STKS - Earnings call transcript Q1 2022 | The ONE Group Hospitality, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, everyone. And welcome to The ONE Group First Quarter 2022 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask question. [Operator Instructions] Please also note today's event is being recorded. like Chief the Financial I'd to call time, Loy, Tyler Officer. this to conference turn over At Sir, please go ahead.

Tyler Loy

Thank you, operator, and hello, everyone.

to our cause our statements subject and that events. the operating the include not statements release place begin conditions. forward-looking these no we that refer note are of future statements risks future recent also our we formal reliance results actual what We you of me guarantees any that differ call. let for forward-looking expect. obligation uncertainties statements of Before should financial undertake our and future these remind of are in part materially reflect not of you more risks that our statements. to on light discussion opinion to only We also forward-looking detailed filings will publicly undue impact and discussion results revisions SEC date of numerous performance, today as from could to These forward-looking remarks, you new could Please a them. or revise or this These information

evaluating today's performance. During will non-GAAP in certain measures, we we believe useful be discuss which can financial call, our

other information isolation the of measures results not with these However, as GAAP. be considered accordance presentation in a in should or or prepared for substitute

licensed Manny? call over earnings measures to the comparable and For I'd issued Manny reconciliations that, managed total and sales along food measures profit, to net of Hilario. owned today. like and operating and these measures, sales consider these useful, restaurant please with such discussion release adjusted as GAAP adjusted income, beverage see at our we a EBITDA, of why units turn to With

Manny Hilario

and appreciate your us everyone. hello, and ONE The you Thank for joining Group. sincerely Tyler, you, interest in today We

adjusted thrilled same our sales the include extremely of challenges versus I'm our XXXX for the million XX-month high Let start $XX developments. or for Key be providing and we This guests the XXXX the million finished rapidly industry. to which with expanding or adjusted I exceeded EBITDA performance fund work. million which that revenue these exceeds quarter $XX.X each continued by and and last cash, end in strong strong unforgettable affecting of $X.X quarter in approximately debt the with despite the $XX.X EBITDA every to our hard ongoing million, thank brings used exceptional guidance, proud by highlights dining XXXX, of entire team our I'm day. results pipeline and saying me begin and quarter and for and also versus to year. can experiences achieved increase trailing our their XX.X% the our future robust

be the comparable best Our sales among to restaurant in industry. continue the

Kona of of XX.X% increase Grill. at XX.X% the when During XX.X%, XX.X% of comparable STK the Impressively and Kona increased among sales XX.X% compared sales consolidated consisting our an increase an at at XXXX, first at XX.X%, consisting comparable base best increased year, Grill. in industry pre-pandemic STK consolidated to also increase and of a and quarter, the

upscale remain an dining XXXX. compared environment. even quarter to compared sales Kona strong restaurants in in weekly highly for $XXX,XXX first in same polished same Our $XX,XXX the interest equally our in U.S. the in at at Grill and and STK improves to average period at XXX,XXX cattle impressive sales XXXX were period in momentum the differentiated $XXX,XXX The uncertain

guests to and dining operational offerings on provide focus experiences as themselves. with to enjoy opportunities dining unforgettable exceptional culinary we big our strong with resonate and Our for execution, innovative continues guests

lunch happy with hour. occasions capacity as and to available continue We emphasize build and such

our an and a branch driven convert at approachable our brands daypart, points and an commitment This and to branch us those to with Sundays. expose and Grill atmosphere. vibrant STK offerings guests on innovation to price new Kona guests and incredible to growing our value the incremental room opportunity by dining encouraged interest our on evenings. in fun showcase allow into Saturdays both particularly are culinary which Both We has happy in hour

far, are hour we we happy While still branch the to of our with opportunity progress lots and we so believe grow happy have dayparts.

we addition, broaden to we in on continue In and new base. focus heavily thereby way to holidays, consumer guests brands introduce the which another the

Day STK and guests truly featuring quarter menus and had Bowl first weekend successful very the Kona at Grill, enjoy. special both that the During we our a Super Valentine's

celebrated signature for and also both forward We Tax Day, dishes second all STK. the celebrating a Kona $XX.XX promotions. to Day long featuring We National Easter is day specialty look and Mother's day Grill which beverage cocktails kicked off strong with activations traditionally quarter with and

Our delivery part business be additive of the and in we're continues business, by takeout and meaningful encouraged a layer. to this ourselves

and For X% of it's is takeout and the STK Grill delivery, approximately have restaurants XX% approximately that of Kona sales. sales

we building gatherings capabilities as larger catering delivery, offices resumed. reopen and are have In addition our takeout to

missing private seeing We are as years. has also over dining business private for been which is business of past planning tremendous the a layer a and increase, dining of opportunity bookings couple

our in in a offerings Arizona. three Ohio Grill in plan Grill and Utah, and Valiant open only we'll California, we XX Kona London, developed to the company-owned Stratford, Columbus, STK, ever provide STKs, Kona to Riverton, strongest with STK venues, And Texas Concepts company-owned on Reef's which in had Three XXXX and and pipeline Moving Kona U.K. Grill Kona Texas. Grills, we've Valley, units finally, year, managed a Kitchen, today. plan in a takeout open licensed history in is and partnership San to The at a featuring Dallas, and include Paradise we This Kona from Francisco, our Grill development. delivery least two

have we As white are stated, strategy long space growth early in our significant we ahead. with

opportunity returns. as best-in-class believe we We are excited units our our about long-term deliver

of XXX Kona globally Grills total at least XX% For company new restaurants for ROIs at market least we for restaurants, foresee grows. and XXX STKs addressable including targeting new domestically. are We restaurants, and and XX% company-owned between XXX owned a STK

cost the to on Moving current environment.

We continue deliver operating margins. best-in-class to restaurant

initiatives We of XX% high goods of been cost this chain are Corners supply as has to Grill, and menu sales margin are STK signed to our at stopping and deliver This chain provide the still our with to being and inflation historically and us such and We've and driving delivering world-class breadth this managing XX% allowed Grill. STK along at and executing beverage able range. in both our sales accomplish margins. entire supply by challenges Kona through offerings yet still at Kona with emphasizing flexible and

is of restaurants. execution in high protect and levels in ensure fully advantage brand Turning staffed this order to Being our to a competitive labor. environment. the In

in and restaurants. happy are that doing experiences. of continue and To a is in be our development. to Ultimately, continue restaurants disciplined translating our fantastic team we We on operations for walking day-to-day industry-leading same-store we conclude, our to for strong report cost invest retention to we job focus guests our continue and a plan to fully our execution and exceptional management a effective current all to levels into hiring staffed unforgettable proved great dining and in store trajectory sales on has P&L, and new

Tyler. Now the to I'll call turn back

Tyler Loy

Manny. you, Thank

greater detail. Let discussing quarter financials by me start first in our

restaurant quarter quarter million quarter for XX.X% same which GAAP $XX.X same increase net strong consolidated million, the is of resulting our First from increased our the of The total $XX.X for initiatives execution year. in sales XX.X% were increased XX.X% momentum revenues million, total year. revenues from Included last last for XXXX. the our million the new opening along $XX.X Domestic sales from primarily quarter revenue revenue of $XX.X increasing comparable in owned compared is attributable sales the with to units. to

in increase For fee stock-based primarily basis, increased adjusting the administrative and Kona comparable increased sales quarter increased first to Management, increased activity increased percentage operating XX.X% administrative $X.X operational were Versus the of $X.X quarter the XX.X% XX.X%, two management of Airport compensation, and license quarter owned $X and general and XXXX. from F&B decreased sales venues operating year Owned to of with due reported STK Grill recovery million comparable of Westminster XX.X% expenses adding cost adjusted for first million quarter Los first coupled restaurant of higher pandemic the compared with operating XX points and the opening initiatives. is XX.X%. on weekly XX.X% August. total weekly and in and the of sales Rivershore XXX.X% were compared sales Grill $X.X year. May & Owned a from as revenue first quarter as general points XX.X% in Cabos year. in and sales. a STK basis attributable Bar managing May quarter On basis STK primarily the same XX.X% net were restaurant the to of XXX the compared a This of Restaurant versus XX.X% partially in to STK, the year sales $X.X due actively offset increased incentive restaurants last XX.X% first million in domestic to average in in percentage XXXX the the in prior increasing $X.X of XXXX increase XXXX. leverage as When our to result generating in to expenses from by consolidated XXX first XXXX, million sales COVID-XX basis menu prices, increased comparable sales The prior expenses XXXX revenues million is to the for XX.X% XXXX strong Kona XXXX and comparable are owned and in commodity sales restaurant Grill comparable versus in net the profit increased decreased to points quarter. prior of costs. average restaurant quarter revenue million

quarter last apply regular of of of costs were COVID-XX. million in percentage $XXX,XXX to last quarter, XXXX. first for year. compared of approximately incurred protective to and in of X.X% first composed venues, first quarter were termination expenses of sanitation administrative compares related cleaning general $XXX,XXX and Lease COVID-XX during a the during $X.X first were quarter direct million our first the of of the $X.X the total revenues, costs of As expenses revenue We personal to quarter favorable of This XXXX the and slightly primarily similar cost [Indiscernible] in to year. compared equipment adjusted

in expense all and of termination outstanding interest the first lower refinancing by before average income August balance of Income tax and expense income for benefit of XXXX was in closed rates driven nominal in expenses by for first quarter XXXX. compared originated disputes quarter $XXX,XXX quarter XXXX that $XXX,XXX an and interest the in of first lease driven lower compared first to the have the to of our Interest $XXX,XXX The of credit anticipate We going tax the million $X.X quarter forward. net was facility decrease was XXXX. XXXX. of lease

due million an first rate income ONE of $X.XX the million tax was $X.X discrete to or effective Inc. million $XX,XXX annual our quarter Group attributable attributable the per or Inc. quarter adjusted income first million from income to items $X.X net or income Net differs $X adjusted was to rate the in net income the Hospitality to Group share quarter compared income $XX.X to net the quarter share. the net for was of XXXX of compared compared income adjusted in tax When in effective the ONE share $X.XX of income adjusted Adjusted XXXX. first COVID-XX-related quarter net EBITDA XXXX first Hospitality, to for net zero of per $X.XX from cents share. net adjusting in million first The quarter. expenses, per per $X.X

included XXXX EBITDA adjusted earnings We our release. tables have quarter in first reconciliation the in a of

new Lastly, they City, STK partners we in can licensing the we our restaurant decided the Mexico ongoing pandemic, strong to have know close the STK Mexico that pre-pandemic challenges as Mexico. drive forward market. upon and look arise that to COVID-XX by as of Based in result a on and a City in brought permanently performance, opportunities

XXXX. Now on guidance like touch second I the quarter would it to to relates as of

license and and G&A For the owned $XX approximately revenue million $XX XXXX, total restaurant quarter $X.X to million, total million now of of second I call back of $XX.X will approximately sentence Manny. of net $X to turn million revenue to million. following: million of the $XX GAAP million revenues to we the $X Management expect

Manny Hilario

all you today. thank and Tyler, you, time your for Thank

challenging in Let by start I'm in very had about strong operating. environment despite excited have saying we me which the the are we XXXX conclude

time. best our we high they call I'm who stages to of craving. all, and portfolio any the we returns. to strategy may growth to return would exceptional high to also grateful continue all have in teammates mission the every like to volume, joining build the answer restaurants can life our and by early are where with us the delivering as highly to everyone thank operate. appreciate this Operator? unforgettable they our experiences market compelling I have on every continued and bring a to enjoy customers day We be brands questions so restaurant in our long-term differentiated We every have. visited been of experience guest of margin to our today. Above are Tyler guest I fine-dine you every happy that We do

Operator

Ladies and from Sandler. gentlemen, Nicole question-and-answer this with the question your first today Instructions] time, begin Please ahead [Operator at go session. comes Piper question. Miller we’ll from Our

Nicole Miller

if the do modeling Good so, you. you quick Great Thank super average sales? total? STK just And average one. Were a company-owned morning sales update. have Wondering STK weekly weekly

Tyler Loy

Yeah, Nicole.

quarter. the for $XXX,XXX about is owned company the So

Nicole Miller

prior range, like that's the year? the And to in something like that compared XXX

Tyler Loy

provide prior number. Yeah. you a year exact can We the

Nicole Miller

just question. Awesome. quarter And would just seasonally pieces margin second big XQ, you the a better. get When speaking, then together picture put

last I COGS in terms quite be should that of produce think anything way similar that was or another labor up just it So margin, is assume level? high or through quarter-over-quarter, revenues there at robust would one you want year enough on weigh a to the us are yet a but like strong. to

Manny Hilario

Hey, second Nicole. there of to favorable, your the better second And than about just being first. No, cost remember the I last that were think into This Manny. just that the relative goods year, quarter is very coming quarter. then comment

trend. a and accordingly take COGS year-over-year and adjust to evaluate that need just you So look

Nicole Miller

big just social business And a of absolutely mix Things used last, the certainly picture way today Perfect. terms daypart. just and by segment, of business changed, robust the restructured have and really in so question. you've the versus the in been cohort Okay. is

So a need see proposition, going are MOI ease comments we segment hour slowing. recession, being, ease really, large? if the ask characterize a I today albeit happen specifically, is don't people as through want like but market just could at the is a so brands you not there's is the could to even frankly, brunch Thanks. going to or also pause Europe question way your something happy What category. what and and the But of that And you to out conditions? address an realistic value

Manny Hilario

important the a think layers in Yeah. I our value it focus I environment. mean should kind said you any on well there of be tougher

our been and continue robust have our resources sales just we'll So social occasion date. And around to and emphasizing those our then has birthdays for layers, marketing also which strategy and date night. building we recently anniversaries very built business a

tough So well those I as in as think of even will continue lot holidays. the a environment, a

a we clearly So intact strategy with value I different, emphasis the environment total working we'll bit been even have our -- which is layers, if still be already in on think on.

it's think the obviously, flexible know, I of continuation And on So just very we're that. operating a of as business. the side you

of flexible pivot, environment. be kind in we'll and that So we'll

Nicole Miller

you. Thank

Operator

from comes with from go question. your Nick question ahead Setyan Please Our next Wedbush Securities.

Nick Setyan

Congrats you. the quarter. on great Thank

the there, headwinds pricing, would quarter it in average maybe to your you're out forward? and of pricing now thinking menu the helpful understand was be menu sort check inflationary really about how what going growth each for given Just brand,

Manny Hilario

we Yeah. I X% mean of pricing do a in is still X% STK at quarter, tremendous if think looking menu wanted in power the we to I range. have amount pricing And the to.

cities very of but event feel coming coming good our the as and starting traffic but in recovery back. And not growth to strong layer see pandemic, on STK that not banquet that. have brand, we've majority business business we business significantly pretty definitely about recovery that was it big a -- we seen back been So we're to for has before seen and the that full the

are pleased So we business with that coming back.

the And really that the been on of in we're growth the -- but has restaurant. on so and checks traffic number getting

Nick Setyan

And what for Kona? about

Manny Hilario

as X, modest majority thing that that say so well. Same on the traffic. as same our around is plus is there I pricing price brand increases would

Nick Setyan

just of the we think year? realistic cost what But well And the about think of were think, how range QX the of should then terms still we margins expecting. sales line? OpEx above, for forward, in it. other to revenue rest XX% the guidance XX% going I is all the Got is obviously, And

Manny Hilario

COGS I in mean think same I the range. our Yeah. stays guidance

still in the costs. As other you expenses, challenges point job there. as a out, from and there of And seen you've operating labor other lots of is I think controlling good we've done operating the very

our it's to significant there's staying cost labor think is I well a expect the as both job in a don't the any the But that. that team lot Again, doing good of for saying I the So -- costs not as year. of remainder I'm lines. on super impact operating ahead headwinds of opening of very

not to in see don't what any I those of operating the any anything cost quarter. from saw material impact So different lines, we first

Nick Setyan

still are openings, in QX? to or be we maybe in STK those The QX expecting to

Manny Hilario

I the cool Dallas as end of and the third. San beginning grow kind right Yeah. right, in of well now, as of and quarter, Francisco we're mean very in the second

or to coming those open we're the So getting steps restaurants now. final

Nick Setyan

environment And it of I XXXX? terms just rates of when for the wrap Do last STK? units are we growth question, we you Kona? thinking 'XX, about about Could are up X% we're to out about? in what four? be there, mean it Is three just think how the kind thinking

Manny Hilario

Yeah.

than in X. X Grill STK definitely year will the more be So Kona also X more and to than X will next be range

is Our right now. very pipeline robust

of matter a timing just it's So out. them

in and record done to be than relative grow. SDK more definitely will it this have, again, year So development we going But to will we've year. another

Nick Setyan

company owned, now X that STK the And for X. to

Manny Hilario

owned say couple sites, it but management year maybe for now, be STK. two company of company-owned one I a four and a majority will or next Right would Yeah.

new amount great that a like be we'd opportunities. markets in have of Washington, of D.C., Boston, to a couple tremendous We Florida

be do we to as we So as to open markets can. want big these soon able in

Nick Setyan

very you much. Thank Great.

Manny Hilario

Nick. Thanks,

Operator

next go Mark Capital. And ahead question Lake comes our from Please Street with your Smith from question.

Mark Smith

could that to of I pressure, guys. remind roll on some just any the contracts up of just inflationary Hey, wanted follow you contracts. off

Tyler Loy

Mark. Yeah,

right things So the volatility, XX-XX time to locking frames, of now, the shorter days. kind just in on we're due

that lock but But seeing of from year. last XX- prices stable relatively we I protein to of come in And XX-day so comfortable some -- off think the from kind peaks feel now, that right period. we're

Mark Smith

Okay. And solid we during you've you but on customer prices impact really gas saw spiked that as on saw did just or check can primarily a gas then -- as base, prices Manny, any move customer, maybe, talk picture, got big if in the we cone [Indiscernible] you any see out? pullback quarter,

Manny Hilario

No. I you Kona and -- been experiential. Grill, know, mean a again, emphasis, as our has it's

not So as in have tremendously some any we gas impact have seen even markets. these prices increased of

that So that. been again, growth of emphasis we our value are definitely remember I on aware layer. very also has But the

to of a on have we So put hour. well emphasis as branch lot happy as returning

seen we've dayparts. success a So those lot on of

we value certain not been that been our not on strategy emphasis comments say to rather economic would difference has by a a research driven a check lot at our we research. broad with degree, value any than in And as our we I do has on any And seen as pricing, So haven't significantly people's has if all. and track customers. -- changed our comments of

down we haven't or in really is that people just not either to to describable on say So of anything coming the I trading restaurant. PEMEX date, seen would terms

news, I lot of we issues. And lots environment haven't these dynamic But macro super far, the it. again, is days. of there's So a seen know

to because parts we're environment with moving ready have of and I So just there's just a as in or to team prepared speak lot overall not. pivot just the We be the flexible again, internally.

Mark Smith

one Great. for then last And me.

out and think we in pipeline. pipeline, a or that's seeing bit? potential things development, pointing And getting what good you're and about delays seeing down got Are for really the of talk about up opportunities as about there little you estate just kind tightening a maybe if market at all it's kind kind expansion. in then as of any slowing far we Just the for spoke units? maybe attractive think about new Is opportunities you've year next of as just it way as anything real

Manny Hilario

that more the dynamic. of us and do it Yeah. environment a as development -- and if came more does a the mean you on feels more I for some bit aggressive as to back it top The permitting from is really changed process flows, require -- it. more on stay people are requires permitting. now preplanning pandemic There's lot of just

impacts in you -- little openings of difference that but timing significant So our to restaurants for have of there, rational there's of mean the yeah. a future equipment. relative I've a opening to the noticed restaurants, bit I nothing terms

stuff lead last If you longer can't minute. don't plan out you times, buy

whereas it So the for in the six-month new that require does equipment period. we in the maybe timed restaurants,

nine-XX-month we're Now for equipment. the a looking at timing

your time frames So you do management on change have things out. project to those timing of some

And so do. that's we how

it environment. just have different -- have go four-five equipment That different. to of doing kind pick So could from of to up past, this business quick. adjusted in -- the -- is distributors relatively is you in no those pieces it we and we But has instances new

on there's such Now a you enough pushing lot back so people chips, as get equipment. of things not

specs to relative to on some have flexible equipment. kitchen We be

project get ahead of it's about and So management all again, that -- but the being you sure planning.

I that that estate, that people a there's real I've I is vacated. of what markets, of mean real is the availability, there terms estate available is seen have last lot months the spaces great In of XX malls big in in think have lots

you that So have to taking want. where can right flexibility now where brands, opportunity want the we estate with be and a the there's we in really lot we real an of do go

probably we're again, deals program. that's getting markets a think real it's costs, the But volume And of So their the our and that have programs average landlords. success we the I've STKs to and from think projects testimony from seen. the programs better happy exciting on ever I to estate to get just because fantastic the and our the relative selection, like brand, like hour one and them get a so branch I of in people rolls fact to of want

excited say time go-forward have we lines about I have for and development lead is to adjust be we that more the have I'm And caveat very So the time with more that. plans project to would proactive. only our that

Mark Smith

Thank you. Exactly.

Manny Hilario

you. Thank

Operator

we'll and for gentlemen, turn with ladies that, like Manny conclude question-and-answer the I'd today's over And session. to back closing remarks. Hilario to floor

Manny Hilario

you. to in Thank as second a team The fantastic the I ONE their like And I'd always do, thank quarter and for first execution the quarter. Group continued execution to

So incredible proud of our every we of achievements team. our one again, experiences ratios. none in I'm of time every And providing results and of and to possible pleased continue forward the unforgettable to team. commitment every guest exceptional our are deducting very of And look very everyone that

and you our appreciate everybody’s interest So in Thank you. see out we restaurants.

Operator

with that, gentlemen, presentation. call conclude and joining. today's and We we'll Ladies for conference thank you

You may now disconnect your lines.

The ONE Group Hospitality, Inc. (STKS) 6 May 222022 Q1 Earnings call transcript