The ONE Group Hospitality, Inc. (STKS): 5 FORCES Analysis [Nov-2025 Updated]

You're assessing The ONE Group Hospitality, Inc.'s competitive footing right now, and the Benihana acquisition has definitely changed the game. Honestly, we're watching a tug-of-war: the premium pricing power of STK versus real customer pressure, which shows up in the projected -3% to -2% comparable sales for FY 2025. While their scale helps manage supplier costs, high rivalry and customer sensitivity-especially with a high average check around $127-are squeezing margins, evidenced by the 210 bp drop in Restaurant EBITDA last quarter. Keep reading to see how all five forces dictate the near-term strategy for The ONE Group Hospitality, Inc.

The ONE Group Hospitality, Inc. (STKS) - Porter's Five Forces: Bargaining power of suppliers

You're analyzing supplier power for The ONE Group Hospitality, Inc. (STKS) as they integrate major acquisitions and face macro pressures. Here's the quick math on where that power sits right now.

The bargaining power of suppliers for The ONE Group Hospitality, Inc. is generally assessed as low to moderate. This is largely because the increased scale post-acquisition drives significant purchasing leverage. Management has guided that cost synergies resulting from this scale and integration are expected to reach at least $20 million by 2026. That's a clear financial benefit derived from having more volume to push back on vendors.

However, you can't ignore the immediate headwinds, especially concerning premium inputs. High inflation risk on key items like steaks and seafood is an ongoing macro challenge. For instance, in the second quarter of 2025, the benefit from integration synergies was offset by higher than anticipated inflation specifically driven by chicken, eggs, and certain cuts of beef, even as the Company owned restaurant cost of sales as a percentage of revenue held flat at 21.2% year-over-year. To be fair, the CEO noted in the third quarter of 2025 that rising commodity costs outpaced their pricing adjustments, further pressuring profitability.

The company's diversified global footprint helps temper reliance on any single regional supplier. The ONE Group Hospitality, Inc. operates its portfolio across the U.S., Europe, and the Middle East. This geographic spread offers some insulation. Still, the core strength against suppliers comes from sheer volume.

The high-volume purchasing power is leveraged across the entire system. As of early 2025, The ONE Group Hospitality, Inc. managed, owned, operated, licensed, or franchised 166+ venues. This scale allows the company to negotiate better terms for core commodities across its brands, which include STK, Benihana, Kona Grill, and RA Sushi.

Here is a snapshot of the operational scale influencing supplier negotiations as of early 2025:

The strategic response to supplier power involves both scale and portfolio management. You can see the active management of underperforming assets, which indirectly affects purchasing concentration:

• Completed closure of six Grill locations by Q3 2025.
• Plan to convert up to nine Grill units to Benihana or STK formats by the end of 2026.
• Limiting owned venues under construction to four at any time to manage cash requirements.
• Setting a maximum of twelve signed leases to cap annual cash rent commitment to approximately $3.0 million to $4.0 million for restaurants under development.

Finance: draft 13-week cash view by Friday.

The ONE Group Hospitality, Inc. (STKS) - Porter's Five Forces: Bargaining power of customers

You're analyzing The ONE Group Hospitality, Inc. (STKS) and the customer power is definitely a key lever to watch. When customers feel the pinch or see better value elsewhere, they vote with their wallets, and that pressure shows up directly in the top line. Honestly, this force is sitting in the moderate to high range right now.

The value-driven nature of the consumer base is translating into a challenging same-store sales (SSS) environment. Consolidated comparable sales are projected to fall between -3% to -2% for the full fiscal year 2025. This negative outlook suggests that even with brand strength, consumers are trading down or reducing frequency, which is a clear sign of elevated bargaining power.

To put this in context, look at recent performance. Consolidated comparable sales decreased by -4.1% in the second quarter of 2025, and for the full year 2024, comparable sales decreased by approximately -6.8%. These figures underscore the sensitivity to price and value perception.

The high average check per person at the flagship STK brand makes demand particularly elastic to economic shifts. The required figure for 2024 is pegged at ~$127 per person. For context, the average domestic check per person for comparable STK restaurants was $130 in 2023. When the average ticket is this high, even small changes in discretionary spending by the customer base have a magnified impact on overall traffic and sales volume.

The ONE Group Hospitality, Inc. is actively working to lock in its customer base to counteract this price sensitivity. The loyalty program, Friends with Benefits, is a direct tool to raise switching costs. This program is reported to have over 6.5 million members, which is a substantial base to target with personalized offers.

The power of the customer is also evident in the operational necessity for constant tactical adjustments. Menu adjustments and targeted promotions are not optional; they are required to maintain competitiveness against lower-priced upscale casual dining rivals. The company needs to balance the premium positioning of STK with the need to drive traffic, especially when comparable sales are under pressure.

Here's a quick look at the data points influencing this force:

The strategy to combat this power involves leveraging the loyalty base for targeted incentives. The Friends with Benefits program offers specific rewards that encourage repeat visits:

• Instant unlock of member status upon sign-up.
• A free appetizer just for joining the club.
• A $50 birthday reward and a $25 half-birthday reward.
• Earning 1 point for every $1 spent across all The ONE Group Hospitality brands.

Finance: draft 13-week cash view by Friday.

The ONE Group Hospitality, Inc. (STKS) - Porter's Five Forces: Competitive rivalry

The competitive rivalry facing The ONE Group Hospitality, Inc. (STKS) is high. The ONE Group Hospitality, Inc. operates squarely within the saturated upscale casual and fine dining segments, competing directly against established, major national chains. This environment demands constant differentiation to capture consumer spend.

Direct competition comes from large, well-capitalized rivals. Consider Darden Restaurants, Inc., which operates The Capital Grille. Darden reported total sales of $12.1 billion for its fiscal year 2025. In contrast, The ONE Group Hospitality, Inc.'s Q2 2025 GAAP revenue was $207.4 million. This scale difference means rivals can absorb more operational shocks and invest more heavily in marketing and real estate.

Rivalry intensity is focused on the experience, which The ONE Group Hospitality, Inc. terms Vibe Dining, along with location strategy and price competitiveness. This focus directly translates to margin pressure. For instance, Restaurant EBITDA for The ONE Group Hospitality, Inc. decreased by 210 bp in Q2 2025. This margin compression is a clear indicator of the cost of maintaining competitive positioning.

The competitive landscape shows mixed signals for The ONE Group Hospitality, Inc.'s core brands. While the STK brand showed positive transaction growth of 4.1% in Q1 2025, overall consolidated same-store sales (SSS) remained negative, decreasing by 4.1% in Q2 2025. This suggests that while the high-energy STK concept is attracting traffic, the broader portfolio, including the recently acquired Benihana and the Grill segment, is struggling to drive overall comparable sales growth.

Here is a snapshot comparing The ONE Group Hospitality, Inc.'s recent margin pressure against a direct competitor's segment performance:

The pressure is evident across the upscale dining sector, as Darden's Fine Dining segment, which houses The Capital Grille, also experienced a sales decline of 3.3% in its Q4 2025 period.

Key elements driving the rivalry include:

• Focus on experiential dining concepts.
• Intense competition for prime urban locations.
• Price sensitivity impacting margins.
• STK transaction growth of 4.1% in Q1 2025.
• Q2 2025 Restaurant EBITDA margin at 15.4%.
• Q2 2025 Consolidated SSS decline of 4.1%.

The ONE Group Hospitality, Inc. (STKS) - Porter's Five Forces: Threat of substitutes

The threat of substitutes for The ONE Group Hospitality, Inc. (STKS) is multifaceted, stemming from both direct dining alternatives and entirely different discretionary spending categories. While the company's core concepts aim for differentiation, macroeconomic pressures are clearly pushing consumers to re-evaluate their spending on premium experiences.

Moderate: The unique 'Vibe Dining' (STK) and 'Experiential Dining' (Benihana) models create a high barrier for direct substitution.

The differentiation strategy relies on the perceived uniqueness of the offering. STK blends a modern steakhouse with a chic lounge, emphasizing a social experience with a DJ-curated soundtrack. Benihana offers its signature teppanyaki experience. These models aim to be less substitutable than a standard restaurant. However, the portfolio's overall performance in late 2025 suggests this barrier is being tested. Consolidated comparable sales for The ONE Group Hospitality, Inc. decreased by 5.9% in the third quarter of 2025. Conversely, the Benihana segment showed positive momentum with same-store sales increasing by 0.4% in the second quarter of 2025, while STK transactions saw a 2.8% increase in the same period. The company is actively optimizing its portfolio, having closed six underperforming Grill locations and planning to convert up to nine more to STK or Benihana formats by the end of 2026.

Significant threat from non-restaurant alternatives, like high-end home meal kits or other forms of discretionary entertainment.

The shift to at-home consumption remains a significant substitute, particularly in the high-quality segment. The global meal kits market size was estimated to be worth between $17.11 billion and $32.40 billion in 2025, depending on the market definition. This market is projected to grow substantially, with one estimate forecasting it to reach nearly $58.8 billion by 2034. Meal kits offer convenience and portion control, providing an alternative for consumers looking to manage discretionary spending while still preparing quality food at home.

The threat is quantified by the sheer scale and growth trajectory of this substitute market:

• Global Meal Kit Market Size (2025 Est.): $17.11 Billion to $32.40 Billion.
• Projected Market Size by 2034: Up to $105.03 Billion.
• Projected CAGR (2025-2034): Between 13.96% and 14.7%.

High-quality, lower-cost dining options are luring fine dining guests in a downward traffic shift.

Consumer caution is driving a trade-down effect, where patrons shift from the highest tier of dining to more value-oriented options. While fine dining sales showed some recovery, growing between 2.1% and 3.1% by early 2025 after a 13% decline in early 2024, this segment is still vulnerable. In contrast, Quick Service Restaurants (QSR) showed continued strength into 2025, with sales growth between 8.7% and 9.1%. The Upscale Casual segment, which includes STK and Benihana, saw traffic fall 2.9% on a same-store basis from July through September 2025, making it one of the two weakest segments over that period. This indicates that while special occasion dining persists, regular discretionary spending is migrating to less expensive formats, like Casual Dining, which led industry sales growth since March 2025.

For the sushi segment (RA Sushi), there is a proliferation of low-cost competitors with low barriers to entry.

The RA Sushi brand, now being converted into STK units, historically faced intense competition in the broader sushi and casual dining space. The general industry trend shows that when economic conditions tighten, consumers shift spending to lower-priced options, which benefits Limited Service segments. The proliferation of low-cost, fast-casual sushi concepts presents a direct substitution threat to the RA Sushi model, which was part of the Grill Concepts portfolio that management is optimizing. The strategic decision to convert RA Sushi locations to the higher-priced STK format suggests management views the low-cost substitution threat in the sushi segment as significant enough to warrant a brand shift.

The ONE Group Hospitality, Inc. (STKS) - Porter's Five Forces: Threat of new entrants

The threat of new entrants for The ONE Group Hospitality, Inc. remains a dynamic factor, influenced heavily by the capital intensity of the full-service segment and the intangible value of established concepts.

Moderate to High: High capital expenditure (CapEx) for new venues is a major barrier for STK and Benihana owned-and-operated locations. For the fiscal year 2025, The ONE Group Hospitality, Inc. projected total capital expenditures to be between $45 million and $50 million. This level of required investment for ground-up development or significant relocations-such as the recent move of STK Los Angeles to an expansive new venue-creates a substantial financial hurdle for any independent operator attempting to launch a comparable, high-end concept from scratch. The company's own planned capital outlay for opening 5 to 7 new venues in 2025 underscores this high cost of entry.

Expansion opportunities are further constrained by the need for premier, high-traffic real estate in major metropolitan cities. The ONE Group Hospitality, Inc. operates its core brands, including STK and Benihana, in key markets across North America, Europe, and the Middle East. Securing prime locations in these dense urban centers-where STK targets 8,000 to 10,000 square feet and Benihana targets 6,000 to 10,000 square feet-is fiercely competitive and expensive.

The company's asset-light franchising strategy for Benihana Express lowers the barrier for its own expansion but not for new, independent competitors. The ONE Group Hospitality, Inc. recently opened its second franchised Benihana Express location in Miami, Florida, and has the 3rd and 4th in the pipeline. This strategy allows The ONE Group Hospitality, Inc. to grow the Benihana footprint with minimal capital deployment, as they aim for over 60% of their total footprint to eventually be franchise, licensed, or managed. However, this does not reduce the initial capital and operational risk for a completely new, independent restaurant concept trying to enter the market without the benefit of an established, recognizable franchise system.

Established brand equity and operational complexity of 'Vibe Dining' are difficult to replicate quickly. New entrants face the challenge of building the intangible assets The ONE Group Hospitality, Inc. has cultivated:

• STK is focused on being the global leader in Vibe Dining, characterized by sophisticated, high-energy design elements like the signature white horn wall and vibrant neon signs.
• Benihana is a cultural icon, famous for the 'art of teppanyaki cooking and its unrivaled guest experience,' which requires highly skilled chefs and an interactive setup.
• As of March 2025, Benihana had 77 restaurants across the US, Latin America, and the Caribbean.

The table below summarizes key operational scale metrics that new entrants must overcome:

Building a brand with the recognition of Benihana or the specific atmosphere of STK requires significant, sustained marketing investment that a startup typically cannot match immediately. Honestly, replicating that 'vibe' is more than just interior design; it's about operational consistency across a large footprint.