Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following management’s discussion and analysis of our consolidated financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes to those statements included elsewhere in this Annual Report on Form 10-K.
Overview
We currently own, operate, manage, license or franchise 158 venues including 31 STKs, 86 Benihanas, 23 Kona Grills and 12 RA Sushis in major metropolitan cities in North America, Europe and the Middle East and 6 F&B venues in three hotels and casinos in the United States and Europe.
We opened the following seven new venues in 2025:
● Owned Benihana restaurant in San Mateo, California
● Owned STK restaurant in Canoga Park, California
● Franchised Benihana Express restaurant in Miami, Florida
● Owned STK restaurant in Oak Brook, Illinois
● Sports arena Benihana restaurant at the UBS Arena in Elmont, New York
In January 2026, we opened a Company-owned Kona Grill restaurant in San Antonio, Texas, a relocation of an existing Kona Grill restaurant.
In February 2026, we converted a franchised Benihana restaurant to a Company-owned Benihana restaurant in Monterey, California.
We intend to add six to ten new venues in 2026.
There are currently two Company-owned STK restaurants and two Company-owned Benihana restaurants under construction in the following cities:
● Owned STK restaurant in Phoenix, Arizona
● Owned Benihana restaurant in San Jose, California
● Owned Benihana restaurant in Seattle, Washington
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The table below reflects our venues by restaurant brand and geographic location:
Venues
Domestic
Sports arena(4) — 4 — — 4
Managed 1 — — 1 2
Licensed 1 — — — 1
Franchised — 7 — — 7
International
Owned — — — — —
Sports arena(4) — — — — —
Managed 4 — — 4 8
Licensed 4 — — — 4
Franchised — 4 — — 4
Total international 8 4 — 4 16
(2) Includes five temporarily closed venues.
During 2024 and 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 closed four Kona Grill restaurants and two RA Sushi restaurants in 2025. Additionally, we closed one RA Sushi restaurant in January 2026.
In addition, during the first quarter of 2025, we exited two Benihana restaurants in sports arenas. In the second quarter of 2025, a management agreement for one STK restaurant and an operating agreement at The W Hotel were terminated. A ONE Hospitality venue was closed during the second quarter of 2025. In the third quarter of 2025, we terminated a license agreement for one STK restaurant and closed one RA Sushi restaurant. We converted a RA Sushi restaurant to a STK restaurant during the fourth quarter of 2025. 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.
2025 Financial Highlights
Total revenue increased $132.4 million, or 19.7% to $805.7 million for 2025 compared to $673.3 million for 2024 primarily attributable to our acquisition of 100% of the issued and outstanding equity interests of Safflower Holdings Corp. from Safflower Holdings LLC on May 1, 2024 (the “Benihana Acquisition”) partially offset by the fiscal calendar change that shifted New Year’s Eve to 2026 and four less days in 2025 compared to 2024.
Same store sales for 2025 compared to 2024 were as follows:
Q1 Q2 Q3 Q4 YTD
US STK Owned Restaurants (2.3)% (4.9)% (6.2)% (0.7)% (3.4)%
US STK Managed Restaurants (12.7)% (9.5)% (4.7)% 4.2% (4.6)%
US STK Total Restaurants (3.6)% (6.0)% (5.8)% 0.3% (3.7)%
Benihana Owned Restaurants 0.7% 0.4% (4.0)% (0.4)% (0.8)%
Combined Same Store Sales (3.2)% (4.1)% (5.9)% (1.8)% (3.7)%
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Operating income decreased $0.9 million to $8.0 million for 2025 from $8.9 million for 2024 primarily due to the decrease in the transaction costs related to the Benihana Acquisition and the additional operating income from a full year of the acquired restaurants from the Benihana acquisition partially offset by the loss on impairment of non-current assets.
Restaurant operating profit increased $19.5 million, or 18.1%, to $127.1 million for 2025 compared to $107.6 million in 2024. Restaurant operating profit as a percentage of owned restaurant net revenue, excluding Grill Concepts locations closed or to be closed, was 16.6% in 2025 compared to 17.5% in 2024. See “Results of Operations” below for a reconciliation of Operating income (loss), the most directly comparable GAAP measure to restaurant operating 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, Inc. was $92.2 million in 2025 compared to net income of $17.1 million in 2024, primarily due to the non-cash tax valuation allowance that was recorded during the third quarter of 2025.
Our Growth Strategies and Outlook
Our growth model is primarily driven by the following:
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 three to five 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 2025, we opened Company-owned STK restaurants in Los Angeles, California, Canoga Park, California and Oak Brook, Illinois. We converted a Company-owned RA Sushi restaurant to a Company-owned STK restaurant in Scottsdale, Arizona. Additionally, we have three STK restaurants in Phoenix, Arizona, New York, New York and White Plains, New York under construction and several restaurants in the development phase or under lease that we plan to open in 2026 or 2027.
In 2024, we opened Company-owned STK restaurants in Washington, D.C. and Aventura, Florida. We 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 three to five 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 2025, we opened Company-owned Benihana restaurants in San Mateo, California and at the UBS Arena in Elmont, New York. We also opened one franchised Benihana Express location in Miami, Florida. Additionally, we currently have two Benihana restaurants in San Jose, California and Seattle, Washington under construction and several restaurants in the development phase or under lease we plan to open in 2026 or 2027.
In December 2025, we entered into our largest asset-light development agreement in our history by securing development rights for a total of ten restaurants, either Benihana or Benihana Express locations, throughout the Greater San Francisco Bay Area with an experienced operator. We expect this agreement will significantly accelerate our West Coast expansion while maintaining our focus on capital-efficient growth.
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. 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.
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Acquisitions. We continue to evaluate potential acquisition opportunities.
As our footprint increases, we expect to benefit by leveraging system-wide operating efficiencies and best practices through the management of our general and administrative expenses as a percentage of overall revenue.
Key Performance Indicators
We use the following key performance indicators in evaluating our restaurants and assessing our business:
Same Store Sales (“SSS”). 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. 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 thirteen domestic restaurants for the year ended December 28, 2025. For Benihana SSS, sixty-eight domestic restaurants are included in the comparable restaurant base. For Grill Concepts SSS, thirty-four domestic restaurants are included in the comparable restaurant base. STK, Benihana and Grill Concepts SSS decreased 3.7%, 0.8% and 12.5%, respectively, for 2025 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 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 24 months after opening. Some new restaurants may experience a “honeymoon” period that is either shorter or longer than this time frame.
In 2025, we opened three Company-owned STK restaurants in Los Angeles, California, Canoga Park, California and Oak Brook, California. We converted a Company-owned RA Sushi restaurant to a Company-owned STK restaurant in Scottsdale, Arizona. We opened Company-owned Benihana restaurants in San Mateo, California and at the UBS Arena in Elmont, New York. We also opened one franchised Benihana Express location in Miami, Florida.
Average Check Per Person. Average check per person is calculated by dividing total restaurant sales by total number of guests for a specified period. Our management team uses these indicators at STK 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 per person was $129 for 2025 compared to $127 for 2024.
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. The average transaction for comparable Benihana restaurants was $116 in 2025 compared to $111 for 2024. The average transaction was $64 for our comparable Grill Concepts restaurants in both 2025 and 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 $14.2 million and $15.5 million for 2025 and 2024, respectively. For 2025, our average comparable Benihana restaurant revenues were $6.3 million compared to $6.5 million for 2024. Our average comparable Grill Concepts restaurant revenues were $3.6 million and $3.9 million for 2025 and 2024, respectively.
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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:
See Note 15 to our consolidated financial statements for further information on our segment reporting.
Revenues
Owned restaurant net revenues. Owned restaurant net revenues consist of food and beverage sales by owned restaurants net of any discounts associated with each sale and of any ancillary F&B hospitality services at owned locations. Additionally, revenues from offsite banquets and our gift card programs are included in owned restaurant net revenues. For the year ended December 28, 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.
Our primary owned restaurant brands are STK, Benihana, Kona Grill and RA Sushi. 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. 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. 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.
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. 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. 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. Fixed cost leveraging (deleveraging) represents the cost of owned restaurant operating expenses as a percentage of owned restaurant net revenues, in which an increase (decrease) in revenue would cause a decrease (increase) in the cost of owned restaurant operating expenses as a percentage of owned restaurant net revenues.
Owned restaurant operating expenses include the following:
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General and administrative. General and administrative expenses are comprised of all corporate overhead expenses, including payroll and related benefits, stock-based compensation expense, professional fees, such as legal and accounting fees, insurance and travel expenses. Certain centrally managed general and administrative expenses are allocated specifically to restaurant locations and are reflected in owned restaurant operating expenses and include shared services such as reservations, events and marketing. We expect general and administrative expenses to be leveraged as we grow, become more efficient, and continue to focus on best practices and cost savings measures.
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.
Transition and integration expenses. Transition and integration expenses consist of costs associated with the Benihana Acquisition. 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.
Lease termination and exit expenses. Lease termination and exit expenses consist of costs incurred in connection with a closed restaurant or restaurants to be closed. Lease termination and exit expenses can include costs associated exiting a lease agreement, accelerated depreciation on property and equipment and impairment of non-current 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. 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. 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.
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Transaction and exit costs. Transaction and exit costs primarily represent investment banking, legal and professional fees incurred in conjunction with the Benihana Acquisition.
Other Items
EBITDA, Adjusted EBITDA and Restaurant Operating Profit. We presentEBITDA, 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, provision for income taxes, depreciation and amortization, non-cash impairment loss, non-cash rent expense, non-recurring gains and losses, stock-based compensation, lease termination and exit expenses, certain transactional and exit costs, transition and integration expenses, loss on early debt extinguishment and the Adjusted EBITDA 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.
We believe that EBITDA, Adjusted EBITDA and Restaurant Operating Profit are appropriate measures of our operating performance because they eliminate non-cash or non-recurring expenses that do not reflect our underlying business performance. We believe Restaurant Operating Profit is an important component of financial results because: (i) it is a widely used metric within the restaurant industry to evaluate restaurant-level productivity, efficiency, and performance, and (ii) we use Restaurant Operating Profit as a key metric to evaluate our restaurant financial performance compared to our competitors. We use these metrics to facilitate a comparison of our operating performance on a consistent basis from period to period, to analyze the factors and trends affecting our business and to evaluate the performance of our restaurants. Adjusted EBITDA has limitations as an analytical tool and our calculation of Adjusted EBITDA may not be comparable to that reported by other companies; accordingly, you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Adjusted EBITDA is a key measure used by management and is a metric used in our debt compliance calculation. Additionally, Adjusted EBITDA and Restaurant Operating Profit are frequently used by analysts, investors and other interested parties to evaluate companies in our industry. We use Adjusted EBITDA and Restaurant Operating Profit, alongside other GAAP measures such as net income, to measure profitability, as a key profitability target in our budgets, and to compare our performance against that of peer companies despite possible differences in calculation.
Please refer to the table on page 36 for our reconciliation of net income to EBITDA and Adjusted EBITDA and for a reconciliation of operating income to Restaurant Operating Profit.
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Results of Operations
The following table sets forth certain statements of operations data for the periods indicated (in thousands):
For the year ended December 28, For the year ended December 31,
Revenues:
Management, license, franchise and incentive fee revenue 13,960 14,429
Cost and expenses:
Owned operating expenses:
Depreciation and amortization 43,192 34,096
Transition and integration expenses 11,202 13,681
Loss on impairment of non-current assets 10,610 —
Lease termination and exit expenses 7,949 1,567
Transaction and exit costs 256 8,855
Other (income) expenses (418) 124
Other expenses, net:
Interest expense, net of interest income 40,902 31,109
Loss on early debt extinguishment — 4,149
Loss before provision (benefit) for income taxes (32,901) (26,361)
Provision (benefit) for income taxes 60,684 (8,434)
Less: net loss attributable to noncontrolling interest (1,344) (829)
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The following table sets forth certain statements of operations data as a percentage of total revenues for the periods indicated. Certain percentage amounts may not sum to total due to rounding.
For the year ended December 28, For the year ended December 31,
Revenues:
Owned restaurant net revenue 98.3% 97.9%
Management, license, franchise and incentive fee revenue 1.7% 2.1%
Cost and expenses:
Owned operating expenses:
Owned restaurant cost of sales(1) 20.7% 21.1%
Owned restaurant operating expenses(1) 63.5% 62.8%
Total owned operating expenses(1) 84.2% 83.8%
Depreciation and amortization 5.4% 5.1%
Transition and integration expenses 1.4% 2.0%
Loss on impairment of non-current assets 1.3% —
Lease termination and exit expenses 1.0% 0.2%
Pre-opening expenses 0.7% 1.4%
Transaction and exit costs 0.0% 1.3%
Other (income) expenses (0.1)% 0.0%
Total costs and expenses 99.0% 98.7%
Operating income 1.0% 1.3%
Other expenses, net:
Interest expense, net of interest income 5.1% 4.6%
Loss on early debt extinguishment — 0.6%
Total other expenses, net: 5.1% 5.2%
Loss before provision (benefit) for income taxes (4.1)% (3.9)%
Provision (benefit) for income taxes 7.5% (1.3)%
Net loss (11.6)% (2.7)%
Less: net loss attributable to noncontrolling interest (0.2)% (0.1)%
Net loss attributable to The ONE Group Hospitality, Inc. (11.4)% (2.5)%
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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 28, For the year ended December 31,
Net loss attributable to noncontrolling interests (1,344) (829)
Interest expense, net of interest income 40,902 31,109
Provision (benefit) for income taxes 60,684 (8,434)
Depreciation and amortization 43,192 34,096
Stock-based compensation 5,440 6,017
Transition and integration expenses 11,202 13,681
Loss on impairment of non-current assets 10,610 —
Lease termination and exit expenses (1) 7,949 1,567
Transaction and exit costs 256 8,855
Loss on early debt extinguishment — 4,149
Grill Concepts restaurants closed or to be closed (3) 2,163 1,434
Other (income) expenses (418) 124
Adjusted EBITDA attributable to noncontrolling interest (644) (416)
On January 1, 2025, the Company transitioned from a calendar-based fiscal year to a 52/53-week fiscal year. Beginning in 2025, the Company’s fiscal year ended on the last Sunday in December. The Company’s fiscal year ending December 28, 2025 contained 362 days due to the transition. The following unaudited pro forma results of operations for December 28, 2025 have been adjusted to reflect a 364-day year (in thousands):
For the year ended December 28,
Operating income 11,560
Loss before provision (benefit) for income taxes (29,399)
Net loss attributable to The ONE Group Hospitality, Inc. (88,251)
Adjusted EBITDA attributable to The ONE Group Hospitality, Inc. 92,538
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The following table presents a reconciliation of Owned restaurant net revenue to Owned restaurant net revenue, excluding net revenue of Grill Concepts restaurants closed prior to December 28, 2025 or to be closed in the first quarter of 2026 for the periods indicated (in thousands):
For the year ended December 28, For the year ended December 31,
The following table presents a reconciliation of Operating income to Restaurant Operating Profit for the periods indicated (in thousands):
For the year ended December 28, For the year ended December 31,
Operating income as reported $ 8,001 $ 8,897
Depreciation and amortization 43,192 34,096
Transition and integration expenses 11,202 13,681
Loss on impairment of non-current assets 10,610 —
Lease termination and exit expenses 7,949 1,567
Transaction and exit costs 256 8,855
Grill Concepts restaurants closed or to be closed(1) 1,973 1,107
Other (income) expenses (418) 124
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Restaurant Operating Profit by brand is as follows (in thousands):
For the year ended December 28, For the year ended December 31,
STK restaurant operating profit (Company owned) $ 37,888 $ 38,106
Benihana restaurant operating profit (Company owned)(1) $ 80,684 $ 58,133
Core Grill Concepts restaurant operating profit(1) $ 8,989 $ 10,390
Restaurant EBITDA by brand is as follows (in thousands):
For the year ended December 28, For the year ended December 31,
STK restaurant EBITDA (Company owned) $ 36,868 $ 36,892
Benihana restaurant EBITDA (Company owned)(1) $ 82,365 $ 59,608
Core Grill Concepts restaurant EBITDA(1) $ 7,524 $ 10,589
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Results of Operations for the Years Ended December 28, 2025 and December 31, 2024
Revenues
Owned restaurant net revenue. Owned restaurant net revenue increased $132.9 million, or 20.2%, to $791.8 million for 2025 from $658.9 million for 2024. The increase was primarily attributable to the acquisition of Benihana and RA Sushi restaurants on May 1, 2024, which generated $488.9 million in revenues in 2025 compared to $338.1 million for the eight-month period owned by the Company in 2024. Comparable restaurant sales decreased 3.7% in 2025 compared to 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 $0.4 million, or 2.8%, to $14.0 million for 2025 from $14.4 million for 2024. The decrease was primarily attributable to a decrease in revenues at our managed STK restaurants in the United Kingdom, partially offset from the franchise revenue from the acquired Benihana restaurant franchise agreements.
Cost and Expenses
Owned restaurant cost of sales. Food and beverage costs for owned restaurants increased $24.8 million, or 17.9%, to $163.6 million for 2025 from $138.8 million for 2024. The increase in owned restaurant cost of sales is primarily attributed to the incremental sales increase from Benihana and RA Sushi restaurants acquired in the Benihana Acquisition partially offset by a decrease in comparable sales. As a percentage of revenues, cost of sales decreased 40 basis points to 20.7% for 2025 from 21.1% for 2024 primarily due to lower cost of sales for Benihana restaurants and integration synergies partially offset by commodity inflation.
Owned restaurant operating expenses. Owned restaurant operating expenses increased $89.5 million, or 21.6%, to $503.1 million for 2025 from $413.6 million for 2024. The increase in owned restaurant operating expense is primarily attributed to the incremental operating expenses from the acquired Benihana and RA Sushi restaurants. Owned restaurant operating costs as a percentage of owned restaurant net revenue increased 70 basis points from 62.8% in 2024 to 63.5% for 2025 primarily due to general cost inflation and fixed cost deleveraging driven by a decrease in same store sales.
General and administrative. General and administrative costs increased $8.3 million, or 18.8%, to $52.5 million for 2025 from $44.2 million for 2024. The increase was attributable to incremental headcount associated with the Benihana Acquisition and increased travel expenses. As a percentage of revenues, general and administrative costs were 6.5% in 2025 compared to 6.6% in 2024.
Depreciation and amortization. Depreciation and amortization expense increased $9.1 million to $43.2 million for 2025 from $34.1 million for 2024. The increase was primarily related to a full year of depreciation and amortization for the Benihana and RA Sushi restaurants acquired in the Benihana Acquisition.
Transition and integration expenses. In 2025 and 2024, we incurred $11.2 million and $13.7 million, respectively, of transition and integration expenses associated with the Benihana Acquisition, which closed on May 1, 2024. Included in these costs are expenses related to the identified duplicate professional service vendors, operational support offices, support positions, and maintenance expenses.
Loss on impairment of non-current assets. Loss on impairment of noncurrent assets for 2025 was $10.6 million with $6.4 million related to performance of certain restaurants and $4.2 million related to the Kona Grill tradename.
Lease termination and exit expenses. Lease termination and exit expenses were $7.9 million for 2025 compared to $1.6 million for 2024. Costs for 2025 primarily related to accelerated depreciation as well as exit costs associated with the seven restaurants closed in 2025 and the termination of an operating agreement.
Pre-opening expenses. We incurred $5.7 million of pre-opening expenses primarily related to payroll, training, and non-cash rent for seven STK and Benihana restaurants which opened in 2025 as well as restaurants currently under development. Total pre-opening expenses related to non-cash pre-open rent was $0.6 million.
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Pre-opening expenses for 2024 were $9.5 million 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. Total pre-opening expenses related to non-cash rent were $1.2 million.
Detail of pre-opening expenses by category is provided in the tables below for 2025 and 2024 (in thousands).
Year ended December 28, 2025 Preopen Expenses Preopen Rent (1) Total
Transaction and exit costs. Transaction and exit costs were $0.3 million and $8.9 million for 2025 and 2024, respectively. These costs primarily included investment banking, legal and professional fees incurred in conjunction with the Benihana Acquisition, which closed on May 1, 2024.
Other (income) expenses. Other income in 2025 was $0.4 million compared to an expense of $0.1 million in 2024. Other income in 2025 is primarily related to a gain on two legal settlements offset by expenses related to terminated development projects.
Interest expense, net of interest income. Interest expense, net of interest income, was approximately $40.9 million and $31.1 million for 2025 and 2024, respectively. We borrowed $350.0 million under a credit agreement with Deutsche Bank AG New York Branch, Deutsche Bank Securities Inc., HPS Investment Partners, LLC and HG Vora Capital Management, LLC (the “Credit Agreement”) entered into on May 1, 2024 to finance the Benihana Acquisition. The weighted average interest rate for 2025 was 10.7% compared to 11.7% for 2024.
Loss on early debt extinguishment. On May 1, 2024, in conjunction with entering into the Credit Agreement, we prepaid the outstanding debt balance under our credit agreement with Goldman Sachs Bank NA to early extinguish the $73.1 million of outstanding term loans. We recognized a $4.1 million loss on debt extinguishment primarily caused by the prepayment penalty and the recognition of unamortized debt issuance costs related to the debt extinguished for the year ended December 31, 2024.
Provision (benefit) for income taxes. The provision for income taxes for 2025 was $60.7 million compared to a benefit for income taxes of $8.4 million for 2024. Our effective tax rate was (184.4)% and 32.0% for the years ended December 28, 2025 and December 31, 2024, respectively. The increase in income tax expense is primarily due to the non-cash tax valuation allowance that was recorded during the third quarter of 2025.
Net loss attributable to noncontrolling interest. Net loss attributable to noncontrolling interest increased to a net loss of $1.3 million for 2025 compared to net loss of $0.8 million for 2024.
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. 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 credit facility or issue equity, including preferred stock, to
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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 28, 2025, we had cash and cash equivalents of $4.0 million. Our credit card receivables as of December 28, 2025 were $21.2 million, which are typically collected within four days. We had $354.2 million in long-term debt, which consisted of borrowings under our Credit Agreement as of December 28, 2025. As of December 28, 2025, the availability on our revolving credit facility was $27.2 million, subject to certain conditions.
Capital expenditures in 2025 were $57.6 million, of which $30.0 million primarily related to the construction of new STK, Benihana and Kona Grill restaurants, $7.4 million related to remodels or major projects at existing restaurants and $20.2 million related to existing restaurants. Net capital expenditures, inclusive of $6.3 million in landlord contributions, was $51.3 million for 2025. We expect to receive between $1.0 million to $1.3 million in landlord contributions in the next three months.
Capital expenditures by type for 2025 and 2024 is provided below (in thousands).
Year ended December 28, 2025 STK Benihana Grill Concepts Other (1) Total
Other — — — 1,189 1,189
Year ended December 31, 2024 STK Benihana Grill Concepts Other (1) Total
Other — — — 822 822
Tenant Improvement Allowance 5,480 — 1,460 — 6,940
(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. Revenues are received primarily in credit card or cash receipts, and restaurant operations do not require significant receivables or inventories, other than our wine inventory. In addition, we receive trade credit for the purchase of food, beverages and supplies, thereby reducing the need for incremental working capital to support growth. Due to the seasonality of our business, we typically generate a greater proportion of our cash flow from operations during the fourth quarter.
Our future cash requirements will depend on many factors, including the pace of expansion, conditions in the retail property development market, construction costs, the nature of the specific sites selected for new restaurants, and the nature of the specific leases and associated tenant improvement allowances available, if any, as negotiated with landlords. We have made significant investments in our training and development teams to support new restaurants openings. We believe these investments are necessary to support the successful opening of our new restaurants. If we 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 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 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. These conversions are expected to require about $1.0 million in capital investment and are anticipated be accretive to EBITDA.
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We limit the number of owned company venues under construction at any given time to four restaurants. 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. 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 $600 to $650 per square foot, exclusive of $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 feet will increase. Typical cash pre-opening expenses 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.
Our hospitality F&B services projects typically require limited capital investment from us. Capital expenditures for these projects are primarily funded by cash flows from operations and equipment financing, depending upon the timing of these expenditures and cash availability.
We typically seek to lease our restaurant locations for periods of 10 to 20 years under operating lease arrangements, with a limited number of renewal options. Our rent structure varies, but our leases generally provide for the payment of both minimum and contingent rent based on sales, as well as other expenses related to the leases such as our pro-rata share of common area maintenance, property tax and insurance expenses. Many of our lease arrangements include the opportunity to secure tenant improvement allowances to partially offset the cost of developing and opening the related restaurants. Generally, landlords recover the cost of such allowances from increased minimum rents. However, there can be no assurance that such allowances will be available to us on each project that we select for development.
Cash Flows
The following table summarizes the statement of cash flows for the years ended December 28, 2025 and December 31, 2024 (in thousands):
For the year ended December 28, For the year ended December 31,
Net cash provided by (used in):
Effect of exchange rate changes on cash 3 (103)
Net (decrease) increase in cash and cash equivalents $ (23,408) $ 7,028
Operating Activities.Net cash provided by operating activities was $30.3 million for 2025 compared to $44.1 million for 2024. The decrease in net cash provided by operating activities during 2025 compared to 2024 was primarily attributable to the timing of collections on credit card receivables.
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Investing Activities. Net cash used in investing activities for 2025 was $57.6 million, of which $30.0 million primarily related to the construction of new STK, Benihana and Kona Grill restaurants, $7.4 million related to remodels or major projects at existing restaurants and $20.2 million related to existing restaurants. Net capital expenditures, inclusive of $6.3 million in landlord contributions, was $51.3 million for 2025.
Net cash used in investing activities for 2024 was $441.4 million, which was comprised of $369.8 million for the Benihana acquisition, net of cash acquired, and $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.
Financing Activities. Net cash provided by financing activities was $3.9 million for 2025 and was comprised of proceeds from borrowings on the revolving credit facility net of repayments of $7.0 million, partially offset by repayments under the Credit Agreement of $4.0 million. Net cash provided by financing activities was $404.4 million for 2024 and was comprised of net proceeds from borrowings under the Credit Agreement of $333.8 million and net proceeds from the issuance of preferred stock and warrants of $138.9 million, partially offset by the repayment of our prior credit facility of $73.6 million and $3.2 million of shares purchased under our stock buyback plan.
Recent Accounting Pronouncements
Refer to Note 2 of our consolidated financial statements for a detailed description of recent accounting pronouncements.
Critical Accounting Estimates
Critical accounting estimates are those that management believes are the most important to the portrayal of our financial condition and results and require the most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Judgments and uncertainties may result in materially different amounts being reported under different conditions or using different assumptions.
Our significant accounting estimates are discussed in additional detail in Note 2 to our consolidated financial statements. 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 believe that our significant accounting estimates involve a higher degree of judgment and/or complexity for the reasons discussed below:
Income Taxes
We recognize deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the respective tax bases of our assets and liabilities. Deferred tax assets and liabilities are measured using current enacted rates expected to apply to taxable income in the years in which we expect the temporary differences to reverse. We routinely evaluate the likelihood of realizing the benefit of our deferred tax assets and may record a valuation allowance if, based on all available evidence, we determine that some portion of the tax benefit will not be realized.
In addition, our income tax returns are periodically audited by federal, state and foreign tax authorities. These audits include questions regarding our tax filing positions, including the timing and amount of deductions taken and the allocation of income amongst various tax jurisdictions. We evaluate our exposures associated with our various tax filing positions and record a related liability. We adjust our liability for unrecognized tax benefits and income tax provision in the period in which an uncertain tax provision is effectively settled, the statute of limitations expires for the relevant taxing authority to examine the tax position or when more information becomes available.
As of December 28, 2025, we had a valuation allowance of $75.1 million against the Company’s deferred tax assets. The recording of deferred taxes requires significant management judgment regarding the realizability of the deferred tax assets, interpretation of applicable statutes, the status of various income tax audits, and our particular facts and circumstances.
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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 impairment evaluation is generally performed at the individual restaurant level, as we believe this is the lowest level of identifiable cash flows. We believe that historical cash flows, in addition to other relevant facts and circumstances, are the primary basis for estimating future cash flows. Relevant facts and circumstances include, among others, significant underperformance relative to historical or projected future operating results, significant changes in the manner of use of the acquired assets or the strategy for the overall business, and significant negative industry or economic trends. Recoverability of restaurant assets is measured by a comparison of the carrying amount of an individual restaurant’s assets to the estimated identifiable undiscounted future cash flowsexpected to be generated by those restaurant assets. This process requires the use of estimates and assumptions, which are subject to a high degree of judgment. If the carrying amount of an individual restaurant’s assets exceeds its estimated undiscounted future cash flows, an impairment charge is recognized as the amount by which the carrying amount of the asset exceeds its fair value. The estimated fair value is determined for these assets in accordance with ASC 820, Fair Value Measurement. Property and equipment, net of accumulated depreciation and the operating lease right-of-use assets as of December 28, 2025 were $278.2 million and $253.2 million, respectively.
From time to time we have decided to close or dispose of restaurants. Typically, such decisions are based on operating performance or strategic considerations and must be made before the actual costs or proceeds of disposition are known, and management must make estimates of these outcomes. Such outcomes could include the sale of a leasehold, mitigating costs through a tenant or subtenant, or negotiating a buyout of a remaining lease term. In these instances, management evaluates possible outcomes, frequently using outside real estate and legal advice, and records provisions for the effect of such outcomes. The accuracy of such provisions can vary materially from original estimates, and management regularly monitors the adequacy of the provisions until final disposition occurs.
For the year ended December 28, 2025, the Company recorded non-cash impairment charges of $6.4 million on property and equipment, net and operating lease right-of-use-assets recorded in loss on impairment of non-current assets on the consolidated statement of operations and $0.7 million recorded in lease termination and exit expenses on the consolidated statement of operations. No impairment was recognized for the year ended December 31, 2024.
Insurance
We retain financial responsibility for a significant portion of our risks and associated liabilities with respect to workers’ compensation, general liability, health benefits and other insurable risks. The accrued liabilities associated with these programs are based on actuarial assumptions and projections as well as claims incurred but not yet reported to us (“IBNR”) as of the balance sheet date and are recorded in accrued expenses. Our estimated liabilities, which are not discounted, are based on information provided by our insurance brokers and insurers, combined with our judgment regarding a number of assumptions and factors, including the frequency and severity of claims, claims development history, case jurisdiction, applicable legislation and our claims settlement practices. Significant judgment is required to estimate IBNR amounts, as parties have yet to assert such claims. If actual claims trends, including the severity or frequency of claims, differ from our estimates, our financial results could be impacted.
Goodwill and Indefinite-Lived Intangible Assets
Goodwill and indefinite-lived intangible assets are tested for impairment annually on the last day of period 10 or on an interim basis if events or changes in circumstances between annual tests indicate a potential impairment. 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. 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. For the goodwill impairment test, the estimated fair value of the reporting units is determined using a weighting of the income approach using a discounted cash flow analysis and the market approach using the guideline public company method. The fair value of the trade names and trademarks is estimated using the relief from royalty method. Key
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assumptions include projected revenue growth and operating expenses, discount rates, royalty rates and other factors that could affect fair value or otherwise indicate potential impairment. These estimates are subjective, and our ability to realize future cash is affected by factors such as changes in economic conditions and operating performance. 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.
During the year ended December 31, 2024, the Company performed a qualitative test of the Benihana tradename, RA Sushi tradename, Kona Grill tradename and Benihana reporting unit goodwill. During the year ended December 28, 2025, the Company performed a quantitative test of the Benihana tradename, RA Sushi tradename, Kona Grill tradename and Benihana reporting unit goodwill. There is an inherent degree of uncertainty in preparing any forecast of future results as future sales are dependent on discretionary spending patterns, business travel and general economic conditions. A decrease in customer traffic or average transaction could reduce the sales and profitability of the restaurants which could impact the fair value of goodwill and tradenames.
We did not record any impairment charges related to goodwill in 2025 or 2024. For the year ended December 28, 2025, the Company recorded non-cash impairment charges of $4.2 million on the Kona Grill tradename recorded in loss on impairment of non-current assets on the consolidated statement of operations. No impairment related to indefinite-lived intangible assets was recognized for the year ended December 31, 2024. As of December 28, 2025, the goodwill associated with our Benihana reporting unit had a carrying value of $155.8 million and our Benihana tradename, Kona Grill tradename and RA Sushi tradename had carrying values in the amounts of $115.0 million, $11.0 million and $2.0 million respectively.
Leases
Contracts are evaluated to determine whether they contain a lease at inception, and leases are classified as either operating or financing. For operating leases, we recognize a lease liability equal to the present value of the remaining lease payments, and a right of use asset equal to the lease liability, subject to certain adjustments, such as prepaid rents, initial direct costs and lease incentives received from the lessor. For leases that do not have a rate implicit in the lease, we use our incremental borrowing rate to determine the present value of the lease payments. Our incremental borrowing rate is the rate of interest that we would have to borrow on a collateralized basis over a similar term on an amount equal to the lease payments in a similar economic environment.
The lease term at the lease commencement date is determined based on the non-cancellable period for which we have the right to use the underlying asset, together with any periods covered by an option to extend the lease if we are reasonably certain to exercise that option, periods covered by an option to terminate the lease if we are reasonably certain not to exercise that option, and periods covered by an option to extend (or not to terminate) the lease in which the exercise of the option is controlled by the lessor.
Certain of our leases also provide for percentage rent, which are variable lease costs determined as a percentage of gross sales in excess of specified, minimum sales targets. These percentage rents are recognized as rent expense prior to the achievement of the specified sales target provided achievement of the sales target is considered probable.
We currently lease all of our restaurant locations under leases classified as operating leases. Management makes judgments regarding the probable term for each lease and considers a number of factors to evaluate whether renewal options in the lease contracts are reasonably certain of exercise, such as length of time before option exercise, expected value of the leased asset at the end of the initial lease term, importance of the lease to overall operations, costs to negotiate a new lease, and any contractual or economic penalties. The lease term can impact the lease classification and accounting for a lease as either an operating or financing lease, the incremental borrowing rate, the rent holidays and/or escalations in payments that are taken into consideration when calculating the rent expense and the related lease liability and right-of-use asset, and the term over which leasehold improvements for each restaurant are depreciated. 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.
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BusinessCombination
On May 1, 2024, the Company acquired 100% of the issued and outstanding equity interests of Safflower Holdings Corp. and its affiliates comprising of 93 company owned restaurants and 12 franchised restaurants. In accordance with the acquisition method of accounting for business combinations, we allocated the purchase price of the acquired business to the tangible and intangible assets acquired and liabilities assumed based on estimated fair values. Our purchase price allocation methodology contains uncertainties because it requires us to make certain assumptions and to apply judgment to estimate the fair value of acquired assets and liabilities, including, but not limited to, property and equipment and intangible assets. We estimated the fair value of assets and liabilities based upon widely-accepted valuation techniques, including discounted cash flow and relief from royalty method, depending on the nature of the assets acquired or liabilities assumed. The process for estimating fair values in many cases requires the use of significant estimates, assumptions and judgments, including determining the timing and estimates of future cash flows and developing appropriate discount and royalty rates. Unanticipated events or circumstances may occur which could affect the accuracy of our fair value estimates.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Commodity Price Risk
We are exposed to market price fluctuations in beef, seafood, produce and other food product prices. Given the historical volatility of beef, seafood, produce and other food product prices, these fluctuations can materially impact our food and beverage costs. While we have taken steps to qualify multiple suppliers who meet our standards as suppliers for our restaurants and enter into agreements with suppliers for some of the commodities used in our restaurant operations, we do not enter into long-term agreements for the purchase of such supplies. There can be no assurance that future supplies and costs for such commodities will not fluctuate due to weather and other market conditions outside of our control and we may be subject to unforeseen supply and cost fluctuations. Dairy costs can also fluctuate due to government regulation. Because we typically set our menu prices in advance of our food product prices, our menu prices cannot immediately take into account the changing costs of food items. To the extent that we are unable to pass the increased costs on to our customers through price increases, our results of operations would be adversely affected. We do not use financial instruments to hedge our risk to market price fluctuations in beef, seafood, produce and other food product prices at this time. For the years ended December 28, 2025 and December 31, 2024, a hypothetical increase of 1% in food and beverage costs would have negatively impacted food and beverage costs by $1.6 million and $1.4 million, respectively.
Inflation
The impact of inflation on labor, food, operating supplies and occupancy costs could significantly affect our operations. We pay many of our employees hourly rates related to the applicable federal or state minimum wage. Food costs as a percentage of revenues have been somewhat stable due to procurement efficiencies and menu price increases, although no assurance can be made that our procurement will continue to be efficient or that we will be able to raise menu prices in the future. Costs for construction, taxes, repairs, maintenance and insurance all impact our occupancy costs. We believe that our current strategy, which is to seek to maintain operating margins through a combination of menu price increases, cost controls, careful evaluation of property and equipment needs, and efficient purchasing practices, has been an effective tool for dealing with inflation. There can be no assurance, however, that future inflationary or other cost pressure will be effectively offset by this strategy.
Interest Rate Risk
Under our Credit Agreement, we are exposed to market risk from changes in interest rates on our borrowings. Borrowings under the Credit Agreement are subject to rates based on SOFR plus an interest rate margin of 6.0% to 6.5%. As of December 28, 2025, we had $351.3 million of borrowings subject to variable interest rates. Based on outstanding borrowings at both December 28, 2025 and December 31,2024, a hypothetical 1% rise in interest rates would have increased interest expense by $3.5 million on an annual basis.
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. If foreign currency exchange rates depreciate in these countries or regions, or any
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other country or region in which we may operate in the future, we may experience declines in our international operating results but such exposure would not be material to the consolidated financial statements. We currently do not use financial instruments to hedge foreign currency exchange rate changes.
Item 8. Financial Statements and Supplementary Data
Our Consolidated Financial Statements required by this Item are set forth in Item 15 of this Annual Report on Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as our controls are designed to do, and management necessarily applies its judgment in evaluating the risk and cost benefit relationship related to controls and procedures.
Our CEO and CFO have reviewed the effectiveness of our disclosure controls and procedures as of December 28, 2025 and, based on this evaluation, have concluded that our disclosure controls and procedures were effective as of December 28, 2025.
Report of Management on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting for external purposes in accordance with accounting principles generally accepted in the United States of America. Internal control over financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect our transactions; providing reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; providing reasonable assurance that receipts and expenditures are made in accordance with management authorization; and providing reasonable assurance that unauthorized acquisition, use or disposition of company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected.
Our management has assessed the effectiveness of our internal control over financial reporting as of December 28, 2025. In making its assessment of internal control over financial reporting, management used the criteria set forth by the Committee of Sponsoring Organizations (the “COSO”) of the Treadway Commission in Internal Control – Integrated Framework (2013). Based on this assessment, our CEO and CFO concluded that our internal control over financial reporting was effective as of December 28, 2025.
Deloitte & Touche LLP, the independent registered public accounting firm that audited the financial statements included in this Annual Report, has issued an attestation report on our internal control over financial reporting as of December 28, 2025.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during the quarter ended December 28, 2025 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of The ONE Group Hospitality, Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of The ONE Group Hospitality, Inc. and subsidiaries (the "Company") as of December 28, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 28, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 28, 2025, of the Company and our report dated March 19, 2026, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report of Management on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
Denver, Colorado
March 19, 2026
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Item 9B. Other Information
(c) Trading Plans
During the quarter ended December 28, 2025, no director or officer adoptedorterminatedany Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
None.
PART III
Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information required by this item is incorporated by reference from the Company’s Proxy Statement for the 2026 Annual Meeting of Stockholders.
Item 11. EXECUTIVE COMPENSATION
Information required by this item is incorporated by reference from the Company’s Proxy Statement for the 2026 Annual Meeting of Stockholders.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Information required by this item is incorporated by reference from the Company’s Proxy Statement for the 2026 Annual Meeting of Stockholders.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information required by this item is incorporated by reference from the Company’s Proxy Statement for the 2026 Annual Meeting of Stockholders.
Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Information required by this item is incorporated by reference from the Company’s Proxy Statement for the 2026 Annual Meeting of Stockholders.
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PART IV
Item 15. Exhibits, Financial Statement Schedules
(a)(2) Financial Statement Schedules. None.
Item 16. 10-K Summary
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: March 19, 2026
THE ONE GROUP HOSPITALITY, INC.
By: /s/ NICOLE THAUNG
Nicole Thaung
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ EMANUEL HILARIO Chief Executive Officer and Director March 19, 2026
Emanuel Hilario (Principal Executive Officer)
/s/ NICOLE THAUNG Chief Financial Officer March 19, 2026
Nicole Thaung (Principal Financial Officer)
/s/ CHRISTI HING Chief Accounting Officer March 19, 2026
Christi Hing (Principal Accounting Officer)
/s/ JONATHAN SEGAL Executive Chairman, Director March 19, 2026
Jonathan Segal
/s/ DIMITRIOS ANGELIS Director March 19, 2026
Dimitrios Angelis
/s/ EUGENE BULLIS Director March 19, 2026
Eugene Bullis
/S/ JAMES CHAMBERS Director March 19, 2026
James Chambers
/s/ SUSAN LINTONSMITH Director March 19, 2026
Susan Lintonsmith
/s/ HAYDEE OLINGER Director March 19, 2026
Haydee Olinger
/s/ SCOTT ROSS Director March 19, 2026
Scott Ross
/s/ MICHAEL SERRUYA Director March 19, 2026
Michael Serruya
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Exhibit Index
ExhibitNumber Exhibit Description
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21.1* List of Subsidiaries.
23.1* Consent of Deloitte & Touche LLP
101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.INS* Inline XBRL Instance Document
* Filed herewith.
** Furnished herewith.
† Management contract or compensatory plan or arrangement.
ɸ Certain portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K. A copy of any omitted schedule or exhibit will be furnished supplementally to the U.S. Securities and Exchange Commission upon request; provided, however, that the parties may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any document so furnished.
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THE ONE GROUP HOSPITALITY, INC.
INDEX TO FINANCIAL STATEMENTS
Page
Report of Independent Registered Public Accounting Firm (PCAOB ID: 34) F-2
Consolidated Balance Sheets F-5
Consolidated Statements of Operations F-6
Consolidated Statements of Comprehensive (Loss) Income F-7
Consolidated Statements of Changes in Stockholders’ Equity F-8
Consolidated Statements of Cash Flows F-9
Notes to Consolidated Financial Statements F-10
F-1
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of The ONE Group Hospitality, Inc.
Opinion on the Financial Statements