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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 166 venues including 30 STKs, 84 Benihanas, 27 Kona Grills and 16 RA Sushis in major metropolitan cities in North America, Europe, Latin America and the Middle East and 9 F&B venues in four hotels and casinos in the United States and Europe.

We opened the following six new venues in 2024:

● Owned STK restaurant in Washington, D.C.

● Owned STK restaurant in Aventura, Florida

● Managed STK restaurant at Niagara Falls in Ontario, Canada

● Owned Kona Grill restaurant in Tigard, Oregon

● Owned RA Sushi restaurant in Plantation, Florida

● Owned Salt Water Social restaurant in Denver, Colorado

We intend to add five to seven new venues in 2025.

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

● Owned STK restaurant in Los Angeles, California

● Owned STK restaurant in Topanga, California

● Owned Benihana restaurant in San Mateo, California

● Owned Kona Grill restaurant in Seattle, Washington

● Franchised Benihana (Express) restaurant in Miami, Florida

The table below reflects our venues by restaurant brand and geographic location:

Venues

STK(1) Benihana Grill Concepts ONE Hospitality(2) Total

Domestic

Managed 2 — — 1 3

Licensed 1 — — — 1

Franchised — 8 — — 8

International

Owned — — — 1 1

Managed 5 — — 4 9

Licensed 4 — — — 4

Franchised — 3 — — 3

Total international 9 3 — 5 17

(3) Includes Benihana locations at sports arenas

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Acquisitions

On May 1, 2024, the Company acquired 100% of the issued and outstanding equity interests of Safflower Holdings Corp. from Safflower Holdings LLC for $365.0 million., subject to customary adjustments (the “Benihana Acquisition”). Safflower Holdings Corp. beneficially owns most of the Benihana restaurants, as well as all of the RA Sushi restaurants, in the United States. It also franchises Benihana locations in the U.S., Latin America (excluding Mexico) and the Caribbean.

In connection with the Benihana Acquisition, on May 1, 2024, the Company sold and issued to (a) HPC III Kaizen LP, for $150.0 million cash, subject to a 5% original issuance discount, 150,000 shares of Series A Preferred Stock, a warrant to purchase 1,786,582 shares of Common Stock of the Company for an exercise price of $0.01 per share, and a warrant to purchase 1,000,000 shares of Common Stock of the Company for an exercise price of $10.00 per share and (b) to the HPS Investors, for $10 million cash in the aggregate, subject to a 5% original issuance discount, securities allocated among the HPS Investors as follows: (i) to HPS Special Situations Opportunity Fund II, L.P., 4,309 shares of such Series A Preferred Stock in book-entry form, a warrant to purchase 51,236 shares of Common Stock of the Company for an exercise price of $0.01 per share, and a warrant to purchase 28,729 shares of Common Stock of the Company for an exercise price of $10.00 per share, (ii) to SSOF II BH US Subsidiary, L.P., 3,691 shares of such Series A Preferred Stock in book-entry form, a warrant to purchase 43,957 shares of Common Stock of the Company for an exercise price of $0.01 per share, and a warrant to purchase 24,604 shares of Common Stock of the Company for an exercise price of $10.00 per share, (iii) to HPS Corporate Lending Fund, 1,000 shares of such Series A Preferred Stock in book-entry form, a warrant to purchase 11,911 shares of Common Stock of the Company for an exercise price of $0.01 per share, and a warrant to purchase 6,667 shares of Common Stock of the Company for an exercise price of $10.00 per share, and (iv) to HPS Corporate Capital Solutions Fund, 1,000 shares of such Series A Preferred Stock in book-entry form, a warrant to purchase 11,911 shares of Common Stock of the Company for an exercise price of $0.01 per share, and a warrant to purchase 6,667 shares of Common Stock of the Company for an exercise price of $10.00 per share, in each case of clauses (a) and (b), in a private placement exempt from registration under the Securities Act of 1933, as amended.

The Series A Preferred Stock is non-voting and non-convertible; has compounding dividends that begin at a rate of 13.0% per annum and increase over time at specified intervals; is subject to optional redemption by the Company and mandatory redemption following specified events and in certain circumstances upon the exercise by the holders of a majority of the outstanding shares of Series A Preferred Stock of an option to deliver written notice to the Company to require redemption, in each case, for specified prices; and gives certain consent rights for the holders of a majority of the outstanding shares of Series A Preferred Stock for specified matters.

Additionally, in connection with the Benihana Acquisition, on May 1, 2024, the Company entered into 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”). The Credit Agreement provides a $350.0 million senior secured term loan facility and a $40.0 million senior secured revolving credit facility, which allows for up to $10.0 million of which will be available in the form of letters of credit. On May 1, 2024, we borrowed $350.0 million under the Term Loan Facility and the Revolving Facility was and remains undrawn.

Refer to Notes 6 and 12 to our consolidated financial statements set forth in Item 15 of this Annual Report on Form 10-K for further information regarding the Credit Facility and preferred stock financing.

2024 Financial Highlights

Total revenue increased $340.6 million, or 102.3% to $673.3 million for 2024 compared to $332.8 million for 2023. Approximately $339.7 million of the increase in total revenue was attributable to the addition of the Benihana and RA Sushi restaurants from May 1, 2024 to December 31, 2024.

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Same store sales for 2024 compared to 2023 were as follows:

Q1 Q2 Q3 Q4 YTD

US STK Owned Restaurants (6.0)% (11.9)% (11.4)% (5.0)% (8.3)%

US STK Managed Restaurants (8.6)% (7.4)% (10.3)% (12.2)% (9.5)%

US STK Total Restaurants (6.8)% (10.6)% (11.1)% (6.9)% (8.7)%

Benihana Owned Restaurants —% (1.0)% (4.2)% (0.2)% (1.8)%

Combined Same Store Sales (7.9)% (7.0)% (8.8)% (4.3)% (6.8)%

Operating income increased $1.5 million to $10.8 million for 2024 from $9.3 million for 2023 primarily due to the increase in operating income attributable to the acquired restaurants offset by transaction, transition and integration costs related to the Benihana Acquisition.

Restaurant operating profit increased $57.9 million, or 114.9% to $108.3 million for 2024 compared to $50.4 million in 2023. Restaurant operating profit as a percentage of owned restaurant net revenue was 16.4% in 2024 compared to 15.9% 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. See “Results of Operations” below for a reconciliation of Operating income (loss), the most directly comparable GAAP measure to restaurant operating profit.

Net loss attributable to The ONE Group Hospitality, Inc was $15.8 million in 2024 compared to net income of $4.7 million in 2023 primarily due to transaction, transition and integration costs partially offset the by the income generated at the acquired restaurants.

Our Growth Strategies and Outlook

Our growth model is primarily driven by the following:

Expansion of STK. 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 four to six STKs annually, primarily through Company-owned locations and management or licensing agreements, provided that we have sufficient interest from prospective licensees, acceptable locations and quality restaurant managers available to support that pace of growth.

In 2024, we opened Company-owned STK restaurants in Washington, D.C. and Aventura, Florida. We also opened one managed STK restaurant in Ontario, Canada. Additionally, we have two STK restaurants in Topanga, California and Los Angeles, California under construction and several restaurants in the development phase or under lease that we plan to open in 2025 or 2026.

In 2023, we opened Company-owned STK restaurants in Charlotte, North Carolina, Boston, Massachusetts and Salt Lake City, Utah.

Expansion of Benihana. We expect to expand our operations domestically and internationally through a mix of owned and franchised Benihana restaurants using a disciplined and targeted site selection process. We believe we could grow the Benihana brand to 400 restaurants over the foreseeable future. We expect to open one to three Benihanas annually, primarily through Company-owned locations and franchising agreements, provided that we have sufficient interest from prospective franchisees, acceptable locations and quality restaurant managers available to support that pace of growth.

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

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through growth in same store sales, as defined below in Key Performance Indicators, and a reduction of store-level operating expenses.

Acquisitions. We continue to evaluate potential acquisition opportunities.

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, 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. Revenues from locations where we do not directly control the event sales force are excluded from this measure.

Our comparable restaurant base for STK SSS consisted of twelve domestic restaurants for the year ended December 31, 2024. For Benihana SSS, sixty-six domestic restaurants are included in the comparable restaurant base. For Grill Concepts SSS, forty domestic restaurants are included in the comparable restaurant base. STK, Benihana and Grill Concepts SSS decreased 8.7%, 1.8% and 13.2%, respectively for 2024 compared to the prior year.

Number of Restaurant Openings. Number of restaurant openings reflects the number of restaurants opened during a particular fiscal period. For each restaurant opening, we incur pre-opening costs, which are defined below. Typically, new restaurants open with an initial start-up period of higher than normalized sales volumes (also referred to in the restaurant industry as the “honeymoon” period), which decrease to a steady level approximately 24 months after opening. 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.

In 2024, we opened three STK restaurants including two Company-owned restaurants in Washington, D.C. and Aventura, Florida and a managed STK restaurant at Niagara Falls in Ontario, Canada. We also opened one Company-owned Kona Grill restaurant in Tigard, Oregon, one Company-owned RA Sushi restaurant in Plantation, Florida and one Company-owned Salt Water Social restaurant in Denver, Colorado. In 2023, we opened three STK restaurants, three Kona Grill restaurants and two Bao Yum venues under a licensing agreement with REEF Kitchens. In 2024, the Company exited its licensing agreement with REEF Kitchens and has no venues operating pursuant to that agreement.

Average Check Per Person. 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 $127 for 2024 compared to $130 for 2023.

Average Transaction. Average transaction is calculated by dividing total restaurant sales by total number of transactions for a specified period. Our management team uses these indicators at Benihana and Grill Concepts to analyze trends in customers’ preferences, customer expenditures and the overall effectiveness of menu changes and price increases. Average transaction for comparable Benihana restaurants was $111. The average transaction was $64 for our comparable Grill Concepts restaurants in 2024 compared to $63 for 2023. 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.

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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 million and $17.3 million for 2024 and 2023, respectively. For 2024, our average comparable Benihana restaurant revenues were $6.5 million. Our average comparable Grill Concepts restaurant revenues were $3.9 million and $5.2 million for 2024 and 2023, respectively. In 2024, full year information for both Benihana and RA Sushi, which is within Grill Concepts, is presented whereas 2023 reflects only Kona Grill within Grill Concepts.

Key Financial Terms and Metrics

We evaluate our business using a variety of key financial measures:

Segment reporting

Our reportable operating segments are as follows:

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 31, 2024, beverage sales comprised 17% of food and beverage sales, and food sales comprised the remaining 83%. This indicator assists management in understanding the trends in gross margins of the restaurants.

Our primary owned restaurant brands are STK, Benihana, Kona Grill and RA Sushi. 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

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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. Owned restaurant operating expenses include the following:

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.

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.

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.

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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, benefit for income taxes, depreciation and amortization, non-cash rent expense, transaction and exit costs, transition and integration expenses, stock-based compensation, and non-recurring gains and losses. 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 37 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 31,

Revenues:

Management, license, franchise and incentive fee revenue 14,429 15,403

Cost and expenses:

Owned operating expenses:

Transition and integration expenses 13,681 —

Transaction and exit costs 9,326 207

Lease termination expenses 1,096 —

Other expenses, net:

Interest expense, net of interest income 31,109 7,028

Loss on early debt extinguishment 4,149 —

(Loss) income before benefit for income taxes (24,487) 2,266

Benefit for income taxes (7,834) (1,760)

Less: net loss attributable to noncontrolling interest (829) (692)

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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 31,

Revenues:

Owned restaurant net revenue 97.9% 95.4%

Management, license, franchise and incentive fee revenue 2.1% 4.6%

Cost and expenses:

Owned operating expenses:

Owned restaurant cost of sales (1) 21.1% 23.9%

Owned restaurant operating expenses (1) 62.5% 60.3%

Total owned operating expenses (1) 83.6% 84.1%

Depreciation and amortization 5.1% 4.7%

Transition and integration expenses 2.0% —%

Pre-opening expenses 1.4% 2.7%

Transaction and exit costs 1.4% 0.1%

Lease termination expenses 0.2% —%

Other expenses 0.0% 0.3%

Total costs and expenses 98.4% 97.2%

Operating income 1.6% 2.8%

Other expenses, net:

Interest expense, net of interest income 4.6% 2.1%

Loss on early debt extinguishment 0.6% —%

Total other expenses, net 5.2% 2.1%

(Loss) income before benefit for income taxes (3.6)% 0.7%

Benefit for income taxes (1.2)% (0.5)%

Net (loss) income (2.5)% 1.2%

Less: net loss attributable to noncontrolling interest (0.1)% (0.2)%

Net (loss) income attributable to The ONE Group Hospitality, Inc. (2.4)% 1.4%

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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 31,

Net loss attributable to noncontrolling interest (829) (692)

Interest expense, net of interest income 31,109 7,028

Benefit for income taxes (7,834) (1,760)

Stock-based compensation 6,017 5,032

Transaction and exit costs 9,326 207

Transition and integration expenses 13,681 —

Lease termination expense (1) 1,096 —

Loss on debt extinguishment 4,149 —

Adjusted EBITDA attributable to noncontrolling interest (416) (339)

(1) Lease termination expenses are costs associated with closed locations.

The following table presents a reconciliation of Operating income to Restaurant Operating Profit for the periods indicated (in thousands):

For the year ended December 31,

Operating income as reported $ 10,771 $ 9,294

Management, license, franchise and incentive fee revenue (14,429) (15,403)

Transition and integration expenses 13,681 —

Transaction and exit costs 9,326 207

Lease termination expenses 1,096 —

Restaurant Operating Profit by brand is as follows (in thousands):

For the year ended December 31,

STK restaurant operating profit (Company owned) $ 38,106 $ 38,023

Benihana restaurant operating profit (Company owned) $ 59,597 $ —

Core Grill Concepts restaurant operating profit $ 11,180 $ 12,134

Non-core Grill Concepts restaurant operating profit $ (1,764) $ 171

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Results of Operations for the Years Ended December 31, 2024 and December 31, 2023

Revenues

Owned restaurant net revenue. Owned restaurant net revenue increased $341.5 million, or 107.6%, to $658.9 million for 2024 from $317.4 million for 2023. The increase was primarily attributable to the acquisition of Benihana and RA Sushi restaurants on May 1, 2024, which generated $338.1 million in revenues and $35.5 million in revenues from ten new restaurants opened since January 2023, partially offset by a reduction in comparable restaurant sales. Comparable restaurant sales decreased 6.2% in 2024 compared to 2023.

Management, license, franchise and incentive fee revenue. Management, license, franchise and incentive fee revenues decreased $1.0 million, or 6.5%, to $14.4 million for 2024 from $15.4 million for 2023. The decrease was primarily attributable to a decrease in revenues at our managed STK restaurants in North America, 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 $63.1 million, or 83.4%, to $138.8 million for 2024 from $75.7 million for 2023. The increase in owned restaurant cost of sales is primarily attributed to $64.9 million in cost of sales associated with revenues generated by Benihana and RA Sushi restaurants acquired on May 1, 2024, partially offset by a decrease in comparable sales. As a percentage of revenues, cost of sales decreased 280 basis points to 21.1% for 2024 from 23.9% for 2023 primarily due to lower cost of sales for Benihana restaurants, product mix management, pricing and operational cost reduction initiatives partially offset by increased commodity prices.

Owned restaurant operating expenses. Owned restaurant operating expenses increased $220.5 million, or 115.3%, to $411.8 million for 2024 from $191.3 million for 2023. The increase in owned restaurant operating expense is primarily attributed to $210.2 million in operating expenses associated with revenues generated by Benihana and RA Sushi restaurants acquired on May 1, 2024. Owned restaurant operating costs as a percentage of owned restaurant net revenue increased 220 basis points from 60.3% in 2023 to 62.5% for 2024 primarily due to higher labor costs driven by wage inflation, increased marketing expenses, general operating cost inflation and fixed cost deleveraging driven by a decrease in same store sales, partially offset by lower restaurant operating costs for Benihana restaurants.

General and administrative. General and administrative costs increased $13.4 million, or 43.5%, to $44.2 million for 2024 from $30.8 million for 2023. The increase was attributable to incremental headcount associated with the Benihana Acquisition and increased professional fees. As a percentage of revenues, general and administrative costs were 6.6% in 2024 compared to 9.2% in 2023.

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

Pre-opening expenses. We incurred $9.5 million of pre-opening expenses primarily related to payroll, training, and non-cash rent for six STK, Kona Grill, RA Sushi and Salt Water Social restaurants which opened in 2024 as well as restaurants currently under development. Total pre-opening expenses related to non-cash pre-open rent was $1.2 million.

Pre-opening expenses for 2023 were $8.9 million primarily related costs associated with six restaurants which opened in 2023 and restaurants opened in 2024. Total pre-opening expenses related to non-cash rent were $1.8 million.

Detail of pre-opening expenses by category is provided in the tables below for 2024 and 2023 (in thousands).

Year ended December 31, 2024 Preopen Expenses Preopen Rent Total

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Year ended December 31, 2023 Preopen Expenses Preopen Rent Total

Transaction and exit costs. Transaction and exit costs were $9.3 million for 2024. These costs primarily included investment banking, legal and professional fees incurred in conjunction with the Benihana Acquisition, which closed on May 1, 2024.

Transition and integration costs. In 2024, we incurred $13.7 million of transition and integration costs 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.

Other expenses. Other expenses in 2024 and 2023 were $0.1 million and $1.0 million, respectively, primarily related to litigation expenses.

Interest expense, net of interest income. Interest expense, net of interest income, was approximately $31.1 million and $7.0 million for 2024 and 2023, respectively. We borrowed $350.0 million on the Credit Agreement on May 1, 2024 to finance the Benihana Acquisition. The weighted average interest rate for 2024 was 11.7% compared to 11.9% for 2023.

Loss on early debt extinguishment. 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.

Benefit for income taxes. The benefit for income taxes for 2024 was $7.8 million compared to a benefit for income taxes for $1.8 million for 2023. Our effective tax rate was 32.0% and (77.7)% for the years ended December 31, 2024 and 2023, respectively. Our effective tax rate differs from the statutory U.S. tax rate of 21% primarily due to the following: (i) tax credits for FICA taxes on certain employees’ tips; (ii) taxes owed in foreign jurisdictions such as the United Kingdom, Canada and Italy; (iii) taxes owed in state and local jurisdictions; and (iv) windfall tax benefits from equity compensation offset by compensation limited for certain individuals with compensation in excess of $1 million.

Net loss attributable to noncontrolling interest. Net loss attributable to noncontrolling interest increased to a net loss of $0.8 million for 2024 compared to net loss of $0.7 million for 2023.

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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 support ongoing business and fund additional expansion. We believe these sources of financing are adequate to support our immediate business operations and plans. As of December 31, 2024, we had cash and cash equivalents of $27.6 million. We had $348.3 million in long-term debt, which consisted of borrowings under our Credit Agreement as of December 31, 2024. As of December 31, 2024, the availability on our revolving credit facility was $33.6 million, subject to certain conditions.

Capital expenditures in 2024 were $71.6 million of which $54.5 million primarily related to the construction of new STK, Benihana, Kona Grill and RA Sushi restaurants and $16.3 million related to existing restaurants. Net capital expenditures, inclusive of $6.9 million in landlord contributions, was $64.7 million for 2024. We expect to receive between $1.0 million to $2.0 million in landlord contributions in the next three months.

Capital expenditures by type for 2024 and 2023 is provided below (in thousands).

Year Ended December 31, 2024 STK Benihana Grill Concepts Other (1) Total

Other — — — 822 822

Tenant Improvement Allowance $ 5,480 $ — $ 1,460 $ — $ 6,940

Year Ended December 31, 2023 STK Benihana Grill Concepts Other (1) Total

Other — — — 449 449

Tenant Improvement Allowance $ 3,519 $ — $ 1,125 $ 22 $ 4,667

(1) Includes inventory of restaurant equipment for venues under development.

Our operations have not required significant working capital, and, like many restaurant companies, we may have negative working capital during the year. 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

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modify our growth plans, the personnel that comprise our training team could be deployed to operate existing restaurants.

To help manage future cash requirements, we limit the number of owned company venues under construction at any given time to four restaurants. 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 $700 to $750 per square foot, exclusive of $150 per square foot in landlord contributions. STK restaurants opened in 2023 and 2024 had a gross cost per square foot of $706 and $132 per square foot in landlord contributions with an average size of 10,618 square feet. For owned Benihana restaurants, where we build from a shell state, we have typically targeted a restaurant size of 7,000 square feet. In situations where we add functional space and build a restaurant with a mezzanine, covered patio, or rooftop, costs per square feet will increase. Typical cash pre-opening costs are $0.6 million to $0.8 million, excluding the impact of cash and non-cash pre-opening rent. 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 31, 2024 and December 31, 2023 (in thousands):

For the year ended December 31,

Net cash provided by (used in):

Effect of exchange rate changes on cash (103) (57)

Net increase (decrease) in cash and cash equivalents $ 7,028 $ (34,074)

Operating Activities.Net cash provided by operating activities was $44.1 million for 2024 compared to $30.8 million for 2023. The increase in net cash provided by operating activities during 2024 compared to 2023 was primarily attributable to the net cash generated by the acquired Benihana and RA Sushi restaurants.

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Investing Activities. 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. Net cash used in investing activities for 2023 was $53.5 million primarily for the construction of six restaurants opened in 2023 and new restaurants under development, as well as capital expenditures for existing restaurants.

Financing Activities. 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. Net cash used by financing activities for 2023 was $11.2 million primarily attributable to $7.9 million in purchases for common stock and $2.0 million to pay employee taxes for shares withheld upon vesting restricted stock units.

Recent Accounting Pronouncements

Refer to Note 2 of our consolidated financial statements for a detailed description of recent accounting pronouncements.

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 31, 2024, we had a valuation allowance of $4.2 million that relates to foreign tax credits we do not expect to utilize as a result of generating income in a jurisdiction with a higher income tax rate than the U.S and certain other credits that the Company does not expect to utilize. The recording of deferred taxes requires significant management judgment regarding the interpretation of applicable statutes, the status of various income tax audits, and our particular facts and circumstances.

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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 31, 2024 were $276.1 million and $260.2 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 years ended December 31, 2024 and 2023, we did not identify any event or changes in circumstances that indicated that the carrying values of our restaurant long-lived assets were impaired and therefore, no impairment loss related to long-lived assets has been recognized.

Goodwill and Indefinite-Lived Intangible Assets

Goodwill and indefinite-lived intangible assets are tested for impairment annually or on an interim basis if events or changes in circumstances between annual tests indicate a potential impairment. 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 blend of the income approach using a discounted cash flow analysis and the market capitalization approach. The fair value of the trade names and trademarks is estimated using the relief from royalty method. Key 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. No quantitative assessments were performed in 2024.

We did not record any impairment charges related to goodwill or indefinite-lived intangible assets in 2024 or 2023.

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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.

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.

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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.

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 6.5%. As of December 31, 2024, we had $348.3 million of borrowings subject to variable interest rates.

Foreign Currency Exchange Rate Risk

We are subject to foreign currency exchange risk for our restaurants operating in the United Kingdom, Europe, Canada, Mexico and the Middle East. If foreign currency exchange rates depreciate in these countries or regions, or any 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.

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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 Chief Executive Officer and Chief Financial Officer, have reviewed the effectiveness of our disclosure controls and procedures as of December 31, 2024 and, based on this evaluation, have concluded that our disclosure controls and procedures were effective as of December 31, 2024.

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 31, 2024. 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 31, 2024.

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 31, 2024.

Changes in Internal Control Over Financial Reporting

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. Given the significance of the Benihana Acquisition, we have excluded the acquired Benihana business from our assessment and report on internal controls over financial reporting for the year ended December 31, 2024. Benihana and RA Sushi make up approximately 50.0% of our total revenue for the year ended December 31, 2024 and 64.9% of total assets as of December 31, 2024. Other than discussed above, there have been no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2024 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 31, 2024, 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 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

On May 1, 2024, The One Group Hospitality Inc. completed the Benihana Acquisition. Accordingly, the acquired assets and liabilities of Benihana are included in the Company’s consolidated balance sheet as of December 31, 2024, and the results of its operations and cash flows are reported in its consolidated statements of operations and cash flows for the year ended December 31, 2024, from the date of acquisition. However, management elected to exclude Benihana from its scope of the Company’s annual report on internal control over financial reporting as of December 31, 2024. The financial position of Benihana represented approximately 65% of total assets as of December 31, 2024, and 50% of total revenues during the year ended December 31, 2024.

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 31, 2024, of the Company and our report dated March 10, 2025, 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 10, 2025

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Item 9B. Other Information

During the quarter ended December 31, 2024, 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 2025 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 2025 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 2025 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 2025 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 2025 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 10, 2025

THE ONE GROUP HOSPITALITY, INC.

By: /s/ TYLER LOY

Tyler Loy

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 10, 2025

Emanuel Hilario (Principal Executive Officer)

/s/ TYLER LOY Chief Financial Officer March 10, 2025

Tyler Loy (Principal Financial Officer)

/s/ CHRISTI HING Chief Accounting Officer March 10, 2025

Christi Hing (Principal Accounting Officer)

/s/ JONATHAN SEGAL Executive Chairman, Director March 10, 2025

Jonathan Segal

/s/ DIMITRIOS ANGELIS Director March 10, 2025

Dimitrios Angelis

/s/ EUGENE BULLIS Director March 10, 2025

Eugene Bullis

/S/ JAMES CHAMBERS Director March 10, 2025

James Chambers

/s/ SUSAN LINTONSMITH Director March 10, 2025

Susan Lintonsmith

/s/ HAYDEE OLINGER Director March 10, 2025

Haydee Olinger

/s/ SCOTT ROSS Director March 10, 2025

Scott Ross

/s/ MICHAEL SERRUYA Director March 10, 2025

Michael Serruya

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Exhibit Index

ExhibitNumber Exhibit Description

19.1* The ONE Group Hospitality, Inc. Insider Trading Policy

21.1* List of Subsidiaries.

23.1* Consent of Deloitte & Touche LLP

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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.

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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

We have audited the accompanying consolidated balance sheets of The One Group Hospitality Inc. and subsidiaries (the "Company") as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income (loss), changes in shareholders' equity, and cash flows, for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 10, 2025, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. 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 audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters – Refer to Notes 1 and 3 to the financial statements

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Acquisition of Safflower Holdings Corp

Critical Audit Matter Description

The Company completed the acquisition of Safflower Holdings Corp (“Safflower”) for $365 million on May 1, 2024. The Company accounted for the acquisition under the acquisition method of accounting for business combinations. Accordingly, the Company allocated the purchase price, on a preliminary basis, to the assets acquired and liabilities assumed based on their estimated fair value including tradenames, property and equipment and operating leases.

F-2

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Management estimated the fair value of these intangible assets and liabilities utilizing an income approach. The fair value determination of the trade names required management to make several assumptions, the most significant of which were the forecasted revenue growth rates and discount rate.

Management estimated the fair value of property and equipment utilizing the cost approach. This fair value determination required management to make significant assumptions related to costs to acquire comparable assets.

Management estimated the fair value of assumed leases using the market rent sales comparison method and the rent as a percent of sales method to conclude on each individual lease’s favorability. This determination required management to make significant assumptions related to the selection of market rent comparisons.

We identified the valuation of the Safflower trade names, property and equipment, and operating leases as a critical audit matter because of the judgement involved in determining the appropriate assumptions used by the Company to estimate the fair value of these assets and liabilities. The most significant assumptions used to estimate fair value include the revenue growth rates and discount rate, used to value the trade names, the costs to acquire comparable assets used to value the property and equipment and the market rent comparisons used to value the leases, and the selection of the related valuation methodologies. This required a high degree of auditor judgement and an increased extent of effort, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the assumptions listed above included the following, among others:

o Intangible Assets:

◾ Tested the mathematical accuracy of the calculations.

◾ Tested the underlying source information used to support the discount rate.

o Property & Equipment:

◾ Tested appropriate inputs were utilized based on type and age of assets.

◾ Tested the mathematical accuracy of the calculations.

o Leases:

◾ Tested the mathematical accuracy of the calculations.

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Long Lived Impairment— Refer to Note 2 to the financial statements

Critical Audit Matter Description

Long-lived assets, which includes 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 values of these assets may not be fully recoverable. The impairment evaluation is performed at the individual restaurant level. Recoverability of restaurant assets is measured by a comparison of the carrying amount of an individual restaurant’s assets to the estimated undiscounted future cash flows expected to be generated by those restaurant assets. 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, and the Operating lease right-of-use assets as of December 31, 2024 were $276.1 million and $291.8 million, respectively. For the year ended December 31, 2024, no impairment loss related to long-lived assets was recognized.

For certain asset groups, we identified the impairment of long-lived assets as a critical audit matter because of the significant estimates and assumptions management makes to evaluate the recoverability of long-lived assets. This required a high degree of auditor judgement and an increased extent of effort when performing audit procedures to evaluate whether management appropriately identified impairment indicators and the reasonableness of management’s undiscounted future cash flows analysis.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to impairment of long-lived assets included the following, among others:

● We evaluated the Company’s evaluation of impairment indicators by:

/s/ Deloitte & Touche LLP

Denver, Colorado

March 10, 2025

We have served as the Company's auditor since 2021.

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Table of Contents

THE ONE GROUP HOSPITALITY, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share information)

December 31, December 31,

ASSETS

Current assets:

Restricted cash and cash equivalents 499 —

Due from related parties 376 376

LIABILITIES, SERIES A PREFERRED STOCK AND STOCKHOLDERS’ EQUITY

Current liabilities:

Current portion of operating lease liabilities 14,998 6,897

Deferred gift card revenue and other 6,540 2,077

Current portion of long-term debt 6,125 1,500

Other current liabilities 313 266

Operating lease liabilities, net of current portion 291,785 120,481

Other long-term liabilities 5,758 832

Commitments and contingencies (Note 17)

STKS US Equity

STKS · 10-K · period ended 2024-12-31

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Item 8. Financial Statements and Supplementary Data

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9A. Controls and Procedures

Item 9B. Other Information

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Item 11. EXECUTIVE COMPENSATION

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Item 15. Exhibits, Financial Statement Schedules

Item 16. 10-K Summary

STKS US Equity☆

STKS · 10-K · period ended 2024-12-31

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Item 8. Financial Statements and Supplementary Data

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9A. Controls and Procedures

Item 9B. Other Information

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Item 11. EXECUTIVE COMPENSATION

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Item 15. Exhibits, Financial Statement Schedules

Item 16. 10-K Summary

STKS US Equity