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What changed in ONE Group Hospitality, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of ONE Group Hospitality, Inc.'s 2023 and 2024 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 2024 report.

+250 added−228 removedSource: 10-K (2025-03-10) vs 10-K (2024-03-14)

Top changes in ONE Group Hospitality, Inc.'s 2024 10-K

250 paragraphs added · 228 removed · 180 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

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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.
Biggest changeThere are currently two Company-owned STK restaurants, one Company-owned Benihana, one Company-owned Kona Grill, and one franchised Benihana (Express) restaurant under construction in the following cities: ● Owned STK restaurant in Los Angeles, California ● Owned STK restaurant in Topanga, California ● Owned Benihana restaurant in San Mateo, California ● Owned Kona Grill restaurant in Seattle, Washington ● Franchised Benihana (Express) in Miami, Florida ​ 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. ​ Acquisitions On May 1, 2024, we acquired Safflower Holdings Corp., which beneficially owns most of the Benihana restaurants, as well as all of the RA Sushi restaurants, in the United States, and franchises Benihana locations in the U.S., Latin America (excluding Mexico) and the Caribbean. ​ ​ ​ ​ 3 Table of Contents Brands and Locations The table below reflects our venues by restaurant brand and geographic location: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Venues ​ STK (1) Benihana Grill Concepts ONE Hospitality (2) Total Domestic Owned (3) 18 ​ 73 ​ 43 ​ 3 137 Managed 2 ​ — ​ — ​ 1 3 Licensed 1 ​ — ​ — ​ — 1 Franchised — ​ 8 ​ — ​ — 8 Total domestic 21 ​ 81 ​ 43 ​ 4 149 International ​ ​ ​ Owned — ​ — ​ — ​ 1 1 Managed 5 ​ — ​ — ​ 4 9 Licensed 4 ​ — ​ — ​ — 4 Franchised — ​ 3 ​ — ​ — 3 Total international 9 3 — 5 17 Total venues 30 84 43 9 166 (1) Locations with an STK and STK Rooftop are considered one venue location.
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.
Item 1. Business Description of the Business We are an international restaurant company that develops, owns and operates, manages, licenses and franchises 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.
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.
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 or leases with hotels and casinos in the United States and in Europe.
We maintain consistent pricing standards and procedures for all top-volume purchases at our restaurants. We select high quality suppliers and negotiate pricing on a national level in each country where one or more of our restaurants operate. We test new suppliers on a regional basis for an extended period before using them on a national basis.
We maintain consistent pricing standards and procedures for all top-volume purchases at our restaurants. We select high quality suppliers and negotiate pricing on a national level in each country where one or more of our restaurants operate. We evaluate new suppliers on a regional basis for an extended period before using them on a national basis.
Our F&B hospitality clients operate global hospitality brands such as the W Hotel, ME Hotel, Hippodrome Casino, and Curio Collection by Hilton.
Our F&B hospitality clients operate global hospitality brands such as the W Hotel, ME Hotel, Curio by Hilton and Hippodrome Casino.
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.
For those restaurants and venues that 2 Table of Contents are managed, licensed or franchised, we generate management fee and franchise fee revenue based on top-line revenues and incentive fee revenue based on a percentage of the location’s revenues and net profits. We opened our first restaurant in January 2004 in New York, New York.
We utilize a network of local and national public relations firms to support these promotional programs. Additional marketing functions include the use of our websites, www.STKsteakhouse.com and www.KonaGrill.com, to facilitate online reservations, to-go/delivery orders and gift card sales to drive revenue.
We utilize a network of local and national public relations firms to support these promotional programs. Additional marketing functions include the use of our websites, www.STKsteakhouse.com, www.Benihana.com, www.KonaGrill.com and www.RASushi.com, to facilitate online reservations, to-go/delivery orders and gift card sales to drive revenue.
Turn-key F&B services are food and beverage services that can be scaled, customized and implemented by us for the client at a particular hospitality venue. Our vision is to be a global market leader in the hospitality industry by melding high-quality service, ambiance, high-energy and cuisine into one great experience that we refer to as “Vibe Dining”.
Turn-key F&B services are food and beverage services that can be scaled, customized and implemented by us for the client. Our vision is to be a global market leader in the hospitality industry by melding high-quality service, ambiance, high-energy and cuisine into one great experience that we refer to as “Vibe Dining”.
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.
Our menu provides a variety of portion sizes and signature options to appeal to a broad customer demographic. We operate eighteen owned, seven 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.
Intellectual Property Our rights in our registered and unregistered intellectual property, including trademarks and service marks, are significant to our business. We own the U.S. federal registration rights to “STK,” “Kona Grill,” and several related word marks and design marks related to our brands.
Intellectual Property Our rights in our registered and unregistered intellectual property, including trademarks and service marks, are significant to our business. We own the U.S. federal registration rights to “STK,” “Kona Grill,” “Benihana,” “RA Sushi” and several related word marks and design marks related to our brands.
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.
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 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.
We refer to our licensing, management and franchising 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.
Kona Grill offers freshly prepared food and attentive service in an upscale, contemporary ambiance that creates an exceptional dining experience that we believe exceeds many traditional casual dining restaurants. Menu items are crafted to have memorable flavor profiles that appeal to a wide range of customers.
Grill Concepts Our Grill Concepts offer freshly prepared food and attentive service in an upscale, contemporary ambiance that creates an exceptional dining experience that we believe exceeds many traditional dining restaurants. Menu items are crafted to have memorable flavor profiles that appeal to a wide range of customers.
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.
STK STK is a modern twist on the American steakhouse 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 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.
We experience competition from a variety of sources, including upscale steakhouse chains such as Ruth Chris, Del Frisco’s, Fleming’s, Mastro’s, The Capital Grille, Fogo De Chao, local upscale steakhouses, local sushi restaurants, local teppanyaki restaurants 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 30% 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, excluding Sysco, accounts for more than 15% of our total food and beverage purchases and no brand of alcohol accounts for more than 25% of our alcohol purchases.
We do not incorporate any information found or accessible through our websites into this Annual Report on Form 10-K.
We do not incorporate any information found or accessible through our websites into this Annual Report on Form 10-K. ​ ​ 8 Table of Contents
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.
Human Capital Resources As of December 31, 2024, we employed 135 employees within our support centers, 51 employees in multi-unit leadership and an aggregate of 594 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 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.
In 2024, the average domestic restaurant revenues and average check per person for owned and managed STK restaurants that have been open at least 24 months at December 31, 2024 were $15.5 million and $127, respectively. We are focused on expanding our global STK footprint.
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.
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 2024, the sale of beverages at owned STK restaurants accounted for 6 Table of Contents approximately 22% of owned STK restaurant revenues.
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.
The average headcount for employees in our domestic restaurants is 70. Combining full-time and part-time employees, we employ and manage directly approximately 10,300 persons and through ONE Hospitality we manage 7 Table of Contents approximately 500 employees for a total of approximately 10,800 employees worldwide.
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 currently own, operate, manage, license or franchise 166 venues including 30 STKs, 84 Benihanas, 27 Kona Grills and 16 RA Sushis in major metropolitan cities in North America, Europe and the Middle East and 9 F&B venues in four hotels and casinos in the United States and Europe.
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.
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.
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.
Historically, our clients have provided the majority of the capital required for the development of the facilities we manage on their behalf. ​ ● Bao Yum . A fast-casual concept that offers a whimsical twist on classic bao. Bao Yum serves breakfast, lunch, dinner and dessert bao along with a variety of salads, soups, sandwiches and snacks.
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 .
Bao Yum currently operates in London, England. ​ ● Heliot . Heliot Steak House is an award-winning steakhouse and bar within the Hippodrome Casino in London, England that offers impressive views of the main casino gambling floor. ​ 5 Table of Contents ● Hideout .
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 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 open five to six STKs annually. Kona Grill Kona Grill is a bar-centric grill concept featuring American favorites, steaks, seafood, award-winning sushi, and specialty cocktails in a polished casual atmosphere.
Grill Concepts is made up of Kona Grill, a bar-centric grill concept featuring American favorites, steaks, seafood, award-winning sushi, and specialty cocktails in a polished casual atmosphere, and RA Sushi, a Japanese cuisine concept that offers a fun-filled, bar-forward, upbeat, and vibrant dining atmosphere.
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.
Salt Water Social, a Company-owned location, is a gateway to the seven seas, featuring an array of signature and unique fresh seafood items, complemented by the highest quality beef dishes and elegant, delicious cocktails in Denver, Colorado. ​ 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.
(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.
(3) Includes Benihana locations at sports arenas. ​ We expect to continue expanding our operations domestically and internationally primarily through a mix of owned, licensed, managed and franchised restaurants using a disciplined and targeted site selection process.
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.
The diverse menu is complemented by a full-service bar offering a broad assortment of wines, craft cocktails, and beers.
Our primary restaurant brands are STK, a multi-unit steakhouse concept that combines a high-energy, social atmosphere with the quality and service of a traditional upscale steakhouse, and Kona Grill, a polished casual bar-centric grill concept featuring American favorites, award-winning sushi, and specialty cocktails in a polished casual atmosphere.
Our primary restaurant brands are STK, a modern twist on the American steakhouse concept featuring premium steaks, seafood and specialty cocktails in an energetic upscale atmosphere; Benihana, an interactive dining destination with highly skilled chefs preparing food in front of guests and served in an energetic atmosphere alongside fresh sushi and innovative cocktails; Kona Grill, a polished casual bar-centric grill concept featuring American favorites, award-winning sushi, and specialty cocktails in a polished casual atmosphere; and RA Sushi, a Japanese cuisine concept that offers a fun-filled, bar-forward, upbeat, and vibrant dining atmosphere anchored by creative sushi, inventive drinks, and outstanding service.
This includes the STK Rooftop in San Diego, CA, which is a licensed location.
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 Salt Water Social, Bao Yum, Heliot, Hideout, Radio and Rivershore Bar & Grill.
Removed
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.
Added
We opened the following six new venues in 2024: ● Owned STK restaurant in Washington, D.C. ● Owned STK restaurant in Aventura, Florida ● Managed STK restaurant at Niagara Falls in Ontario, Canada ● Owned Kona Grill restaurant in Tigard, Oregon ● Owned RA Sushi restaurant in Plantation, Florida ● Owned Salt Water Social restaurant in Denver, Colorado ​ We intend to add five to seven new venues in 2025.
Removed
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.
Added
We expect to open four to six STKs annually. ​ ​ 4 Table of Contents Benihana Benihana is an interactive dining destination with highly skilled chefs preparing food right in front of guests and served in an energetic atmosphere. Benihana restaurants are a place to meet new friends, celebrate special occasions or just enjoy an entertaining meal.
Removed
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.
Added
Highly skilled teppanyaki chefs slice and dice your meal on teppanyaki grills, providing entertainment as you enjoy traditional Japanese cooking using American favorites like steak, chicken, seafood and vegetables. Benihana restaurants pioneered the communal dining concept in the early 1960’s where up to eight people are seated around a Japanese hibachi grill waiting anxiously for their personal show to begin.
Added
We operate seventy-three owned and eleven franchised Benihana restaurants in the U.S, Latin America (excluding Mexico) and the Caribbean. Our Benihana restaurants average 8,000 square feet, and we typically target locations that range in size from 6,000 to 10,000 square feet.
Added
For 2024, the average domestic restaurant revenues and the average transaction for owned Benihana restaurants was $6.5 million and $111, respectively. We are focused on expanding our Benihana footprint. We intend to focus on (i) metropolitan areas with demographic and discretionary spending profiles and (ii) finding partners with excellent track records and brand recognition.
Added
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 additional major metropolitan areas across the U.S., Latin America and the Caribbean, where we could grow our Benihana brand to 400 restaurants over the foreseeable future.
Added
We expect to open one to three Benihanas or Benihana (Expresses) annually. Benihana (Express) is a 1,000 to 3,000 square foot version of Benihana with limited seating, a limited menu, and no teppanyaki grills.
Added
We own and operate twenty-seven Kona Grill restaurants and sixteen RA Sushi restaurants within the United States. Our Grill Concepts restaurants average approximately 6,000 square feet. In 2024, the average restaurant revenues were $3.9 million and average transaction was $64.
Added
We closed the following restaurants in 2024: ● In February 2024, we terminated our agreement with REEF Kitchens. ● In April 2024, we closed one Company-owned Kona Grill restaurant as the lease expired. ● In July 2024, we terminated a franchise agreement for one Benihana restaurant. ● In October 2024, we closed four Company-owned RA Sushi restaurants, three of which shared markets with a Kona Grill. ​ In January 2025, we closed one Company-owned Benihana restaurant at a sports arena in Carson, California.
Added
From the date of the Benihana Acquisition on May 1, 2024 to December 31, 2024, the sales of beverages at owned Benihana restaurants accounted for approximately 12% of owned Benihana restaurant revenues. In 2024, the sale of beverages at Grill Concepts restaurants accounted for approximately 20% of Grill Concepts restaurant revenues.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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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.
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.
Reductions in business travel and dining, which we believe accounts for a majority of our weekday revenues at our hotel-based restaurants and food and beverage services operations, would adversely affect our revenues. Reductions in discretionary income and spending also would impact our casino-based restaurants and food and beverage services operations.
Reductions in discretionary income and spending also would impact our casino-based restaurants and food and beverage services operations. Reductions in business travel and dining, which we believe accounts for a majority of our weekday revenues at our hotel-based restaurants and food and beverage services operations, would adversely affect our revenues.
Accordingly, particularly in cities where we have multiple venues, our business is susceptible to adverse changes in these markets whether as a result of declining economic conditions, declining stock market performance, negative publicity, changes in customer preferences or for other reasons, and any such adverse changes may have a disproportionate effect on our overall results of operations compared to some of our competitors that may have less restaurant concentration or that do not operate in our markets.
Accordingly, in cities where we have multiple venues, our business is susceptible to adverse changes in these markets whether as a result of declining economic conditions, declining stock market performance, negative publicity, changes in customer preferences or for other reasons, and any such adverse changes may have a disproportionate effect on our overall results of operations compared to some of our competitors that may have less restaurant concentration or that do not operate in our markets.
In addition, the occurrence of food-borne illnesses or food safety issues could also adversely affect the price and availability of affected ingredients, which could result in disruptions in our supply chain and/or lower margins for us and our licensees. Labor and Supplies Changes to wage, immigration and labor laws could increase our costs substantially.
In addition, the occurrence of food-borne illnesses or food safety issues could also adversely affect the price and availability of affected ingredients, which could result in disruptions in our supply chain and/or lower margins for us and our licensees and franchisees. Labor and Supplies Changes to wage, immigration and labor laws could increase our costs substantially.
Our licensees are subject to business risks similar to those we face such as competition; customer acceptance; fluctuations in the cost, quality and availability of raw ingredients; increased labor costs; difficulty obtaining acceptable site leases; and difficulty obtaining proper financing.
Our licensees and franchisees are subject to business risks similar to those we face such as competition; customer acceptance; fluctuations in the cost, quality and availability of raw ingredients; increased labor costs; difficulty obtaining acceptable site leases; and difficulty obtaining proper financing.
Our licensees are required to operate our restaurants according to the specific guidelines we set forth, which are essential to maintaining brand integrity and reputation, as well as in accordance with all laws and regulations applicable to us, and all laws and regulations applicable in the countries in which we operate.
Our licensees and franchisees are required to operate our restaurants according to the specific guidelines we set forth, which are essential to maintaining brand integrity and reputation, as well as in accordance with all laws and regulations applicable to us, and all laws and regulations applicable in the countries in which we operate.
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.
Any shifts in consumer preferences away from the kinds of food or beverages we offer, particularly beef or alcohol, 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.
Publicity related to either product contamination, recalls, or food-borne illness, including Bovine-Spongiform Encephalopathy, which is also known as BSE or mad cow disease, aphthous fever, which is also known as hoof and mouth disease, and hepatitis A, listeria, salmonella and e-coli may also injure our brand and may affect the selection of our restaurants by our guests or licensees based on fear of such illnesses.
Publicity related to either product contamination, recalls, or food-borne illness, including Bovine-Spongiform Encephalopathy, which is also known as BSE or mad cow disease, aphthous fever, which is also known as 10 Table of Contents hoof and mouth disease, and hepatitis A, listeria, salmonella and e-coli may also injure our brand and may affect the selection of our restaurants by our guests or licensees based on fear of such illnesses.
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.
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 any of our alcohol beverage distributors cease to supply us, we may be forced to offer brands of alcoholic beverage which have less consumer appeal or that do not match our brand image, which could adversely affect our business and results of operations. Increases in commodity prices would adversely affect our results of operations.
If any of our alcohol beverage distributors cease to supply us, we may be forced to offer brands of alcoholic beverage which have less consumer appeal or that do not match our brand image, which could adversely affect our business and results of operations. 12 Table of Contents Increases in commodity prices would adversely affect our 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 25% 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 32% of our food and beverage costs.
We provide training to these licensees to integrate them into our operating strategy and culture.
We provide training to these licensees and franchisees to integrate them into our operating strategy and culture.
We estimate that approximately 80% of our sales are by credit or debit cards. Other restaurants and retailers have experienced security breaches in which credit and debit card information has been stolen.
We estimate that approximately 79% of our sales are by credit or debit cards. Other restaurants and retailers have experienced security breaches in which credit and debit card information has been stolen.
We may not be able to protect our brands, trademarks, service marks or other proprietary rights. We have registered, or have applications pending to register, the trademarks STK, Kona Grill and Konavore with the United States Patent and Trademark Office and in certain foreign countries in connection with restaurant services.
We may not be able to protect our brands, trademarks, service marks or other proprietary rights. We have registered, or have applications pending to register, the trademarks STK, Benihana, Kona Grill, RA Sushi and Konavore with the United States Patent and Trademark Office and in certain foreign countries in connection with restaurant services.
A loss of key employees or a significant shortage of high-quality restaurant employees to maintain our current business and support our projected growth could adversely affect our business and financial results. The restaurant industry has faced labor challenges coming out of the COVID-19 pandemic.
A loss of key employees or a significant shortage of high-quality restaurant employees to maintain our current business and support our projected growth could adversely affect our business and financial results. The restaurant industry has in the past faced labor challenges, particularly coming out of the COVID-19 pandemic.
If any of our critical IT systems were to become unreliable, unavailable, compromised or otherwise fail, and we were unable to recover in a timely manner, we could experience an interruption in our operations that could have a material adverse impact on our profitability.
If any of our critical IT systems were to become unreliable, unavailable, compromised or otherwise fail, and we were unable to 16 Table of Contents recover in a timely manner, we could experience an interruption in our operations that could have a material adverse impact on our profitability.
In addition, the issuance of a series of preferred stock could be used as a method of discouraging, delaying or preventing a change in control of our company. We are also subject to the anti-takeover provisions under Delaware law, which could delay or prevent a change of control.
In 19 Table of Contents addition, the issuance of a series of preferred stock could be used as a method of discouraging, delaying or preventing a change in control of our company. We are also subject to the anti-takeover provisions under Delaware law, which could delay or prevent a change of control.
In addition, if our licensees fail to make investments necessary to maintain or improve the restaurants, guest preference for our brand could suffer.
In addition, if our licensees and franchisees fail to make investments necessary to maintain or improve the restaurants, guest preference for our brand could suffer.
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.
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.
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.
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.
Our ability to effectively manage our business and coordinate 14 Table of Contents the procurement, production, distribution, safety and sale of our products depends significantly on the availability, reliability and security of these systems.
Our ability to effectively manage our business and coordinate the procurement, production, distribution, safety and sale of our products depends significantly on the availability, reliability and security of these systems.
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.
Failure of licensed or franchised restaurants to operate effectively could adversely affect our cash flows or royalties, as applicable, from those operations or have a negative impact on our reputation and our business. The success of our licensed and franchised restaurants depends on our ability to establish and maintain good relationships with our licensees and franchisees.
Our success will depend in part upon our ability to anticipate, identify and respond to changing economic and other conditions. We have a limited number of venues, and we operate multiple venues in some cities and are therefore sensitive to economic and other trends and developments in these cities.
Our success will depend in part upon our ability to anticipate, identify and respond to changing economic and other conditions. We operate multiple venues in some cities and are therefore sensitive to economic and other trends and developments in these cities. We operate multiple venues in some cities.
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.
As of December 31, 2024, approximately 26% of our employees earn this lower minimum wage in their respective locations since tips constitute a substantial part of their income.
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.
We rely in part on our licensees and franchisees and the manner in which they operate the STK and Benihana restaurants to develop and promote our business. As of December 31, 2024, we had five licensed STK restaurants and eleven franchised Benihana restaurants.
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”).
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”).
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.
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.
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.
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. 18 Table of Contents We may not be able to comply with certain debt covenants on our debt.
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.
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.
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.
If customers perceive or experience a reduction in our food quality, service or ambiance or in any way believe we have failed to 14 Table of Contents deliver a consistently positive experience, this information can be immediately and broadly disseminated.
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.
Although we have developed criteria to evaluate and screen prospective developers, licensees and franchisees, we cannot be certain that the developers, licensees and franchisees we select will have the business acumen necessary to open and operate successful restaurants in their areas, or that the licensees and franchisees, 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.
In addition, the use of trade names, trademarks or service marks similar to ours in some markets may keep us from entering those markets. Each of our intellectual property marks is pledged as collateral securing our credit and guaranty agreement with Goldman Sachs Bank USA (“Goldman Sachs”).
In addition, the use of trade names, trademarks or service marks similar to ours in some markets may keep us from entering those markets. Each of our intellectual property marks is pledged as collateral securing our secured indebtedness.
The market for beef is subject to extreme price fluctuations due to seasonal shifts, climate conditions, the price of feed, industry demand, energy demand and other factors. Our ability to forecast and manage our commodities could significantly affect our gross margins.
The market for beef is subject to extreme price fluctuations due to seasonal shifts, climate conditions, the price of feed, industry demand, energy demand and other factors. Our ability to forecast and manage our commodities could significantly affect our gross margins. Tariffs and agricultural labor shortages resulting from changes in immigration policies may also increase commodities costs.
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.
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.
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.
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. 13 Table of Contents We face a variety of risks associated with doing business with licensees and franchisees.
As the use of digital technologies has increased, cyber incidents, including deliberate attacks and attempts to gain unauthorized access to computer systems and networks, have increased in frequency and sophistication.
We utilize information technology systems and networks to process, transmit and store electronic information in connection with our business activities. As the use of digital technologies has increased, cyber incidents, including deliberate attacks and attempts to gain unauthorized access to computer systems and networks, have increased in frequency and sophistication.
Shifts in consumer preferences away from upscale steakhouses or beef in general, which are significant components of our concepts’ menus and appeal, whether as a result of economic, competitive or other factors, could adversely affect our business and results of operations.
Shifts in consumer preferences away from upscale steakhouses or beef in general, which are significant components of our concepts’ menus and appeal, whether as a result of economic, competitive or other factors, could adversely affect our business and results of operations. 9 Table of Contents A substantial number of national and regional restaurant chains, as well as independently owned restaurants, compete with us for customers, restaurant locations and qualified management and other restaurant staff.
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.
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 federal government has made some recent changes to immigration and deportation policies, and the U.S.
We occupy most of our restaurants and some of our food and beverage hospitality services locations under long-term non-cancelable leases under which we may remain obligated to perform even if we close those operations, and we may be unable to renew leases at the end of their terms.
Although, we have been able to fully staff our restaurants in challenging labor environments, there is no assurance that we will be able to continue to effectively manage our employee base and avoid a labor shortage. 11 Table of Contents We occupy most of our restaurants and some of our food and beverage hospitality services locations under long-term non-cancelable leases under which we may remain obligated to perform even if we close those operations, and we may be unable to renew leases at the end of their terms.
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.
Congress and Department of Homeland Security may implement further 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.
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.
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.
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.
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 issuance of preferred stock would reduce the relative rights of holders of common stock vis-à-vis the holders of preferred stock without the approval of the holders of common stock.
Currently 9,840,000 shares of preferred stock are available to authorize and issue. The issuance of preferred stock would reduce the relative rights of holders of common stock vis-à-vis the holders of preferred stock without the approval of the holders of common stock.
A significant financial reporting failure or material weakness in internal control over financial reporting could cause a loss of investor confidence and decline in the market price of our stock. We cannot be certain that we will be able to maintain adequate controls over our financial processes and reporting.
A significant financial reporting failure or material weakness in internal control over financial reporting could cause a loss of investor confidence and decline in the market price of our stock. On May 1, 2024, we completed the Benihana Acquisition and have implemented new processes and internal controls to assist us in the preparation and disclosure of financial information.
The value of our brand and the rapport that we maintain with our licensees are important factors for potential licensees considering doing business with us. If we are unable to maintain good relationships with licensees, we may be unable to renew license agreements and opportunities for developing new relationships with additional licensees may be adversely affected.
The value of our brand and the rapport that we maintain with our licensees and franchisees are important factors for potential licensees and franchisees considering doing business with us.
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.
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”).
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.
Default under our debt agreements could enable the lenders to sell (at auction or otherwise) our trademarks, which would have a material adverse effect on our ability to continue our business. Negative publicity relating to a Benihana restaurant operated by an unrelated entity may have a material adverse effect on our business and results of operations.
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.
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.
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.
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.
A substantial number of national and regional restaurant chains, as well as independently owned restaurants, compete with us for customers, restaurant locations and qualified management and other restaurant staff. There is also competition from non-steak but upscale and high-energy restaurants, and other high-end hospitality services companies and high-energy nightlife concepts.
There is also competition from non-steak but upscale and high-energy restaurants, and other high-end hospitality services companies and high-energy nightlife concepts.
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.
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.
We have a relatively small number of restaurants and F&B service locations, and we operate multiple venues in some cities. We typically operate one to five venues in the cities where we operate.
We typically operate one to five venues in the cities where we operate.
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.
The risk of negative publicity is particularly great with respect to Benihana restaurants operated by an unrelated entity because we have no control over such entities’ operations and messaging, especially on a real-time basis. 15 Table of Contents 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.
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.
If we were to default under this covenant and such default was not cured or waived, our indebtedness could become immediately due and payable and our business and results of operations could be adversely affected. Failure of our internal controls over financial reporting could harm our business and financial results.
Removed
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.
Added
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.
Removed
Unauthorized workers are subject to seizure and deportation and may subject us to fines, penalties or loss of our business license in certain jurisdictions.
Added
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.
Removed
Although, we have been able to fully staff our restaurants in this challenging labor environment, there is no assurance that we will be able to continue to effectively manage our employee base and avoid a labor shortage.
Added
The imposition of new or increased tariffs could adversely affect our business and results of operations. ​ Recently, the U.S. government has announced significantly increased tariffs on foreign imports into the U.S. from certain countries, including Canada, China, and Mexico, and has made announcements regarding the potential imposition of tariffs on products from other jurisdictions, such as the European Union.
Removed
This, in turn, could have an adverse effect on our results of operations.
Added
Certain of our restaurant supplies, food and beverages are sourced from outside the U.S., in particular alcoholic beverages sourced from Mexico, and may be subject to these tariffs.
Removed
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.
Added
If these tariffs are imposed, or if retaliatory trade measures are taken by foreign countries in response to additional tariffs, it could have the impact of increasing the aggregate purchase cost of those commodities or reducing the supply of available commodities.
Removed
Other Risks Our operations may be negatively impacted by seasonality, adverse weather conditions, natural disasters or acts of terror.
Added
We may be required to raise our menu prices to offset increased cost, which may negatively impact our restaurant traffic, or incur additional expenses. Any such changes could have an adverse effect on our business and results of operations.
Removed
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.
Added
New locations may not be profitable, and their sales performance may not follow historical or projected patterns.
Removed
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.
Added
If we are unable to maintain good relationships with licensees and franchisees, we may be unable to renew license and franchise agreements and opportunities for developing new relationships with additional licensees and franchisees may be adversely affected. This, in turn, could have an adverse effect on our results of operations.
Removed
As a result, at a given annual meeting, only a minority of the Board may be considered for election.
Added
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
Other entities, with which we have no relations or affiliation, operate restaurants under the Benihana brand in foreign jurisdictions, including in Japan. The integrity and strength of the Benihana brand will depend in part on these other entities and how the brand is used, promoted and protected by them, which is outside of our control.
Added
For example, negative publicity or events relating to food quality, public health concerns, restaurant facilities, customer complaints or litigation alleging illness or injury, health inspection scores, employee relationships or other matters, regardless of whether the allegations are valid, affecting or occurring at other entities who use the Benihana brand, including entities unrelated to us that presently or in the future may license the Benihana brand, may negatively impact the public’s perception of Benihanas.
Added
Such negative publicity may extend beyond that restaurant involved to affect some or all of our Company-owned and franchised Benihana restaurants, which may have a material adverse effect on our business and results of operations.
Added
Other Risks We have a debt financing arrangement and preferred stock outstanding that could have a material adverse effect on our financial health and our ability to obtain financing in the future and may impair our ability to react quickly to changes in our business. ​ In connection with our acquisition of Safflower Holdings Corp., on May 1, 2024, we entered into a credit agreement pursuant to which we borrowed $350 million as a term loan and have a $40 million revolving credit facility available.
Added
On that same date we also issued shares of the Company’s Series A Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”) for $160 million that has a compounding dividend initially at 13% and which increases over time at specified intervals and which is mandatorily redeemable, at the option of the holders of a majority of such shares, after a specified period in specified circumstances.
Added
Our exposure to these financing obligations could limit our ability to satisfy our other obligations, limit our ability to operate our business and impair our competitive position.
Added
For example, they could: ​ ● increase our vulnerability to adverse economic and industry conditions, including interest rate fluctuations, because the revolving loan portion of our borrowings are at variable rates of interest; ● require us to dedicate significant future cash flows to the repayment of debt or redemption of the preferred stock, reducing the availability of cash to fund working capital, capital expenditures or other general corporate purposes; ● limit our flexibility in planning for, or reacting to, changes in our business and industry; and ● limit our ability to obtain additional debt or equity financing, or undertake certain other activities, due to applicable financial and restrictive covenants contained in our debt and preferred stock arrangements. ​ We may also incur additional indebtedness in the future, which could materially increase the impact of these risks on our financial condition and results of operations. ​ We may not be able to refinance our debt obligations or the redemption of our preferred stock.
Added
Failure to successfully refinance these obligations could have a material adverse effect on our business, financial condition and results of operations. ​ Our acquisition of Safflower Holdings Corp., as well as any future acquisitions, may have unanticipated consequences that could harm our business and our financial condition. ​ Our acquisition of Safflower Holdings Corp. and any other acquisition that we pursue, whether successfully completed or not, involves risks, including: ​ ● material adverse effects on our operating results, particularly in the fiscal quarters immediately following the acquisition as the acquired restaurants are integrated into our operations; ● risks associated with entering into markets or conducting operations where we have no or limited prior experience; ● problems retaining key personnel; ● potential impairment of tangible and intangible assets and goodwill acquired in the acquisition; ● potential unknown liabilities; ● difficulties of integration and failure to realize anticipated synergies; and ● disruption of our ongoing business, including diversion of management’s attention from other business concerns. ​ 17 Table of Contents Future acquisitions, which may be accomplished through a cash purchase transaction, the issuance of our equity securities or a combination of both, could result in potentially dilutive issuances of our equity securities, the incurrence of debt and contingent liabilities and impairment charges related to goodwill and other intangible assets, any of which could harm our business and financial condition. ​ Our operations may be negatively impacted by seasonality, adverse weather conditions, natural disasters or acts of terror.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

2 edited+0 added−0 removed8 unchanged
Biggest changeThe Audit Committee, which is comprised solely of independent directors, has been designated by our Board to oversee cybersecurity risks. The Committee receives regular updates and reviews with management the implementation and effectiveness of the Company’s controls to monitor and mitigate cybersecurity risks.
Biggest changeThe Audit Committee, which is comprised solely of independent directors, has been designated by our Board to oversee cybersecurity risks. The Committee receives regular updates and reviews with management the implementation and effectiveness of the Company’s controls to monitor and mitigate cybersecurity risks. 20 Table of Contents
We consider cybersecurity, along with other significant risks that we face, within our overall enterprise risk management framework. In the last fiscal year, we have not identified any prior cybersecurity incidents that materially affected us, but we face certain ongoing risks from 17 Table of Contents cybersecurity threats that, if realized, could materially affect us.
We consider cybersecurity, along with other significant risks that we face, within our overall enterprise risk management framework. In the last fiscal year, we have not identified any prior cybersecurity incidents that materially affected us, but we face certain ongoing risks from cybersecurity threats that, if realized, could materially affect us.

Item 2. Properties

Properties — owned and leased real estate

3 edited+1 added−0 removed0 unchanged
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
Biggest changeLauderdale ​ Fort Lauderdale, Florida ​ Owned Benihana Hard Rock Stadium (1) ​ Miami Gardens, Florida ​ Owned Benihana Houston I ​ Houston, Texas ​ Owned Benihana Houston II ​ Houston, Texas ​ Owned Benihana Indianapolis ​ Indianapolis, Indiana ​ Owned Benihana Jardim Europa ​ Jardim Europa, Brazil ​ Franchised Benihana John Hancock ​ Chicago, Illinois ​ Owned Benihana Key West ​ Key West, Florida ​ Franchised Benihana Las Colinas ​ Las Colinas, Texas ​ Owned Benihana Las Vegas ​ Las Vegas, Nevada ​ Owned Benihana Las Vegas ​ Las Vegas, Nevada ​ Franchised Benihana Little Rock ​ Little Rock, Arkansas ​ Franchised Benihana Lombard ​ Lombard, Illinois ​ Owned Benihana Mall Of America ​ Bloomington, Minnesota ​ Owned Benihana Manhasset ​ Manhasset, New York ​ Owned Benihana Maple Grove ​ Maple Grove, Minnesota ​ Owned Benihana Memphis ​ Memphis, Tennessee ​ Owned Benihana Miami Beach ​ Miami Beach, Florida ​ Owned Benihana Miami-S ​ Miami, Florida ​ Owned Benihana Milwaukee ​ Milwaukee, Wisconsin ​ Franchised Benihana Minneapolis ​ Minneapolis, Minnesota ​ Owned Benihana Miramar ​ Miramar, Florida ​ Owned Benihana Monterrey II ​ Monterey, California ​ Franchised Benihana Newport Beach ​ Newport Beach, California ​ Owned 22 Table of Contents Benihana NY West ​ New York, New York ​ Owned Benihana Ontario ​ Ontario, California ​ Owned Benihana Orlando ​ Orlando, Florida ​ Owned Benihana Orlando II ​ Orlando, Florida ​ Owned Benihana Palm Beach ​ Palm Beach, Aruba ​ Franchised Benihana Panama City ​ Panama City, Panama ​ Franchised Benihana Pittsburgh ​ Pittsburgh, Pennsylvania ​ Owned Benihana Plano ​ Plano, Texas ​ Owned Benihana Plymouth Meeting ​ Plymouth Meeting, Pennsylvania ​ Owned Benihana Puente Hills ​ Puente Hills, California ​ Owned Benihana Salt Lake City ​ Salt Lake City, Utah ​ Owned Benihana San Diego ​ San Diego, California ​ Owned Benihana San Francisco ​ San Francisco, California ​ Owned Benihana San Salvador ​ San Salvador, El Salvador ​ Franchised Benihana Santa Anita ​ Santa Anita, California ​ Owned Benihana Santa Monica ​ Santa Monica, California ​ Owned Benihana Schaumburg ​ Schaumburg, Illinois ​ Owned Benihana Scottsdale ​ Scottsdale, Arizona ​ Owned Benihana Short Hills ​ Short Hills, New Jersey ​ Owned Benihana Sprint Center ​ Kansas City, Missouri ​ Owned Benihana Stuart ​ Stuart, Florida ​ Owned Benihana Sugar Land ​ Sugar Land, Texas ​ Owned Benihana Talking Stick Resort Arena (1) ​ Phoenix, Arizona ​ Owned Benihana Temecula ​ Temecula, California ​ Owned Benihana Torrance ​ Torrance, California ​ Owned Benihana Troy ​ Troy, Michigan ​ Owned Benihana Westbury ​ Westbury, New York ​ Owned Benihana Wheeling ​ Wheeling, Illinois ​ Owned Benihana Woodlands ​ Woodlands, Texas ​ Owned Benihana Yankee Stadium (1) ​ New York, New York ​ Owned (1) Located within a sports arena ​ ​ 23 Table of Contents Our Grill Concepts 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 Tampa ​ Tampa, Florida ​ Owned Kona Grill Tigard ​ Tigard, Oregon ​ Owned Kona Grill Troy ​ Troy, Michigan ​ Owned Kona Grill Woodbridge ​ Iselin, New Jersey ​ Owned RA Sushi Addison ​ Addison, Texas ​ Owned RA Sushi Ahwatukee ​ Phoenix, Arizona ​ Owned RA Sushi Chino Hills ​ Chino Hills, California ​ Owned RA Sushi Downtown Austin ​ Austin, Texas ​ Owned RA Sushi Houston ​ Houston, Texas ​ Owned RA Sushi Houston II ​ Houston, Texas ​ Owned RA Sushi Las Vegas ​ Las Vegas, Nevada ​ Owned RA Sushi Leawood ​ Leawood, Kansas ​ Owned RA Sushi Mesa ​ Mesa, Arizona ​ Owned RA Sushi North Scottsdale ​ Scottsdale, Arizona ​ Owned RA Sushi Pembroke Pines ​ Pembroke Pines, Florida ​ Owned RA Sushi Plantation Walk ​ Plantation, Florida ​ Owned RA Sushi Scottsdale ​ Scottsdale, Arizona ​ Owned RA Sushi Southlake ​ Southlake, Texas ​ Owned RA Sushi Times Square ​ New York, New York ​ Owned RA Sushi Tucson ​ Tucson, Arizona ​ Owned ​ 24 Table of Contents Our ONE Hospitality brands and F&B services locations are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Type of Venue ​ Hotel/Casino/Special Venue ​ Location ​ Interest Bao Yum (1) ​ — ​ London, England ​ Owned 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 Salt Water Social ​ — ​ Denver, Colorado ​ 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; Aventura, Florida; and London, England. ​ ​ 25 Table of Contents
Item 2. Properties We do not own any real property. Each of our “owned” restaurants operates in premises leased by its operating subsidiary. We do not have a direct ownership interest in restaurants we operate under a management agreement (“managed”) or license agreement (“licensed”).
Item 2. Properties We do not own any real property. Each of our “owned” restaurants operates in premises leased by its operating subsidiary. We do not have a direct ownership interest in restaurants we operate under a management agreement (“managed”), license agreement (“licensed”) or franchise agreement (“franchised”).
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.
Our STK locations are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Type of Venue ​ Hotel/Casino/Special Venue ​ Location ​ Interest STK Atlanta ​ — ​ Atlanta, Georgia ​ Owned STK Aventura ​ Aventura Mall ​ Aventura, Florida ​ 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 Niagara Falls ​ Embassy Suites ​ Ontario, Canada ​ Managed 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.
Added
(2) Ownership in location is 64.81%. ​ ​ 21 Table of Contents Our Benihana locations are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Type of Venue ​ Location ​ Interest Benihana Addison Walk ​ Dallas, Texas ​ Owned Benihana Alpharetta ​ Alpharetta, Georgia ​ Owned Benihana Anaheim ​ Anaheim, California ​ Owned Benihana Anchorage ​ Anchorage, Alaska ​ Owned Benihana Atlanta I ​ Atlanta, Georgia ​ Owned Benihana Beaverton ​ Beaverton, Oregon ​ Owned Benihana Bethesda II ​ Bethesda, Maryland ​ Owned Benihana Boca Raton ​ Boca Raton, Florida ​ Owned Benihana (Express) Brickell Miami ​ Miami, Florida ​ Franchised Benihana Broomfield ​ Broomfield, Colorado ​ Owned Benihana Burlingame ​ Burlingame, California ​ Owned Benihana Carlsbad ​ Carlsbad, California ​ Owned Benihana Chandler ​ Chandler, Arizona ​ Owned Benihana Cherry Hill ​ Cherry Hill, New Jersey ​ Owned Benihana Cincinnati I ​ Cincinnati, Ohio ​ Owned Benihana Cleveland ​ Cleveland, Ohio ​ Owned Benihana Columbus ​ Columbus, Ohio ​ Owned Benihana Concord ​ Concord, California ​ Owned Benihana Conroe ​ Conroe, Texas ​ Owned Benihana Coral Gables ​ Coral Gables, Florida ​ Owned Benihana Coral Springs ​ Coral Springs, Florida ​ Owned Benihana Cupertino ​ Cupertino, California ​ Owned Benihana Dallas ​ Dallas, Texas ​ Owned Benihana Dearborn ​ Dearborn, Michigan ​ Owned Benihana Denver ​ Denver, Colorado ​ Owned Benihana Downey ​ Downey, California ​ Owned Benihana Dulles ​ Dulles, Virginia ​ Owned Benihana Edison ​ Edison, New Jersey ​ Franchised Benihana Encino ​ Encino, California ​ Owned Benihana Farmington Hills ​ Farmington Hills, Michigan ​ Owned Benihana Ft.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeA 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.
Biggest changeA 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 17. “Commitments and Contingencies” in our consolidated financial statements included in Item 15.
“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 ​
“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. ​ 26 Table of Contents PART II ​

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 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.
Biggest changeItem 4. Mine Safety Disclosures 26 ​ PART II ​ Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 27 Item 6. [Reserved] 27 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 28 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 45 Item 8.
Financial 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
Financial Statements and Supplementary Data 45 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 45 Item 9A. Controls and Procedures 46 Item 9B. Other Information 48

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDuring 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.
Biggest changeIn March 2024, the Company’s Board of Directors authorized an additional $5.0 million of repurchases under this program. During 2024, 2023 and 2022, the Company purchased 0.7 million, 1.2 million and 1.1 million shares for aggregate consideration of $3.2 million, $7.9 million and $7.1 million, respectively.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the NASDAQ Capital Market under the symbol "STKS".
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the NASDAQ Capital Market under the symbol "STKS". As of February 28, 2025, there were 68 holders of record of our common stock.
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.
This does not include persons whose stock is in nominee or “street name” accounts through brokers. ​ 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.
Removed
The repurchase program was completed in October 2023 with the repurchase of $0.2 million in shares.
Added
As of December 31, 2024, the Company had repurchased 3.0 million shares for $18.2 million under the program. During the fourth quarter of 2024, there was no share repurchase activity. ​
Removed
The 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. ​

Item 7. Management's Discussion & Analysis

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

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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 .
Biggest change(2) Non-cash rent expense is included in owned restaurant operating expenses, pre-opening expenses and general and administrative expense on the consolidated statements of operations. ​ 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, ​ 2024 2023 Operating income as reported ​ $ 10,771 ​ $ 9,294 Management, license, franchise and incentive fee revenue ​ (14,429) ​ (15,403) General and administrative ​ 44,170 ​ 30,751 Depreciation and amortization ​ 34,096 ​ 15,664 Transition and integration expenses ​ ​ 13,681 ​ ​ — Pre-opening expenses ​ ​ 9,488 ​ ​ 8,855 Transaction and exit costs ​ ​ 9,326 ​ ​ 207 Lease termination expenses ​ 1,096 ​ — Other expenses ​ 124 ​ 1,021 Restaurant Operating Profit ​ $ 108,323 ​ $ 50,389 Restaurant Operating Profit as a percentage of owned restaurant net revenue ​ ​ 16.4% ​ ​ 15.9% ​ Restaurant Operating Profit by brand is as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ 2024 2023 STK restaurant operating profit (Company owned) ​ $ 38,106 ​ $ 38,023 STK restaurant operating profit (Company owned) as a percentage of STK revenue (Company owned) ​ ​ 18.6% ​ ​ 20.5% Benihana restaurant operating profit (Company owned) ​ $ 59,597 ​ $ — Benihana restaurant operating profit (Company owned) as a percentage of Benihana revenue (Company owned) ​ ​ 20.1% ​ ​ — Core Grill Concepts restaurant operating profit ​ $ 11,180 ​ $ 12,134 Core Grill Concepts restaurant operating profit as a percentage of Core Grill Concepts revenue ​ ​ 8.1% ​ ​ 10.4% Non-core Grill Concepts restaurant operating profit ​ $ (1,764) ​ $ 171 Non-core Grill Concepts restaurant operating profit as a percentage of Non-core Grill Concepts revenue ​ ​ (10.1)% ​ ​ 1.1% 37 Table of Contents Results of Operations for the Years Ended December 31, 2024 and December 31, 2023 Revenues Owned restaurant net revenue .
However, operating costs during this initial period are also higher than normal, resulting in restaurant operating margins that are generally lower during the start-up period of operation and increase to a steady level approximately 18 to 24 months after opening. Some new restaurants may experience a “honeymoon” period that is either shorter or longer than this time frame.
However, operating costs during this initial period are also higher than normal, resulting in restaurant operating margins that are generally lower during the start-up period of operation and increase to a steady level approximately to 24 months after opening. Some new restaurants may experience a “honeymoon” period that is either shorter or longer than this time frame.
Occupancy comprises all occupancy costs, consisting of both fixed and variable rent, deferred rent expense, which is a non-cash adjustment included in our Adjusted EBITDA calculation as defined below, common area maintenance charges, real estate property taxes, utilities and other related occupancy costs and is measured by considering both the fixed and variable components of certain occupancy expenses. ​ ● Direct operating expenses .
Occupancy comprises all occupancy costs, consisting of both fixed and variable rent, non-cash rent expense, which is a non-cash adjustment included in our Adjusted EBITDA calculation as defined below, common area maintenance charges, real estate property taxes, utilities and other related occupancy costs and is measured by considering both the fixed and variable components of certain occupancy expenses. ​ ● Direct operating expenses .
Subject to our operating performance, which, if significantly adversely affected, would adversely affect the availability of funds, we expect to finance our operations for at least the next 12 months, including the costs of opening currently planned new restaurants, through cash provided by operations, construction allowances provided by landlords of certain locations and borrowings under our credit agreement.
Subject to our operating performance, which, if significantly adversely affected, would adversely affect the availability of funds, we expect to finance our operations for at least the next 12 months and the foreseeable future, including the costs of opening currently planned new restaurants, through cash provided by operations, construction allowances provided by landlords of certain locations and borrowings under our Credit Agreement.
We expect these costs to increase at each facility as they get older. ​ ● Marketing . Marketing includes the cost of promoting our brands and, at times, can include the cost of goods used specifically for complementary purposes. Marketing costs will typically be higher during the first 18 months of a restaurant’s operations. ​ General and administrative .
We expect these costs to increase at each facility as they get older. ​ ● Marketing . Marketing includes the cost of promoting our brands and, at times, can include the cost of goods used specifically for complementary purposes. Marketing costs will typically be higher during the first 24 months of a restaurant’s operations. ​ General and administrative .
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.
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 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.
If we modify our growth plans, the personnel that comprise our training team could be deployed to operate existing restaurants. 33 Table of Contents ​ To help manage future cash requirements, we limit the number of owned company venues under construction at any given time to four restaurants.
If we 40 Table of Contents modify our growth plans, the personnel that comprise our training team could be deployed to operate existing restaurants. ​ To help manage future cash requirements, we limit the number of owned company venues under construction at any given time to four restaurants.
SSS represents total food and beverage sales at domestic owned and managed restaurants opened for at least a full 18-month period at the beginning of each quarter, which removes the impact of new restaurant openings in comparing the operations of existing restaurants.
SSS represents total food and beverage sales at domestic owned and managed restaurants opened for at least a full 24-month period at the beginning of each quarter, which removes the impact of new restaurant openings in comparing the operations of existing restaurants.
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.
We believe that our operating margins will improve 30 Table of Contents 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.
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.
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.
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
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.
Management agreements typically call for a management fee based on a percentage of revenue, a monthly marketing fee based on a percentage of revenues and an incentive fee based on a managed venue’s net profits. Similarly, royalties from the licensee in license agreements are generally based on a percentage of the licensed restaurant’s revenue.
Management agreements typically call for a management fee based on a percentage of revenue, a monthly marketing fee based on a percentage of revenues and an incentive fee based on a managed venue’s net profits. Similarly, royalties from the licensee or franchisee in license and franchise agreements are generally based on a percentage of the licensed or franchised restaurant’s revenue.
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.
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 specifically look at comparable sales from both owned and managed restaurants to understand customer count trends and changes in average check as it relates to our primary restaurant brands. Management, license and incentive fee revenue . Management, license and incentive fee revenues include fees received pursuant to management and license agreements.
We specifically look at comparable sales from both owned and managed restaurants to understand customer count trends and changes in average check per person or average transaction as it relates to our primary restaurant brands. Management, license, franchise and incentive fee revenue . Management, license, franchise and incentive fee revenues include fees received pursuant to management and license agreements.
If the qualitative assessment indicates that it is more likely than not that an impairment exists, then a quantitative assessment is performed. ​ The quantitative assessments require the use of estimates and assumptions regarding future cash flows.
If the qualitative assessment indicates that it is more likely than not that an impairment exists, then a quantitative assessment is performed. ​ If necessary, a quantitative assessment requires the use of estimates and assumptions regarding future cash flows.
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.
Net loss attributable to noncontrolling interest increased to a net loss of $0.8 million for 2024 compared to net loss of $0.7 million for 2023. ​ 39 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.
In addition to expanding into new cities and hospitality venues, we intend to continue to increase revenue and profits in our existing operations through continued focus on high-quality, high-margin food and beverage menu items.
Increase Same Store Sales and Increase Our Operating Efficiency . In addition to expanding into new cities and hospitality venues, we intend to continue to increase revenue and profits in our existing operations through continued focus on high-quality, high-margin food and beverage menu items.
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 .
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. Financing Activities .
For owned STK restaurants, where we build from a shell state, we have typically targeted a restaurant size of 8,000 square feet with a gross cash investment of approximately $515 to $675 per square foot, exclusive of $200 per square foot in landlord contributions.
For owned STK restaurants, where we build from a shell state, we have typically targeted a restaurant size of 8,000 square feet with a gross cash investment of approximately $700 to $750 per square foot, exclusive of $150 per square foot in landlord contributions.
In 2023, we opened three STK restaurants, three Kona Grill restaurants and two Bao Yum venues under a licensing agreement. Recently the Company exited its licensing agreement with REEF Kitchens and has no venues operating pursuant to that agreement.
In 2023, we opened three STK restaurants, three Kona Grill restaurants and two Bao Yum venues under a licensing agreement with REEF Kitchens. In 2024, the Company exited its licensing agreement with REEF Kitchens and has no venues operating pursuant to that agreement. Average Check Per Person .
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.
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 32 Table of Contents sales are generally influenced by the cost of food and beverage items, menu mix, discounting activity and restaurant level controls. See “Item 1A.
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 also may borrow on our revolving credit facility or issue equity, including preferred stock, 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, 2024, we had cash and cash equivalents of $27.6 million.
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.
Property and equipment, net of accumulated depreciation and the operating lease right-of-use assets as of December 31, 2024 were $276.1 million and $260.2 million, respectively. From time to time we have decided to close or dispose of restaurants.
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.
For the year ended December 31, 2024, beverage sales comprised 17% of food and beverage sales, and food sales comprised the remaining 83%. This indicator assists management in understanding the trends in gross margins of the restaurants. Our primary owned restaurant brands are STK, Benihana, Kona Grill and RA Sushi.
Typically, new restaurants open with an initial start-up period of higher than normalized sales volumes (also referred to in the restaurant industry as the “honeymoon” period), which decrease to a steady level approximately 18 to 24 months after opening.
For each restaurant opening, we incur pre-opening costs, which are defined below. Typically, new restaurants open with an initial start-up period of higher than normalized sales volumes (also referred to in the restaurant industry as the “honeymoon” period), which decrease to a steady level approximately 24 months after opening.
We incurred $8.9 million of pre-opening expenses primarily related to payroll, training, and non-cash rent for six STK and Kona Grill restaurants which opened in 2023 as well as STK and Kona Grill restaurants currently under development.
We incurred $9.5 million of pre-opening expenses primarily related to payroll, training, and non-cash rent for six STK, Kona Grill, RA Sushi and Salt Water Social restaurants which opened in 2024 as well as restaurants currently under development.
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 .
As a percentage of revenues, cost of sales decreased 280 basis points to 21.1% for 2024 from 23.9% for 2023 primarily due to lower cost of sales for Benihana restaurants, product mix management, pricing and operational cost reduction initiatives partially offset by increased commodity prices. Owned restaurant operating expenses .
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.
In addition, some of our existing restaurants will require capital improvements to either maintain or improve the facilities. We may add seating or provide enclosures for outdoor space in the next twelve months for some of our locations, when we believe that will increase revenues for those locations. Our hospitality F&B services projects typically require limited capital investment from us.
We had $73.5 million in long-term debt, which consisted of borrowings under our Credit Agreement as of December 31, 2023.
We had $348.3 million in long-term debt, which consisted of borrowings under our Credit Agreement as of December 31, 2024.
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.
As of December 31, 2024, we had a valuation allowance of $4.2 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 and certain other credits that the Company does not expect to utilize.
Our effective tax rate was (77.7)% and 6.2% for the years ended December 31, 2023 and 2022, respectively.
Our effective tax rate was 32.0% and (77.7)% for the years ended December 31, 2024 and 2023, respectively.
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.
Overview We currently own, operate, manage, license or franchise 166 venues including 30 STKs, 84 Benihanas, 27 Kona Grills and 16 RA Sushis in major metropolitan cities in North America, Europe, Latin America and the Middle East and 9 F&B venues in four hotels and casinos in the United States and Europe.
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.
Total pre-opening expenses related to non-cash rent were $1.8 million. ​ Detail of pre-opening expenses by category is provided in the tables below for 2024 and 2023 (in thousands). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, 2024 Preopen Expenses Preopen Rent ​ Total Training Team ​ $ 4,904 ​ $ — ​ $ 4,904 Restaurants ​ ​ 2,646 ​ ​ 1,938 ​ ​ 4,584 Total ​ $ 7,550 ​ $ 1,938 ​ $ 9,488 ​ ​ 38 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 (1) Cash rent paid was $0.7 million and $0.2 million for the years ended December 31, 2024 and 2023, respectively. ​ Transaction and exit costs .
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.
Cash Flows The following table summarizes the statement of cash flows for the years ended December 31, 2024 and December 31, 2023 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ 2024 2023 Net cash provided by (used in): ​ ​ Operating activities ​ $ 44,188 ​ $ 30,781 Investing activities ​ (441,393) ​ (53,550) Financing activities ​ 404,336 ​ (11,248) Effect of exchange rate changes on cash ​ (103) ​ (57) Net increase (decrease) in cash and cash equivalents ​ $ 7,028 ​ $ (34,074) ​ Operating Activities.
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.
Other expenses in 2024 and 2023 were $0.1 million and $1.0 million, respectively, primarily related to litigation expenses. ​ Interest expense, net of interest income . Interest expense, net of interest income, was approximately $31.1 million and $7.0 million for 2024 and 2023, respectively.
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.
Our management team uses these indicators at Benihana and Grill Concepts to analyze trends in customers’ preferences, customer expenditures and the overall effectiveness of menu changes and price increases. Average transaction for comparable Benihana restaurants was $111. The average transaction was $64 for our comparable Grill Concepts restaurants in 2024 compared to $63 for 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. In 2023, we opened Company-owned STK restaurants in Charlotte, North Carolina, Boston, Massachusetts and Salt Lake City, Utah.
We expect to open four 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 2024, we opened Company-owned STK restaurants in Washington, D.C. and Aventura, Florida.
Owned restaurant net revenue increased $16.5 million, or 5.5%, to $317.4 million for 2023 from $300.9 million for 2022.
Owned restaurant net revenue increased $341.5 million, or 107.6%, to $658.9 million for 2024 from $317.4 million for 2023.
First, we determine if, based on qualitative factors, it is more likely than not that an impairment exists. Factors considered include, but are not limited to, historical financial performance, expected future cash flows, changes in management or key personnel, macroeconomic and industry conditions and the legal and regulatory environment.
Factors considered include, but are not limited to, historical financial performance, expected future cash flows, changes in management or key personnel, macroeconomic and industry conditions and the legal and regulatory environment.
We define EBITDA as net income before interest expense, provision for income taxes and depreciation and amortization. We define Adjusted EBITDA as EBITDA before non-cash rent expense, pre-opening expenses, lease termination expenses, stock-based compensation, COVID-19 related expenses and non-recurring gains and losses.
We define Adjusted EBITDA as net income before interest expense, benefit for income taxes, depreciation and amortization, non-cash rent expense, transaction and exit costs, transition and integration expenses, stock-based compensation, and non-recurring gains and losses.
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.
For the years ended December 31, 2024 and 2023, 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.
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 .
Owned restaurant operating costs as a percentage of owned restaurant net revenue increased 220 basis points from 60.3% in 2023 to 62.5% for 2024 primarily due to higher labor costs driven by wage inflation, increased marketing expenses, general operating cost inflation and fixed cost deleveraging driven by a decrease in same store sales, partially offset by lower restaurant operating costs for Benihana restaurants. ​ General and administrative .
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.
Our average comparable STK restaurant revenues were $15.5 million and $17.3 million for 2024 and 2023, respectively. For 2024, our average comparable Benihana restaurant revenues were $6.5 million. Our average comparable Grill Concepts restaurant revenues were $3.9 million and $5.2 million for 2024 and 2023, respectively.
Net income attributable to The ONE Group Hospitality, Inc was $4.7 million in 2023 compared to $13.5 million in 2022. Our Growth Strategies and Outlook Our growth model is primarily driven by the following: Expansion of STK .
Net loss attributable to The ONE Group Hospitality, Inc was $15.8 million in 2024 compared to net income of $4.7 million in 2023 primarily due to transaction, transition and integration costs partially offset the by the income generated at the acquired restaurants. Our Growth Strategies and Outlook Our growth model is primarily driven by the following: Expansion of STK .
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.
Total pre-opening expenses related to non-cash pre-open rent was $1.2 million. ​ Pre-opening expenses for 2023 were $8.9 million primarily related costs associated with six restaurants which opened in 2023 and restaurants opened in 2024.
Impairment of Long-Lived Assets and Disposal of Property and Equipment Long-lived assets, which include property and equipment and right-of-use assets for operating leases , are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be fully recoverable.
The recording of deferred taxes requires significant management judgment regarding the interpretation of applicable statutes, the status of various income tax audits, and our particular facts and circumstances. 42 Table of Contents Impairment of Long-Lived Assets and Disposal of Property and Equipment Long-lived assets, which include property and equipment and right-of-use assets for operating leases , are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be fully recoverable.
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 .
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 restaurant at either a leased or F&B location.
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.
Please refer to the table on page 37 for our reconciliation of net income to EBITDA and Adjusted EBITDA and for a reconciliation of operating income to Restaurant Operating Profit. 34 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, ​ 2024 2023 Revenues: ​ ​ Owned restaurant net revenue ​ $ 658,915 ​ $ 317,366 Management, license, franchise and incentive fee revenue ​ 14,429 ​ 15,403 Total revenues ​ 673,344 ​ 332,769 Cost and expenses: ​ ​ Owned operating expenses: ​ ​ ​ ​ ​ Owned restaurant cost of sales ​ 138,794 ​ 75,727 Owned restaurant operating expenses ​ 411,798 ​ 191,250 Total owned operating expenses ​ 550,592 ​ 266,977 General and administrative (including stock-based compensation of $6,017 and $5,032 for the years ended December 31, 2024 and 2023, respectively) ​ 44,170 ​ 30,751 Depreciation and amortization ​ 34,096 ​ 15,664 Transition and integration expenses ​ ​ 13,681 ​ — Pre-opening expenses ​ 9,488 ​ 8,855 Transaction and exit costs ​ 9,326 ​ 207 Lease termination expenses ​ 1,096 ​ — Other expenses ​ 124 ​ 1,021 Total costs and expenses ​ 662,573 ​ 323,475 Operating income ​ 10,771 ​ 9,294 Other expenses, net: ​ ​ Interest expense, net of interest income ​ 31,109 ​ 7,028 Loss on early debt extinguishment ​ 4,149 ​ — Total other expenses, net ​ 35,258 ​ 7,028 (Loss) income before benefit for income taxes ​ (24,487) ​ 2,266 Benefit for income taxes ​ (7,834) ​ (1,760) Net (loss) income ​ (16,653) ​ 4,026 Less: net loss attributable to noncontrolling interest ​ (829) ​ (692) Net (loss) income attributable to The ONE Group Hospitality, Inc. ​ $ (15,824) ​ $ 4,718 ​ 35 Table of Contents The following table sets forth certain statements of operations data as a percentage of total revenues for the periods indicated.
Net capital expenditures, inclusive of $4.7 million in landlord contributions, was $48.8 million for 2023.
Net capital expenditures, inclusive of $6.9 million in landlord contributions, was $64.7 million for 2024.
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.
Net cash used by financing activities for 2023 was $11.2 million primarily attributable to $7.9 million in purchases for common stock and $2.0 million to pay employee taxes for shares withheld upon vesting restricted stock units. Recent Accounting Pronouncements Refer to Note 2 of our consolidated financial statements for a detailed description of recent accounting pronouncements.
Other Items EBITDA, Adjusted EBITDA and Restaurant Operating Profit . We present EBITDA, Adjusted EBITDA and Restaurant Operating Profit to supplement other measures of financial performance. EBITDA, Adjusted EBITDA and Restaurant Operating Profit are not required by, or presented in accordance with, accounting principles generally accepted in the United States of America (“GAAP”).
EBITDA, Adjusted EBITDA and Restaurant Operating Profit are not required by, or presented in accordance with, accounting principles generally accepted in the United States of America (“GAAP”). We define EBITDA as net income before interest expense, benefit for income taxes and depreciation and amortization.
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.
We evaluate the performance of our managed, licensed and franchised properties based on sales growth, a key driver for management, license, franchise and incentive fees, and on improvements in operating profitability margins, which, combined with sales, drives incentive fee growth. Cost and expenses Owned restaurant cost of sales .
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.
STK restaurants opened in 2023 and 2024 had a gross cost per square foot of $706 and $132 per square foot in landlord contributions with an average size of 10,618 square feet. For owned Benihana restaurants, where we build from a shell state, we have typically targeted a restaurant size of 7,000 square feet.
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.
We expect to receive between $1.0 million to $2.0 million in landlord contributions in the next three months. ​ Capital expenditures by type for 2024 and 2023 is provided below (in thousands). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2024 STK ​ Benihana ​ Grill Concepts ​ Other (1) ​ Total New Venues ​ $ 40,119 ​ $ 2,724 ​ $ 11,098 ​ $ 532 ​ $ 54,473 Maintenance ​ ​ 3,854 ​ ​ 7,914 ​ ​ 4,492 ​ ​ — ​ ​ 16,260 Other ​ ​ — ​ ​ — ​ ​ — ​ ​ 822 ​ ​ 822 Total ​ $ 43,973 ​ $ 10,638 ​ $ 15,590 ​ $ 1,354 ​ $ 71,555 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tenant Improvement Allowance ​ $ 5,480 ​ $ — ​ $ 1,460 ​ $ — ​ $ 6,940 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2023 STK ​ Benihana ​ Grill Concepts ​ Other (1) ​ Total New Venues ​ $ 24,574 ​ $ — ​ $ 17,234 ​ $ 2,865 ​ $ 44,673 Maintenance ​ ​ 4,294 ​ ​ — ​ ​ 4,134 ​ ​ — ​ ​ 8,428 Other ​ ​ — ​ ​ — ​ ​ — ​ ​ 449 ​ ​ 449 Total ​ $ 28,868 ​ $ — ​ $ 21,368 ​ $ 3,314 ​ $ 53,550 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tenant Improvement Allowance ​ $ 3,519 ​ $ — ​ $ 1,125 ​ $ 22 ​ $ 4,667 (1) Includes inventory of restaurant equipment for venues under development. ​ ​ Our operations have not required significant working capital, and, like many restaurant companies, we may have negative working capital during the year.
Average check is calculated by dividing total restaurant sales by total number of guests for a specified period. Average spend per transaction is calculated by dividing total restaurant sales by total number of transactions for a specified period.
For our comparable STK restaurants, the average check per person was $127 for 2024 compared to $130 for 2023. Average Transaction . Average transaction is calculated by dividing total restaurant sales by total number of transactions for a specified period.
Pre-opening expenses also include payroll and travel costs associated with our new restaurant opening training team.
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 also include payroll and travel costs associated with our new restaurant opening training team.
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 .
The increase was primarily related to depreciation and amortization for the Benihana and RA Sushi restaurants acquired on May 1, 2024, depreciation associated with the opening of ten new owned venues since January 2023 and capital expenditures to maintain and enhance the guest experience in our restaurants. Pre-opening expenses .
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.
As of December 31, 2024, the availability on our revolving credit facility was $33.6 million, subject to certain conditions. ​ Capital expenditures in 2024 were $71.6 million of which $54.5 million primarily related to the construction of new STK, Benihana, Kona Grill and RA Sushi restaurants and $16.3 million related to existing restaurants.
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 .
The STK segment consists of the results of operations from STK restaurants and ONE Hospitality restaurant locations, as well as management, license and incentive fee revenue generated from the STK brand and ONE Hospitality restaurants. ● Benihana.
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 .
In 2024, full year information for both Benihana and RA Sushi, which is within Grill Concepts, is presented whereas 2023 reflects only Kona Grill within Grill Concepts. 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 .
Changes in circumstances existing at the measurement date or at other times in the future, or in the estimates associated with management’s judgments and assumptions made in assessing the fair value of our trademarks, could result in an impairment loss of a portion or all of our trademarks.
Changes in circumstances existing at the measurement date or at other times in the future, or in the estimates associated with management’s judgments and assumptions made in assessing fair value. These fair value assessments could change materially if different estimates and assumptions were used. No quantitative assessments were performed in 2024.
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.
Net cash provided by operating activities was $44.1 million for 2024 compared to $30.8 million for 2023. The increase in net cash provided by operating activities during 2024 compared to 2023 was primarily attributable to the net cash generated by the acquired Benihana and RA Sushi restaurants. 41 Table of Contents Investing Activities.
We expect to open three to five Kona Grills annually, primarily through company-owned locations, provided that we have acceptable locations and quality restaurant managers available to support that pace of growth.
We believe we could grow the Benihana brand to 400 restaurants over the foreseeable future. We expect to open one to three Benihanas annually, primarily through Company-owned locations and franchising agreements, provided that we have sufficient interest from prospective franchisees, acceptable locations and quality restaurant managers available to support that pace of growth.
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.
There are currently two Company-owned STK restaurants, one Company-owned Benihana, one Company-owned Kona Grill restaurant and one franchised Benihana (Express) restaurant under construction in the following cities: ● Owned STK restaurant in Los Angeles, California ● Owned STK restaurant in Topanga, California ● Owned Benihana restaurant in San Mateo, California ● Owned Kona Grill restaurant in Seattle, Washington ● Franchised Benihana (Express) restaurant in Miami, Florida ​ The table below reflects our venues by restaurant brand and geographic location: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Venues ​ STK (1) Benihana Grill Concepts ONE Hospitality (2) Total Domestic Owned (3) 18 ​ 73 ​ 43 ​ 3 137 Managed 2 ​ — ​ — ​ 1 3 Licensed 1 ​ — ​ — ​ — 1 Franchised — ​ 8 ​ — ​ — 8 Total domestic 21 ​ 81 ​ 43 ​ 4 149 International ​ ​ ​ Owned — ​ — ​ — ​ 1 1 Managed 5 ​ — ​ — ​ 4 9 Licensed 4 ​ — ​ — ​ — 4 Franchised — ​ 3 ​ — ​ — 3 Total international 9 3 — 5 17 Total venues 30 84 43 9 166 (1) Locations with an STK and STK Rooftop are considered one venue location.
Leases Contracts are evaluated to determine whether they contain a lease at inception, and leases are classified as either operating or financing.
We did not record any impairment charges related to goodwill or indefinite-lived intangible assets in 2024 or 2023. 43 Table of Contents Leases Contracts are evaluated to determine whether they contain a lease at inception, and leases are classified as either operating or financing.
In March 2024, we opened a Company-owned STK restaurant at the Marriott Marquis hotel in Washington, D.C. Additionally, we have one STK restaurant in Aventura, Florida under construction and several restaurants in the development phase or under lease that we plan to open in 2024 or 2025.
We also opened one managed STK restaurant in Ontario, Canada. Additionally, we have two STK restaurants in Topanga, California and Los Angeles, California under construction and several restaurants in the development phase or under lease that we plan to open in 2025 or 2026.
These management, license and incentive fees are recognized as revenue in the period the restaurant’s sales occur.
These management, license, franchise and incentive fees are recognized as revenue in the period the restaurant’s sales occur. Initial licensing fees, franchising fees and upfront fees related to management, license, and franchise agreements are recognized as revenue on a straight-line basis over the term of the agreement.
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.
Certain percentage amounts may not sum to total due to rounding. ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ 2024 ​ 2023 Revenues: ​ ​ ​ Owned restaurant net revenue 97.9% ​ 95.4% Management, license, franchise and incentive fee revenue 2.1% ​ 4.6% Total revenues 100.0% ​ 100.0% Cost and expenses: ​ ​ ​ ​ Owned operating expenses: ​ ​ ​ ​ Owned restaurant cost of sales (1) ​ 21.1% ​ 23.9% Owned restaurant operating expenses (1) ​ 62.5% ​ 60.3% Total owned operating expenses (1) ​ 83.6% ​ 84.1% General and administrative (including stock-based compensation of 0.9% and 1.5% for the years ended December 31, 2024 and 2023, respectively) 6.6% ​ 9.2% Depreciation and amortization 5.1% ​ 4.7% Transition and integration expenses 2.0% ​ —% Pre-opening expenses ​ 1.4% ​ 2.7% Transaction and exit costs ​ 1.4% ​ 0.1% Lease termination expenses 0.2% ​ —% Other expenses 0.0% ​ 0.3% Total costs and expenses 98.4% ​ 97.2% Operating income 1.6% ​ 2.8% Other expenses, net: ​ ​ ​ Interest expense, net of interest income 4.6% ​ 2.1% Loss on early debt extinguishment 0.6% ​ —% Total other expenses, net 5.2% ​ 2.1% (Loss) income before benefit for income taxes ​ (3.6)% ​ 0.7% Benefit for income taxes (1.2)% ​ (0.5)% Net (loss) income (2.5)% ​ 1.2% Less: net loss attributable to noncontrolling interest (0.1)% ​ (0.2)% Net (loss) income attributable to The ONE Group Hospitality, Inc.
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.
For Grill Concepts SSS, forty domestic restaurants are included in the comparable restaurant base. STK, Benihana and Grill Concepts SSS decreased 8.7%, 1.8% and 13.2%, respectively for 2024 compared to the prior year. Number of Restaurant Openings . Number of restaurant openings reflects the number of restaurants opened during a particular fiscal period.
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.
In 2024, full year information for both Benihana and RA Sushi, which is within Grill Concepts, is presented whereas 2023 reflects only Kona Grill within Grill Concepts. 31 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.
Kona Grill restaurants opened in 2023 had a gross cost per square foot of $600 and $90 per square foot in landlord contributions with an average size of 8,631 square feet. In situations where we add functional space and build an STK or Kona Grill restaurant with a mezzanine, covered patio, or rooftop, costs per square feet will increase.
In situations where we add functional space and build a restaurant with a mezzanine, covered patio, or rooftop, costs per square feet will increase. Typical cash pre-opening costs are $0.6 million to $0.8 million, excluding the impact of cash and non-cash pre-opening rent.
We also set a maximum number of signed leases for new restaurant development to twelve in order to minimize our cash rent commitment to approximately $3.0 million to $4.0 million annually for restaurants under development. ​ Credit Agreement On October 4, 2019, in conjunction with the acquisition of Kona Grill, the Company entered into a Credit Agreement with Goldman Sachs Bank USA.
We also set a maximum number of signed leases for new restaurant development to twelve in order to minimize our cash rent commitment to approximately $3.0 million to $4.0 million annually for restaurants under development. ​ Credit Agreement Refer to Note 6 and Note 17 to our consolidated financial statements set forth in Item 15 of this Annual Report on Form 10-K for further information regarding the terms of our long-term debt arrangements and information regarding our commitments and contingencies. ​ Capital Expenditures and Lease Arrangements When we open new Company-owned restaurants, our capital expenditures for construction increase.
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.
Revenues from locations where we do not directly control the event sales force are excluded from this measure. Our comparable restaurant base for STK SSS consisted of twelve domestic restaurants for the year ended December 31, 2024. For Benihana SSS, sixty-six domestic restaurants are included in the comparable restaurant base.
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.
General and administrative costs increased $13.4 million, or 43.5%, to $44.2 million for 2024 from $30.8 million for 2023. The increase was attributable to incremental headcount associated with the Benihana Acquisition and increased professional fees. As a percentage of revenues, general and administrative costs were 6.6% in 2024 compared to 9.2% in 2023. Depreciation and amortization .
(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.
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 Salt Water Social, Bao Yum, Heliot, Hideout, Radio and Rivershore Bar & Grill.
We borrowed $50.0 million on the delayed draw term loan facility in December 2022. The weighted average interest rate for 2023 was 11.9% compared to 6.9% for 2022. ​ (Benefit) provision for income taxes . The benefit for income taxes for 2023 was ($1.8) million compared to provision for income taxes of $0.9 million for 2022.
We borrowed $350.0 million on the Credit Agreement on May 1, 2024 to finance the Benihana Acquisition. The weighted average interest rate for 2024 was 11.7% compared to 11.9% for 2023. ​ Loss on early debt extinguishment.
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.
Food and beverage costs for owned restaurants increased $63.1 million, or 83.4%, to $138.8 million for 2024 from $75.7 million for 2023.
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).
The Credit Agreement provides a $350.0 million senior secured term loan facility and a $40.0 million senior secured revolving credit facility, which allows for up to $10.0 million of which will be available in the form of letters of credit.
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 .
Management, license, franchise and incentive fee revenue . Management, license, franchise and incentive fee revenues decreased $1.0 million, or 6.5%, to $14.4 million for 2024 from $15.4 million for 2023.
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.
In 2023, we opened Company-owned STK restaurants in Charlotte, North Carolina, Boston, Massachusetts and Salt Lake City, Utah. Expansion of Benihana . We expect to expand our operations domestically and internationally through a mix of owned and franchised Benihana restaurants using a disciplined and targeted site selection process.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe 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.
Biggest changeWe 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 The impact of inflation on labor, food, operating supplies and occupancy costs could significantly affect our operations.
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.
As of December 31, 2024, we had $348.3 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, Europe, Canada, Mexico and the Middle East.

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