ONE Group Hospitality Inc

Previous wording

We currently own, operate, manage or license 63 venues including 28 STKs and 27 Kona Grills in major metropolitan cities in North America, Europe and the Middle East and 8 F&B venues in four hotels and casinos in the United States and Europe.

Current wording

We currently own, operate, manage, license or franchise 166 venues including 30 STKs, 84 Benihanas, 27 Kona Grills and 16 RA Sushis in major metropolitan cities in North America, Europe, Latin America and the Middle East and 9 F&B venues in four hotels and casinos in the United States and Europe.

Previous wording

We opened the following eight new venues in 2023:

Current wording

We opened the following six new venues in 2024:

Previous wording

There is currently one Company-owned STK restaurant, one Company-owned Kona Grill restaurant, and one Company-owned Salt Water Social restaurant under construction in the following cities:

Current wording

There are currently two Company-owned STK restaurants, one Company-owned Benihana, one Company-owned Kona Grill restaurant and one franchised Benihana (Express) restaurant under construction in the following cities:

Previous wording

Net income attributable to The ONE Group Hospitality, Inc was $4.7 million in 2023 compared to $13.5 million in 2022.

Current wording

Net loss attributable to The ONE Group Hospitality, Inc was $15.8 million in 2024 compared to net income of $4.7 million in 2023 primarily due to transaction, transition and integration costs partially offset the by the income generated at the acquired restaurants.

Previous wording

Expansion of STK*.* We expect to continue to expand our operations domestically and internationally through a mix of owned, licensed and managed STK restaurants using a disciplined and targeted site selection process. We have identified over 75 additional major metropolitan areas across the globe where we expect we could grow our STK brand to 200 restaurants over the foreseeable future. We expect to open five to six STKs annually, primarily through company-owned locations and management or licensing agreements, provided that we have sufficient interest from prospective licensees, acceptable locations and quality restaurant managers available to support that pace of growth.

Current wording

Expansion of STK*.* We expect to continue to expand our operations domestically and internationally through a mix of owned, licensed and managed STK restaurants using a disciplined and targeted site selection process. We have identified over 75 additional major metropolitan areas across the globe where we expect we could grow our STK brand to 200 restaurants over the foreseeable future. We expect to open four to six STKs annually, primarily through Company-owned locations and management or licensing agreements, provided that we have sufficient interest from prospective licensees, acceptable locations and quality restaurant managers available to support that pace of growth.

Previous wording

In 2023, we opened Company-owned STK restaurants in Charlotte, North Carolina, Boston, Massachusetts and Salt Lake City, Utah. In March 2024, we opened a Company-owned STK restaurant at the Marriott Marquis hotel in Washington, D.C. Additionally, we have one STK restaurant in Aventura, Florida under construction and several restaurants in the development phase or under lease that we plan to open in 2024 or 2025.

Current wording

In 2024, we opened Company-owned STK restaurants in Washington, D.C. and Aventura, Florida. We also opened one managed STK restaurant in Ontario, Canada. Additionally, we have two STK restaurants in Topanga, California and Los Angeles, California under construction and several restaurants in the development phase or under lease that we plan to open in 2025 or 2026.

Previous wording

Expansion of Kona Grill*.* We expect to expand our operations domestically using a disciplined and targeted site selection process. We believe we could grow the Kona Grill brand to 200 restaurants over the foreseeable future. We expect to open three to five Kona Grills annually, primarily through company-owned locations, provided that we have acceptable locations and quality restaurant managers available to support that pace of growth. We opened the first Kona Grill since the Company acquired the Kona Grill brand in Columbus, Ohio in January 2023 and also opened two additional Kona Grill restaurants in Riverton, Utah and Phoenix, Arizona in 2023.

Current wording

Expansion of Benihana*.* We expect to expand our operations domestically and internationally through a mix of owned and franchised Benihana restaurants using a disciplined and targeted site selection process. We believe we could grow the Benihana brand to 400 restaurants over the foreseeable future. We expect to open one to three Benihanas annually, primarily through Company-owned locations and franchising agreements, provided that we have sufficient interest from prospective franchisees, acceptable locations and quality restaurant managers available to support that pace of growth.

Previous wording

Increase Same Store Sales and Increase Our Operating Efficiency*.* In addition to expanding into new cities and hospitality venues, we intend to continue to increase revenue and profits in our existing operations through continued focus on high-quality, high-margin food and beverage menu items. We believe that our operating margins will improve through growth in same store sales, as defined below in Key Performance Indicators, and a reduction of store-level operating expenses.

Current wording

Increase Same Store Sales and Increase Our Operating Efficiency*.* In addition to expanding into new cities and hospitality venues, we intend to continue to increase revenue and profits in our existing operations through continued focus on high-quality, high-margin food and beverage menu items. We believe that our operating margins will improve

Previous wording

Same Store Sales (“SSS”)**. SSS represents total food and beverage sales at domestic owned and managed restaurants opened for at least a full 18-month period at the beginning of each quarter, which removes the impact of new restaurant openings in comparing the operations of existing restaurants. For STK SSS, this measure includes total revenue from our owned and managed domestic STK locations, excluding revenues from our owned STK restaurant located in the W Hotel in Los Angeles, California due to the impact of the F&B hospitality management agreement with the hotel. Revenues from locations where we do not directly control the event sales force are excluded from this measure. We have presented four-year comparable sales to illustrate how sales at our restaurant base before the COVID-19 pandemic compare to sales post COVID-19 restrictions.

Current wording

Same Store Sales (“SSS”)**. SSS represents total food and beverage sales at domestic owned and managed restaurants opened for at least a full 24-month period at the beginning of each quarter, which removes the impact of new restaurant openings in comparing the operations of existing restaurants. For STK SSS, this measure includes total revenue from our owned and managed domestic STK locations, excluding revenues from our owned STK restaurant located in the W Hotel in Los Angeles, California due to the impact of the F&B hospitality management agreement with the hotel. Revenues from locations where we do not directly control the event sales force are excluded from this measure.

Previous wording

Our comparable restaurant base for STK SSS consisted of twelve domestic restaurants for the year ended December 31, 2023. For Kona Grill SSS, 24 domestic restaurants are included in the comparable restaurant base. STK and Kona Grill SSS decreased 3.0% and 2.2%, respectively for 2023 compared to the prior year. On a four-year basis, STK SSS increased 64.1% while Kona Grill SSS increased 23.6%.

Current wording

Our comparable restaurant base for STK SSS consisted of twelve domestic restaurants for the year ended December 31, 2024. For Benihana SSS, sixty-six domestic restaurants are included in the comparable restaurant base. For Grill Concepts SSS, forty domestic restaurants are included in the comparable restaurant base. STK, Benihana and Grill Concepts SSS decreased 8.7%, 1.8% and 13.2%, respectively for 2024 compared to the prior year.

Previous wording

Number of Restaurant Openings*.*Number of restaurant openings reflects the number of restaurants opened during a particular fiscal period. For each restaurant opening, we incur pre-opening costs, which are defined below. Typically, new restaurants open with an initial start-up period of higher than normalized sales volumes (also referred to in the restaurant industry as the “honeymoon” period), which decrease to a steady level approximately 18 to 24 months after opening. However, operating costs during this initial period are also higher than normal, resulting in restaurant operating margins that are generally lower during the start-up period of operation and increase to a steady level approximately 18 to 24 months after opening. Some new restaurants may experience a “honeymoon” period that is either shorter or longer than this time frame.

Current wording

Number of Restaurant Openings*.*Number of restaurant openings reflects the number of restaurants opened during a particular fiscal period. For each restaurant opening, we incur pre-opening costs, which are defined below. Typically, new restaurants open with an initial start-up period of higher than normalized sales volumes (also referred to in the restaurant industry as the “honeymoon” period), which decrease to a steady level approximately 24 months after opening. However, operating costs during this initial period are also higher than normal, resulting in restaurant operating margins that are generally lower during the start-up period of operation and increase to a steady level approximately to 24 months after opening. Some new restaurants may experience a “honeymoon” period that is either shorter or longer than this time frame.

Previous wording

In 2023, we opened three STK restaurants, three Kona Grill restaurants and two Bao Yum venues under a licensing agreement. Recently the Company exited its licensing agreement with REEF Kitchens and has no venues operating pursuant to that agreement. In 2022, we opened three STK restaurants including two owned restaurants in San Francisco, California and Dallas, Texas, a managed STK restaurant in London, United Kingdom and opened one Bao Yum venue under a licensing agreement.

Current wording

In 2024, we opened three STK restaurants including two Company-owned restaurants in Washington, D.C. and Aventura, Florida and a managed STK restaurant at Niagara Falls in Ontario, Canada. We also opened one Company-owned Kona Grill restaurant in Tigard, Oregon, one Company-owned RA Sushi restaurant in Plantation, Florida and one Company-owned Salt Water Social restaurant in Denver, Colorado. In 2023, we opened three STK restaurants, three Kona Grill restaurants and two Bao Yum venues under a licensing agreement with REEF Kitchens. In 2024, the Company exited its licensing agreement with REEF Kitchens and has no venues operating pursuant to that agreement.

Previous wording

Average Check Per Person and Average Spend*.* Average check is calculated by dividing total restaurant sales by total number of guests for a specified period. Average spend per transaction is calculated by dividing total restaurant sales by total number of transactions for a specified period. Our management team uses these indicators to analyze trends in customers’ preferences, customer expenditures and the overall effectiveness of menu changes and price increases. For our comparable STK restaurants, the average check was $130 for 2023 compared to $131 for 2022. The average spend per transaction was $63 for our comparable Kona Grill restaurants in 2023 compared to $61 for 2022.

Current wording

Average Check Per Person*.* Average check per person is calculated by dividing total restaurant sales by total number of guests for a specified period. Our management team uses these indicators at STK to analyze trends in customers’ preferences, customer expenditures and the overall effectiveness of menu changes and price increases. For our comparable STK restaurants, the average check per person was $127 for 2024 compared to $130 for 2023.

Previous wording

Average Comparable Restaurant Revenue. Average comparable restaurant revenue consists of the average sales of our comparable restaurants over a certain period of time. This measure is calculated by dividing total comparable restaurant sales in a given period by the total number of comparable restaurants in that period. For purposes of this calculation, STK Downtown restaurant and rooftop are considered a single venue. This indicator assists management in measuring changes in customer traffic, pricing and development of our brand. Our average comparable STK restaurant revenues were $17.3 million and $19.1 million for 2023 and 2022, respectively. Our average comparable Kona Grill restaurant revenues were $5.2 million and $5.3 million for 2023 and 2022, respectively.

Current wording

Average Comparable Restaurant Revenue. Average comparable restaurant revenue consists of the average sales of our comparable restaurants over a certain period of time. This measure is calculated by dividing total comparable restaurant sales in a given period by the total number of comparable restaurants in that period. For purposes of this calculation, STK Downtown restaurant and rooftop are considered a single venue. This indicator assists management in measuring changes in customer traffic, pricing and development of our brand. Our average comparable STK restaurant revenues were $15.5 million and $17.3 million for 2024 and 2023, respectively. For 2024, our average comparable Benihana restaurant revenues were $6.5 million. Our average comparable Grill Concepts restaurant revenues were $3.9 million and $5.2 million for 2024 and 2023, respectively. In 2024, full year information for both Benihana and RA Sushi, which is within Grill Concepts, is presented whereas 2023 reflects only Kona Grill within Grill Concepts.

Previous wording

Owned restaurant net revenues. Owned restaurant net revenues consist of food and beverage sales by owned restaurants net of any discounts associated with each sale and of any ancillary F&B hospitality services at owned locations. Additionally, revenues from offsite banquets and our gift card programs are included in owned restaurant net revenues. For the year ended December 31, 2023, beverage sales comprised 23% of food and beverage sales, and food sales comprised the remaining 77%. This indicator assists management in understanding the trends in gross margins of the restaurants.

Current wording

Owned restaurant net revenues. Owned restaurant net revenues consist of food and beverage sales by owned restaurants net of any discounts associated with each sale and of any ancillary F&B hospitality services at owned locations. Additionally, revenues from offsite banquets and our gift card programs are included in owned restaurant net revenues. For the year ended December 31, 2024, beverage sales comprised 17% of food and beverage sales, and food sales comprised the remaining 83%. This indicator assists management in understanding the trends in gross margins of the restaurants.

Previous wording

Our primary owned restaurant brands are STK and Kona Grill. We specifically look at comparable sales from both owned and managed restaurants to understand customer count trends and changes in average check as it relates to our primary restaurant brands.

Current wording

Our primary owned restaurant brands are STK, Benihana, Kona Grill and RA Sushi. We specifically look at comparable sales from both owned and managed restaurants to understand customer count trends and changes in average check per person or average transaction as it relates to our primary restaurant brands.

Previous wording

Management, license and incentive fee revenue*.*Management, license and incentive fee revenues include fees received pursuant to management and license agreements. Management agreements typically call for a management fee based on a percentage of revenue, a monthly marketing fee based on a percentage of revenues and an incentive fee based on a managed venue’s net profits. Similarly, royalties from the licensee in license agreements are generally based on a percentage of the licensed restaurant’s revenue. These management, license and incentive fees are recognized as revenue in the period the restaurant’s sales occur. Initial licensing fees and upfront fees related to management and license agreements are recognized as revenue on a straight-line basis over the term of the agreement.

Current wording

Management, license, franchise and incentive fee revenue*.*Management, license, franchise and incentive fee revenues include fees received pursuant to management and license agreements. Management agreements typically call for a management fee based on a percentage of revenue, a monthly marketing fee based on a percentage of revenues and an incentive fee based on a managed venue’s net profits. Similarly, royalties from the licensee or franchisee in license and franchise agreements are generally based on a percentage of the licensed or franchised restaurant’s revenue. These management, license, franchise and incentive fees are recognized as revenue in the period the restaurant’s sales occur. Initial licensing fees, franchising fees and upfront fees related to management, license, and franchise agreements are recognized as revenue on a straight-line basis over the term of the agreement.

Previous wording

We evaluate the performance of our managed and licensed properties based on sales growth, a key driver for management and license fees, and on improvements in operating profitability margins, which, combined with sales, drives incentive fee growth.

Current wording

We evaluate the performance of our managed, licensed and franchised properties based on sales growth, a key driver for management, license, franchise and incentive fees, and on improvements in operating profitability margins, which, combined with sales, drives incentive fee growth.

Previous wording

Owned restaurant cost of sales*.* Owned restaurant cost of sales includes all owned restaurant food and beverage expenditures. We measure cost of goods as a percentage of owned restaurant net revenues. Owned restaurant cost of sales are generally influenced by the cost of food and beverage items, menu mix, discounting activity and restaurant level controls. See “Item 1A. Risk Factors — Increases in commodity prices would adversely affect our results of operations.”

Current wording

Owned restaurant cost of sales*.* Owned restaurant cost of sales includes all owned restaurant food and beverage expenditures. We measure cost of goods as a percentage of owned restaurant net revenues. Owned restaurant cost of

Previous wording

Pre-opening expenses*.* Pre-opening expenses consist of costs incurred prior to opening an owned or managed STK or Kona Grill restaurant at either a leased or F&B location. Pre-opening expenses are comprised principally of manager salaries and relocation costs, employee payroll, training costs for new employees and lease costs incurred prior to opening. Pre-opening expenses also include payroll and travel costs associated with our new restaurant opening training team. Pre-opening expenses have varied from location to location depending on a number of factors, including the proximity to our existing restaurants; the amount of rent expensed during the construction and in-restaurant training periods; the size and physical layout of each location; the number of management and hourly employees required to operate each restaurant; the relative difficulty of the restaurant staffing process; the cost of travel and lodging for

Current wording

Pre-opening expenses*.* Pre-opening expenses consist of costs incurred prior to opening an owned or managed restaurant at either a leased or F&B location. Pre-opening expenses are comprised principally of manager salaries and relocation costs, employee payroll, training costs for new employees and lease costs incurred prior to opening. Pre-opening expenses also include payroll and travel costs associated with our new restaurant opening training team. Pre-opening expenses have varied from location to location depending on a number of factors, including the proximity to our existing restaurants; the amount of rent expensed during the construction and in-restaurant training periods; the size and physical layout of each location; the number of management and hourly employees required to operate each restaurant; the relative difficulty of the restaurant staffing process; the cost of travel and lodging for different metropolitan areas; the timing of the restaurant opening; and the extent of unexpected delays, if any, in obtaining necessary licenses and permits to open the restaurant.

Previous wording

EBITDA, Adjusted EBITDA and Restaurant Operating Profit*.We present EBITDA, Adjusted EBITDA and Restaurant Operating Profit to supplement other measures of financial performance. EBITDA, Adjusted EBITDA and Restaurant Operating Profit are not required by, or presented in accordance with, accounting principles generally accepted in the United States of America (“GAAP”). We define EBITDA as net income before interest expense, provision for income taxes and depreciation and amortization. We define Adjusted EBITDA as EBITDA before non-cash rent expense, pre-opening expenses, lease termination expenses, stock-based compensation, COVID-19 related expenses and non-recurring gains and losses. Not all of the items defining Adjusted EBITDA occur in each reporting period but have been included in our definitions of these terms based on our historical activity.* We define Restaurant Operating Profit as owned restaurant net revenue minus owned restaurant cost of sales and owned restaurant operating expenses.

Current wording

EBITDA, Adjusted EBITDA and Restaurant Operating Profit*.We present *EBITDA, Adjusted EBITDA and Restaurant Operating Profit to supplement other measures of financial performance. EBITDA, Adjusted EBITDA and Restaurant Operating Profit are not required by, or presented in accordance with, accounting principles generally accepted in the United States of America (“GAAP”). We define EBITDA as net income before interest expense, benefit for income taxes and depreciation and amortization. We define Adjusted EBITDA as net income before interest expense, benefit for income taxes, depreciation and amortization, non-cash rent expense, transaction and exit costs, transition and integration expenses, stock-based compensation, and non-recurring gains and losses. Not all of the items defining Adjusted EBITDA occur in each reporting period but have been included in our definitions of these terms based on our historical activity. We define Restaurant Operating Profit as owned restaurant net revenue minus owned restaurant cost of sales and owned restaurant operating expenses.

Previous wording

Management, license and incentive fee revenue*.*Management and license fee revenues decreased $0.4 million, or 2.4%, to $15.4 million for 2023 from $15.8 million for 2022. The decrease was primarily attributable to the non-renewal of the management agreement for Radio at the ME London hotel.

Current wording

Management, license, franchise and incentive fee revenue*.*Management, license, franchise and incentive fee revenues decreased $1.0 million, or 6.5%, to $14.4 million for 2024 from $15.4 million for 2023. The decrease was primarily attributable to a decrease in revenues at our managed STK restaurants in North America, partially offset from the franchise revenue from the acquired Benihana restaurant franchise agreements.

Previous wording

Owned restaurant cost of sales*.* Food and beverage costs for owned restaurants increased $0.3 million, or 0.5%, to $75.7 million for 2023 from $75.4 million for 2022. The increase was due to the incremental sales increases noted above from the opening of eight new venues since August 2022. As a percentage of revenues, cost of sales decreased 110 basis points to 23.9% for 2023 from 25.0% for 2022 primarily due to product mix management, pricing and operational cost reduction initiatives partially offset by increased commodity prices.

Current wording

Owned restaurant cost of sales*.* Food and beverage costs for owned restaurants increased $63.1 million, or 83.4%, to $138.8 million for 2024 from $75.7 million for 2023. The increase in owned restaurant cost of sales is primarily attributed to $64.9 million in cost of sales associated with revenues generated by Benihana and RA Sushi restaurants acquired on May 1, 2024, partially offset by a decrease in comparable sales. As a percentage of revenues, cost of sales decreased 280 basis points to 21.1% for 2024 from 23.9% for 2023 primarily due to lower cost of sales for Benihana restaurants, product mix management, pricing and operational cost reduction initiatives partially offset by increased commodity prices.

Previous wording

Owned restaurant operating expenses*.* Owned restaurant operating expenses increased $16.6 million, or 9.5%, to $191.3 million for 2023 from $174.7 million for 2022. Owned restaurant operating costs as a percentage of owned restaurant net revenue increased 220 basis points from 58.1% in 2022 to 60.3% for 2023 primarily due to higher labor costs driven by wage inflation and investments in anticipation of growth, increased marketing expenses and general operating cost inflation.

Current wording

Owned restaurant operating expenses*.* Owned restaurant operating expenses increased $220.5 million, or 115.3%, to $411.8 million for 2024 from $191.3 million for 2023. The increase in owned restaurant operating expense is primarily attributed to $210.2 million in operating expenses associated with revenues generated by Benihana and RA Sushi restaurants acquired on May 1, 2024. Owned restaurant operating costs as a percentage of owned restaurant net revenue increased 220 basis points from 60.3% in 2023 to 62.5% for 2024 primarily due to higher labor costs driven by wage inflation, increased marketing expenses, general operating cost inflation and fixed cost deleveraging driven by a decrease in same store sales, partially offset by lower restaurant operating costs for Benihana restaurants.

Previous wording

General and administrative*.* General and administrative costs increased $1.7 million, or 5.7%, to $30.8 million for 2023 from $29.1 million for 2022. The increase was attributable to increased stock-based compensation expense and additional investments required ahead of new restaurant openings partially offset by lower incentive-based performance compensation. As a percentage of revenues, general and administrative costs were 9.2% in both 2023 and 2022.

Current wording

General and administrative*.* General and administrative costs increased $13.4 million, or 43.5%, to $44.2 million for 2024 from $30.8 million for 2023. The increase was attributable to incremental headcount associated with the Benihana Acquisition and increased professional fees. As a percentage of revenues, general and administrative costs were 6.6% in 2024 compared to 9.2% in 2023.

Previous wording

Depreciation and amortization*.* Depreciation and amortization expense increased $3.6 million to $15.7 million for 2023 from $12.1 million for 2022. The increase was primarily attributable to the opening of eight new owned venues since August 2022 and capital expenditures to maintain and enhance the guest experience in our restaurants.

Current wording

Depreciation and amortization*.* Depreciation and amortization expense increased $18.4 million to $34.1 million for 2024 from $15.7 million for 2023. The increase was primarily related to depreciation and amortization for the Benihana and RA Sushi restaurants acquired on May 1, 2024, depreciation associated with the opening of ten new owned venues since January 2023 and capital expenditures to maintain and enhance the guest experience in our restaurants.

Previous wording

Pre-opening expenses*.* We incurred $8.9 million of pre-opening expenses primarily related to payroll, training, and non-cash rent for six STK and Kona Grill restaurants which opened in 2023 as well as STK and Kona Grill restaurants currently under development. Total pre-opening expenses related to non-cash pre-open rent was $1.8 million.

Current wording

Pre-opening expenses*.* We incurred $9.5 million of pre-opening expenses primarily related to payroll, training, and non-cash rent for six STK, Kona Grill, RA Sushi and Salt Water Social restaurants which opened in 2024 as well as restaurants currently under development. Total pre-opening expenses related to non-cash pre-open rent was $1.2 million.

Previous wording

Pre-opening expenses for 2022 were $5.5 million primarily related costs associated with STK San Francisco which opened August 2022, STK Dallas which opened November 2022, and restaurants opened in 2023. Total pre-opening expenses related to non-cash rent were $1.1 million.

Current wording

Pre-opening expenses for 2023 were $8.9 million primarily related costs associated with six restaurants which opened in 2023 and restaurants opened in 2024. Total pre-opening expenses related to non-cash rent were $1.8 million.

Previous wording

Other expenses. Other expenses were $1.0 million for 2023 primarily related to litigation expenses compared to other expenses of $0.6 million for 2022 composed primarily of trademark defense and litigation expenses.

Current wording

*Other expenses.*Other expenses in 2024 and 2023 were $0.1 million and $1.0 million, respectively, primarily related to litigation expenses.

Previous wording

Interest expense, net of interest income*.* Interest expense, net of interest income, was approximately $7.0 million and $2.1 million for 2023 and 2022, respectively. We borrowed $50.0 million on the delayed draw term loan facility in December 2022. The weighted average interest rate for 2023 was 11.9% compared to 6.9% for 2022.

Current wording

Interest expense, net of interest income*.* Interest expense, net of interest income, was approximately $31.1 million and $7.0 million for 2024 and 2023, respectively. We borrowed $350.0 million on the Credit Agreement on May 1, 2024 to finance the Benihana Acquisition. The weighted average interest rate for 2024 was 11.7% compared to 11.9% for 2023.

Previous wording

(Benefit) provision for income taxes*.* The benefit for income taxes for 2023 was ($1.8) million compared to provision for income taxes of $0.9 million for 2022. Our effective tax rate was (77.7)% and 6.2% for the years ended December 31, 2023 and 2022, respectively. Our effective tax rate differs from the statutory U.S. tax rate of 21% primarily due to the following: (i) tax credits for FICA taxes on certain employees’ tips; (ii) taxes owed in foreign jurisdictions such as the United Kingdom, Canada and Italy; (iii) taxes owed in state and local jurisdictions; and (iv) windfall tax benefits from equity compensation offset by compensation limited for certain individuals with compensation in excess of $1 million.

Current wording

Benefit for income taxes*.* The benefit for income taxes for 2024 was $7.8 million compared to a benefit for income taxes for $1.8 million for 2023. Our effective tax rate was 32.0% and (77.7)% for the years ended December 31, 2024 and 2023, respectively. Our effective tax rate differs from the statutory U.S. tax rate of 21% primarily due to the following: (i) tax credits for FICA taxes on certain employees’ tips; (ii) taxes owed in foreign jurisdictions such as the United Kingdom, Canada and Italy; (iii) taxes owed in state and local jurisdictions; and (iv) windfall tax benefits from equity compensation offset by compensation limited for certain individuals with compensation in excess of $1 million.

Previous wording

Net loss attributable to noncontrolling interest. Net loss attributable to noncontrolling interest increased to a net loss of $0.7 million for 2023 compared to net loss of $0.2 million for 2022.

Current wording

Net loss attributable to noncontrolling interest. Net loss attributable to noncontrolling interest increased to a net loss of $0.8 million for 2024 compared to net loss of $0.7 million for 2023.

Previous wording

Our principal liquidity requirements are to meet our lease obligations, working capital and capital expenditure needs and to pay principal and interest on our outstanding debt. Subject to our operating performance, which, if significantly adversely affected, would adversely affect the availability of funds, we expect to finance our operations for at least the next 12 months, including the costs of opening currently planned new restaurants, through cash provided by operations, construction allowances provided by landlords of certain locations and borrowings under our credit agreement. We also may borrow on our revolving credit facility or issue equity to support ongoing business and fund additional expansion. We believe these sources of financing are adequate to support our immediate business operations and plans. As of December 31, 2023, we had cash and cash equivalents of $21.0 million. We had $73.5 million in long-term debt, which consisted of borrowings under our Credit Agreement as of December 31, 2023. As of December 31, 2023, the availability on our revolving credit facility was $10.6 million, subject to the restrictions described in Note 5 to our consolidated financial statements.

Current wording

Our principal liquidity requirements are to meet our lease obligations, working capital and capital expenditure needs and to pay principal and interest on our outstanding debt. Subject to our operating performance, which, if significantly adversely affected, would adversely affect the availability of funds, we expect to finance our operations for at least the next 12 months and the foreseeable future, including the costs of opening currently planned new restaurants, through cash provided by operations, construction allowances provided by landlords of certain locations and borrowings under our Credit Agreement. We also may borrow on our revolving credit facility or issue equity, including preferred stock, to support ongoing business and fund additional expansion. We believe these sources of financing are adequate to support our immediate business operations and plans. As of December 31, 2024, we had cash and cash equivalents of $27.6 million. We had $348.3 million in long-term debt, which consisted of borrowings under our Credit Agreement as of December 31, 2024. As of December 31, 2024, the availability on our revolving credit facility was $33.6 million, subject to certain conditions.

Previous wording

Capital expenditures in 2023 were $53.5 million of which $41.8 million primarily related to the construction of six new STK and Kona Grill restaurants and several restaurants that were under development as of December 31, 2023. We spent $8.4 million on maintenance capital expenditures for existing restaurants which included additional furniture, fixtures and equipment commensurate with the higher sales volumes at our restaurants. In addition, we spent approximately $2.9 million for furniture, fixtures and equipment for restaurants that we plan to open in the future. Net capital expenditures, inclusive of $4.7 million in landlord contributions, was $48.8 million for 2023. We expect to receive between $1.5 million to $2.1 million in landlord contributions in the next three months.

Current wording

Capital expenditures in 2024 were $71.6 million of which $54.5 million primarily related to the construction of new STK, Benihana, Kona Grill and RA Sushi restaurants and $16.3 million related to existing restaurants. Net capital expenditures, inclusive of $6.9 million in landlord contributions, was $64.7 million for 2024. We expect to receive between $1.0 million to $2.0 million in landlord contributions in the next three months.

Previous wording

Our future cash requirements will depend on many factors, including the pace of expansion, conditions in the retail property development market, construction costs, the nature of the specific sites selected for new restaurants, and the nature of the specific leases and associated tenant improvement allowances available, if any, as negotiated with landlords. We have made significant investments in our training and development teams to support new restaurants openings. We believe these investments are necessary to support the successful opening of our new restaurants. If we modify our growth plans, the personnel that comprise our training team could be deployed to operate existing restaurants.

Current wording

Our future cash requirements will depend on many factors, including the pace of expansion, conditions in the retail property development market, construction costs, the nature of the specific sites selected for new restaurants, and the nature of the specific leases and associated tenant improvement allowances available, if any, as negotiated with landlords. We have made significant investments in our training and development teams to support new restaurants openings. We believe these investments are necessary to support the successful opening of our new restaurants. If we

Previous wording

See Note 5 and Note 14 to our consolidated financial statements for further information on our long-term debt and commitments and contingencies.

Current wording

Refer to Note 6 and Note 17 to our consolidated financial statements set forth in Item 15 of this Annual Report on Form 10-K for further information regarding the terms of our long-term debt arrangements and information regarding our commitments and contingencies.

Previous wording

When we open new Company-owned restaurants, our capital expenditures for construction increase. For owned STK restaurants, where we build from a shell state, we have typically targeted a restaurant size of 8,000 square feet with a gross cash investment of approximately $515 to $675 per square foot, exclusive of $200 per square foot in landlord contributions. STK restaurants opened in 2023 had a gross cost per square foot of $690 and $125 per square foot in landlord contributions with an average size of 10,386 square feet. For owned Kona Grill restaurants, where we build from a shell state, we have typically targeted a restaurant size of 7,000 square feet with a gross cash investment of approximately $510 per square foot, exclusive of $150 per square foot in landlord contributions. Kona Grill restaurants opened in 2023 had a gross cost per square foot of $600 and $90 per square foot in landlord contributions with an average size of 8,631 square feet. In situations where we add functional space and build an STK or Kona Grill restaurant with a mezzanine, covered patio, or rooftop, costs per square feet will increase. Typical cash pre-opening costs are $0.6 million to $0.8 million, excluding the impact of cash and non-cash pre-opening rent. In addition, some of our existing restaurants will require capital improvements to either maintain or improve the facilities. We may add seating or provide

Current wording

When we open new Company-owned restaurants, our capital expenditures for construction increase. For owned STK restaurants, where we build from a shell state, we have typically targeted a restaurant size of 8,000 square feet with a gross cash investment of approximately $700 to $750 per square foot, exclusive of $150 per square foot in landlord contributions. STK restaurants opened in 2023 and 2024 had a gross cost per square foot of $706 and $132 per square foot in landlord contributions with an average size of 10,618 square feet. For owned Benihana restaurants, where we build from a shell state, we have typically targeted a restaurant size of 7,000 square feet. In situations where we add functional space and build a restaurant with a mezzanine, covered patio, or rooftop, costs per square feet will increase. Typical cash pre-opening costs are $0.6 million to $0.8 million, excluding the impact of cash and non-cash pre-opening rent. In addition, some of our existing restaurants will require capital improvements to either maintain or improve the facilities. We may add seating or provide enclosures for outdoor space in the next twelve months for some of our locations, when we believe that will increase revenues for those locations.

Previous wording

Operating Activities. Net cash provided by operating activities was $30.8 million for 2023 compared to $25.3 million for 2022. The increase in net cash provided by operating activities during 2023 compared to 2022 was primarily attributable to higher accounts payable and accrued expenses attributable to the timing of payments.

Current wording

Operating Activities. Net cash provided by operating activities was $44.1 million for 2024 compared to $30.8 million for 2023. The increase in net cash provided by operating activities during 2024 compared to 2023 was primarily attributable to the net cash generated by the acquired Benihana and RA Sushi restaurants.

Previous wording

Investing Activities. Net cash used in investing activities for 2023 was $53.5 million primarily for the construction of six restaurants opened in 2023 and new restaurants under development, as well as capital expenditures for existing restaurants compared to $32.6 million for 2022.

Current wording

Investing Activities. Net cash used in investing activities for 2024 was $441.4 million, which was comprised of $369.8 million for the Benihana acquisition, net of cash acquired, and $71.6 millionof which $54.5 million primarily related to the construction of new STK, Benihana, Kona Grill and RA Sushi restaurants and $16.3 million related to existing restaurants. Net cash used in investing activities for 2023 was $53.5 million primarily for the construction of six restaurants opened in 2023 and new restaurants under development, as well as capital expenditures for existing restaurants.

Previous wording

Financing Activities*.* Net cash used by financing activities was $11.2 million for 2023 primarily attributable to $7.9 million of shares purchased under our stock buyback plan compared to net cash provided by financing activities of $39.1 million for 2022. During 2022, we borrowed $50.0 million under the amended Credit Agreement, partially offset by $7.1 million in purchases of common stock and $2.0 million to pay employee taxes for shares withheld upon vesting of restricted stock units.

Current wording

Financing Activities*.* Net cash provided by financing activities was $404.4 million for 2024 and was comprised of net proceeds from borrowings under the Credit Agreement of $333.8 million and net proceeds from the issuance of preferred stock and warrants of $138.9 million, partially offset by the repayment of our prior credit facility of $73.6 million and $3.2 million of shares purchased under our stock buyback plan. Net cash used by financing activities for 2023 was $11.2 million primarily attributable to $7.9 million in purchases for common stock and $2.0 million to pay employee taxes for shares withheld upon vesting restricted stock units.