Breaking Down The ONE Group Hospitality, Inc. (STKS) Financial Health: Key Insights for Investors

You're looking at The ONE Group Hospitality, Inc. (STKS) and seeing a classic restaurant group balancing aggressive expansion with real economic headwinds, and honestly, the numbers for the 2025 fiscal year are a mixed bag you need to unpack right now.

Management has narrowed their full-year GAAP revenue guidance to a tight range of $820 million to $825 million, which is solid top-line growth driven by the Benihana acquisition, but that's hiding a crucial detail: they are projecting consolidated comparable sales to be down -3% to -2% for the year, reflecting persistent macro pressure on the consumer. Here's the quick math: while they target a respectable Adjusted EBITDA of $95 million to $100 million, the third quarter alone saw a GAAP net loss of $85.3 million, largely due to non-cash impairments, which tells you their portfolio optimization strategy is defintely a work in progress. Still, they plan to open 5 to 7 new venues, so the action item is clear: we need to see if the growth engine can outrun the same-store sales decline and high integration costs.

Revenue Analysis

You need to understand where The ONE Group Hospitality, Inc. (STKS) is actually making its money, especially after the massive Benihana acquisition in 2024. The direct takeaway is this: the company is on track for a full-year 2025 revenue target of $820 million to $825 million, but the growth story is now less about organic sales and more about the shift to a multi-brand, higher-volume model.

The core of The ONE Group's revenue comes from its three primary, company-owned restaurant segments: the upscale steakhouse brand STK, the newly acquired Benihana Japanese steakhouse chain, and the Grill Concepts portfolio, which includes Kona Grill and RA Sushi. The Benihana acquisition in May 2024 is the single biggest factor driving the company's top-line scale in 2025.

Here's the quick math on the 2025 revenue streams, based on the latest guidance and actual results:

• Company-Owned Restaurants: This is the bulk of the revenue, projected to be approximately $808 million for the full year 2025.
• Managed, Franchise, and License Fees: This smaller, high-margin, asset-light segment is expected to contribute between $14 million and $15 million in 2025.

The company's strategy is clear: focus on the flagship STK and the newly acquired Benihana brands, which posted industry-leading restaurant-level EBITDA margins of 17.7% and 20.1%, respectively.

Year-over-Year Revenue & Growth Trends

The year-over-year (YoY) revenue figures for 2025 are a mixed bag, which is defintely a key risk for investors. While the overall revenue number is huge compared to prior years due to the acquisition, the organic growth is under pressure. For example, Q1 2025 saw a massive YoY revenue increase of 148.4% to $211.1 million (from $85.0 million in Q1 2024). But Q3 2025 tells a different story: total GAAP revenues decreased 7.1% to $180.2 million from $194.0 million in the prior year quarter.

This volatility is why you must look past the headline numbers to the underlying comparable sales (same-store sales). The full-year 2025 guidance projects consolidated comparable sales to be in the range of -3% to -2%. This negative trend highlights the challenge of driving organic traffic in the current consumer spending environment, even as the Benihana brand showed positive same-store sales in Q2 2025.

Strategic Shift in Segment Contribution

The most significant change in The ONE Group Hospitality, Inc. (STKS)'s revenue profile is the strategic pivot away from underperforming assets. The company is executing a 'Grill portfolio optimization' strategy, which involves closing six underperforming Grill locations and planning to convert up to nine additional Grill units-like RA Sushi-to the higher-performing Benihana or STK formats by the end of 2026. This is a move to consolidate revenue around the strongest brands.

This portfolio optimization is changing the segment contribution mix, making Benihana a crucial new pillar of the business alongside STK. The long-term goal is to have franchise licenses and managed locations represent over 60% of the total venue footprint, which will significantly increase the contribution of the asset-light, high-margin revenue stream over time. For a deeper dive into the company's long-term strategy, you can read their Mission Statement, Vision, & Core Values of The ONE Group Hospitality, Inc. (STKS).

Your next step should be to look at the traffic trends at the STK and Benihana brands specifically; positive transaction growth at those core concepts is what matters most right now.

Profitability Metrics

You need to know if The ONE Group Hospitality, Inc. (STKS) is translating its high-volume, upscale dining model into sustainable bottom-line returns. The short answer for the 2025 fiscal year is: the margins are under significant pressure, especially net profitability, largely due to integration costs and fixed cost deleveraging.

Looking at the trailing twelve months (TTM) ending in Q3 2025, the company's profitability ratios show a struggle to maintain positive net income. The TTM Gross Profit Margin sits at 12.86%, which is a significant drop from recent years, indicating rising costs of sales. The TTM Operating Profit Margin is at 3.80%, and the TTM Net Profit Margin is negative at -1.96%.

Margin Trends and Industry Comparison

The trend in profitability is a major concern for The ONE Group Hospitality, Inc. (STKS) right now. Over the last few years, we've seen a clear erosion of margins, which is a red flag for any seasoned analyst. Here's the quick math on the annual trend:

• Gross Margin dropped from 23.52% in 2021 to 18.23% in 2024.
• Net Profit Margin plummeted from a healthy 11.31% in 2021 to a loss of -5.19% in 2024.

This trend shows that the company's cost structure is defintely increasing faster than its revenue, or the revenue mix is shifting to lower-margin segments. This is a crucial point for investors to consider when Exploring The ONE Group Hospitality, Inc. (STKS) Investor Profile: Who's Buying and Why?

When you compare the TTM margins to the industry, the picture gets clearer. The ONE Group Hospitality, Inc. (STKS) operates in the full-service restaurant (FSR) space, where the average net profit margin is typically thin, ranging from 3% to 6% in 2025. The company's TTM Net Profit Margin of -1.96% is clearly underperforming this industry benchmark, indicating that, on a net basis, the company is not profitable as of late 2025. The positive TTM Operating Margin of 3.80% is closer to the industry average, but the substantial net loss in Q3 2025 of $85.3 million due to noncash impairment charges shows the underlying fragility.

Operational Efficiency and Cost Management

The core challenge is operational efficiency, particularly integrating the Benihana acquisition. While the company is achieving strong Restaurant-Level EBITDA margins-with the STK brand hitting 17.7% and Benihana reaching 20.1% in Q1 2025-the consolidated TTM Operating Margin is pulled down by corporate overhead and non-restaurant costs.

In Q3 2025, company-owned restaurant operating expenses as a percentage of revenue increased 140 basis points to 67.6%, a direct impact of general cost inflation and fixed cost deleveraging. You can see management is reacting, though. They are targeting a reduction in Benihana table turn times from 120 minutes to 90 minutes in Q4 2025, which is a clear, actionable move to boost capacity and revenue without adding significant fixed costs. Plus, they are on track to deliver at least $20 million in acquisition synergies by 2026, which should provide a much-needed lift to the operating margin.

Next Step: Check the Q4 2025 earnings release for the Benihana table turn time improvement and the initial synergy realization figures.

Debt vs. Equity Structure

The ONE Group Hospitality, Inc. (STKS) is currently running a highly leveraged capital structure, which is a critical point for any investor to understand. The company's debt-to-equity ratio is significantly high, primarily because it is operating with a negative total stockholders' equity as of the latest reporting period.

You need to look past the top-line revenue growth and focus on how the business is funded. As of the third quarter of 2025 (September 28, 2025), the company's total stockholders' equity was a negative $61.47 million (or $61,472 thousand), a sharp drop from a positive equity of $45.89 million at the end of 2024. This negative figure means the company's total liabilities exceed its total assets, a major red flag that analysts defintely watch closely. It's a tough spot to be in.

Here's the quick math on their debt components:

• Total Long-Term Debt (net of current portion): $334.04 million (or $334,041 thousand)
• Current Portion of Long-Term Debt: $9.31 million (or $9,307 thousand)
• Outstanding Revolving Credit Facility: $5.5 million

This puts the core bank debt at approximately $348.85 million. The total liabilities figure is much higher at $762.64 million, which includes significant operating lease liabilities, a common feature in the restaurant industry.

Debt-to-Equity Ratio: A High-Leverage Stance

The ONE Group Hospitality, Inc.'s debt-to-equity (D/E) ratio is a clear signal of its aggressive financing strategy. The reported D/E ratio is approximately 5.50 (or 549.98%) as of the most recent quarter. This ratio is calculated by dividing total liabilities by shareholders' equity.

To put that in perspective, the average debt-to-equity ratio for the restaurant industry in 2025 is around 3.456. So, The ONE Group Hospitality, Inc. is operating with a significantly higher debt load relative to its equity base than its peers. This high leverage amplifies both returns and risks for common shareholders. A high D/E ratio is not always bad for a growth company, but it demands higher returns on assets to service the debt.

Recent Financing and the Debt/Equity Balance

The shift in the company's capital structure is largely tied to its major acquisition of Benihana in 2024. This deal was financed through a mix of debt and a unique form of equity, which shows their balancing act.

• Debt Financing: They secured a credit agreement that provided a $350 million term loan and a $40 million revolving credit facility. This debt is the foundation of the current long-term liability.
• Equity Funding: They also issued $160 million in Series A Preferred Stock to help finance the acquisition. While this is technically classified as temporary equity on the balance sheet, it acts as a hybrid instrument, providing capital without diluting common shareholders as much as a new common stock issuance would, but it still carries a dividend obligation.

The company is currently focused on using debt to fuel its expansion and portfolio optimization, like converting underperforming Grill locations to Benihana or STK formats. The term loan does not currently have a financial covenant, which gives management some operational flexibility, but the high interest expense-$10.5 million in Q3 2025 alone-is a substantial drag on net income. You can read more about their strategic focus here: Mission Statement, Vision, & Core Values of The ONE Group Hospitality, Inc. (STKS).

Liquidity and Solvency

The ONE Group Hospitality, Inc. (STKS) is operating with a tight liquidity profile, which is a significant factor for any investor to consider. The core takeaway is that the company does not have enough highly-liquid assets to cover its short-term debts, a situation common in the high-growth, capital-intensive restaurant sector, but one that demands careful monitoring.

The most recent trailing twelve months (TTM) data, which includes the third quarter of 2025, shows a concerning liquidity position. The company's Current Ratio, which measures its ability to cover short-term liabilities (due within one year) with current assets, stands at just 0.35. A healthy ratio is typically 1.0 or higher, so this is a clear red flag. Furthermore, the Quick Ratio (or Acid-Test Ratio), which is a more stringent test that excludes inventory, is even lower at 0.20. This means for every dollar of immediate liability, The ONE Group Hospitality, Inc. has only $0.20 in cash or near-cash assets to pay it.

Here's the quick math on the working capital (current assets minus current liabilities): The company's net current asset value is a negative $716.13 million on a TTM basis. This substantial negative working capital is a direct result of the low current ratio and highlights the company's reliance on continuous cash flow from operations and external financing to manage its day-to-day obligations. This is defintely not a sign of financial flexibility.

The cash flow statement for the trailing twelve months ending in Q3 2025 tells a story of strategic investment despite the liquidity crunch. While the balance sheet looks constrained, the operations are generating positive cash:

• Operating Cash Flow (TTM): $35.74 million
• Investing Cash Flow (TTM): -$61.96 million
• Financing Cash Flow: This is the balancing act, and the company is using a combination of debt and equity to fund its growth.

The primary strength here is the operating cash flow, but the major potential liquidity concern is the low cash balance and high debt. The company finished the third quarter of 2025 with only $6 million in cash and cash equivalents. Management is focused on balance sheet strength, noting they have approximately $45 million in total liquidity, which includes availability under their revolving credit facility. The high debt-to-EBITDA ratio, around 7x, is another solvency risk that makes lenders more cautious. For a deeper understanding of the company's long-term strategy that drives this investment, you should review their Mission Statement, Vision, & Core Values of The ONE Group Hospitality, Inc. (STKS).

To summarize the liquidity position, here is a snapshot:

The clear action for you, the investor, is to track the company's capital expenditure execution and its impact on operating cash flow in the upcoming quarters. If CapEx starts to exceed its return targets, the liquidity risk will rise sharply.

Valuation Analysis

You are looking at The ONE Group Hospitality, Inc. (STKS) after a tough year, and the core question remains: Is the stock a deep-value play or a value trap? The direct takeaway is that while the stock is technically undervalued based on analyst price targets, its negative earnings and mixed valuation multiples signal high risk. The market is pricing in significant near-term execution risk, especially given the recent earnings misses.

The stock price has been in a clear downtrend, falling over 38% in the last 52 weeks, trading near the low end of its range. As of November 2025, The ONE Group Hospitality, Inc. (STKS) is trading around $1.82 per share, a far cry from its 52-week high of $5.26. The current price is a reflection of the company's recent Q3 2025 loss and a challenging casual dining environment. They are defintely fighting an uphill battle.

Is The ONE Group Hospitality, Inc. (STKS) Overvalued or Undervalued?

The ONE Group Hospitality, Inc. (STKS) appears to be significantly undervalued based on the consensus price target from Wall Street analysts. The average 12-month price target is between $4.63 and $5.05, which suggests a massive potential upside from the current price. However, you must look past the price target and into the underlying ratios, which tell a more complex story.

The analyst consensus is a mixed Hold rating, with a split between Buy, Hold, and Sell recommendations, indicating a lack of strong conviction either way. This mixed signal suggests that while the company has strong brands like STK and Benihana, the market is waiting for proof that its strategic initiatives-like the Friends with Benefits loyalty program and website upgrades-can translate into consistent earnings.

• Stock Price Trend: Down over 38% in the last 52 weeks.
• Analyst Consensus: Hold (Average 12-month price target: $4.63 to $5.05).
• Dividend Policy: The company does not pay a dividend; the yield is 0.00%.

Key Valuation Multiples (Fiscal Year 2025 Estimates)

Valuation multiples for The ONE Group Hospitality, Inc. (STKS) are tricky because the company is currently posting a net loss. This immediately makes the Price-to-Earnings (P/E) ratio irrelevant for a standard comparison.

Here's the quick math on the key forward-looking (FY 2025) and trailing (TTM) valuation metrics:

The negative P/E ratio (forecasted at -1.81x for FY 2025) confirms the company is expected to post a net loss, with an estimated EPS of around -$1.252. You should focus on Enterprise Value-to-EBITDA (EV/EBITDA) instead, as it focuses on operating cash flow before debt and taxes.

The forward EV/EBITDA estimate of 0.72x is exceptionally low and suggests a significant undervaluation relative to the projected operating cash flow (Adjusted EBITDA guidance is $95 million to $115 million). What this estimate hides, however, is the company's high debt load, which is a major factor driving the stock price down. The low TTM Price-to-Book (P/B) of 0.47 also points to a stock trading below its book value, which is a classic deep-value signal, but one that often comes with high leverage and risk.

For a deeper dive into who is currently buying and selling this stock, you should be Exploring The ONE Group Hospitality, Inc. (STKS) Investor Profile: Who's Buying and Why?

Risk Factors

You need to know that The ONE Group Hospitality, Inc. (STKS) is facing a clear set of near-term headwinds, primarily stemming from macroeconomic pressures and the performance of its recently acquired assets. The company's Q3 2025 results defintely highlighted these risks, reporting a total GAAP revenues (Generally Accepted Accounting Principles) decrease of 7.1% year-over-year to $180.2 million, which missed analyst expectations. That's a significant miss, and it signals a bumpy road ahead.

The biggest financial risk right now is the sharp drop in profitability, driven by both external market conditions and internal strategic adjustments. The company reported a substantial GAAP net loss of $76.7 million for Q3 2025. Here's the quick math: this loss is largely due to non-cash charges, specifically a non-cash tax valuation allowance and a non-cash loss on impairment of $3.4 million related to their Grill portfolio optimization strategy. Still, even Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), which strips out those non-cash items, fell to $10.6 million, down from $14.9 million in Q3 2024. That's a real operational decline.

The operational and market risks break down into a few clear categories you should be watching:

• Market and Competition: External factors temporarily reduced traffic in key markets, especially with the upscale dining target demographic. Consolidated comparable sales (same-store sales) decreased by 5.9% in Q3 2025, a direct sign of competitive pressure and reduced consumer spending.
• Inflationary Pressure: Rising commodity costs are a persistent external risk. The CEO noted these costs are outpacing the company's pricing adjustments, which puts a squeeze on margins.
• Grill Portfolio Performance: This is the major internal strategic risk. The non-STK/Benihana Grill portfolio has been underperforming, necessitating a major restructuring.

The company is already executing a clear mitigation strategy, which is a positive sign of management taking action. They are aggressively optimizing the underperforming Grill portfolio, which includes closing six underperforming locations and planning to convert up to nine additional Grill units to the more profitable Benihana or STK formats by the end of 2026. This is a painful, but necessary, move to cut losses and focus capital on their core, high-performing brands.

Plus, they are continuing their growth strategy with plans to open five to seven new venues in 2025, focusing on their asset-light model. The goal is to realize at least $20 million in acquisition synergies by 2026, which should help offset some of the inflationary cost pressures. You can dive deeper into the ownership structure and market sentiment by Exploring The ONE Group Hospitality, Inc. (STKS) Investor Profile: Who's Buying and Why?

To summarize the core financial and operational risks, here is a breakdown of the Q3 2025 performance indicators that drove the negative market reaction:

The action for you is to monitor the comparable sales trend in Q4 2025 and Q1 2026. If the comparable sales decline slows down or reverses, it means the Grill optimization and new venue openings are starting to work. If onboarding takes 14+ days, churn risk rises.

Growth Opportunities

You're looking at The ONE Group Hospitality, Inc. (STKS) and seeing a mixed picture: a challenging near-term environment but clear, actionable steps for future growth. The company is defintely not sitting still, using a strategic pivot to focus on their highest-performing assets and an asset-light expansion model. This is a classic move for a seasoned restaurant operator in a tight consumer spending cycle.

The core of their future growth isn't about massive, new acquisitions; it's about optimizing the portfolio and scaling the proven winners. They are actively shedding underperforming locations, having closed six Grill locations, and plan to convert up to nine more to their more profitable Benihana or STK formats by 2026. This portfolio clean-up is crucial because it immediately boosts the average unit economics.

Future Revenue and Earnings Estimates

The ONE Group Hospitality, Inc. has provided updated guidance for the full 2025 fiscal year, which reflects the current economic headwinds, particularly in consolidated comparable sales. This is a trend-aware realist's view: they're acknowledging the softness but banking on strategic execution to drive profitability.

Here's the quick math on their official 2025 outlook:

What this estimate hides is the shift in revenue mix. While consolidated comparable sales are negative, the company is targeting a higher-margin revenue stream from managed and franchise fees, which is a key part of their capital-efficient growth strategy.

Key Growth Drivers and Strategic Initiatives

The company's strategy boils down to three clear pillars: brand optimization, asset-light expansion, and digital engagement. They are focusing capital on the STK and Benihana brands, which have demonstrably superior unit economics. For example, a newly redesigned Benihana in San Mateo, California, is validating a new format that can achieve $8 million in annual sales with a mid-20% restaurant-level profit margin.

• New Venue Openings: Plan to open 5 to 7 new venues in 2025, including a new company-owned STK in Oak, Illinois.
• Asset-Light Franchising: Accelerating the Benihana Express format, which requires less capital. The long-term goal is for franchise, licensed, and managed locations to comprise over 60% of the total footprint.
• Product Innovation: Rolling out a new premium holiday menu focused on Wagyu and high-end seafood to align with more intentional, selective diner spending.
• Digital and Loyalty: The 'Friends with Benefits' loyalty program now has over 6.5 million members, a direct channel to drive repeat visits and traffic.

This is a smart way to grow: use other people's capital (franchisees) for expansion while maximizing returns on your best company-owned units. You can learn more about who is betting on this strategy in Exploring The ONE Group Hospitality, Inc. (STKS) Investor Profile: Who's Buying and Why?

Competitive Advantages

The ONE Group Hospitality, Inc.'s primary competitive advantage is the 'Vibe Dining' concept itself, which combines high-quality cuisine with an energetic, social atmosphere. This experiential dining model is harder to replicate than a traditional restaurant concept, creating a moat around their best brands.

STK, in particular, continues to deliver industry-leading unit economics, generating approximately $11 million in annual revenues with 20%+ restaurant-level margins. This strong unit-level profitability provides the cash flow needed to fund the strategic conversions and new, high-performing locations. They're selling an experience, not just a meal, and that drives a higher average check and better margins.