The ONE Group Hospitality, Inc.

Thank you, operator, and hello, everyone. Before we begin our formal remarks, let me remind you that part of our discussion today will include forward-looking statements.

These forward-looking statements are not guarantees of future performance and you should not place undue reliance on them. These statements are also subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect.

Please also note that these forward-looking statements reflect our opinion only as of the date of this call. We undertake no obligation to revise or publicly release any revisions of these forward-looking statements considering new information or future events.

We refer you to our recent SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial conditions. During today's call, we will discuss certain non-GAAP financial measures which we believe can be useful in evaluating our performance.

However, the presentation of these measures or other information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. For reconciliations of these measures, such as adjusted EBITDA, adjusted net income, restaurant EBITDA, comparable sales, and total food and beverage sales at company-owned, managed, licensed, and franchised units to GAAP measures, along with the discussion of why we consider these measures useful, please see our earnings release issued today.

With that, I'd like to turn the call over to Manny Hilario.

Thanks, Tyler, and hello, everyone. Thank you for joining us today and for your continued interest in The ONE Group.

Let me start by thanking our over 11,000 teammates across our STK, Benihana, Samurai, Kona Grill, RA Sushi, and Salt Water Social Brands. Your dedication to creating unforgettable guest experiences is what truly differentiates our company and gives me tremendous confidence that we can achieve our vision of becoming the global leader in vibe dining.

Let's review our first quarter's highlights and our progress against our strategic initiatives. We were pleased that first quarter revenues, comparable sales, and adjusted EBITDA reached or exceeded the high end of our guided ranges.

We increased revenues by almost 150% to $211 million, fueled by a full quarter of Benihana and RA Sushi contributions and the strength of our new units. This was driven by another quarter of sequential improvement in our combined comparable sales trend, positive comparable sales at our Benihana restaurants, and strong positive transaction growth of 4.1% at our flagship STK brand.

We grew restaurant-level EBITDA to 16.4%, representing a 50-basis point improvement year over year through strategic operational efficiencies across our portfolio. Notably, both our Benihana and STK concepts achieved industry-leading restaurant-level EBITDA margins at 20.1% and 17.7%, respectively, for the quarter.

We also increased adjusted EBITDA by over 230% to $25.2 million, meaningfully exceeding our top-line growth and demonstrating our ability to increase profitability through the execution of our initiatives, tight cost management, and our growing economies of scale. Our growth strategy gained momentum in March with the opening of a company-owned Benihana in San Mateo, California, our first new Benihana restaurant since acquiring the brand last year.

We then continued our expansion in April, just after the quarter's end, by unveiling a new company-owned STK restaurant in Topanga, California, further strengthening our presence in the Los Angeles market. Now, let me provide an update on our four strategic priorities.

First, driving sales across our brands by executing our strategic pillars. Our mission is to create great guest memories by offering the best restaurants in every market that we operate by delivering exceptional and unforgettable guest experiences to every guest every time.

Our success is built on three fundamental pillars. Operations, flawless daily execution in every location; culinary, masterful preparation and innovative menu development; and marketing, drive strategic guest engagement through thoughtful marketing that creates meaningful connections.

Each element works together to ensure that we consistently exceed expectations and create the dining memories that our guests deserve. While we saw positive comparable sales at our Benihana restaurants and strong positive transaction growth at our flagship STK brand, we are still seeing some dining shifts across our restaurants because of the challenged and volatile economic environment.

We see a growing preference for alternative day parts like happy hour and particularly in our steakhouse business and an increase in guests sharing dishes and thoughtfully managing their average check. As a result, we continue to focus on our value-driven offerings while maintaining our premium positioning.

Our strategic dual-tier approach features exciting happy hour menus with $3, $6, and $9 selections across our brands. We also offer midweek complete dining experiences with beverage pairings at $69 for STK and $39 for all our other brands, creating accessible, value-driven entry points.

Simultaneously, we're elevating our culinary program with premium items for discerning guests, including Australian and Japanese Wagyu offerings at STK and Benihana. We're also laser-focused on improving throughput during our peak Friday and Saturday periods, leveraging our centralized logistics and reservation systems to enhance table turn times and overall efficiency.

We're also leveraging our $39 taste of Benihana menu in the bar to increase seating capacity so we can accommodate more guests during our peak dinner service hours of 6 to 9 p.m. on weekends.

Holiday dining represents a consistent strength across our brand portfolio. Building on our Valentine's Day success, we capitalized on our specially curated Easter menus and are now gearing up for Mother's Day menus this week.

These celebratory occasions truly showcase what makes our restaurant concept special. We continue to leverage our digital marketing infrastructure to drive awareness of both our value propositions and exceptional offerings, creating targeted messaging that resonates with distinct customer segments.

Our database currently consists of approximately 7 million contacts that we can strategically target. Additionally, we have soft-launched our Friends with Benefits rewards program designed to enhance our guest dining experiences across all our restaurant concepts.

This exciting new program will allow guests to earn points seamlessly through our family of restaurants with one point awarded for every dollar spent at STK, Benihana, Samurai, Kona Grill, Salt Water Social, or RA Sushi. These points can be converted into food and beverage offerings redeemable during future visits at any one of The ONE Group restaurants throughout the United States.

As a special touch, there will be exclusive rewards for both birthdays and half birthdays, giving guests even more reasons to celebrate special occasions with us. In other words, by combining strategic pricing, culinary innovation, and targeted marketing with flawless execution, we are confident that we can navigate the current market challenges and drive sustainable long-term sales growth.

Our second key priority is the successful integration of Benihana and delivering on our cost initiatives. By uniting two premier entertainment brands, we have secured a key position as a global leader in vibe dining.

Our integration efforts have already yielded significant results with synergies realized from streamline operations at both the restaurant and support levels. We've optimized workforce efficiency, consolidated professional services and insurance, centralized purchasing, and streamlined supply chain management with expected annual synergies of at least $20 million in 2026.

Our enhanced scale has strengthened our negotiating power with suppliers across all brands. By maintaining the industry's most competitive cost structure while delivering exceptional customer experiences, we're positioned to increase profit margins as traffic grows.

And notably, our diversified product mix across brands also provides resilience against commodity fluctuations. We have also successfully applied our operational expertise, marketing skills, and culinary innovation to strengthen Benihana and RA Sushi.

From unified reservation system to enhanced digital strategies and many developments, these improvements, combined with streamlined back-office operations, have created a powerful platform for continued transaction growth and operational excellence across our dining portfolio. Third, we are focused on our next phase of growth, balancing company-owned development and asset-like growth.

After opening six new restaurants last year, our 2025 expansion is off to a strong start. As I mentioned earlier, we celebrated a significant milestone in March with the opening of our San Mateo Benihana, the first Benihana restaurant opened under our ownership.

This was followed by our successful April launch of the company-owned STK at the Westfield Topanga Mall in the San Fernando Valley, further strengthening our California presence. This is our second successful opening in a high-end mall.

While early, both restaurants are off to a strong start. We continue to develop company-owned locations while pursuing asset-like expansion with high-margin royalty streams through managed and licensed properties.

We plan to open a franchise Benihana Express at Bayside Marketplace in Miami, Florida, as we have begun to accelerate our Benihana franchising strategy. We have discovered strong interest from franchisees seeking to enhance their portfolios with our established upscale and casual dining brand.

In response, we have strengthened our franchising infrastructure, and we are actively negotiating numerous development agreements. This franchising initiative will be instrumental in driving Benihana's expansion.

Looking ahead, we are on track to open a total of five to seven new venues in 2025 across our portfolio, with the remaining locations opening in the third and fourth quarters, including a Kona Grill in Seattle, Washington. Even with all this activity, it is important to remember that we are still in the early stages of our growth story, with significant expansion potential across our portfolio.

Benihana has a clear path to 400 locations through our dual strategy of company-owned and asset-like expansion. STK presents exceptional unit economics, with new locations averaging over $11 million in revenue and 23% restaurant-level EBITDA margins.

STK's remarkable cash-on-cash returns make it one of the most profitable expansion models in the restaurant industry, naturally positioning it as our priority for development with a target of 200 restaurants globally. Our approach to growth concepts will remain optimistic, allowing us to selectively pursue only the highest potential location that meet our return thresholds.

Lastly, our fourth priority is balance sheet’s flexibility and returning value to our shareholders through share repurchases. We finished the quarter with nearly $68 million in liquid resources when combining our cash-on-hand, short-term credit card receivables, and the availability under the revolving credit facility, which remains undrawn.

Under the current conditions, our term loan is not subject to a financial covenant. Wrapping up, we are excited for the future.

We are laser-focused on balance sheet flexibility, prioritizing cash flow generation, and maximizing shareholder returns. We are building a path to $5 billion in system-wide sales by executing a strategy that encompasses multiple avenues for growth and will enable us to create long-term shareholder value.

I will now turn the call over to Tyler.

Thank you, Manny. As a reminder, beginning this year, we are reporting financial information on a fiscal quarter basis using four 13-week quarters with the addition of a 53rd week when necessary.

For 2025, our fiscal calendar began on January 1, 2025, and will end on December 28, 2025, and our first quarter contains 89 days. Let me start by discussing our first quarter financials in greater detail before providing our outlook for the second quarter and the current year.

Please note that the first quarter of 2025 has three months of contributions from Benihana and RA Sushi, whereas the prior quarter excludes any contribution from the acquisition of Benihana, which closed on May 1, 2024. Total consolidated GAAP revenues were $211.1 million, increasing 148.4% from $85 million for the same quarter last year.

Included in total revenues were our company-owned restaurant's net revenue of $207.4 million, which increased 154.5% from $81.5 million for the prior year quarter. The increase was due primarily to $128.3 million in contributions from Benihana and RA Sushi, and to a lesser extent, contributions from the opening of six restaurants since the beginning of the first quarter of 2024.

These were partially offset by a 3.2% reduction in consolidated comparable sales. Managed license and incentive fee revenues increased 7% to $3.7 million from $3.5 million for the prior year quarter.

Benihana Franchise Restaurants contributed $0.5 million in revenues in the first quarter of 2025, and was partially offset by decreased revenues at managed STK restaurants in North America. Company-owned restaurant cost of sales as a percentage of company-owned restaurant net revenue decreased 220 basis points to 20.8% compared to 23% in the prior year quarter.

This was primarily due to integration synergies and lower cost of sales for Benihana restaurants and our existing business. Company-owned restaurant operating expenses as a percentage of company-owned restaurant net revenue increased 120 basis points to 62.1% from 60.9% in the prior year quarter.

This was primarily due to fixed cost deleveraging driven by decreasing sales, partially offset by integration synergies. Restaurant EBITDA increased 50 basis points to 16.4% compared to 15.9% in the prior year quarter.

This included restaurant EBITDA of 20.1% for Benihana locations and 17.7% at STK locations. On a total reported basis, general and administrative costs increased $5.6 million or 73.8% to $13.1 million from $7.5 million in the prior quarter driven by the addition of the Benihana acquisition.

When adjusting for stock-based compensation, adjusted general and administrative expenses were $11.5 million and $6.2 million in the first quarter of 2025 and 2024 respectively. As a percentage of revenues when adjusting for stock-based compensation, adjusted general administrative costs improved 190 basis points to 5.4% compared to 7.3%.

The improvement is due to sales leverage realized with the Benihana acquisition and the implementation of cost savings and integration synergies. Depreciation and amortization expense was $9.8 million compared to $5.3 million in the prior year quarter.

The increase was primarily related to depreciation and amortization for the Benihana and RA Sushi restaurants, depreciation associated with the opening of six new company-owned restaurants since March 2024, and capital expenditures to maintain and enhance the guest experience in our restaurants. Pre-opening expenses were $1.7 million consisting primarily of payroll, training, and other costs for Benihana San Mateo and STK Topanga, which opened in March 2025 and April 2025 respectively, payroll and travel costs for the training team and pre-opening expenses for restaurants currently under development.

Pre-opening expenses were $2.9 million in the prior year. Interest expense was $9.8 million compared to $2.1 million in the prior year quarter due to our higher level of outstanding debt post-acquisition.

Provision for income taxes was $0.3 million compared to a benefit of $0.3 million in the prior year quarter. The effective income tax rate for the first quarter of 2025 was 31.4% compared to 9.9% for the first quarter of 2024, which was driven by the ratio of discrete items compared to pre-tax net income during the quarter.

Net loss available to common stockholders was $6.6 million or $0.21 net loss per share compared to $2.1 million in the first quarter of 2024 or $0.07 net loss per share. Adjusted net income was $4.6 million or $0.14 adjusted net income per share compared to an adjusted net loss of $0.6 million or $0.02 cents adjusted net loss per share in the prior year quarter.

Please note, we have redefined our definition of adjusted net income this quarter. For additional information, please refer to our previously issued press release from earlier today.

Adjusted EBITDA attributable to The ONE Group Hospitality Inc. was $25.2 million compared to $7.6 million in the prior quarter, an increase of 233%.

We've included a reconciliation of adjusted EBITDA, adjusted net income, and historical adjusted net income in the table of our first quarter 2025 earnings release. Turning to liquidity, we finished the quarter with $34.1 million in cash and short-term credit card receivables and $33.6 million available under our revolving credit facility, which remains undrawn.

Under the current conditions, our term loan does not have a financial covenant. Now I would like to provide some forward-looking commentary regarding our business.

This commentary is subject to risks and uncertainties associated with forward-looking statements as discussed in our SEC filing. We always remind our investors the actual number and timing of new restaurant openings for any given period is subject to a number of factors outside the company's control, including macroeconomic conditions, weather, and factors under the control of landlords, contractors, licensees, and regulatory and licensing authorities.

Based on the information available now and the expectations as of today, we are issuing the following financial targets for the second quarter of 2025. Beginning with the top line, we project total GAAP revenues between $205 and $210 million, which reflects our anticipation of consolidated comparable sales of minus 5.5% to minus 4% and factors in a greater amount of uncertainty in the near-term macro environment.

Managed franchise and licensee revenues are expected to be between $3 million and $4 million. Total company-owned operating expenses as a percentage of company-owned restaurant net revenue of approximately 83%.

Total G&A, excluding stock-based compensation, of approximately $11 million. Adjusted EBITDA between $23 million and $25 million.

Restaurant pre-opening expenses of between $1.5 and $2 million. And finally, we plan to add one to two new venues.

Based on the information available now and the expectations as of today, we are reiterating the following financial targets for 2025. Please note, this does not include the potential impact of tariffs on broader economic conditions.

We project total GAAP revenues of between $835 and $870 million, which reflects our anticipation of consolidated comparable sales of minus 3% to plus 1%. Managed franchise and licensee revenues are expected to be between $15 million and $16 million.

Total company-owned operating expenses as a percentage of company-owned restaurant net revenue of 83.5% to 82.2%. Total G&A, excluding stock-based compensation, of approximately $47 million.

Adjusted EBITDA between $95 million and $115 million. Restaurant pre-opening expenses of between $7 million and $8 million.

An effective income tax rate of approximately 7.5%. Total capital expenditures and net of allowances received from landlords of between $45 million and $50 million.

And finally, we plan to add five to seven new venues. I will now turn the call back to Manny.

Thank you, Tyler, and thank you all for your time today and interest in The ONE Group. We remain confident in our plans and our portfolio of iconic, high-volume brands and long-term vision to be the undisputed global leader in vibe dining.

We are in the early stages of an exciting phase in our company's journey, and we appreciate your continued support. Tyler and I are happy to answer any questions that you may have.

Operator?

Hi, guys. First question for me, just big picture, wanted to look at consumer behavior.

It sounds like during the quarter, higher-end consumers held up better than kind of real concepts consumers. Is this right, and then can you speak to if you've seen any change in behavior here in Q2 thus far?

I think the consumer trends that we continue to talk about is more about the check in the higher-end, in the STK brand. If I look at the performance of STK on traffic, I think that's more of a function of the strategy and the emphasis on value rather than just a pure demographic play on that.

So I would say that I would attribute to our own performance more to what we're doing strategically with the brands. In terms of the growth side, obviously, that still continues to be the more challenged side of the business for us.

And as we think about real concepts, can you just talk about work that's being done in those brands to improve results and even longer-term plans or options as we think about some of those non-core real concepts units?

I don't know if it's the due difference, but we're clearly stepping up our marketing efforts. I think particularly in the casual category, there's been a heavy emphasis on TV.

And obviously, at our size, that's not really a viable alternative to us. So we have to compete more on the local store marketing area and try to be a little bit more grassroots in our marketing.

So we've stepped up dramatically our marketing efforts. And obviously, the big one for us is the launch of our Friends with Benefits loyalty program, which is, as we mentioned on the prepared statements, is on a soft face right now but with emphasis on bringing in the casual brands first.

So that's kind of some of the things that we're working on. So it's mostly on the side of marketing.

When I look at the execution on the experience, the casual brands are executing at a very high level, at least from what we see on our social metrics and on in-store surveys and secret shop group. So I think that quality of execution is strong.

So our emphasis has been on the marketing side.

And last question for me, we haven't talked about it in a while was just wanted to look at restaurant labor costs, any changes that you're seeing there, and also anything that you'd speak to on retention of in today's economy, are you guys having an easier time retaining or are you seeing difficulties around retention?

I think retention, at least for us, retention is at parity with what we experienced in the second half of last year. So nothing really dramatically either worse or better.

I think actually for STK and Benihana, the retention has been very good. So there's nothing really noticeable there.

And then on the cost side, I think the inflation has been very moderate on the wage. So we haven't really seen any inflationary pressures on the labor line.

Good afternoon, and thank you for taking the question. So first, I just wanted to see if you guys could talk about the cadence of same-store sales during the quarter, how did January through March progress?

Would be curious to get your take on that.

I think generally in the quarter, at least for us, I think February was probably the more challenged of the periods, although we did have a very good Valentine's holiday period. But in general, that probably was the choppier of the periods.

But I think that March probably was the place where we performed really well. Obviously, with the Easter coming in at the end of the quarter and everything else.

So I would say that the toughest month would have been February.

Understood. Yeah, thank you for that.

And then just in terms of the second quarter comp guidance, I know you touched on this a little bit, but just overall, it does imply more of a decline than the first quarter. So can you just maybe talk about what you're seeing so far in the second quarter, maybe just be a little bit more specific as to the trends that you're seeing thus far?

Yeah, I think for us, the second quarter is a little bit more about a little bit of weather, at least for our portfolio of footprint. And the other item that's a little unique for us in the second quarter is a little bit of the convention schedules.

There's less weeks between Easter and Mother's Day this year. So I think the convention business schedule has shifted a little bit.

So we do have exposure to markets like Orlando and Vegas and San Diego, some of the markets where there's a lot of active conventions and conferences. That gets changed a little bit.

That's part of what's implied in there. And just in general, I mean, the second quarter has been there's been a lot of environmental ups and downs with the tariffs on, tariffs off, all kinds of different activities that we think sometimes causes the consumer to change their behavior within the quarter.

Those probably would be the items that I would point out that cause our number or our guidance in the second quarter to be a little different from the first quarter performance.

That's very helpful. And the last question for me, just wondering if you've seen any notable changes from your competitors in regards to promotions and discounting, anything to call out?

Yeah. I think as I mentioned on my previous answer to Mark's question TV is back.

And if you have scale and you have TV power, I think this is the time post-COVID where we've seen a lot of the brands, particularly on the casual category, going heavy on TV. And obviously I don't have to call out who's been super successful with that, but there's been a significant amount of brands out there who really have leveraged TV to get out and ahead with their, frankly, very high value point promotion.

The combination of high volume with, I mean, high value with TV has changed a little bit the game on the casual side. So we've seen that out there.

And as I mentioned earlier, particularly on our casual size, for the size of our casual brands, we've really had to up all our grassroots promoting, and we've also had to add emphasis with our loyalty. So that's how we've been able to offset some of that macro pressure from the discounting and the TV strategies.

Good afternoon. Thanks for taking my questions.

So first question, I just wanted to see if you could touch base a little bit on your franchising efforts. If you see them picking up, I know you had talked in the past about you were looking at developing more of a team on the franchising side to get that part of the business growing faster.

I wonder if you could just give us a little update on that.

Yeah, I mean, great question. So we have updated the infrastructure in terms of internally people, everything else that's required to drive a franchising model.

We've also expanded our participation in conventions and conferences where people talk about franchising. So we've really created-- we've elevated the awareness in the marketplace that we are in the franchising business.

So that's kind of like stage one is infrastructure, stage two is building the awareness. And now currently we have a significant amount of people who have come to the table and have interest in being in that franchising business.

So now we're working on, if you will, putting together development deals with these individuals based on their experience and their financial ability. So we definitely have made a significant progress basically in about nine months or so, because we started this probably in the middle of July last year.

We've moved fast and the demand has been there and we feel excited about the progress that we've made there. And as we have signed on development agreements, we'll be communicating that out to everybody.

Thank you for that. And just wanted to touch base also about pricing.

Are you still holding off on taking pricing? Are you looking at selectively increasing prices?

Is kind of where you are in that today?

Yeah. I mean, our overall strategy, frankly, at this point has been to be conservative on pricing and only take it where we have to take it or if there's like significant gaps to market.

But for the most part, we want to stay true to the value positioning and we want to stay true to building traffic. And so in the long term, traffic and market share are probably the more important part of our story.

So we certainly weigh more on the side of playing on the traffic now and picking up market share at this point. So I would say we're super conservative.

And the last one for me, maybe just kind of give us a little bit more of your thinking of how you weigh opening more company-owned stores versus deleveraging the balance sheet. Any additional color you can give there would be greatly appreciated.

Yeah. I think the balance is always about figuring out what the best return is for shareholders as well as managing the business risk.

So we weigh those factors in all the time and we talk about that internally. And obviously, over time, as I've mentioned earlier, we expect to grow more through franchising and asset-wide assets.

In the longer term, that's the most important part of our growth story. Right now, we do have a significant pipeline of really high-quality real estate, which I think we do a good job of developing.

So our plan is to keep a healthy balance on the short-term of the company-owned, and frankly, as I mentioned earlier, our emphasis on asset-wide is to build up the pipeline. So we're building the pipeline on franchising and on licensed deals.

Okay, great. Thank you very much.

I'll get back to you.

Hey, thanks for the question. I just wanted to follow up a little bit more on the discussion on same-store sales trend in the first quarter and heading into the second quarter.

Can you walk us through how the Easter calendar shift impacted first quarter and will impact second quarter across the major brands?

I mean, Easter was definitely an impact, but I would not consider Easter to be a significant impact in terms of being a significant holiday for us. So it did have a little bit of an impact, but I wouldn't qualify that as a big impact between quarters.

Okay. So that would be maybe a slight benefit in the first quarter, or negative in the first quarter, maybe slight in the second?

Is that the---

At best, it caused a differential in the rounding, not a lot. It's not a really big holiday for us.

Just wondering if you have any feedback on your Mother's Day bookings, if you think that's where it should be for this time of year.

I think that so far, the books are where we thought they should be. So we haven't detected anything that drives us to think one way or the other, and frankly, the big game for us for Mother's Day is such a big day.

It's more about operational execution and throughput in the reference, because there's always a significant amount of demand for reservations on the Friday and Saturday before Mother's Day. So our emphasis has been more on readiness and being able to take the walk-in traffic and managing the reservations on the two last days before the holiday.

So that's really been our emphasis. And then more recently, particularly with the proliferation of online reservations, people that book early before Mother's Day tend to have higher rates of no-shows on the actual holidays.

So we're really putting a lot more thought behind cleaning up our reservation books for anticipated no-shows, et cetera. So we're just putting a lot more emphasis on it, but I haven't really noticed any particular either bullish or not-so-good trends on the bookings at this point.

All right. Any feedback on concern with tourism travel to the United States?

Any exposure there? You mentioned conventions, for example.

I think there's been a lot of better sources of information on this than probably us, but we certainly believe that in markets like Vegas that has a significant influx of visitors from Canada and Mexico. I think we've seen some level of decrease in their visits to the U.S.

There has been some of that. Of course, it's a little bit more anecdotal to us because we don't do scientific studies on tourism, but we certainly have noticed a little bit less people in the restaurants from those countries.

And then just a follow-up question to the same-store sales numbers you published for the first quarter. Can you break that out for us between traffic and check, just so we can understand maybe what type of menu pricing you're carrying into 2025 and how mix is impacting check?

Well, Tyler can give you the pricing for the brands. Pricing is around 3%, 4% for the brands, Tyler?

Yeah. Average check was about 4%.

Average check.

Okay. So, how do we look at maybe some potential mix?

You mentioned a little bit of leaning towards value for STK. Is that pressuring check a little bit?

Yeah. I think overall mix is just kind of slightly down.

I mean, Benihana is now 55% of the revenue, so we didn't see a lot of mix there, and so the mix is just slightly down across the portfolio.

All right. And last question for you, just wanted to go back to the commentary on Benihana.

Any thoughts on how you will balance company and franchised stores as far as your 400-unit target goal in the United States?

I think although we haven't provided a full guidance on this, at least internally, we're talking somewhere in the 50% kind of portfolio balance between franchise and company-owned stores for Benihana.

Very good. All right.

Thank you very much. I'll pass it on.

Yes. Hi, Manny.

Hi, Tyler. Thanks for taking the question.

I wanted just to follow up on Benihana, since that, as you just pointed out, happens to represent 55% of your total revenues and has the best comps right now, the best comps and best margins of any of your brands. So it becomes pretty important.

In terms of the improvement in comps you're assuming the rest of this year to get to that minus three to plus one [ph] for the year, obviously, it will require a stronger second half. Does that come from just Benihana's dominance, or are you figuring some improvement in STK and even Kona in that improvement?

I think probably one of the big things that drives our view on that fourth quarter is we've learned a lot about holidays and Benihana, and Benihana is certainly a holiday concept. And as we've gained more experience in working with the team on throughput and volume interactions, I think a big part of our thought is that Benihana should do very well, particularly during the holiday season this year in the fourth quarter.

Last year was kind of our first holiday season with a brand, so we have a lot of learnings that we will clearly apply that we think helps that out. And I think just in general, our lap in the third and fourth quarter is more manageable for us than the lap in Q1 and Q2, that's a big part of that view and guidance.

Tyler, anything else you want to add on that?

Okay. And just before I move on to STK for a moment, at Benihana, as I recall, the average volume domestically is about $6.5 million.

Is that, do I recall right?

That's about right.

And then if you had to guess what the hard costs would be in terms of building a Benihana these days, what would be an approximate number?

I mean, we just built one just in fairness and disclosure. Some of the costs were already loaded up in pre-acquisition of the company.

I think probably a fair evaluation, that is, after we open the next couple of them, but I figure that on a net basis, we're looking somewhere between $400 and $500 a square foot, so I would just take the size of the box times the midpoint of that range of $400 to $500.

Okay. And the box is how large?

I'm sorry. 7,000 is kind of the sweet spot for Benihana.

So, if it were 7,000 times $500, it would be $3.5 million, and a 20% margin on $6.5 million is $1.3 million on $3.5 million-- that's an interesting return on cash on cash, return on investment. Going back to STK for a moment, the 17.7% margin is obviously a little lower than we're used to seeing, subject probably because of the value orientation.

Is there a prospect that that can improve the rest of the year? What would be your expectation in terms of the margin at STK the rest of the year?

Well, I think seasonally the fourth quarter is always the best quarter for margin, there's a function of seasonality there. I think it probably Q2 and Q4 tend to be in the higher end of the margins, and then Q1 and Q3 usually are the tighter on the restaurant level margins for the STK brand.

Again, you can just take a look at the history of how we published the number, but that tends to be seasonality. So, I would look at the seventh, the number that we published for Q1 as the ultimate number, so there's upside, particularly in the fourth quarter and possibly even the second quarter.

Okay. That's all for now.

Thank you very much.

Thanks, Roger.

Thank you all for your interest in The ONE Group. As I always do, I'd like to thank our teammates, again, for a significant work in driving results for the company and living our mission every day.

And I look forward to seeing everyone out in our restaurants. Everyone have a great day.