Upscale restaurant company The One Group Hospitality (NASDAQ:STKS) fell short of analysts' expectations in Q1 CY2024, with revenue up 3% year on year to $85 million. On the other hand, the company's full-year revenue guidance of $720 million at the midpoint came in 91.3% above analysts' estimates. It made a non-GAAP loss of $0.02 per share, down from its profit of $0.10 per share in the same quarter last year.
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The ONE Group (STKS) Q1 CY2024 Highlights:
- Revenue: $85 million vs analyst estimates of $87.59 million (3% miss)
- EPS (non-GAAP): -$0.02 vs analyst estimates of $0.03 (-$0.05 miss)
- The company lifted its revenue guidance for the full year from $370 million to $720 million at the midpoint, a 94.6% increase
- Gross Margin (GAAP): 19.6%, down from 20.4% in the same quarter last year
- Same-Store Sales were down 7.9% year on year
- Market Capitalization: $151.8 million
Doubling as a hospitality services provider for hotels and resorts, The One Group Hospitality (NASDAQ:STKS) is an upscale restaurant company that operates STK Steakhouse and Kona Grill.
Sit-Down DiningSit-down restaurants offer a complete dining experience with table service. These establishments span various cuisines and are renowned for their warm hospitality and welcoming ambiance, making them perfect for family gatherings, special occasions, or simply unwinding. Their extensive menus range from appetizers to indulgent desserts and wines and cocktails. This space is extremely fragmented and competition includes everything from publicly-traded companies owning multiple chains to single-location mom-and-pop restaurants.
Sales GrowthThe ONE Group is a small restaurant chain, which sometimes brings disadvantages compared to larger competitors benefitting from better brand awareness and economies of scale. On the other hand, one advantage is that its growth rates can be higher because it's growing off a small base.
As you can see below, the company's annualized revenue growth rate of 30.4% over the last five years was incredible as it added more dining locations and expanded its reach.
This quarter, The ONE Group's revenue grew 3% year on year to $85 million, falling short of Wall Street's estimates. Looking ahead, Wall Street expects sales to grow 16.2% over the next 12 months, an acceleration from this quarter.
Same-Store SalesSame-store sales growth is an important metric that tracks organic growth and demand for a restaurant's established locations.
The ONE Group's demand has been shrinking over the last eight quarters, and on average, its same-store sales have declined by 1% year on year. This performance isn't ideal and the company should reconsider its growth strategy before opening new restaurants with its precious capital.
In the latest quarter, The ONE Group's same-store sales fell 7.9% year on year. This decline was a reversal from the 1.6% year-on-year increase it posted 12 months ago. We'll be keeping a close eye on the company to see if this turns into a longer-term trend.
Key Takeaways from The ONE Group's Q1 Results We were impressed by The ONE Group's optimistic full-year revenue guidance, which blew past analysts' expectations. We were also excited its gross margin outperformed. On the other hand, its EPS and revenue missed Wall Street's estimates. Overall, the results could have been better. The stock is flat after reporting and currently trades at $4.8 per share.