STKS 10-K & 10-Q changes, risk factors and insider trading

We depend on consumer discretionary spending, business travel and the overall economic environment. Disruptions in the economy, including recessions, high unemployment, foreclosures, bankruptcies, inflationinflation, stock market declines and other economic impacts, could affect consumers’ ability and willingness to spend discretionary dollars. 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. If uncertain economic conditions were to persist for an extended period of time or worsen, consumers might make long-lasting changes to their discretionary spending behavior, including dining out less frequently. Adverse changes in consumer discretionary spending could be affected by many different factors that are out of our control, including international, national and local economic conditions, any of which could harm our business prospects, financial condition, operating results and cash flows. Continued uncertainty in or a worsening of the economy, generally or in a number of our markets, and our customers’ reactions to these trends could adversely affect our business and cause us to, among other things, reduce the number and frequency of new restaurant openings, close locations and delay any remodeling of existing restaurants. 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. We typically operate one to five venues in the cities where we operate. 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 preferencespreferences, increased immigration enforcement 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. Any regional occurrences such as local labor strikes, natural disasters, prolonged inclement weather, acts of terrorism or other national emergencies, accidents, energy shortages, system failures or other unforeseen events in or around these cities could result in temporary or permanent closings of our venues, which could have a material adverse effect on our business, financial condition and results of operations as a whole.

Some of our competitors have greater financial, marketing and operating resources than we do, have been in business longer, have greater name recognition and are better established in the markets where our restaurants and F&B hospitality services operations are located or where we may expand. In addition, improved product offerings in the fast casual segment of the restaurant industry, combined with the effects of negative economic conditions and other factors, may lead consumers to choose less expensive alternatives. Our competitors may be more adept at adapting and responding to new technological developments, including artificial intelligence, to develop customer insights that assist in increasing customer demand. 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.

The United States and other countries have experienced, or may experience in the future, outbreaks of viruses, such as coronavirus, norovirus, Avian Flu or “SARS,” H1N1 or “swine flu,” or other diseases such as bovine spongiform encephalopathy, commonly known as “BSE” or “mad cow disease.” If a virus is transmitted by human contact, our employees or customers may become infected, or may choose, or be advised, to avoid gathering in public places, any of which may adversely affect the guest traffic at our restaurants and the ability to adequately staff our restaurants, receive deliveries on a timely basis or perform functions at the corporate level. We also may be adversely affected if jurisdictions in which we have restaurants impose mandatory closures, seek voluntary closures or impose restrictions on operations. Even if such measures are not implemented and a virus or other disease does not spread significantly, the perceived risk of infection or significant health risk may adversely affect our business.

Failure to protect our food supply or enforce food safety policies, such as proper food temperature and adherence to shelf-life dates, could result in food-borne illnesses to our guests. Also, our reputation of providing high-quality food is an important factor in our guests choosing our restaurants. Whether or not traced to our restaurants or those of our competitors, instances of food borne illness or other food safety issues could reduce the demand for certain or all of our menu offerings. If any of our guest become ill from consuming our products, the affected restaurants may be forced to close, and we may be subject to legal liability. An instance of food contamination from one of our restaurants or suppliers could have far-reaching effects, as the contamination, or the perception of contamination could affect any or all of our restaurants. 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,BSE, aphthous fever, which is also known as “hoof and mouth disease,disease”, and hepatitis A, listeria, salmonella and e-coli may also injure our brand and may affect the selection of our restaurants byor those of our guestslicensees or licenseesfranchisees by guests based on fear of such illnesses. 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.

Further, the federal government has made some recent changes to immigration and deportation policies, and the U.S. Congress andor 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. 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. 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. Additionally, a government audit could result in a disruption to our workforce or adverse publicity that could negatively impact our brand and our use of E-Verify and/or potential for receipt of letters from the Social Security Administration requesting information (commonly referred to as no-match letters) could make it more difficult to recruit and/or retain qualified employees.

Our 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%35% of our food and beverage costs. 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.costs, as could international conflicts and other geopolitical events. Energy prices can also affect our operating results because increased energy prices may cause increased transportation costs for beef and other commodities and supplies, and increased costs for the utilities required to run each restaurant. Historically we have passed increased commodity and other costs on to our customers by increasing the prices of our menu items. 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.

Recently,Beginning in 2025, the U.S. government has announced significantly increased tariffs on foreign imports into the U.S. from certain countries,countries and jurisdictions, including Canada, China, and Mexico,Mexico and has made announcements regarding the potentialEuropean impositionUnion, ofand in some cases threatened to impose additional tariffs. In response, several countries have imposed, or threatened to impose, reciprocal tariffs on productsimports from the U.S. and other jurisdictions,retaliatory such as the European Union.measures. 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. 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. 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.

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 sevensix to twelveten 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”). However, there can be no assurance that we will be able to open new restaurants or F&B hospitality services locations at the rate that we currently expect.

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 31,28, 2024,2025, we had five licensed STK restaurants and eleventwelve franchised Benihana restaurants.

The quality of our food and ambiance of our restaurants are two of our competitive strengths. Therefore, adverse publicity, whether accurate or not, relating to food quality, public health concerns, illness, safety, injury or government or industry findings concerning our venues or those operated by others could negatively impact us. 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.

We have registered, or have applications pending to register, the trademarks STK, Benihana, Kona Grill,Grill and RA Sushi and Konavore with the United States Patent and Trademark Office and in certain foreign countries in connection with restaurant services. Our brands, which include our trademarks, service marks and other intellectual property and proprietary rights, are important to our success and our competitive position. In that regard, we believe that our trade names, trademarks and service marks are valuable assets that are critical to our success. Accordingly, we devote substantial resources to the establishment and protection of our brands. However, the actions we take may be inadequate to prevent imitation of our products and concepts by others, to prevent various challenges to our registrations or applications or denials of applications for the registration of trademarks, service marks and proprietary rights in the U.S. or other countries, or to prevent others from claiming violations of their trademarks and proprietary marks. In addition, others may assert rights in our trademarks, service marks and other proprietary rights or may assert that we are infringing rights they have in their trademarks, service marks, patents or other proprietary rights. Any such disputes could force us to incur costs related to enforcing our rights. In addition, the use of trade names, trademarks or service marks similar to ours in some markets may keep us from entering those markets.

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. 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.Benihana. 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. 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.

CybersecurityCybersecurity, Data Privacy and IT Systems

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. 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. 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. For example, they could:

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. We cannot be certain that we will be able to maintain adequate controls over our financial processes and reporting. Refer to Part II —Item 9A, “Controls and Procedures” of this Annual Report on Form 10-K for management’s assessment as of December 31,28, 2024.2025. 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. 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, and we could be subject to sanctions or investigation by regulatory authorities, such as the SEC or Nasdaq.

We currently own, operate, manage, license or franchise 166158 venues including 3031 STKs, 8486 Benihanas, 2723 Kona Grills and 1612 RA Sushis in major metropolitan cities in North America, Europe, Latin AmericaEurope and the Middle East and 96 F&B venues in fourthree hotels and casinos in the United States and Europe.

We opened the following sixseven new venues in 20242025:

We intend to add fivesix to seventen new venues in 2025.2026.

There are currently two Company-owned STK restaurants,restaurants oneand two Company-owned Benihana, one Company-owned Kona Grill restaurant and one franchised Benihana (Express) restaurantrestaurants under construction in the following cities:

Restaurant operating profit increased $57.9$19.5 million, or 114.9%18.1%, to $108.3$127.1 million for 20242025 compared to $50.4$107.6 million in 2023.2024. Restaurant operating profit as a percentage of owned restaurant net revenuerevenue, excluding Grill Concepts locations closed or to be closed, was 16.4%16.6% in 20242025 compared to 15.9%17.5% in 2023. Approximately $63.0 million of the increase in restaurant operating profit was attributable to the addition of the Benihana and RA Sushi restaurants from May 1, 2024 to December 31, 2024 offset by a decrease in restaurant operating profit from our existing business driven by food cost deleveraging driven by a decrease in same store sales.2024. See “Results of Operations” below for a reconciliation of Operating income (loss), the most directly comparable GAAP measure to restaurant operating profit.profit and a reconciliation of Owned restaurant net revenue, the most directly comparable GAAP measure to owned restaurant net revenue, excluding Grill Concepts locations closed or to be closed.

Net loss attributable to The ONE Group Hospitality, IncInc. was $15.8$92.2 million in 20242025 compared to net income of $4.7$17.1 million in 20232024, primarily due to transaction,the transitionnon-cash andtax integrationvaluation costsallowance partiallythat offsetwas recorded during the bythird thequarter incomeof generated at the acquired restaurants.2025.

Expansion of STK. We expect to continue to expand our operations domestically and internationally through a mix of owned, licensed and managed STK restaurants using a disciplined and targeted site selection process. We have identified over 75 additional major metropolitan areas across the globe where we expect we could grow our STK brand to 200 restaurants over the foreseeable future. We expect to open fourthree to sixfive 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 2024,2025, we opened Company-owned STK restaurants in Washington,Los D.C.Angeles, California, Canoga Park, California and Aventura,Oak Florida.Brook, Illinois. We alsoconverted openeda oneCompany-owned managedRA Sushi restaurant to a Company-owned STK restaurant in Ontario,Scottsdale, Canada.Arizona. Additionally, we have twothree STK restaurants in Topanga,Phoenix, CaliforniaArizona, New York, New York and LosWhite Angeles,Plains, CaliforniaNew York under construction and several restaurants in the development phase or under lease that we plan to open in 20252026 or 2026.2027.

In 2023,2024, we opened Company-owned STK restaurants in Charlotte,Washington, North Carolina, Boston, MassachusettsD.C. and SaltAventura, LakeFlorida. City,We Utah.also opened one licensed STK restaurant in Ontario, Canada.

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. We believe we could grow the Benihana brand to 400 restaurants over the foreseeable future. We expect to open onethree to threefive 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.

Same Store Sales (“SSS”). 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. For STK SSS, this measure includes total revenue from our owned and managed domestic STK locations, excluding revenues from our owned STK restaurant located in the W Hotel in Los Angeles, California due to the impact of the F&B hospitality management agreement with the hotel.locations. 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 twelvethirteen domestic restaurants for the year ended December 31,28, 2024.2025. For Benihana SSS, sixty-sixsixty-eight domestic restaurants are included in the comparable restaurant base. For Grill Concepts SSS, fortythirty-four domestic restaurants are included in the comparable restaurant base. STK, Benihana and Grill Concepts SSS decreased 8.7%,3.7%, 1.8%0.8% and 13.2%,12.5%, respectivelyrespectively, for 20242025 compared to the prior year.

Number of Restaurant Openings. Number of restaurant openings reflects the number of restaurants opened during a particular fiscal period. For each restaurant opening, we incur pre-opening costs,expenses, 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. 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.

Average Transaction. Average transaction is calculated by dividing total restaurant sales by total number of transactions for a specified period. 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. AverageThe average transaction for comparable Benihana restaurants was $111.$116 in 2025 compared to $111 for 2024. The average transaction was $64 for our comparable Grill Concepts restaurants in 2024 compared to $63 for 2023. In 2024, full year information for both Benihana2025 and RA Sushi, which is within Grill Concepts, is presented whereas 2023 reflects only Kona Grill within Grill Concepts.2024.

Average Comparable Restaurant Revenue. Average comparable restaurant revenue consists of the average sales of our comparable restaurants over a certain period of time. This measure is calculated by dividing total comparable restaurant sales in a given period by the total number of comparable restaurants in that period. For purposes of this calculation, STK Downtown restaurant and rooftop are considered a single venue. This indicator assists management in measuring changes in customer traffic, pricing and development of our brand. Our average comparable STK restaurant revenues were $15.5$14.2 million and $17.3$15.5 million for 20242025 and 2023,2024, respectively. For 2024,2025, our average comparable Benihana restaurant revenues were $6.3 million compared to $6.5 million.million for 2024. Our average comparable Grill Concepts restaurant revenues were $3.9$3.6 million and $5.2$3.9 million for 20242025 and 2023,2024, respectively. 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.

Owned restaurant net revenues. Owned restaurant net revenues consist of food and beverage sales by owned restaurants net of any discounts associated with each sale and of any ancillary F&B hospitality services at owned locations. Additionally, revenues from offsite banquets and our gift card programs are included in owned restaurant net revenues. For the year ended December 31,28, 2024,2025, in-venue beverage sales comprised 17% of food and beverage sales, and in-venue food sales comprised the remaining 83%. This indicator assists management in understanding the trends in gross margins of the restaurants.

Owned restaurant operating expenses. We measure owned restaurant operating expenses as a percentage of owned restaurant net revenues. OwnedFixed cost leveraging (deleveraging) represents the cost of owned restaurant operating expenses includeas a percentage of owned restaurant net revenues, in which an increase (decrease) in revenue would cause a decrease (increase) in the following:cost of owned restaurant operating expenses as a percentage of owned restaurant net revenues.

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”). We define EBITDA as net income before interest expense, benefit for income taxes and depreciation and amortization. We define Adjusted EBITDA as net income before interest expense, benefitprovision for income taxes, depreciation and amortization, non-cash impairment loss, non-cash rent expense, transactionnon-recurring gains and losses, stock-based compensation, lease termination and exit expenses, certain transactional and exit costs, transition and integration expenses, stock-basedloss compensation,on early debt extinguishment and non-recurringthe gainsAdjusted andEBITDA losses.attributable to Grill Concept restaurants closed or to be closed. Not all of the items defining Adjusted EBITDA occur in each reporting period but have been included in our definitions of these terms based on our historical activity. We define Restaurant Operating Profit as owned restaurant net revenue minus owned restaurant cost of sales and owned restaurant operating expenses.

Owned restaurant net revenue. Owned restaurant net revenue increased $341.5$132.9 million, or 107.6%,20.2%, to $791.8 million for 2025 from $658.9 million for 2024 from $317.4 million for 2023.2024. The increase was primarily attributable to the acquisition of Benihana and RA Sushi restaurants on May 1, 2024, which generated $338.1$488.9 million in revenues andin $35.52025 compared to $338.1 million infor revenuesthe fromeight-month tenperiod new restaurants opened since January 2023, partially offsetowned by athe reductionCompany in comparable restaurant sales.2024. Comparable restaurant sales decreased 6.2%3.7% in 20242025 compared to 2023.2024 primarily due to the current economic and macro environment.

Management, license, franchise and incentive fee revenue. Management, license, franchise and incentive fee revenues decreased $1.0$0.4 million, or 6.5%,2.8%, to $14.0 million for 2025 from $14.4 million for 2024 from $15.4 million for 2023.2024. The decrease was primarily attributable to a decrease in revenues at our managed STK restaurants in Norththe America,United Kingdom, partially offset from the franchise revenue from the acquired Benihana restaurant franchise agreements.

Owned restaurant cost of sales. Food and beverage costs for owned restaurants increased $63.1$24.8 million, or 83.4%,17.9%, to $163.6 million for 2025 from $138.8 million for 2024 from $75.7 million for 2023.2024. The increase in owned restaurant cost of sales is primarily attributed to $64.9the million in cost ofincremental sales associatedincrease with revenues generated byfrom Benihana and RA Sushi restaurants acquired onin Maythe 1,Benihana 2024,Acquisition partially offset by a decrease in comparable sales. As a percentage of revenues, cost of sales decreased 28040 basis points to 20.7% for 2025 from 21.1% for 2024 from 23.9% for 2023 primarily due to lower cost of sales for Benihana restaurants, product mix management, pricingrestaurants and operationalintegration cost reduction initiativessynergies partially offset by increased commodity prices.inflation.

Owned restaurant operating expenses. Owned restaurant operating expenses increased $220.5$89.5 million, or 115.3%,21.6%, to $411.8$503.1 million for 20242025 from $191.3$413.6 million for 2023.2024. The increase in owned restaurant operating expense is primarily attributed to $210.2the million inincremental operating expenses associatedfrom withthe revenues generated byacquired Benihana and RA Sushi restaurants acquired on May 1, 2024.restaurants. Owned restaurant operating costs as a percentage of owned restaurant net revenue increased 22070 basis points from 60.3%62.8% in 20232024 to 62.5%63.5% for 20242025 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.sales.

General and administrative. General and administrative costs increased $13.4$8.3 million, or 43.5%,18.8%, to $52.5 million for 2025 from $44.2 million for 2024 from $30.8 million for 2023.2024. The increase was attributable to incremental headcount associated with the Benihana Acquisition and increased professionaltravel fees.expenses. As a percentage of revenues, general and administrative costs were 6.6%6.5% in 20242025 compared to 9.2%6.6% in 2023.2024.

Depreciation and amortization. Depreciation and amortization expense increased $18.4$9.1 million to $43.2 million for 2025 from $34.1 million for 2024 from $15.7 million for 2023.2024. The increase was primarily related to a full year of depreciation and amortization for the Benihana and RA Sushi restaurants acquired on May 1, 2024, depreciation associated within the openingBenihana of ten new owned venues since January 2023 and capital expenditures to maintain and enhance the guest experience in our restaurants.Acquisition.

Transition and integration costs.expenses. In 2025 and 2024, we incurred $11.2 million and $13.7 millionmillion, respectively, of transition and integration costsexpenses associated with the Benihana Acquisition, which closed on May 1, 2024. Included in these costs are expenses related to the implementation of happy hour and wagyu offerings at Benihana and identified duplicate professional service vendors, operational support offices, support positions, and maintenance expenses that will be eliminated in the foreseeable future. Over the next twelve months, we intend to integrate Benihana by leveraging our corporate infrastructure, our supply chain, and unique Vibe Dining program, to elevate the brand experience and drive improved performance.expenses.

Ongoing or future armed conflict, heightened geopolitical tensions, or military hostilities involving Iran, including the full or partial closure of the Strait of Hormuz or restricted access to the Red Sea, damage to energy production, transport facilities or infrastructure, or retaliatory actions by regional or global powers, could materially and adversely affect global economic conditions and financial markets. Such developments could disrupt international trade, energy markets, fertilizer markets, currency stability and transportation routes, leading to increased volatility in commodity prices, supply chain disruptions, inflationary pressures and reduced consumer and business confidence.

This Quarterly Report on Form 10-Q and certain information incorporated herein by reference contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Section 27A of the Securities Act of 1933, as amended (the “Securities Act”). Forward-looking statements speak only as of the date thereof and involve risks and uncertainties that may cause our actual results, performance or achievements to be materially different from the results, performance or achievements expressed or implied by the forward-looking statements. These risks and uncertainties include the risk factors discussed under Item 1A. “Risk Factors” of this Quarterly Report on Form 10-Q and the Company’s Annual Report on Form 10-K for the year ended December 28, 2025. A number of factors could cause actual results or outcomes to differ materially from those indicated by such forward-looking statements, including but not limited to: (1) our ability to integrate the new or acquired restaurants into our operations without disruptions to operations; (2) our ability to capture anticipated synergies; (3) our ability to open new restaurants and food and beverage locations in current and additional markets, grow and manage growth profitably, maintain relationships with suppliers, obtain adequate supply of products and retain employees; (4) factors beyond our control that affect the number and timing of new restaurant openings, including weather conditions and factors under the control of landlords, contractors and regulatory and/or licensing authorities; (5) our ability to successfully improve performance and cost, realize the benefits of our marketing efforts and achieve improved results as we focus on developing new management and license deals; (6) changes in applicable laws or regulations; (7) the possibility that the Company may be adversely affected by other economic, business, and/or competitive factorsfactors, including economic downturns; (8) the impact of actual and potential changes in immigration policies, including potential labor shortages; (9) the potential impact of the imposition of tariffs, including increases in food prices and inflation and any resulting negative impacts on the macro-economic environment; (10) the impact of international conflicts on macroeconomic conditions; (11) risks related to our development and franchise partners; and (12) other risks and uncertainties indicated from time to time in our filings with the Securities and Exchange Commission. We have attempted to identify forward-looking statements by terminology including “anticipates,” “believes,” “can,” “continue,” “ongoing,” “could,” “estimates,” “expects,” “intends,” “may,” “appears,” “suggests,” “future,” “likely,” “goal,” “plans,” “potential,” “projects,” “predicts,” “should,” “targets,” “would,” “will” and similar expressions that convey the uncertainty of future events or outcomes. You should not place undue reliance on any forward-looking statement. We do not undertake any obligation to update or revise any forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events, except as required under applicable law.

We are an international restaurant company that develops, owns and operates, manages, licenses and franchises upscale and polished casual, high-energy restaurants. Our vision is to be the undisputed global leader in VIBE dining by executing upon our mission of creating great guest memories by operating the best restaurant in every market that we operate in by delivering exceptional and unforgettable experiences to every guest, every time. We design all our restaurants, lounges and F&B services to create a social dining and high-energy entertainment experience within a destination location. We believe that this design and operating philosophy separates us from more traditional restaurant and foodservice competitors.

Our primary restaurant brands are belowas follows:

We opened our first restaurant in January 2004 in New York, New York. We currently own, operate, manage, license or franchise 157158 venues,venues including 3132 STKs, 8586 Benihanas, 2322 Kona Grills and 12 RA SushisRAs in major metropolitan cities in North America, EuropeEurope, Latin America and the Middle East,East and 6 food and beverage (“F&B”) venues operated under ONE Hospitality in three hotels and casinos inthroughout the United States and Europe.

We intend to open six to ten new venues in 2026. InWe January 2026, wehave opened athe Company-ownedfollowing Konarestaurants Grillto restaurantdate in San Antonio, Texas, a relocation of an existing Kona Grill restaurant.2026:

During the second quarter of 2026, we converted a franchised Benihana Express restaurant to a Company-owned Benihana Express restaurant and terminated an agreement for a franchised Benihana Express restaurant.

There are currently twothe Company-owned STKfollowing restaurants and one Company-owned Benihana restaurant under construction in the following cities:

In 2025, we completed a comprehensive review of our Grill Concepts portfolio and made the strategic decision to close or convert several locations. As part of this initiative, we permanently closed one RA Sushi restaurant in January 2026. In addition, we temporarily closed three Kona Grill restaurants and two RA Sushi restaurants in January 2026 that will be converted into a Benihana or STK restaurant. We expect these conversions to be completed by the end of 2026.

Total revenue increaseddecreased $1.7$6.9 million, or 0.8%3.3% to $212.8$200.5 million for the three periods ended MarchJune 29,28, 2026,2026 compared to $211.1$207.4 million for the three periods ended MarchJune 30,29, 2025. The change in revenue is attributable to the closures of certain restaurants pursuant to the Grill Concepts portfolio optimization discussed above.

Operating income increased $3.2$5.9 million to $13.9$6.6 million for the three periods ended MarchJune 29,28, 2026 compared to $10.7$0.7 million for the three periods ended MarchJune 30,29, 2025 primarily due to improved restaurant operating profit partly offset by higher general and administrative expenses coupled with the reduction in transition and integration costs related to the acquisition of the Benihana and RA Sushirestaurants restaurants.and lower lease termination and restaurant closure expenses partly offset by higher general and administrative expenses.

Restaurant Operatingoperating Profit,profit excludingimproved Grill Concepts restaurants closed, increased $4.0$1.2 million, or 11.1%,3.8%, to $39.9$32.4 million for the three periods ended MarchJune 29,28, 20262026, compared to $35.9$31.2 million for the three periods ended MarchJune 30,29, 2025. Restaurant Operatingoperating Profitprofit as a percentage of owned restaurant net revenue, excluding Grill Concepts locations closed,revenue was 19.1%16.4% in the firstsecond quarter of 2026 compared to 18.1%15.3% in the firstsecond quarter of 2025. See “Results of Operations” below for a reconciliation of Restaurant operating profit to Operating income, the most directly comparable GAAP measure to Restaurant Operating Profit.measure.

Net incomeloss attributable to The ONE Group Hospitality, Inc. was $3.2$2.1 million for the three periods ended MarchJune 29,28, 2026, compared to $1.0a net loss of $10.1 million for the three periods ended MarchJune 30,29, 2025, primarily due to improved restaurant operating profit partly offset by higher general and administrative expenses coupled with the decrease in transition and integration costs related to the acquisition of the Benihana and RA Sushi restaurants.

EBITDA, Adjusted EBITDA, Restaurant Operatingoperating Profitprofit and Restaurant EBITDA are presented in this Quarterly Report on Form 10-Q to supplement other measures of financial performance. EBITDA, Adjusted EBITDA, Restaurant Operatingoperating Profitprofit and Restaurant EBITDA are not required by, or presented in accordance with, accounting principles generally accepted in the U.S. (“GAAP”). We define EBITDA as net income before interest expense, provision for income taxes and depreciation and amortization. We define Adjusted EBITDA as net income before interest expense, provision for income taxes, depreciation and amortization, stock-based compensation, lease termination and restaurant closure expenses, transition and integration expenses, transaction costs, non-cash rent, non-cash impairment loss, non-recurring gains and losses, certain transactional and exit costs,costs and loss on early debt extinguishment and the Adjusted EBITDA attributable to Grill Concepts restaurants closed.extinguishment. Not all the aforementioned items defining Adjusted EBITDA occur in each reporting period but have been included in our definitions of terms based on our historical activity. Adjusted EBITDA presented in this Quarterly Report on Form 10-Q is a supplemental measure of financial performance that is not required by, or presented in accordance with, GAAP. We define Restaurant Operatingoperating Profitprofit as owned restaurant net revenue minus owned restaurant cost of sales and owned restaurant operating expenses. We define Restaurant EBITDA as owned restaurant net revenue minus owned restaurant cost of sales and owned restaurant operating expenses before non-cash rent.

The following table presents a reconciliation of net incomeloss to EBITDA and Adjusted EBITDA for the periods indicated (in thousands):

The following table presents a reconciliation of Owned restaurant net revenue for the six periods ended MarchJune 30,28, 20252026 to the threesix periods ended MarchJune 29, 20262025 (in thousands):

Results of Operations for the Three Periods Ended MarchJune 29,28, 2026 Compared to the Three Periods Ended MarchJune 30,29, 2025

Owned restaurant net revenue. Owned restaurant net revenue increaseddecreased $1.9$6.6 million, or 0.9%,3.2%, to $209.3$197.3 million for the three periods ended MarchJune 29,28, 2026,2026 from $207.4$203.9 million for the three periods ended MarchJune 30,29, 2025. The increasechange was primarily attributable to the change in our fiscal calendar and sales generated by seven new restaurants, partially offset bya decrease in revenues from Grill Concepts restaurants closed,either atemporarily decreaseor inpermanently same store salesclosed and the elimination of auto-gratuities.auto-gratuities, partially offset by an increase in comparable restaurant sales and sales from new restaurants opened since July 2025. Comparable restaurant sales decreasedincreased 0.3%0.9% in the three periods ended MarchJune 29,28, 2026 compared to the three periods ended MarchJune 30,29, 2025.

Management, license, franchise and incentive fee revenue. Management, license, franchise,franchise and incentive fee revenues decreased $0.2$0.3 million,million orto 5.4%$3.2 million for the three periods ended June 28, 2026 compared to $3.5 million for the three periods ended MarchJune 29, 2026, from $3.7 million for the three periods ended March 30, 20252025, primarily due to the exit of a management agreement in Scottsdale, Arizona in the second quarter of 2025.

Owned restaurant cost of sales. Food and beverage costs for owned restaurants decreased $2.6$4.7 million, or 6.0%,10.9%, to $40.5$38.5 million for the three periods ended MarchJune 29,28, 2026,2026 from $43.1$43.2 million for the three periods ended MarchJune 30,29, 2025. As a percentage of owned restaurant net revenue, cost of sales decreasedimproved 140by 170 basis points from 20.8% in the three periods ended March 30, 2025 to 19.4%19.5% for the three periods ended MarchJune 28, 2026 compared to 21.2% for the three periods ended June 29, 20262025 primarily due to menu optimization, integration synergies, supply chain initiatives,initiatives and increased menu pricing and more efficient cost of sales associated with New Years Eve and Valentine’s Day.pricing.

Owned restaurant operating expenses. Owned restaurant operating expenses increaseddecreased $0.2$3.2 millionmillion, or 2.5% to $129.0$126.3 million for the three periods ended MarchJune 29,28, 2026,2026 from $128.8$129.5 million for the three periods ended MarchJune 30,29, 2025. Owned restaurant operating costs as a percentage of owned restaurant net revenue decreasedincreased 4050 basis points from 62.1%63.5% in the three periods ended MarchJune 30,29, 2025 to 61.7%64.0% for the three periods ended MarchJune 29,28, 2026 primarily due to improvementsan increase in labormarketing costs and the elimination of auto-gratuities.expenses.

General and administrative. General and administrative costs increased $1.9$2.3 million, or 14.5%,19.7%, to $15.0$14.0 million for the three periods ended MarchJune 29,28, 2026,2026 comparedfrom to $13.1$11.7 million for the three periods ended MarchJune 30,29, 2025. The increase was attributable to inflation on salaries and bonus,salaries, higher audit-relatedbonus fees,expense, planned investments in information technology, specificallyincluding AI-related technologies, and increased marketingtravel expenses. As a percentage of revenues, general and administrative costs increasedwere by 90 basis points to 7.1%7.0% for the three periods ended MarchJune 29,28, 2026 compared to 6.2%5.6% for the three periods ended MarchJune 30,29, 2025.

Depreciation and amortization. Depreciation and amortization expense increasedwas $0.6 million to $10.4$11.0 million for the three periods ended MarchJune 29,28, 2026, compared to $9.8$10.9 million for the three periods ended MarchJune 30,29, 2025. The increase is attributed to new restaurants opened during fiscal year 2025.

Lease termination and restaurant closure expenses. Lease termination and restaurant closure expenses were $2.0$0.9 million for the three periods ended MarchJune 29,28, 2026, which consisted primarily of expenses related to the Grill Concepts optimization and includedthe $0.4relocation millionof an STK restaurant in non-cashNew expenses.York, New York. Lease termination and restaurant closure expenses were $0.1$5.6 million for the three periods ended MarchJune 30,29, 2025.2025 primarily related to accelerated depreciation as well as exit costs associated with five Grill Concept restaurants closed during the quarter and the termination of an operating agreement.

Pre-opening expenses. In the three periods ended MarchJune 29,28, 2026, we incurred $1.5$2.9 million of pre-opening expenses primarily comprised of payroll, training and other costs for KonaSTK GrillDowntown LandmarkPhoenix, which opened in JanuaryJune 2026, and STK Chelsea, which opened in July 2026, preopen rent for restaurants that the Company has possession of, which included $0.5$1.1 million in non-cash rent, and pre-opening expenses for restaurants currently under development. Pre-opening expenses for the three periods ended MarchJune 30,29, 2025 were $1.7$1.6 million. Details of pre-opening expenses by category are provided in the table below for the three periods ended MarchJune 29,28, 2026 and Marchthree 30,periods ended June 29, 2025 (in thousands).

Transition and integration costs. In the three periods ended MarchJune 29,28, 2026, we incurred $0.5$0.2 million in transition and integration costs associated with the acquisition of the Benihana and RA Sushi restaurants for expenses related to temporary rentals of heating, ventilation and air conditioning equipment while we complete repairs and replacements of equipment acquired with the Benihana and RA Sushi restaurants. In the three periods ended MarchJune 30,29, 2025, we incurred $3.7$3.9 million of transition and integration costs associated with the acquisition of the Benihana and RA Sushi restaurants. Included in these costs are expenses related to identified duplicate professional service vendors, operationaloperations support offices, support positions, and maintenance expenses that have since been eliminated.

Interest expense, net of interest income. Interest expense, net of interest income, was $9.7$9.6 million for the three periods ended MarchJune 29,28, 2026 compared to $9.8$10.3 million for the three periods ended MarchJune 30,29, 2025. The weighted average interest rate for the three periods ended MarchJune 29,28, 2026 was 10.2%10.1% compared to 10.9%10.8% for the three periods ended MarchJune 30,29, 2025.

(Benefit) Provision for income taxes. The provisionbenefit for income taxes for the three periods ended MarchJune 30,28, 20252026 was $1.2$0.7 million,million compared to $0.3$0.7 million of tax expense for the three periods ended MarchJune 30,29, 2025. The effective income tax rate for the firstsecond quarter of 2026 was 28.0%23.4% compared to 31.4%7.3% for the firstsecond quarter of 2025.

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. 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 also may borrow on our Revolving Facility or issue equity, including preferred stock, to support ongoing business operations and fund additional expansion.operations. We believe these sources of financing are adequate to support our immediate business operations and plans. As of MarchJune 29,28, 2026, we had cash and cash equivalents of $6.1$6.4 million. Our credit card receivables as of MarchJune 29,28, 2026 were $11.8$10.7 million, which are typically collected within four days. We had $345.0$347.7 million in long-term debt, which primarily consisted of borrowings under our Credit Agreement as of MarchJune 29,28, 2026. As of MarchJune 29,28, 2026, the availability on our Revolving Facility was $33.7$28.7 million, subject to certain conditions.

For the threesix periods ended MarchJune 29,28, 2026, capital expenditures were $9.9$23.0 million, of which $6.5$15.4 million related to the construction of new STK, Benihana and Kona Grill restaurants, $1.2 million$2.5 related to remodels or major projects at existing restaurants and $2.2$4.7 million related to existing restaurants. We expect to receive between $1.6$1.0 million andto $3.0$1.6 million in landlord contributions in the next three months.

Capital expenditures by type for the threesix periods ended MarchJune 29,28, 2026 and theJune three29, periods2025, ended March 30, 2025respectively, are shownprovided below (in thousands).

To help manage future cash requirements, we intend to prioritize capital-efficient growth in 2026, significantly reducing discretionary capital expenditures. New-restaurant Company-owned development will focus on locations requiring $1.5 million or less, net of tenant improvement allowance, to open. We plan to convert up to an additional nine Company-owned Grill restaurants to Benihana or STK formats, with five that are expected to be converted by the end of 2026.formats. These conversions are expected to require aboutapproximately $1.0 million in capital investment and are anticipated to be accretive to EBITDA.

When we open new Company-owned restaurants, our capital expenditures for construction increase. 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 net cash investment of approximately $450 to $500 per square foot, made up of a gross cash investment of $600 to $650 per square foot and $150 per square foot in landlord contributions. STK restaurants opened in 2024 and 2025 had a gross cost per square foot of $689 and $119 per square foot in landlord contributions with an average size of 11,922 square feet. For owned Benihana restaurants, where we build from a shell state, we have typically targeted a restaurant size of 6,000 to 7,000 square feet. In situations where we add functional space and build a restaurant with a mezzanine, covered patio, or rooftop, costs per square foot will increase. Typical cash pre-opening expensescosts are $0.6 million to $0.8 million, excluding the impact of cash and non-cash pre-opening rent. In addition, some of our existing restaurants will require capital improvements to either maintain or improve the facilities. 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.

The following table summarizes the statement of cash flows for the threesix periods ended MarchJune 29,28, 2026 and the threesix periods ended MarchJune 30,29, 2025 (in thousands):

Operating Activities. Net cash provided by operating activities was $21.7$33.0 million for the threesix periods ended MarchJune 29,28, 2026, compared to $8.5$11.3 million for the threesix periods ended MarchJune 30,29, 2025. The increase was primarily attributable to increased net income,income and collections on credit card receivables, partially offset by the timing of payments on accounts payable andof accrued expenses.

Investing Activities. Net cash used in investing activities for the threesix periods ended MarchJune 30,28, 20252026, was $14.3$23.6 million, excluding tenant improvement allowances of $4.6 million, of which $9.7$15.4 million primarily related to the construction of new STK, Benihana and Kona Grill restaurants, $2.5 million related to remodels or major projects at existing restaurants and $4.4$4.7 million related to existing restaurants.

Financing Activities. Net cash used in financing activities for the threesix periods ended MarchJune 29,28, 2026 was $9.6$7.1 million, primarily comprised of $2.2$4.4 million of repayments under the CreditTerm AgreementLoan Facility and $7.0$2.0 million in the repayments net of borrowings on the Revolving Facility compared to net cash used in financing activities of $0.3$2.2 million for the threesix periods ended MarchJune 30,29, 2025.