Earnings call transcript Q3 2022

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Operator

[Abrupt Start] ONE Group Third Quarter 2022 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Tyler Loy.

Tyler Loy

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. subject results risks what to also could uncertainties we are actual cause differ statements to and numerous that expect. These materially from opinion of note as also that forward-looking reflect Please these the call. this our date statements only We any of undertake of information these release events. light revisions or in no future revise statements publicly to new obligation or forward-looking impact refer financial of the discussion you more a detailed and to We results that our our could for conditions. operating recent SEC filings future risks

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

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

as and a discussion reconciliations GAAP today. beverage food measures net EBITDA, with and adjusted operating licensed measures, see at along we and issued why For useful, such earnings income, and owned units please total these our sales of to managed adjusted these consider profit, measures, of restaurant comparable sales release

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

Manny Hilario

you, We and hello, you the in appreciate everyone. company. sincerely and your interest today for us joining Thank Tyler,

that at operate and ONE every Here every committed to market be delivering we to by the time. the best are unforgettable every in experiences our on exceptional restaurant executing Group, to mission guest we

moving that upscale our Let life been have casual to have mission in to work because me everyday. world and position our confidence who we members and strengthen that It of thank our them dining bring exceptionally we of class all high-end continue team able great hard operations leadership to is and to forward. provide

of sales at $XXX,XXX our remained million revenue we for and Grill On total trailing Kona million at industry. our XX-month unit U.S. grew $X.X STK STK quarter, average third in million, the volumes the Kona XX,XXX average For reflecting U.S. the to believe for a among $XX.X basis, Grill. highest and our of weekly $XX

San impressive per Francisco opened average sales. averaging unit in August, volumes, in to is STK over $XXX,XXX we which week addition those In

X.X% Our consolidated When the retained and STK comparable base sales a X.X% which shows of sales our our the increased of X.X%, and at compared XX.X% of and we’ve XX.X%, at with experience Kona year, Grill, our consolidated state Grill. fine increase as a guests. resonating increased to consisting in decrease to on increases at increase of XXXX, X.X% and STK for sales an pre-pandemic It note impact an important base, that at STK increase is sales comparable consisting share Ian resides Kona both of Hurricane that brands Grill is that a comparable our Florida. of differentiated negative both XX% had dining Kona

of at more celebrated specials House July, advantage to Steak these activations restaurants. to Adding Kona results, National color numerous our we at and STK In took buzz Wagyu with month Grill. drive we

addition, differentiated In and Cheese with & Mac we and programs. our National beverage innovations Day excitement celebrated to Day National culinary Day, drive National Tequila Cheeseburger

which incredibly very communities. received Labor for we on offered frontline off Lastly, was by XX% successful our and well workers, local Day,

$X hour at happy-hour happy STK at our enhance and offerings and and emphasize to continue Kona guests. and working we is Grill $X, our with Additionally, both well menu $X

to in at loyalty exposes markets social this periods on brands guests through We capture value a and order dining with points. during channels us behind shoulder of put of many guests their approachable have back excess offering to our in our rooms then with to us. and see price our We lot occasions celebrate our special our allow these traffic program capacity

programs night such power delivery as menus In running specials. lunch, addition we to currently happy date weekday midweek and and hour at are brands, pre-theater value-driven offerings, both takeout the other

newsworthy and important to leverage bottomless continued brunch culinary day part cravable also with offerings the mimosas. We and

years pause. X after back come business events our of seeing a are we Lastly,

exciting we to have an fourth seasonal offerings is business slate event building more returning of check-driven bookings are and look incredible as expense we quarter, As holiday the our and many planned.

am the increases to increase we currently Moving offset double-digit as our the in that is At Based seasonal holidays have third decided are X% come price we period would inflation an to and in as increases. as quarter. confident resistance we a believe price take I seasonal pleased an are price notice on the we environment, modest can STK, Based current and less still and are that current quarter, in economic you to on on both Kona market during a increase celebrate we Grill, across approximate of not to the took quarter, we likely through slower our strongest the no which during it. that to quarter, in take approximate fourth knowing we the both headwinds. say aware, historically results, exercise saw high we guests we noticeable took significant will power industry. X% all cost building midway our brands act and environment, interest more the quarter the Long-term, the at inflationary share pricing we that

XX.X%. fourth staffed third quarter make operating investments profit pressures outpaced decreased during a decreased, Both increases quarter. brands the the historically important to restaurant is consolidated from STK quarter quarter lower at third It’s last for it the fully busy still but that operating was as profit our price margin saw remember a be to year. Expectedly, Restaurant quarter. strong inflationary we

range Grill XX% Over price still current profit still and the to the to we STK over profit adjusted operating after XX% adjusted XX-month our million. expect headwinds, for we delivered Despite the address million differential, in approximately the Restaurant operating Restaurant long in to inflation EBITDA trailing we range. term, Kona XX% $XX.X to quarter be the cost bringing XX% to $X the EBITDA in be to

in to August, company-owned San first Market of turning opened Street. in our Downtown Now development, we STK on Francisco XXXX

live Grills, open U.K., of this XXXX a famous spun quarter week, we In space Kona this a with culinary Columbus, plan new additional to STK couple in and partnership from weeks to one in enjoy in in to partnership renowned of restaurant of Yum has open by we in enables us within and the Grill base This Grill and dining to room to deal Guests limited can This award-winning the start, with Grill locations the excited investments. units challenging terrific a we plan Despite enjoy concepts and from during in we of customer is delivery and Texas. XXXX, Riverton, our world X company-owned Kona remainder first we location. to Stratford REEF Kona could in first off expand Ohio; and in Austin cocktails license Grill future Also capture more Kitchens be Utah, finally, opened McKinney virtual X the Texas. now X restaurant DJs. great a the offerings Avenue. select dining and items capital takeout And Bao Kona and Dallas featuring Kona license Austin STK with London Desert only kitchens provide outdoor REEF our music with construction further July, Arizona. next managed As Grill Ridge, previously environment, elevated plentiful delivery Bao Yum. not mentioned, on selections, an Kona opened concepts, menu of about of and

strong. is pipeline XXXX remaining our Additionally,

X units, managed second include company-owned STKs, company-owned to For or quarter, and plan through the X Kona licensed fourth new which X Grills. open we STK one

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

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

Grills. For new restaurants, XX% we’re for STKs targeting between company-owned company-owned new for XX% and Kona ROI and

to total market providing our restaurants, domestically. on operations our fantastic XXX continue Ultimately, a P&L, our translating industry-leading experiences. current globally and dining guests a execution the of management of least store least and effective foresee trajectory we and comparable is conclude, day-to-day and on doing sales, team has including Kona exceptional cost Grills our to strong and job at XXX development. focus disciplined proven STK addressable restaurants at new in We a plan XXX unforgettable To

call Now I’ll Tyler. to the turn back

Tyler Loy

Manny. you, Thank

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

revenues to owned million, X.X% net of from same $XX.X total comparable million the $XX sales consolidated million year. quarter from The increased our in is attributable which Included for increase primarily million, quarter $XX.X in Domestic STK revenue X.X% increasing year. $XX.X restaurant of opening Third San XXXX. quarter quarter for the last the increased last compared same of revenue August total our is were XXXX. GAAP X.X% for the in Francisco revenue to

sales versus XXXX. sales of Kona XX.X% and XXXX, comparable of X.X% comparable XXXX, Grill in Grill, Versus $X.X license properties England. $X.X X.X% XX.X%. million, the third incentive Kona in from and consolidated This sales comparable the versus primarily and quarter the managed STK, increased increased Management, sales domestic STK XXXX. were XX.X%. decreased For decreased million sales increased decreasing comparable comparable decrease revenues in result XX.X% our revenues London, is fee increased

higher restaurant at XX.X% to still initiatives, operational primarily decreased profit consolidated Owned operating to points net third in pressures was points prior a sales operating period. cost XXX partially the quarter Both average restaurant compared compared basis XX.X% offset owned XXX of from Restaurant basis the XX.X% operating percentage basis XX.X%. during Restaurant increases primarily X.X% revenue XXXX operating to due XXX cost increases quarter. points profit decreased quarter quarter year, XX XX.X% of in of increased expenses. Owned expenses improvement to strong to basis third for was quarter SDK price third prior due and of as to in reduction but third wage and inflationary a increased Grill basis the saw brands of decreased net restaurant Kona restaurant XXXX of approximately in by the as for profit percentage points commodity the operating XX.X% quarter. versus the prices. quarter the outpace XX.X% points year XXXX XXXX. XXX decreased the a in a revenue the and owned represents of XXX to basis second This point

On investments stock-based general decrease attributable $X and million compensation legal a administrative basis, accounting in The performance-based total a to expense, by in partially offset ahead compensation growth, additional of was prior $X.X and year. increase were expenses increased the and million expense. increased fees compared reported variable to

quarter to of costs. When adjusting in general the year. last for In travel increased XXXX of and million and million due airfare quarter in hotel $X.X third were compensation, expenses stock-based the the expenses administrative $X.X and same addition, rising experienced adjusted company

expense $X.X decrease by to The refinancing third average was of Interest the quarter in XXXX expense tax in of the $X.X last year. benefit of XXXX. credit facility quarter our of quarter for $X.X an August million tax million third third income to lower in driven XXXX Income $X.X of in of million balances lower rates million the the and third compared was interest by driven XXXX. was quarter outstanding of compared the

is the Our the XXXX XXXX million per or income rate $X.XX for ONE income gains, Hospitality, to Net forgiveness or loans. $X.XX or Act a third $X.X Act net and the to adjusted million Inc. to income net loans, Group per of expenses compared income quarter income XXXX net was compared in the annualized a effective income $XX.X CARES COVID-XX-related net attributable quarter adjusted adjusted adjusting non-recurring share. million net tax of gain $X.XX on or $XX to share year at the $X.X estimated gains CARES net per other an of included net When million $X.XX third adjusted income income share in of expenses income Prior net per million was XX.X%. share. of related or $X.X

for million of to million attributable compared Adjusted in Inc. to the Group EBITDA $X.X Hospitality, was third quarter $XX ONE XXXX. the third the quarter

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

XXXX, repurchased stock. third of the XXX,XXX common we of During quarter our shares

XXXX, its As use under continue conditions share on September time, repurchase discretion determining shares will repurchases X, program $X.X if of share September XXXX. purchased time $XX XX, the in million from available remained under in which Management all. million announced to the be may to at

to I Manny. turn will back the now call

Manny Hilario

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

conclude that our saying the headwinds. despite obvious very me remains Let business solid by

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

Operator

line you. Our with with Please Instructions] comes Smith first your question Thank proceed Street. Lake of question. [Operator from the Mark

Mark Smith

Hi, guys.

Kona I far a just on into dig as as a how the quarter? to comps you about little restaurants the use bit you what Grill. wanted of more traffic or talk First, any the behavior, and Can kind insight bit people more guys in just consumer saw versus the check little during there

Manny Hilario

Sure.

statements, about by So were we the X/X traffic on check going X Kona as for prepared quarter, quarter, Grill about was down in points that the up. and down offset was for we had the and then

have. more selling historically – I the going steak think we up that to primarily due than more we’re check is

don’t seen Grill for X-year of on significant X-year still other consumer if you I are at that we’ve anything that stack. Kona stack, than a pretty terms significant our on look behavior, comps In they think

So there quarter that Grill a year. for per other Kona lot strong last say very we had I wouldn’t third a is se just than

Mark Smith

And profit more really operating mix for and restaurant Okay. it just look inflationary impact? have Or at was pressure did negative the Grill, that lower? a we as labor that push then Kona

Manny Hilario

I prepared we with biggest Kona our we we our the in make share, as mean look statements, to sure think traffic think said want long-term. that I item Grill in obviously, want the market is preserve at to and I we

we was how really should much So take. pricing about concern biggest our

mid-quarter didn’t saw As our we we about prepared in the pricing. Kona in I did points we think do resistance. X fourth I lot Grill took another X raise, comments, in quarter. a points And you see of will

to would the Grill say to saw Kona margin I the related So – pressure been of we’ve all pricing inflation you that taking was that pressure. offset mostly in the fact what that

a As the for whole COGS fact, matter pretty good general company. in of help us

about offset mostly not labor. in it that So increases pricing saw we was the and to having operating expenses enough

Mark Smith

hiring in were labor, a heavily in And preparation late Okay. in you QX? heavy of pretty staffing for kind QX

Manny Hilario

to I par XXX% Yes. were the mean quarter. in our we

staffing we So be wanted kept we our all to at. where

keep on and, absolutely well board – and training answer the that the so keep that to of scheduling yes we And having for is and we course, them make trained. have sure employees obviously we’re many them

get third but reflected quarter year, obviously that that’s because So that big for the always fourth this usually is ready not just P&L just typically on quarter we our when our is quarter.

Mark Smith

openings insight of of lot Okay. the Konas And into next I and a in those timing then here can for of into any in get QX Will additional you those done that things three that three QX QX? some year? here of know the shift shift

Manny Hilario

Yes.

construction. Grill excited So about its we STK, we’re just Dallas super Kona in opened opening stage that Columbus final of which is

be right in teams is So it next we should now that here one making be decision until to we’re weeks trying up opening the just into the of wait to to couple or of able to about honest January risk the or go week so. first The I’m training have it access mode win keeping open rewards the maybe in Columbus. to that in

So decision through open that is fourth we want really, or the here going that’s to quarter do execution focus up. we’re on

away right in XXXX. and So weeks, really, open Columbus not if will well the in we is next answer of beginning open the X either the

Mark Smith

And Okay. the last me. one then for

availability? seeing estate looking open far you kind of available? start And these days STK Kona, here sites as seeing at you look are real change as you you really are at as and and anything what Just restaurants and on more to opportunities as

Manny Hilario

been The for significant availability us. has

the I’ve largest with been we’ve company. We had ever since pipeline the have

happy that. we’re So super about

seen from of is of lot it the have of estate. there into amount is tremendous current that getting and reality The COVID availability a We also the landlords. with not TIs with local operators of – a real situations, economic

just companies easily more the So the really are availability growing more they because organized made chef-driven struggling that because independent environment. real estate concepts current smaller are available in for has not of

us. certainly of high-quality have very seen for strong real So we be estate the availability

Mark Smith

the guys. I thank all, will back Great, you Okay. in queue.

Manny Hilario

Thanks.

Operator

Capital [Operator proceed Our Wollam Please comes line from next question. the your Instructions] of Partners. ROTH with with J.P. question

J.P. Wollam

think is picked a of Just if to touched maybe comment geared talk up, it around you highlight expense just towards that. corporate could the Power there? say, little about kind the first more one, Lunch maybe you lunchtime, can business. we that bit, on anything we I Has of especially but Manhattan on the But tracked kind or

Manny Hilario

Yes.

So suits definitely the are back.

definitely So we’re demand events. business significant more if and a for seeing urban lot going you’re and a restaurants, in increase to dine, you’re centers, also our corporate seeing

would business as amount is obviously, But back. definitely there look I around, is of still So I vacancy the in that, city. say that tremendous a

So I as opportunity. look upside at an that

there, So can the rebounded an see I and business uptick. actually has

seeing an convention. increase also We’re in

we’re activity small of cities So starting convention like Denver, Vegas, definitely lot back. particularly to business convention Orlando, a is midsized on to conventions, that see

question definitely that seeing then Atlanta, urban an we’re on I And much business. in seeing like lunch where – think have say for places was have we your New space. Midtown, around would pretty office uptick we a where we’re different markets I markets, in specifically. presence uptick of in also York, anywhere an lunch So

up is would starting business pick to say urban I definitely cities. in lunch So big

J.P. Wollam

some restaurants. could managing know I near-term think thank Great, a – just minute, you. you of call trending there? may any food do your guys I then we to a And of but moves your anything talk about job anything costs still about the mix be But for headwinds, inputs? maybe if commodity anything, out good

Manny Hilario

about us stabilization more see I bit the wage specifically. mean of macroeconomic I to on think maybe getting I probably a but side. comments do without

and second it more least been that’s slow that. quarter. I a was a mean that’s lot down to to at kind us. a started it on So – aggressive in – quarter little bit I of third But so think the positive

In I beef, that still mean, core you obviously, we’re to commodities. can on ongoing see terms of we those the performance, fish, etcetera, from pressure of a be commodities expect our goods cost just in But business. again, the seeing as an

super offerings And that to continued we that’s promotions manage through do. our we think be that So I product and effective.

as then line for will through pricing the short-term that company for take So doing. prices still from relief although we’re we quarter, the on is competitors. through we our the And will amount the said the for pricing we power that call, increases least mix. a other we me, for taking there management COGS as our for pricing compared better think continue to our look And in to in we tremendous to look of the that we’re at fourth business items, I is model our in think product

still lot of we the a pricing half were in I commodities to into think So leeway long-term. have persist if

J.P. Wollam

one then Got to quick how perhaps I Florida maybe you that. you the missed had And close? quantify revenue kind can there Anything it. any last in on Ian, long or Hurricane just can quantify of impact terms one, the appreciate of restaurants restaurants is on that? that and anything around

Manny Hilario

I base mean comments sales. about on I sales XX% the of Tyler is think his mentioned that total

I whole enough a around a X not after. maybe our big before to sales days week portion base, the of super but difference. a it’s week hurricane it’s maybe and So big the would say make

then of keep a interested parks in Disney go of hurricane. to weren’t a just Disney places and the one, restaurants after – early total and the saw two, decided call closed days. close the let’s lot pretty to basically we’re them and like We Springs So XX people to

sales a said XX-day I we hurricane around of base. said, to XX% like probably So earlier, the about as XX- window and think, our I

Kona We one the also restaurant had Grill portfolio. in

park a next had Our that restaurant collapse. it garage, to Baltimore garage

be uses one it’s we days. want whole And and and majority things to a be that of not lost several we don’t we what gas they garage basically to So the list the the that capacity. did were a restaurant numbers days quarter. to where the then cause able XXX% were both gas electrical for have have Again, for did restaurant of at also of get are, into we then couple they that but up

J.P. Wollam

Thank Got it. you, guys.

Manny Hilario

you, Thank sir.

Operator

comes your the Sandler. with Our proceed from Please next question of question. Piper with line Nicole Miller

Unidentified Analyst

be there just and Nicole. that I This the there. for the My is Hi below interesting? first, should XX%. clarification, thinking might you to Abbie be XX% guess Thanks taking line on anything guys. operating we about provide but on question. this can I know understand I will that of your my of Is be reiteration that one margin the for quarters, else seasonally, better anything line

Manny Hilario

Yes.

the color margin. mean I So, on

think mentioned it the we I call. on

usually is one quarter of our seasonal Third lower quarter.

say then strongest we the far a where third that’s the we be that lower. is little So, margin quarter. do quarter fourth prepare labor in also our for margins. for And I will the quarter see fourth quarter the by would

quarter profile seasonality we feature them tremendous a have the frankly, for the that the always the premium So, price always margin demand sales, premium a in super and of around but we there not items. way We only just high. and either is great amount Wagyu because products other promoting we product the of or of also do

margin us a So, that does with high profile. very help having

be in margins. the quarter So, the tend to quarter terms fourth will higher of significantly to third

where it up. So, usually we make that’s

Unidentified Analyst

it. Got

level the just then seeing but store you And the of are to understand you in that. chain? for you more about getting suppliers delayed? Are Thank or second I in pressure, high commodity is with question, still in are terms supply you what can I there talk guess Okay. units? what do

Manny Hilario

won’t a I a so question perspective. I the which is a showing there product that order. but have not more with substitution think – that up, to trying are you does sure is from not from happen your they primary the about am lot good suppliers, supply chain

major items on that some a vendors the restaurants, just always sometimes trucks by see showing in the B up We C to option So, vendors to. do we we more restaurant the stock they will items. in the submitting haven’t But use. substitute to will the the of go supply of not we option event backup we go the seen and tend have that out then that items. are And alternative

they So, get product, we may SKU. the be primary sometimes our not have been but able to

And how seen the supply have so in the environment chain. that’s we from

Unidentified Analyst

for compare know at about talked like you are And good. to Can least one pre-COVID? beating XXXX, I bookings looking this Okay. Is me. you in expectations then coming and already line? last in, holiday it or it’s

Manny Hilario

would more pre-COVID I the biggest get that on business very are is the restaurant requests because compared for of the day. full venue a we to trend we for lot say profitable selling the we seeing event whole buyouts, which frankly are were

of seeing holiday doing And don’t we people other are party their want parties, so to a companies lot around. more so they with have

business, there for buyouts. more that is prices as at as an which we for we a charge So, looked frankly, opportunity lot demand premium

an that for see as we opportunity so us. And

just now, corporate frankly, In the business actually, in weeks lot – and business, a both holiday due are bookings of terms last seen we we see couple had into the to general to demand holidays have of we bookings, of convention for have starting the parties.

event urban a to am in us think say pleased, vacancy of So, be we in now going an business have is XXX% because pre-COVID not I business. say, that earlier, mentioned on am sure there we still recovered I as have markets. good just But seen uptick very relative fourth I quarter. pretty overall, amount would to for and the and a would I significant I all I and it’s

Unidentified Analyst

great. sounds you. Thank That

Manny Hilario

Abbie. you, Thank

Operator

Imbro question. proceed Our of from your Stephens. [Operator the next with line Daniel Please Instructions] with comes question

Daniel Imbro

couple you of ones. for my taking I Thank have Hi. question. just a quick

did if the sorry this disclose First, you missed in you how carry comp? price was much I XQ moving much forward? expect How to earlier,

Manny Hilario

Yes.

for effective a STK third for put and had place quarter, Grill, in said we about it the X% on So, we we X% and mid-quarter. Kona

of So, I and we full guess, which quarter, say And in because quarter I happing it that for at are looking the effectively at Kona STK am the November, putting put STK we Grill midpoint. X.X% are at at another is fourth for for and effective around then for X% right beginning and X.X% that’s Kona we the for just pricing would about coming I now.

Daniel Imbro

Okay. Thank That’s helpful. you.

into what the your So, visibility terms of is XXXX? basket in heading

Manny Hilario

lost your sorry, mind am I question. we your question, repeating do

Daniel Imbro

Yes.

of your XXXX? visibility lost into in what is terms how of much So, heading commodity your its basked,

Manny Hilario

stand I at immediate where in visibility now least or pressure our release is we We either here. see mean from right any don’t beef.

say that’s not would material shifting I really anything So, there.

frozen on some We seafood. have seen positivity

So, done crab some even think we on lobster. and I buys some and shrimp have

So, I the it to the a labor no beef. overall, at bit questions, in as but seems on mentioned be would a on say of least we And third then seafood on change the favorable, stabilization becoming I seen have really one on earlier side, rates the quarter.

So, the wouldn’t the saw see as as much in regular we for increases we second quarter way.

want forward. be say those days. these very I mean in parts. I commodities to I – stabilization How would those slight mean of a basically going decrease. I seem a and flux I mean, a So, two seafood stabilization labor beef and slight far on decrease

year. bit would first the that perhaps probably a that holds next for quarter I on say fourth early quarter So, and little my views of

Daniel Imbro

Thank you.

Operator

proceed next Our your Kanen question. of from question Management. with Wealth David line Please comes with Kanen the

David Kanen

guys. Hi

quick of margins numbers, the couple look quarter. questions. it seems like in a held nicely I COGS and the at for Just When pretty

expenses, guess my price item get with think the So, I will is gross operating of we quarter-over-quarter. are $X.X the you up is me out a were improvement. that margin million sits bit year-over-year, at But taking, little

of there hiring a that a are consuming to also we rent give advance like expense factor, new that And Is pull-in much or stores. revenues up opening from we we any that if weren’t us are any are able openings? store more yet color How potentially going to there will? of get could So, on the was match a lot from we up in sales the with is and you you doing the that? little that

Manny Hilario

Yes.

question way. on reason The and you lot product that the the of me introductions obviously we did did as see don’t let a We this items a COGS. it is on inflation lot other of maybe on So, answer promoting line have items. because as other

things cost seafood promoted a would our perspective. we pasta than from pumpkin instance, presentation things like So, pasta, beef better for a has profile or much which

we that amount of did. lot on the a by products inflationary a we offset side lot pressure So, tremendous of promoting of and the a COGS

We also our the emphasized weren’t the bar cocktail significantly program. business with We third in happy quarter.

Spice really for our Old brands instance, successful and carries Fashioned were the so program Martini liquor Pumpkin premium have, and and forth We in prices. the

helps maintenance you then revenue. use digit percentage services which for having very embedded quarter, that inflation, have COGS. have not see that just is is the those really labor Obviously, modest other costs the double enough on lot DJ, pressure offset labor. like things cost was because usually inflation are the reason a and to instance, labor is, work, the which seen the numbers was And on operating you The of repair services. the the those per of pricing an all of in would increase of quarter, of line service, operating that the as it on offset in in on impact And those So, that the definitely comes we that thing out pressure the because janitorial a the side. of on weight the

for we the points into STK. five quarter more price So, that got we for fourth go five Kona I and increases, and would say affected this as another

items alone more think percentage the with line bring I that line those will in historical.

mostly and cost say I off being would inflation pricing of function cycle. it’s So, just a

pricing fixed. get we as the will that and So, I get think

in company, would bring where have probably seen the into In bigger you we have line of restaurants we impact G&A the leaders. the through advance opening of terms been more growth have, obviously, in because that a of of the multiunit investments,

re-summarize a we margin obviously, and to leaders costs we costs class management on operating mix have just is side. product developing the the the nice and that again, on taken side whole if very pricing be on margin But the with enough G&A than cost our I job would to So, for managing and a of opportunities have company really operating more investments the haven’t multi-units. been for offset growth and training

David Kanen

we run rate, the north XX% EBITDA at that what a kind San with of it’s seeing, $XX kind inflation much at then of would in you hit have than modeled me, And Francisco numbers that the of labor? a do especially gave on million, store-level that are pace Okay. I surprised higher you

Manny Hilario

Yes.

So, good question.

San to pace. $XX the closer actually for pattern value million So, Francisco is

$XX actually for we million it’s weeks with fantastic, month I think that. we sustained on now the new and it’s is $XX a which actually frankly, it for million, pace, are and restaurant – around several brand basis

for has well COVID. So, restaurant we are double since in we the city very and has incredibly about pleased the received expected that with been The performance been city in revenue. restaurant dormant what

restaurants of There So, activity anything opened significant of not that that lot a lot not a really had in there. or city. was

we the has the are really city embraced happy very and So, restaurant, with that.

wage of the In terms San that means what city. have margin that is minimum Francisco higher in a does for

to of margins as not think range, we do But have dollars if those are labor. So, volumes, put higher, I even XX% kind than more our XX% that. up probably the higher STK for significantly higher to

right running volumes very So, now. they I that have expect would at the San to are margin Francisco healthy a

David Kanen

then do seasonality, economy then and start you taking, kind EBITDA the it to the in with back when are QX, price do Great. Okay. stores we from grow growth year-over-year grow, stores get but status And I seasonality coming the assuming like at by events, quo QX I that’s or XX.X% we seasonality the sort in to etcetera, do and tailwind parties, better. being in and Yes EBITDA expect we conservative is of new new the – the to beyond? of with run said and a were the you XX%, of rate or the sounded was private

Manny Hilario

I do that now. increases price great question. right quarter think fourth are putting that are in Yes, mean, we the happening the I

if have Grill into my will, week, But of pricing. we that to prepared a STK bit and that little – getting back quarter see didn’t have we I a be. full have you do as margins our do the said can we I in say in where say, comments, So, would Kona I it

between somewhere said on XX I XX% and Kona Grill and XX% STK. XX we think to on

that think is that fact we I now So, the very are class. the level do putting frankly, at the the and pricing are in that new operating that high-quality a we with right stores

just opened have that this we We Dallas week.

Ridge, margin the consider is of San and are that. which more just be what those restaurants And restaurants Desert then opened we to Francisco class stuff and smaller Columbus, Kona that in the we friendly placements recently. Riverton we restaurants that sushi up, Grill We opening like Phoenix, up with bar have are

be we restaurants, them those expect to actually So, than portfolio current of more margin the efficient restaurants.

efficient So, them. to margin restaurants actually we the Kona of we and class are of the actually we way have Grill looking profile – that they designed are plan to because positive Grill more forward Kona impact the to operate the new

profile restaurants So, the the ‘XX bullish and we quarter am for margin pretty fourth I year are ‘XX. the into the – on

David Kanen

you. guys. nice Thank Have Alright. Good holidays. a luck

Manny Hilario

you, Thank David.

Operator

us Hilario, questions no I will Mr. call you. now this to the for turn time. there back further at are

Manny Hilario

Thank on call joining everyone the us Thanks today. you. for

As environment, operate frankly, what’s market to do, but to all for in. rewarding that very hard is I great very thank restaurants work would I in contributions in we also like see tremendous and team us our single a challenging always their are every

that. So, all thank like that provide, you for I and in dining brands forward for of our love who our our and all fine you seeing people And you then to the all we restaurants. look guests

a Thank everyone one. So, you. good has

Operator

thank call you ask today. That for that and conclude lines. your your conference the for please We does disconnect you participation

The ONE Group Hospitality, Inc. (STKS) 3 Nov 222022 Q3 Earnings call transcript