The ONE Group: Traffic Rebound, Benihana Synergies Lift Margins & Cash Flow – Quarterly Update Report

Traffic Led Comparable Sales Recovery and Benihana Synergies Continue to Drive Margin Expansion and Free Cash Flow Improvement

• Key Takeaways

  • Revenue and comparable income were modestly impacted by softer postulation astatine definite STK promenade locations and vacation timing shifts, though trends improved sequentially exiting the quarter.

  • Benihana synergies, procurement efficiencies, and disciplined execution drove 100 bps of edifice borderline enlargement and 12.1% Adjusted EBITDA maturation contempt ongoing closures.

  • Traffic trends turned affirmative entering 2Q26 arsenic loyalty, blessed hour, and Power Lunch initiatives gained traction crossed brands.

  • Portfolio optimization initiatives continued advancing, with 5 Grill conversions expected to reopen by year-end 2026 astatine charismatic returns.

  • Shares stay materially discounted comparative to improving escaped currency travel generation, expanding borderline visibility, and continued deleveraging potential.

• Revenue and comparable income were impacted by softer postulation astatine definite STK promenade locations and vacation timing shifts, though trends improved sequentially exiting the quarter. STKS reported 1Q26 gross of $212.8 million, up 0.8% y/y but beneath the guided scope of $217-$221 million, portion company-owned edifice nett gross accrued 0.9% to $209.3 million. Consolidated comparable income declined 0.3%, representing an betterment from the 1.8% diminution reported successful 4Q25 and continuing the affirmative trajectory exiting fiscal 2025. Management noted that softer postulation astatine respective mall-based STK locations and broader calendar-related timing shifts created humble unit connected quarterly show comparative to expectations, though momentum improved materially exiting the quarter. Importantly, absorption noted that comparable income and transaction trends turned affirmative entering 2Q26, suggesting caller betterment is being driven progressively by postulation alternatively than pricing.

  • Franchise and inducement interest gross moderated owed to little contributions from managed STK locations successful North America. Management, licensing and inducement interest revenues decreased to $3.5 cardinal successful 1Q26 compared with $3.7 cardinal successful the prior-year quarter, reflecting exit of absorption statement successful Scottsdale, Arizona successful 2Q25.

• Margins expanded meaningfully connected procurement synergies, favorable beef sourcing, and disciplined outgo management, portion EBITDA maturation and little capex continued supporting escaped currency travel procreation and deleveraging. Company-owned edifice outgo of income improved 140 bps y/y to 19.4% of edifice gross from 20.8% successful the prior-year period, driven by procurement synergies, paper optimization, favorable beef sourcing, operational efficiencies, and improved PMIX management. Operating income accrued 30% y/y, portion adjusted EBITDA grew 12.1%. Capital expenditures, nett of tenant betterment allowances, declined 23% y/y arsenic the institution prioritized capital-efficient growth.

• Comparable income and transaction trends turned affirmative entering 2Q26 crossed the broader portfolio, reinforcing assurance successful the underlying trajectory of the business. Both STK and Benihana generated affirmative comparable income entering 2Q26, portion absorption highlighted affirmative transaction trends crossed the portfolio. Importantly, absorption noted that caller comparable income betterment is being driven progressively by postulation alternatively than pricing, representing a notable displacement comparative to broader manufacture trends. The 4th besides benefited from astir $8.3 cardinal of incremental gross associated with the fiscal calendar displacement that moved New Year’s Eve into fiscal 2026, partially offset by astir $1.8 cardinal of mislaid gross associated with closed Grill Concept locations.

  • Benihana continued functioning arsenic a stabilizing higher-margin plus wrong the broader portfolio portion integration initiatives drove further operational improvement. Benihana comparable income were ~flat during 1Q26 pursuing a 0.4% diminution successful 4Q25 and a 4.0% diminution successful 3Q25, reflecting stabilizing postulation and resilient impermanent demand. Restaurant operating nett margins astatine Benihana expanded 130 bps to astir 21%, driven by procurement synergies, labour optimization, improved scheduling, and supply-chain efficiencies. The conception continues benefiting from procurement standard associated with the Benihana acquisition, peculiarly crossed beef sourcing and broader vendor consolidation initiatives.

  • Grill Concepts trends continued improving sequentially. Grill Concepts comparable income declined 5.3% successful 1Q26 compared to declines of 9.4% successful 4Q25 and 11.8% successful 3Q25, representing the strongest quarterly show since 2023. Importantly, absorption noted that transactions wrong the Grill portfolio turned affirmative during the quarter, suggesting that postulation stabilization efforts whitethorn beryllium opening to summation traction adjacent arsenic the institution continues aggressively rationalizing underperforming locations.

  • Commentary surrounding beef procurement and promotional strategy besides provided further penetration into however STKS plans to negociate commodity volatility done the remainder of 2026. While beef pricing remains contracted done September 2026, absorption acknowledged that the broader beef situation remains challenging heading into 4Q26. Rather than relying solely connected pricing actions, the institution is actively optimizing PMIX and promotional windows by emphasizing alternate cuts and reducing reliance connected filet-heavy promotions. This attack could assistance mitigate aboriginal commodity unit portion preserving postulation momentum.