The ONE Group Hospitality: Serving More Steaks and Shareholders with Benihana Deal – Initiation Report

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Exec-Edge

Tue, Apr 1, 2025, 10:28 AM 2 min read

Investors tin bask conscionable that with The ONE Group Hospitality, Inc. (Nasdaq: STKS), relation of 167 full-service, experience-driven eating establishments nether a premix of ownership models crossed 32 states and 12 countries. Demand for experiential upscale meals, besides known arsenic “vibe” dining, is increasing, particularly among higher-income households. STKS is perfectly positioned to payment from this displacement with an outstanding marque portfolio of STK Steakhouse and Kona Grill — on with newly-acquired Safflower Holdings, genitor of world-famous Benihana (known for hibachi-side cook performances) and RA Sushi.

Multiple forces substance our bullish outlook for 2025. First is the $365 cardinal Safflower acquisition past year, which drove a 100% emergence successful gross and a 130% summation successful Ebitda. Benihana brings more-than 80 venues to the STKS portfolio, which besides has immoderate franchise restaurants enabling asset-light enlargement internationally. The borderline illustration of these restaurants is adjacent amended than the existing portfolio, which volition assistance boost wide profitability.

The woody besides generated efficiencies: Adjusted G&A expenses and outgo of income declined arsenic a percent of sales, reflecting palmy synergy realization. Diversification into integer and off-premise income with Benihana (takeout and transportation 12% of revenue) and RA Sushi (20% integer and off-premise sales) balances the predominantly dine-in quality of STK and Kona Grill.

To scope its semipermanent maturation people of clocking $5 cardinal successful system-wide revenue, the institution devised a strategy focused connected some fiscal prudence and growth. STKS plans to thrust higher same-store sales, trim overhead costs, and grow its footprint done licensing and absorption deals.

Throughout 2024, organization owners specified arsenic Goldman Sachs, JPMorgan Chase & Co, and Jane Street person accrued their ownership. Some made precise important purchases, specified arsenic Deutsche Bank which accrued its involvement by 839%.

For the moment, STKS shares are connected sale. The institution trades astatine an endeavor value, adjusted for debt, of conscionable 5.2 times guardant Ebitda. That’s little than fractional the multiples commanded by Brinker International, Inc. and The Cheesecake Factory Inc.

Guests are drawn successful by sushi, steak, and seafood – and investors by an charismatic valuation with plentifulness of maturation levers successful place. Appetites for delicacies and returns are satisfied equally. Click beneath to work our elaborate initiation report.