest on an undrawn portion of the delayed draw term loan up to $35.0 million, beginning 90 days following the effective date until December 13, 2023. ​ We borrowed $50.0 million on the delayed draw term facility on December 28, 2022.
The term loan is payable in quarterly installments of $0.1 million, with the final payment due in August 2026. ​ On December 13, 2022, the Company entered into the Fourth Amendment to the Credit Agreement that: ​ ● Allows for a new $50.0 million delayed draw term facility, available to draw for twelve months and subject to a 1.75x Net Leverage Ratio incurrence test (as defined in the Credit Agreement) for permitted acquisitions, stock repurchases and new restaurant capital expenditures; ● Allows the Company to redeem, repurchase or otherwise acquire its own capital stock in an aggregate amount of up to $50 million subject to a 1.75x Net Leverage Ratio incurrence test and no default or event of default; ● Changes the interest rate from London Interbank Offered Rate (“LIBOR“) plus a margin to Secured Overnight Financing Rate (“SOFR”) plus an applicable margin. ​ The Company borrowed $50.0 million on the delayed draw term facility on December 28, 2022.
We continue to receive inbound inquiries regarding new opportunities globally, and we continue to work with existing hospitality clients to identify and develop additional opportunities in their venues. We expect to enter into at least one to two new F&B hospitality agreements annually.
We continue to receive inbound inquiries regarding new opportunities globally, 23 Table of Contents and we continue to work with existing hospitality clients to identify and develop additional opportunities in their venues. We expect to enter into one to two new F&B hospitality agreements annually.
The ONE Hospitality segment is composed of the management, license and incentive fee revenue and results of operations generated from the Company’s other brands and venue concepts, which include ANGEL, Bao Yum, Heliot, Hideout, Marconi, Radio and Rivershore Bar & Grill.
The ONE Hospitality segment is composed of the management, license and incentive fee revenue and results of operations generated from the Company’s other brands and venue concepts, not including STK or Kona Grill, which include Bao Yum, Heliot, Hideout, Radio and Rivershore Bar & Grill.
Overview We currently own, operate, manage or license 63 venues including 25 STKs and 25 Kona Grills in major metropolitan cities in North America, Europe and the Middle East and 13 F&B venues in six hotels and casinos in the United States and Europe.
Overview We currently own, operate, manage or license 63 venues including 28 STKs and 27 Kona Grills in major metropolitan cities in North America, Europe and the Middle East and 8 F&B venues in four hotels and casinos in the United States and Europe.
On a three-year basis, STK SSS increased 69.1% while Kona Grill SSS increased 26.3%. Number of Restaurant Openings . Number of restaurant openings reflects the number of restaurants opened during a particular fiscal period. For each restaurant opening, we incur pre-opening costs, which are defined below.
On a four-year basis, STK SSS increased 64.1% while Kona Grill SSS increased 23.6%. Number of Restaurant Openings . Number of restaurant openings reflects the number of restaurants opened during a particular fiscal period. For each restaurant opening, we incur pre-opening costs, which are defined below.
Outside services include music and entertainment costs, such as the use of live DJ’s, promoter costs, security services, outside cleaning services and commissions paid to event staff for banquet sales and delivery service fees. ● Repairs and maintenance . Repairs and maintenance consist of general repair work to maintain our facilities, and computer maintenance contracts.
Outside services include music and entertainment costs, such as the use of live DJ’s, security services, outside cleaning services and delivery service fees. ​ ● Repairs and maintenance . Repairs and maintenance consist of general repair work to maintain our facilities, and computer maintenance contracts.
Property and equipment, net of accumulated depreciation and the operating lease right-of-use assets as of December 31, 2022 were $94.1 million and $85.2 million, respectively. From time to time, we have decided to close or dispose of restaurants.
Property and equipment, net of accumulated depreciation and the operating lease right-of-use assets as of December 31, 2023 were $139.9 million and $95.1 million, respectively. From time to time, we have decided to close or dispose of restaurants.
Net income attributable to noncontrolling interest decreased $0.8 million to a net loss of $0.2 million for 2022 compared to net income of $0.6 million for 2021. ​ 31 Table of Contents 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 our outstanding debt.
Net loss attributable to noncontrolling interest increased to a net loss of $0.7 million for 2023 compared to net loss of $0.2 million for 2022. ​ 32 Table of Contents 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 our outstanding debt.
Critical Accounting Estimates Critical accounting estimates are those that management believes are the most important to the portrayal of our financial condition and results and require the most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain, especially in light of the current economic environment due to the COVID-19 pandemic.
Critical Accounting Estimates Critical accounting estimates are those that management believes are the most important to the portrayal of our financial condition and results and require the most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
Other expenses were $0.6 million for 2022 composed primarily of trademark defense and litigation expenses. ​ Interest expense, net of interest income . Interest expense, net of interest income, was approximately $2.1 million and $3.8 million for 2022 and 2021, respectively.
Other expenses were $1.0 million for 2023 primarily related to litigation expenses compared to other expenses of $0.6 million for 2022 composed primarily of trademark defense and litigation expenses. ​ Interest expense, net of interest income . Interest expense, net of interest income, was approximately $7.0 million and $2.1 million for 2023 and 2022, respectively.
We had $74.3 million in long-term debt, which consisted of borrowings under our Credit Agreement as of December 31, 2022.
We had $73.5 million in long-term debt, which consisted of borrowings under our Credit Agreement as of December 31, 2023.
Cash Flows The following table summarizes the statement of cash flows for the years ended December 31, 2022 and December 31, 2021 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ 2022 2021 Net cash provided by (used in): ​ ​ Operating activities ​ $ 25,251 ​ $ 30,966 Investing activities ​ (32,629) ​ (11,467) Financing activities ​ 39,102 ​ (20,275) Effect of exchange rate changes on cash ​ (217) ​ 5 Net increase (decrease) in cash and cash equivalents ​ $ 31,507 ​ $ (771) ​ Operating Activities.
Cash Flows The following table summarizes the statement of cash flows for the years ended December 31, 2023 and December 31, 2022 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ 2023 2022 Net cash provided by (used in): ​ ​ Operating activities ​ $ 30,781 ​ $ 25,251 Investing activities ​ (53,550) ​ (32,629) Financing activities ​ (11,248) ​ 39,102 Effect of exchange rate changes on cash ​ (57) ​ (217) Net (decrease) increase in cash and cash equivalents ​ $ (34,074) ​ $ 31,507 ​ Operating Activities.
During 2022, we borrowed $50.0 million under the amended Credit Agreement, partially offset by $7.1 million in purchases of common stock and $2.0 million to pay employee taxes for shares withheld upon vesting of restricted stock units.
During 2022, we borrowed $50.0 million under the amended Credit Agreement, partially offset by $7.1 million in purchases of common stock and $2.0 million to pay employee taxes for shares withheld upon vesting of restricted stock units. Recent Accounting Pronouncements Refer to Note 2 of our consolidated financial statements for a detailed description of recent accounting pronouncements.
As a percentage of revenues, cost of sales decreased 50 basis points to 25.0% for 2022 from 25.5% for 2021 primarily due to product mix management, pricing and operational cost reduction initiatives partially offset by significant commodity price increases. Owned restaurant operating expenses .
As a percentage of revenues, cost of sales decreased 110 basis points to 23.9% for 2023 from 25.0% for 2022 primarily due to product mix management, pricing and operational cost reduction initiatives partially offset by increased commodity prices. Owned restaurant operating expenses .
We measure cost of goods as a percentage of owned restaurant net revenues. Owned restaurant cost of sales are generally influenced by the cost of food and beverage items, menu mix, discounting activity and restaurant 24 Table of Contents level controls. See “Item 1A.
Cost and expenses Owned restaurant cost of sales . Owned restaurant cost of sales includes all owned restaurant food and beverage expenditures. We measure cost of goods as a percentage of owned restaurant net revenues. Owned restaurant cost of sales are generally influenced by the cost of food and beverage items, menu mix, discounting activity and restaurant level controls.
Our comparable restaurant base for STK SSS consisted of ten domestic restaurants for the year ended December 31, 2022. For Kona Grill SSS 24 domestic restaurants are included in the comparable restaurant base. STK and Kona Grill SSS increased 17.1% and 2.5%, respectively, for 2022 compared to the prior year.
Our comparable restaurant base for STK SSS consisted of twelve domestic restaurants for the year ended December 31, 2023. For Kona Grill SSS, 24 domestic restaurants are included in the comparable restaurant base. STK and Kona Grill SSS decreased 3.0% and 2.2%, respectively for 2023 compared to the prior year.
As of December 31, 2022, the availability on our revolving credit facility was $10.6 million, subject to the restrictions described in Note 5 to our consolidated financial statements. ​ Capital expenditures in 2022 were $32.7 million of which $17.8 million primarily related to the construction of two new STK restaurants in San Francisco, California and Dallas, Texas which opened in 2022, Kona Grill Columbus which opened in January 2023 and several restaurants that were under construction as of December 31, 2022.
As of December 31, 2023, the availability on our revolving credit facility was $10.6 million, subject to the restrictions described in Note 5 to our consolidated financial statements. ​ Capital expenditures in 2023 were $53.5 million of which $41.8 million primarily related to the construction of six new STK and Kona Grill restaurants and several restaurants that were under development as of December 31, 2023.
We expect to open five to six STKs annually, primarily through company-owned locations and management or licensing agreements, provided that we have sufficient interest from prospective licensees, acceptable locations and quality restaurant managers available to support that pace of growth.
We expect to open five to six STKs annually, primarily through company-owned locations and management or licensing agreements, provided that we have sufficient interest from prospective licensees, acceptable locations and quality restaurant managers available to support that pace of growth. In 2023, we opened Company-owned STK restaurants in Charlotte, North Carolina, Boston, Massachusetts and Salt Lake City, Utah.
In 2022, we opened three STK restaurants including two owned restaurants in San Francisco, California and Dallas, Texas, a managed STK restaurant in London, United Kingdom and opened one venue under a licensing agreement. Average Check Per Person and Average Spend . Average check is calculated by dividing total restaurant sales by total number of guests for a specified period.
In 2022, we opened three STK restaurants including two owned restaurants in San Francisco, California and Dallas, Texas, a managed STK restaurant in London, United Kingdom and opened one Bao Yum venue under a licensing agreement. Average Check Per Person and Average Spend .
For our comparable STK restaurants, our average check was $131 for 2022 compared to $114 for 2021. The average spend per transaction was $61 for Kona Grill restaurants for 2022 compared to $56 for 2021. Average Comparable Restaurant Revenue . Average comparable restaurant revenue consists of the average sales of our comparable restaurants over a certain period of time.
The average spend per transaction was $63 for our comparable Kona Grill restaurants in 2023 compared to $61 for 2022. 24 Table of Contents Average Comparable Restaurant Revenue . Average comparable restaurant revenue consists of the average sales of our comparable restaurants over a certain period of time.
For STK locations where we may be the successor restaurant tenant, which anticipate total cash investment of $2.0 million to $3.0 million. 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.
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.
Certain percentage amounts may not sum to total due to rounding. ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ 2022 ​ 2021 Revenues: ​ ​ ​ Owned restaurant net revenue 95.0% ​ 95.4% Management, license and incentive fee revenue 5.0% ​ 4.6% Total revenues 100.0% ​ 100.0% Cost and expenses: ​ ​ ​ ​ Owned operating expenses: ​ ​ ​ ​ Owned restaurant cost of sales (1) ​ 25.0% ​ 25.5% Owned restaurant operating expenses (1) ​ 58.1% ​ 54.7% Total owned operating expenses (1) ​ 83.1% ​ 80.2% General and administrative (including stock-based compensation of 1.3% and 1.3% for the years ended December 31, 2022 and 2021, respectively) 9.2% ​ 9.2% Depreciation and amortization 3.8% ​ 3.9% COVID-19 related expenses 0.8% ​ 2.1% Transaction costs ​ 0.0% ​ 0.1% Lease termination expenses 0.1% ​ 0.7% Agreement restructuring expenses ​ —% ​ 0.2% Pre-opening expenses 1.7% ​ 0.4% Write-off of trademark costs and other 0.2% ​ —% Total costs and expenses 94.9% ​ 93.0% Operating income 5.1% ​ 7.0% Other expenses (income), net: ​ ​ ​ Interest expense, net of interest income 0.7% ​ 1.4% Loss on early debt extinguishment —% ​ 0.2% Gain on CARES Act Loan Forgiveness —% ​ (6.7)% Total other expenses (income), net 0.7% ​ (5.1)% Income before provision for income taxes 4.5% ​ 12.1% Provision for income taxes ​ 0.3% ​ 0.6% Net income 4.2% ​ 11.5% Less: net (loss) income attributable to noncontrolling interest (0.1)% ​ 0.2% Net income attributable to The ONE Group Hospitality, Inc. 4.3% ​ 11.3% (1) These expenses are being shown as a percentage of owned restaurant net revenue. ​ 28 Table of Contents The following table presents a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods indicated (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ 2022 2021 Net income attributable to The ONE Group Hospitality, Inc. ​ $ 13,534 ​ $ 31,348 Net income (loss) attributable to noncontrolling interest ​ (215) ​ 600 Net income ​ 13,319 ​ 31,948 Interest expense, net of interest income ​ 2,113 ​ 3,780 Provision for income taxes ​ 874 ​ 1,586 Depreciation and amortization ​ 12,134 ​ 10,790 EBITDA ​ 28,440 ​ 48,104 COVID-19 related expenses ​ ​ 2,534 ​ ​ 5,821 Transaction costs ​ ​ 123 ​ ​ 160 Stock-based compensation ​ ​ 3,985 ​ ​ 3,618 Lease termination expense (1) ​ 257 ​ 1,912 Agreement restructuring expense ​ — ​ 503 Pre-opening expenses ​ 5,519 ​ 1,037 Non-cash rent (2) ​ ​ (164) ​ ​ (32) Gain on CARES Act Loan forgiveness ​ ​ — ​ ​ (18,529) Loss on early debt extinguishment ​ ​ — ​ ​ 600 Write-off of trademark costs and other ​ 630 ​ — Adjusted EBITDA ​ 41,324 ​ 43,194 Adjusted EBITDA attributable to noncontrolling interest ​ 72 ​ 507 Adjusted EBITDA attributable to The ONE Group Hospitality, Inc. ​ $ 41,252 ​ $ 42,687 (1) Lease termination expense are costs associated with closed, abandoned and disputed locations or leases.
Certain percentage amounts may not sum to total due to rounding. ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ 2023 ​ 2022 Revenues: ​ ​ ​ Owned restaurant net revenue 95.4% ​ 95.0% Management, license and incentive fee revenue 4.6% ​ 5.0% Total revenues 100.0% ​ 100.0% Cost and expenses: ​ ​ ​ ​ Owned operating expenses: ​ ​ ​ ​ Owned restaurant cost of sales (1) ​ 23.9% ​ 25.0% Owned restaurant operating expenses (1) ​ 60.3% ​ 58.1% Total owned operating expenses (1) ​ 84.1% ​ 83.1% General and administrative (including stock-based compensation of 1.5% and 1.3% for the years ended December 31, 2023 and 2022, respectively) 9.2% ​ 9.2% Depreciation and amortization 4.7% ​ 3.8% Pre-opening expenses 2.7% ​ 1.7% Transaction costs ​ 0.1% ​ 0.0% Lease termination expenses —% ​ 0.1% COVID-19 related expenses —% ​ 0.8% Other expenses 0.3% ​ 0.2% Total costs and expenses 97.2% ​ 94.9% Operating income 2.8% ​ 5.1% Other expenses, net: ​ ​ ​ Interest expense, net of interest income 2.1% ​ 0.7% Total other expenses, net 2.1% ​ 0.7% Income before provision for income taxes 0.7% ​ 4.5% (Benefit) provision for income taxes ​ (0.5)% ​ 0.3% Net income 1.2% ​ 4.2% Less: net loss attributable to noncontrolling interest (0.2)% ​ (0.1)% Net income attributable to The ONE Group Hospitality, Inc. 1.4% ​ 4.3% (1) These expenses are being shown as a percentage of owned restaurant net revenue. ​ 29 Table of Contents The following table presents a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods indicated (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ 2023 2022 Net income attributable to The ONE Group Hospitality, Inc. ​ $ 4,718 ​ $ 13,534 Net loss attributable to noncontrolling interest ​ (692) ​ (215) Net income ​ 4,026 ​ 13,319 Interest expense, net of interest income ​ 7,028 ​ 2,113 (Benefit) provision for income taxes ​ (1,760) ​ 874 Depreciation and amortization ​ 15,664 ​ 12,134 EBITDA ​ 24,958 ​ 28,440 Pre-opening expenses ​ 8,855 ​ 5,519 Stock-based compensation ​ ​ 5,032 ​ ​ 3,985 Transaction costs ​ ​ 207 ​ ​ 123 COVID-19 related expenses ​ ​ — ​ ​ 2,534 Lease termination expense (1) ​ — ​ 257 Non-cash rent (2) ​ ​ (340) ​ ​ (164) Other expenses ​ 1,021 ​ 630 Adjusted EBITDA ​ 39,733 ​ 41,324 Adjusted EBITDA attributable to noncontrolling interest ​ (339) ​ 72 Adjusted EBITDA attributable to The ONE Group Hospitality, Inc. ​ $ 40,072 ​ $ 41,252 (1) Lease termination expense are costs associated with closed, abandoned and disputed locations or leases.
Our average comparable STK restaurant revenues were $19.1 million and $16.3 million for 2022 and 2021, respectively.
Our average comparable STK restaurant revenues were $17.3 million and $19.1 million for 2023 and 2022, respectively. Our average comparable Kona Grill restaurant revenues were $5.2 million and $5.3 million for 2023 and 2022, respectively.
Food and beverage costs for owned restaurants increased $7.9 million, or 11.7%, to $75.4 million for 2022 from $67.5 million for 2021. The increase was primarily due to the incremental sales increases noted above.
Food and beverage costs for owned restaurants increased $0.3 million, or 0.5%, to $75.7 million for 2023 from $75.4 million for 2022. The increase was due to the incremental sales increases noted above from the opening of eight new venues since August 2022.
Please refer to the table on page 28 for our reconciliation of net income to EBITDA and Adjusted EBITDA and for a reconciliation of operating income to Restaurant Operating Profit. 26 Table of Contents Results of Operations The following table sets forth certain statements of operations data for the periods indicated (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ 2022 2021 Revenues: ​ ​ Owned restaurant net revenue ​ $ 300,859 ​ $ 264,404 Management, license and incentive fee revenue ​ 15,779 ​ 12,774 Total revenues ​ 316,638 ​ 277,178 Cost and expenses: ​ ​ Owned operating expenses: ​ ​ ​ ​ ​ Owned restaurant cost of sales ​ 75,365 ​ 67,468 Owned restaurant operating expenses ​ 174,689 ​ 144,529 Total owned operating expenses ​ 250,054 ​ 211,997 General and administrative (including stock-based compensation of $3,985 and $3,618 for the years ended December 31, 2022 and 2021, respectively) ​ 29,081 ​ 25,573 Depreciation and amortization ​ 12,134 ​ 10,790 COVID-19 related expenses ​ 2,534 ​ 5,821 Transaction costs ​ ​ 123 ​ 160 Lease termination expenses ​ 257 ​ 1,912 Agreement restructuring expenses ​ — ​ 503 Pre-opening expenses ​ 5,519 ​ 1,037 Write-off of trademark costs and other ​ 630 ​ — Total costs and expenses ​ 300,332 ​ 257,793 Operating income ​ 16,306 ​ 19,385 Other expenses (income), net: ​ ​ Interest expense, net of interest income ​ 2,113 ​ 3,780 Loss on early debt extinguishment ​ — ​ 600 Gain on CARES Act Loan Forgiveness ​ — ​ (18,529) Total other expenses (income), net ​ 2,113 ​ (14,149) Income before provision for income taxes ​ 14,193 ​ 33,534 Provision for income taxes ​ 874 ​ 1,586 Net income ​ 13,319 ​ 31,948 Less: net (loss) income attributable to noncontrolling interest ​ (215) ​ 600 Net income attributable to The ONE Group Hospitality, Inc. ​ $ 13,534 ​ $ 31,348 ​ 27 Table of Contents The following table sets forth certain statements of operations data as a percentage of total revenues for the periods indicated.
Please refer to the table on page 30 for our reconciliation of net income to EBITDA and Adjusted EBITDA and for a reconciliation of operating income to Restaurant Operating Profit. 27 Table of Contents Results of Operations The following table sets forth certain statements of operations data for the periods indicated (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ 2023 2022 Revenues: ​ ​ Owned restaurant net revenue ​ $ 317,366 ​ $ 300,859 Management, license and incentive fee revenue ​ 15,403 ​ 15,779 Total revenues ​ 332,769 ​ 316,638 Cost and expenses: ​ ​ Owned operating expenses: ​ ​ ​ ​ ​ Owned restaurant cost of sales ​ 75,727 ​ 75,365 Owned restaurant operating expenses ​ 191,250 ​ 174,689 Total owned operating expenses ​ 266,977 ​ 250,054 General and administrative (including stock-based compensation of $5,032 and $3,985 for the years ended December 31, 2023 and 2022, respectively) ​ 30,751 ​ 29,081 Depreciation and amortization ​ 15,664 ​ 12,134 Pre-opening expenses ​ 8,855 ​ 5,519 Transaction costs ​ ​ 207 ​ 123 Lease termination expenses ​ — ​ 257 COVID-19 related expenses ​ — ​ 2,534 Other expenses ​ 1,021 ​ 630 Total costs and expenses ​ 323,475 ​ 300,332 Operating income ​ 9,294 ​ 16,306 Other expenses, net: ​ ​ Interest expense, net of interest income ​ 7,028 ​ 2,113 Total other expenses, net ​ 7,028 ​ 2,113 Income before provision for income taxes ​ 2,266 ​ 14,193 (Benefit) provision for income taxes ​ (1,760) ​ 874 Net income ​ 4,026 ​ 13,319 Less: net loss attributable to noncontrolling interest ​ (692) ​ (215) Net income attributable to The ONE Group Hospitality, Inc. ​ $ 4,718 ​ $ 13,534 ​ 28 Table of Contents The following table sets forth certain statements of operations data as a percentage of total revenues for the periods indicated.
Depreciation and amortization . Depreciation and amortization expense consists principally of charges related to the depreciation of fixed assets including leasehold improvements, equipment and furniture and fixtures and loss on disposal of fixed assets. Pre-opening expenses . Pre-opening expenses consist of costs incurred prior to opening an owned or managed STK restaurant at either a leased or F&B location.
Depreciation and amortization . Depreciation and amortization expense consists principally of charges related to the depreciation of fixed assets including leasehold improvements, equipment and furniture and fixtures and loss on disposal of fixed assets. Pre-opening expenses .
We expect to expand our operations domestically using a disciplined and targeted site selection process. We believe we could grow the Kona Grill brand to 200 restaurants over the foreseeable future.
In 2022, we opened two owned STK restaurants in San Francisco, California and Dallas, Texas and one managed STK restaurant in London, United Kingdom. Expansion of Kona Grill . We expect to expand our operations domestically using a disciplined and targeted site selection process. We believe we could grow the Kona Grill brand to 200 restaurants over the foreseeable future.
Pre-opening expenses are comprised principally of manager salaries and relocation costs, employee payroll, training costs for new employees and lease costs incurred prior to opening.
Pre-opening expenses consist of costs incurred prior to opening an owned or managed STK or Kona Grill restaurant at either a leased or F&B location. Pre-opening expenses are comprised principally of manager salaries and relocation costs, employee payroll, training costs for new employees and lease costs incurred prior to opening.
Net cash provided by operating activities was $25.3 million for 2022 compared to $31.0 million for 2021. The decrease in net cash provided by operating activities during 2022 compared to 2021 was primarily attributable to payments on accrued expenses partially offset by collection on accounts receivable. Investing Activities.
Net cash provided by operating activities was $30.8 million for 2023 compared to $25.3 million for 2022. The increase in net cash provided by operating activities during 2023 compared to 2022 was primarily attributable to higher accounts payable and accrued expenses attributable to the timing of payments. Investing Activities.
Our average comparable Kona Grill restaurant revenues were $5.3 million and $5.1 million for 2022 and 2021, respectively. ​ 23 Table of Contents Key Financial Terms and Metrics We evaluate our business using a variety of key financial measures: Segment reporting Our reportable operating segments are as follows: ● STK .
Key Financial Terms and Metrics We evaluate our business using a variety of key financial measures: Segment reporting Our reportable operating segments are as follows: ● STK .
We have identified over 75 additional major metropolitan areas across the globe where we expect we could grow our STK brand to 200 restaurants over the foreseeable future.
We expect to continue to expand our operations domestically and internationally through a mix of owned, licensed and managed STK restaurants using a disciplined and targeted site selection process. We have identified over 75 additional major metropolitan areas across the globe where we expect we could grow our STK brand to 200 restaurants over the foreseeable future.
Net capital expenditures, inclusive of $2.2 million in landlord contributions, was $30.5 million for 2022.
Net capital expenditures, inclusive of $4.7 million in landlord contributions, was $48.8 million for 2023.
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.
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.
Loans under the amended Credit Agreement bear interest at a rate per annum using the SOFR rate subject to a 1.00% floor plus an interest rate margin of 6.50%.
The delayed draw term loan is payable in quarterly installments of $0.25 million beginning December 31, 2023, with the final payment due in August 2026. Loans under the amended Credit Agreement bear interest at a rate per annum using the SOFR rate subject to a 1.00% floor plus an interest rate margin of 6.50%.
We incurred $5.5 million of pre-opening expenses primarily related to payroll, training, and non-cash rent for STK San Francisco which opened August 2022, STK Dallas which opened November 2022, Kona Grill Columbus which opened January 2023 and two new restaurants which are currently under construction. Total pre-opening expenses related to non-cash rent were $1.1 million.
Total pre-opening expenses related to non-cash pre-open rent was $1.8 million. ​ 31 Table of Contents Pre-opening expenses for 2022 were $5.5 million primarily related costs associated with STK San Francisco which opened August 2022, STK Dallas which opened November 2022, and restaurants opened in 2023.
We evaluate the performance of our managed and licensed properties based on sales growth, a key driver for management and license fees, and on improvements in operating profitability margins, which, combined with sales, drives incentive fee growth. Cost and expenses Owned restaurant cost of sales . Owned restaurant cost of sales includes all owned restaurant food and beverage expenditures.
Initial licensing fees and upfront fees related to management and license agreements are recognized as revenue on a straight-line basis over the term of the agreement. 25 Table of Contents We evaluate the performance of our managed and licensed properties based on sales growth, a key driver for management and license fees, and on improvements in operating profitability margins, which, combined with sales, drives incentive fee growth.
General and administrative costs increased $3.5 million, or 13.7% to $29.1 million for 2022 from $25.6 million for 2021. The increase was attributable to additional investments required ahead of growth, increased accounting and legal fees partially offset by a decrease in performance based variable compensation.
General and administrative costs increased $1.7 million, or 5.7%, to $30.8 million for 2023 from $29.1 million for 2022. The increase was attributable to increased stock-based compensation expense and additional investments required ahead of new restaurant openings partially offset by lower incentive-based performance compensation. As a percentage of revenues, general and administrative costs were 9.2% in both 2023 and 2022.
Net cash used in investing activities for 2022 was $32.7 million primarily for the construction of STK restaurants in Dallas, Texas and San Francisco, California; and Kona Grill restaurants in Riverton, Utah and Columbus, Ohio, as well as capital expenditures for existing restaurants compared to $11.5 million for 2021. Financing Activities .
Net cash used in investing activities for 2023 was $53.5 million primarily for the construction of six restaurants opened in 2023 and new restaurants under development, as well as capital expenditures for existing restaurants compared to $32.6 million for 2022. Financing Activities .
These management, license and incentive fees are recognized as revenue in the period the restaurant’s sales occur. Initial licensing fees and upfront fees related to management and license agreements are recognized as revenue on a straight-line basis over the term of the agreement.
These management, license and incentive fees are recognized as revenue in the period the restaurant’s sales occur.
Management, license and incentive fee revenue . Management and license fee revenues increased $3.0 million, or 23.5%, to $15.8 million for 2022 from $12.8 million for 2021. The increase was primarily attributable to strong revenues at our managed restaurants in North America. Cost and Expenses Owned restaurant cost of sales .
Management, license and incentive fee revenue . Management and license fee revenues decreased $0.4 million, or 2.4%, to $15.4 million for 2023 from $15.8 million for 2022. The decrease was primarily attributable to the non-renewal of the management agreement for Radio at the ME London hotel. Cost and Expenses Owned restaurant cost of sales .
Owned restaurant operating expenses increased $30.2 million, or 20.9%, to $174.7 million for 2022 from $144.5 million for 2021. Owned restaurant operating costs as a percentage of owned restaurant net revenue increased 340 basis points from 54.7% in 2021 to 58.1% for 2022 primarily due to higher average wage and operating costs. ​ General and administrative .
Owned restaurant operating costs as a percentage of owned restaurant net revenue increased 220 basis points from 58.1% in 2022 to 60.3% for 2023 primarily due to higher labor costs driven by wage inflation and investments in anticipation of growth, increased marketing expenses and general operating cost inflation. ​ General and administrative .
Average spend per transaction is calculated by dividing total restaurant sales by total number of transactions for a specified period. Our management team uses these indicators to analyze trends in customers’ preferences, customer expenditures and the overall effectiveness of menu changes and price increases.
Our management team uses these indicators to analyze trends in customers’ preferences, customer expenditures and the overall effectiveness of menu changes and price increases. For our comparable STK restaurants, the average check was $130 for 2023 compared to $131 for 2022.
The Corporate segment’s total assets primarily include cash and cash equivalents, the Kona Grill tradename, and deferred tax assets. ​ See Note 13 to our consolidated financial statements for further information on our segment reporting. Revenues Owned restaurant net revenues .
This segment also includes STK Meat Market, an e-commerce platform that offers signature steak cuts nationwide, and revenue generated from gift card programs. The Corporate segment’s total assets primarily include cash and cash equivalents, the Kona Grill tradename, and deferred tax assets. ​ See Note 12 to our consolidated financial statements for further information on our segment reporting.
On August 6, 2021, we entered into the Third Amendment to the Credit Agreement to extend the maturity date for both the term loan and revolving credit facility to August 2026. The Credit Agreement provides for a secured revolving credit facility of $12.0 million and a $25.0 million term loan (reduced from $48.0 million).
As amended, the Credit Agreement provided for a secured revolving credit facility of $12.0 million and a $25.0 million term loan (reduced from $48.0 million).
For owned restaurants, where we build from a shell state, we have typically targeted an average cash investment of approximately $3.8 million for a 10,000 square-foot STK restaurant and approximately $2.5 million for an 8,000 square-foot Kona Grill restaurant, in each case, net of landlord contributions and excluding pre-opening costs.
For owned Kona Grill restaurants, where we build from a shell state, we have typically targeted a restaurant size of 7,000 square feet with a gross cash investment of approximately $510 per square foot, exclusive of $150 per square foot in landlord contributions.
The table below reflects our venues by restaurant brand and geographic location: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Venues ​ STK (1) Kona Grill ONE Hospitality (2) Total Domestic Owned 13 25 2 40 Managed 2 — 1 3 Licensed 1 — 3 4 Total domestic 16 25 6 47 International Owned — — — — Managed 5 — 7 12 Licensed 4 — — 4 Total international 9 — 7 16 Total venues 25 25 13 63 (1) Locations with an STK and STK Rooftop are considered one venue location.
In March 2024, we opened the following: ● Owned STK restaurant in Washington DC There is currently one Company-owned STK restaurant, one Company-owned Kona Grill restaurant, and one Company-owned Salt Water Social restaurant under construction in the following cities: ● Owned STK restaurant in Aventura, Florida ● Owned Kona Grill restaurant Tigard, Oregon ● Owned Salt Water Social restaurant in Denver, Colorado ​ The table below reflects our venues by restaurant brand and geographic location: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Venues ​ STK (1) Kona Grill ONE Hospitality (2) Total Domestic Owned 17 ​ 27 ​ 2 46 Managed 2 ​ — ​ 1 3 Licensed 1 ​ — ​ — 1 Total domestic 20 ​ 27 ​ 3 50 International ​ ​ Owned — ​ — ​ 1 1 Managed 4 ​ — ​ 4 8 Licensed 4 ​ — ​ — 4 Total international 8 — 5 13 Total venues 28 27 8 63 (1) Locations with an STK and STK Rooftop are considered one venue location.
Net cash provided by financing activities was $39.1 million for 2022 compared to net cash used by financing activities of $20.3 million for 2021.
Net cash used by financing activities was $11.2 million for 2023 primarily attributable to $7.9 million of shares purchased under our stock buyback plan compared to net cash provided by financing activities of $39.1 million for 2022.
Capital expenditures by type for 2022 is provided below (in thousands). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ STK ​ Kona Grill ​ Other ​ Total New Venues ​ $ 12,555 ​ $ 5,226 ​ $ 2,258 ​ $ 20,039 Maintenance ​ ​ 5,279 ​ ​ 4,748 ​ ​ — ​ ​ 10,027 Other ​ ​ 409 ​ ​ 413 ​ ​ 1,741 ​ ​ 2,563 Total ​ $ 18,243 ​ $ 10,387 ​ $ 3,999 ​ $ 32,629 ​ 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. ​ Our operations have not required significant working capital, and, like many restaurant companies, we may have negative working capital during the year.
We expect to receive between $1.5 million to $2.1 million in landlord contributions in the next three months. ​ Capital expenditures by type for 2023 and 2022 is provided below (in thousands). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2023 STK ​ Kona Grill ​ Other ​ Total New Venues ​ $ 24,574 ​ $ 17,234 ​ $ 2,865 ​ $ 44,673 Maintenance ​ ​ 4,294 ​ ​ 4,134 ​ ​ — ​ ​ 8,428 Other ​ ​ — ​ ​ — ​ ​ 449 ​ ​ 449 Total (1) ​ $ 28,868 ​ $ 21,368 ​ $ 3,314 ​ $ 53,550 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2022 STK ​ Kona Grill ​ Other ​ Total New Venues ​ $ 12,555 ​ $ 5,226 ​ $ 2,258 ​ $ 20,039 Maintenance ​ ​ 5,279 ​ ​ 4,748 ​ ​ — ​ ​ 10,027 Other ​ ​ 409 ​ ​ 413 ​ ​ 1,741 ​ ​ 2,563 Total (1) ​ $ 18,243 ​ $ 10,387 ​ $ 3,999 ​ $ 32,629 (1) Exclusive of landlord contributions of $4.7 million and $2.2 million for the years ended December 31, 2023 and 2022, respectively. ​ ​ Our operations have not required significant working capital, and, like many restaurant companies, we may have negative working capital during the year.
On a 21 Table of Contents three-year basis, same-store sales increased 47.7% for 2022 compared to 2019; STK same store sales increased 69.1% on a three-year basis while Kona Grill same store sales increased 26.3%. Restaurant operating profit decreased $1.6 million, or 3.1% to $50.8 million for 2022 compared to $52.4 million in 2021.
Compared to pre COVID-19 pandemic sales volumes, same-store sales increased 43.8% for 2023 compared to 2019; STK same store sales increased 64.1% which includes a 39.1% increase in traffic, while Kona Grill same store sales increased 23.6%. Restaurant operating profit decreased $0.4 million, or 0.8% to $50.4 million for 2023 compared to $50.8 million in 2022.
Detail of pre-opening expenses by category is provided in the table below for 2022 (in thousands). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Preopen Expenses Preopen Rent ​ Total Training Team ​ $ 1,186 ​ $ — ​ $ 1,186 Restaurants (1) ​ ​ 3,200 ​ ​ 1,133 ​ ​ 4,333 Total ​ $ 4,386 ​ $ 1,133 ​ $ 5,519 (1) Includes STK San Francisco, STK Dallas, Kona Grill Columbus, Kona Grill Phoenix and Kona Grill Riverton. ​ Write-off of trademark costs and other.
Total pre-opening expenses related to non-cash rent were $1.1 million. ​ Detail of pre-opening expenses by category is provided in the tables below for 2023 and 2022 (in thousands). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, 2023 Preopen Expenses Preopen Rent ​ Total Training Team ​ $ 3,845 ​ $ — ​ $ 3,845 Restaurants ​ ​ 3,213 ​ ​ 1,797 ​ ​ 5,010 Total ​ $ 7,058 ​ $ 1,797 ​ $ 8,855 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, 2022 Preopen Expenses Preopen Rent ​ Total Training Team ​ $ 1,186 ​ $ — ​ $ 1,186 Restaurants ​ ​ 3,200 ​ ​ 1,133 ​ ​ 4,333 Total ​ $ 4,386 ​ $ 1,133 ​ $ 5,519 (1) Cash rent paid was $0.2 million and $0.2 million for the years ended December 31, 2023 and 2022, respectively. ​ Other expenses.
In 2022, we opened a licensed virtual location in conjunction with REEF Kitchens in Austin, Texas that features offerings from Bao Yum. Increase Same Store Sales and Increase Our Operating Efficiency .
In 2023, we opened two licensed virtual Bao Yum locations in Denver, Colorado in conjunction with REEF Kitchens. Recently the Company exited its licensing agreement with REEF Kitchens and has no venues operating pursuant to that agreement. Increase Same Store Sales and Increase Our Operating Efficiency .
As a result, we recognized an $18.5 million gain on CARES Act Loan forgiveness for the year ended December 31, 2021. ​ Capital Expenditures and Lease Arrangements When we open new Company-owned restaurants, our capital expenditures for construction increase.
Capital Expenditures and Lease Arrangements When we open new Company-owned restaurants, our capital expenditures for construction increase.
The increase was primarily attributable to strong execution of our sales initiatives combined with the opening of STK San Francisco and STK Dallas in August 2022 and November 2022, respectively. Same store sales increased 10.8% in 2022 compared to 2021. STK same store sales increased 17.1% while Kona Grill same store sales increased 2.5%.
The increase was primarily attributable to the opening of three STK restaurants and three Kona Grill restaurants during 2023. Same store sales decreased 2.7% in 2023 compared to 2022. STK same store sales decreased 3.0% while Kona Grill same store sales decreased 2.2%.
We recognized a loss on early debt extinguishment of $0.6 million in 2021. ​ Provision for income taxes . The provision for income taxes for 2022 was $0.9 million compared to $1.6 million for 2021. Our effective tax rate was 6.2% and 4.7% for the years ended December 31, 2022 and 2021, respectively.
Our effective tax rate was (77.7)% and 6.2% for the years ended December 31, 2023 and 2022, respectively.
This includes the STK Rooftop in San Diego, CA, which is a licensed location. (2) Includes concepts under the Company’s F&B hospitality management agreements and other venue brands such as ANGEL, Bao Yum, Heliot, Hideout, Marconi, Radio and Rivershore Bar & Grill.
(2) Includes concepts under the Company’s F&B hospitality management agreements and other venue brands such as Bao Yum, Heliot, Hideout, Marconi, Radio and Rivershore Bar & Grill. ​ ​ 22 Table of Contents ​ 2023 Financial Highlights Total revenue increased $16.1 million, or 5.1% to $332.8 million for 2023 compared to $316.6 million for 2022.
The increase was primarily related to the opening of two owned STK restaurant in the second half of 2022 and capital expenditures to enhance the guest experience. Lease termination expenses . Lease termination expense was $0.3 million and $1.9 million in 2022 and 2021, respectively.
Depreciation and amortization . Depreciation and amortization expense increased $3.6 million to $15.7 million for 2023 from $12.1 million for 2022. The increase was primarily attributable to the opening of eight new owned venues since August 2022 and capital expenditures to maintain and enhance the guest experience in our restaurants. Pre-opening expenses .

… 47 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−1 removed8 unchanged
Biggest changeIn addition, the COVID-19 pandemic has resulted in inflation due to supply and labor shortages. We pay many of our employees hourly rates related to the applicable federal or state minimum wage.
Biggest changeWe pay many of our employees hourly rates related to the applicable federal or state minimum wage.
We do not use financial instruments to hedge our risk to market price fluctuations in beef, seafood, produce and other food product prices at this time. Inflation Inflation significantly affected our operations in 2022. The impact of inflation on labor, food and occupancy costs could, in the future, significantly affect our operations.
We do not use financial instruments to hedge our risk to market price fluctuations in beef, seafood, produce and other food product prices at this time. Inflation Inflation significantly affected our operations in 2022 and 2023, to a lesser extent. The impact of inflation on labor, food and occupancy costs could, in the future, significantly affect our operations.
As of December 31, 2022, we had $74.3 million of borrowings subject to variable interest rates. ​ Foreign Currency Exchange Rate Risk We are subject to foreign currency exchange risk for our restaurants operating in the United Kingdom, Italy, Canada, Mexico and the Middle East.
As of December 31, 2023, we had $73.5 million of borrowings subject to variable interest rates. ​ Foreign Currency Exchange Rate Risk We are subject to foreign currency exchange risk for our restaurants operating in the United Kingdom, Europe, Canada, Mexico and the Middle East.
Removed
In addition, the COVID-19 pandemic has adversely impacted commodity prices due to supply and labor shortages.

Other STKS 10-K year-over-year comparisons