STKS - NASDAQ

Greetings, and welcome to The ONE Group Fourth Quarter and Full Year 2024 Earnings Conference Call. At this time, all participants will be in listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to Tyler Loy. Please go ahead.

Thank you, operator, and hello, everyone. Before we begin our formal remarks, let me remind you that part of our discussion today will include forward-looking statements. These forward-looking statements are not guarantees of future performance, and you should not place undue reliance on them. These statements are also subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. Please also note that, these forward-looking statements reflect our opinion only as of the date of this call. We undertake no obligation to revise or publicly release any revisions of these forward-looking statements considering new information or future events. We refer you to our recent SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition. During today's call, we will discuss certain non-GAAP financial measures, which we believe can be useful in evaluating our performance. However, the presentation of these measures or other information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. For reconciliations of these measures, such as adjusted EBITDA, adjusted net income, restaurant operating profit, comparable sales and total food and beverage sales that are owned and managed, license and franchise units to GAAP measures, along with a discussion of why we consider these measures useful, please see our earnings release issued today. With that, I'd just like to turn the call over to Manny Hilario.

Thank you, Tyler, and hello, everyone. Thank you all for joining us today and for your continued interest in The ONE Group. I would like to begin this call by recognizing our amazing team members, their unwavering commitment to our mission, creating great guest experiences by operating the best restaurant in every market we're in, by delivering exceptional and unforgettable guest experiences to every guest every time. This is what gives me confidence that we can realize our vision of becoming the global leader in vibe dining. 2024 marked a transformative year for us, with the strategic acquisition of Benihana and RA Sushi restaurant. This milestone event expanded our portfolio of vibe dining venues and enabled us to achieve scale that would have taken us years to build organically. The acquisition also drove significant operational efficiencies yielding significant run rate synergies during 2024. These savings came from streamlining restaurant operations and support functions, eliminating redundant costs and leveraging our enhanced scale to secure more favorable supplier contracts. Looking ahead, we are targeting a total of $20 million in total cost savings by year end 2026. Our annual financial performance certainly reflected the transformational change at our company. Full year revenue increased over 100% to $672 million and adjusted EBITDA increased almost 130% to $75.2 million. Both metrics obviously represent significant growth from the prior year, but also came in, at the higher end of our 2024 guidance ranges. Now let us share highlights from our recent fourth quarter. First, we increased revenues by almost 150% to a record $222 million. We had our best consolidated comparable sales of the year, including positive transactions at STK and improved sales performance of Benihana due to our initiatives. The momentum seen in the fourth quarter has carried into the first quarter, and we anticipate another quarter of sequential improvement in comparable sales. In addition, we increased our adjusted EBITDA by almost 150% to $30.3 million, led by strong restaurant level margins of 16.4%. Next, we opened three restaurants including two company-owned units and one managed location ended the year with six new restaurants. And finally, we had over $71 million in liquid resources at year end, between cash on hand, short-term credit card receivables and revolver availability, which is currently undrawn. Looking ahead, let us review our priorities. First, driving sales across all brands by executing our strategic pillars. As I referenced earlier, we are determined to create great memories for our guests by operating the best restaurants across all our markets and delivering exceptional and unforgettable experiences to every guest every time. We do this through our focus on three strategic pillars: operations, culinary and marketing. While traffic generation across the industry remains challenging, we were encouraged by the positive transactions at STK during the fourth quarter. Our focus is on maintaining guest frequency and brand engagement during this period. And when the economic conditions improve, we expect these guests to return to traditional dining patterns. Our menu strategy balances accessibility with innovation. We offer complete dinner and beverage packages at $69 for STK, and $39 for all other brands, and maintain strategic entry price points. For instance like $50 premium steaks at STK and $39 bistro options at Benihana. We also refresh our offerings four to five times annually with new seasonal items. The stood strategy of approachable pricing and regular menu innovation helps maintain guest engagement and loyalty, which is particularly important in today's promotion driven environment. On culinary innovation, we launched a successful Wagyu program at Benihana as a premium offering with significant potential for further menu innovation ahead. We also launched a new drink menu, with three new margaritas. Moving on to marketing, we are prioritizing local store outreach within a four block radius of each restaurant, building strong relationships with local businesses, concierge and hotels to drive traffic across our portfolio brands. Evolving our digital engagement and assets is critical across all our brands. We maintain active communication with our guests across digital platforms, consistently sharing fresh, compelling content that showcases our innovation and keeps guests connected to our brands through their mobile devices. At Benihana, we have updated our digital channels to showcase the brand as more than just a special occasion destination, highlighting our quality ingredients in everyday dining appeal. Obviously, Benihana does wsell with celebrations, birthdays and anniversaries, but one of our biggest learnings so far is that promotions and product innovation also bring people into our restaurants. And so, there is tremendous opportunity to build frequency, beyond milestone events and turn people into regular Monday through Thursday customers of the brand. On a related note, this year we plan to launch a new customer loyalty program across all our brands, with a special emphasis on celebrating birthdays and rewarding our guests' milestone moments with personalized offerings. This is another strategy in how we show appreciation to our guests, and represents a key step forward in our retention efforts, because our underlying goal is to convert those who dine with us once or twice annually, into more frequent visitors. Our second key priority is the successful integration of Benihana delivering on our cost initiatives. Our post acquisition integration efforts have delivered strong results this year. We have achieved significant synergies through streamlined operations at both the restaurant and support center levels. These savings came from consolidating contracts and eliminating redundant costs. Key areas of optimization include: workforce efficiency, professional services consolidation, unified insurance coverage, centralized purchasing and streamlined supply chain management. We expect to fully realize these benefits over the next 12 months. Looking ahead, we have identified additional opportunities for operational efficiency, and expect to achieve annual synergies of at least $20 million from the acquisition. Our company's largest scale and strength of supply chain team have helped us, negotiate better prices from our suppliers across all our brands. We take pride in constantly pushing ourselves to maintain the most competitive cost structure in the industry. This focus on cost efficiency combined with our commitment to delivering great customer experience means that, as we gain more traffic, we will be able to increase our profit margins. Notably, we're not overly dependent on any single product across any of our brands, and therefore are able to manage our product mix to keep the cost structure in line and manage through commodities fluctuations. And finally, as part of our integration process, we have applied our core strengths to enhance both Benihana and RA Sushi. By sharing our expertise in operations, marketing and culinary innovation, we are boosting sales and performance at both restaurant brands. This includes improvements in supply chain management, reservation systems, digital marketing strategies and menu development. We have also streamlined our back office operations by implementing unified systems for HR, payroll, financial reporting and employee training across all of our restaurants. Third, we are focused on our next phase of growth, balancing company-owned development and asset-light growth. We ended 2024 with six new restaurants, opening three units in the last 70 days of the year. In October, we opened an STK in Aventura, Florida, our third STK in the State of Florida. In November, we opened our new concept Southwater Social within the Cherry Creek neighborhood of Denver, Colorado and in November, we opened a managed STK in the Embassy Suites, Niagara Falls Hotel on the Canadian side of the falls. Throughout 2025, we plan to open five to seven company-owned restaurants and we'll balance this with asset-light growth of managed and licensed STK and Kona Grill and franchise Benihana. In March, we'll open a company owned Benihana in San Mateo, California at the Bridgepoint Shopping Center, 1 of the premier power centers in the Bay Area. Next, we'll open a company-owned SDK in Los Angeles, California in Westwood Village. This is a relocation of the existing STK in the W Hotel. We also plan to open a company owned STK restaurant in the Westfield Topanga Shopping Center, located in the heart of California's San Fernando Valley. The new Topanga location will extend our presence in the Greater Los Angeles area. Also under construction is Kona Grill on Lake Union in Seattle, Washington. We are still in the early stages of our growth story, with significant expansion potential across our portfolio. Looking ahead, we envision Benihana growing to 400 locations, while STK has a clear path to 200 restaurants and provide us with an exceptional return on investment, making it one of the most profitable expansion models in the restaurant industry, and naturally positions STK as our priority for development. We're also accelerating our franchising strategy for Benihana. We have discovered strong interest from franchisees, looking to diversify their portfolios with an established upscale casual dining brand. In response, we have enhanced our franchising infrastructure and we are currently negotiating numerous development agreements. This franchising initiatives will be instrumental in driving Benihana's expansion. Turning to our growth concepts. We'll be highly-selective on growth opportunities for Kona Grill in RA Sushi depending on the circumstances. The demand for our concepts in non-traditional venues continues to grow. We are seeing significant opportunities in airports with both STK and Benihana Express. Hotels are actively seeking to refresh their food and beverage programs post-COVID, while casinos represent another exciting channel, building on our existing successful locations. We are also exploring retail opportunities for Benihana. Lastly, our fourth key priority is balance sheet flexibility and returning value to our shareholders through share repurchases. We finished the quarter with over $71 million in liquid resources when combining our cash on hand, short-term credit card receivables and the availability under the revolving credit facility, which remains undrawn. Under the current conditions, our total loan is not subject to a financial covenant. During 2024, we've returned approximately $3.2 million to shareholders through share repurchases and we will continue to evaluate optimistic share repurchases under our Board authorized program. We are laser-focused on our balance sheet and are prioritizing cash flow generation, balance sheet flexibility and maximizing shareholder returns. As you can tell, we have been busy building our path to $5 billion in system-wide sales. Our operating cash flow generation, complying with our disciplined pipeline of new locations, proven unit economics and asset-light strategies provide us with multiple avenues for growth. We're excited for the future and will remain focused on executing our strategy and creating long-term shareholder value. I will now turn the call over to Tyler.

Thank you, Manny. Let me start by discussing our fourth quarter financials in greater detail, before providing our outlook for the first quarter and current year. Please note that the fourth quarter of 2024 has three months of contributions from Benihana and RA Sushi, whereas the prior year quarter excludes any contribution from the acquisition of Benihana, which closed on Mat 01, 2024. Total consolidated GAAP revenues were $221.9 million, increasing 147% from $89.9 million for the same quarter last year. Included in total revenues were our company-owned restaurants' net revenue of $217.8 million which increased 155.7% from $85.2 million for the prior year quarter. The increase was due primarily to $130.4 million in contributions from Benihana and RA Sushi and to a lesser extent contributions from the opening of six STKs, two Kona Grill and a Saltwater Social restaurant, since the onset of the fourth quarter of 2023. These were partially offset by a 4.3% reduction in consolidated comparable sales. Management license and franchise revenue decreased 14.5% to $4.1 million from $4.8 million for the prior year quarter. Benihana franchise restaurant contributed $0.5 million in revenues during the fourth quarter of 2024, but was offset by decreased revenues at vantage STK restaurants in North America and the prior termination of an F&B hospitality agreement in Florence, Italy. Company-owned restaurant cost of sales as a percentage of company-owned restaurant net revenue decreased 250 basis points to 20.4% compared to 22.8% in the prior year quarter. This was primarily due to the addition and strong performance of Benihana and RA Sushi, as they contributed positively to cost of sales as a percentage of company-owned restaurant net revenue. Company-owned restaurant operating expenses as a percentage of company-owned restaurant net revenue increased three forty basis points to 61.2% from 57.8% in the prior year quarter. This was due to cost inflation and fixed operating costs, partially offset by operational cost reduction initiative and pricing and income growth. Notably, the addition of Benihana and RA Sushi contributed positively to operating expenses as a percentage of company-owned restaurant net revenue. Restaurant operating profit decreased 90 basis points to 18.4% compared to 19.3% in the prior year quarter. This included restaurant operating profit of 22.6% for Benihana brand locations, which improved approximately 300 basis points versus the prior year. On a total reported basis, general and administrative costs increased $5.3 million or 66.5% to $13.2 million from $7.9 million in the prior year quarter, driven by the addition of the Benihana acquisition. When adjusting for stock-based compensation, adjusted general and administrative expenses were $11.6 million and $6.7 million in the fourth quarter of 2024 and 2023, respectively. As a percentage of revenues, adjusted general and administrative costs improved 230 basis points to 5.2% compared to 7.5%. The improvement is due to the sales leverage realized with the Benihana acquisition and the implementation of cost saving and transactions introduced. Depreciation and amortization expense was $11.4 million, compared to $4.8 million in the prior year quarter. The increase was primarily related to depreciation and amortization for the Benihana and RA Sushi restaurants, depreciation associated with the opening of eight new company-owned venues since October 2023 and capital expenditures to maintain and enhance the guest experience in our restaurants. Pre-opening expenses were $2 million compared to $2.9 million in the prior year. Non-recurring costs of $3.7 million consisted of transition and integration costs of $3.6 million and transaction and exit costs of $0.1 million both related to the acquisition. Interest expense was $10.5 million compared to $1.9 million in the prior year quarter due to our higher level of outstanding debt post acquisition. Provision for income taxes was $0.3 million, compared to a benefit of $1.5 million in the prior year quarter. Net loss available to common stockholders was $5.4 million or $0.18 net loss per share, compared to a net income available to common stockholders of $4.6 million in the fourth quarter of 2023 or $0.15 net income per share. Adjusted net loss available to common stockholders was $0.9 million or $0.03 adjusted net loss per share, compared to adjusted net income available to common stockholders of $5.3 million or $0.17 adjusted net income per share in the prior year quarter. Adjusted EBITDA attributable to The ONE Group Hospitality, Inc. was $30.3 million compared to $12.2 million in the prior year quarter. Please note, in the third quarter of 2024, we updated our definition of adjusted EBITDA to no longer adjust for pre-opening expenses. Under the previous definition, adjusted EBITDA would have been $32.1 million versus $14.5 million in the fourth quarter of the prior year. We have included a reconciliation of adjusted EBITDA, adjusted net income and historical adjusted EBITDA in the tables in our fourth quarter 2024 earnings release. Turning to liquidity. We finished the year with $38.1 million in cash and short-term credit card receivables and $33.6 million under our revolving credit facility, which remains undrawn. Under the current conditions, our term loans did not have a financial covenant. Now, I would like to provide some forward-looking commentary regarding our business. This commentary is subject to risks and uncertainties associated with forward-looking statements as discussed in our SEC filings. We, as always, remind our investors the actual number and timing of new restaurant openings for any given period is subject to a number of factors outside the company's control, including macroeconomic conditions, weather and factors under control of landlords, contractors, licensees and regulatory and licensing authority. Based on the information available now and the expectations that we have today, we are issuing the following financial targets for the first quarter of 2025. Beginning with top-line, we project total GAAP revenues of between $205 million and $210 million, which reflects our anticipation of consolidated comparable sales of minus 4% to minus 3%, a sequential improvement from the fourth quarter of last year. Managed franchise and licensee revenues are expected to be between $3.5 million and $4 million. Total company-owned operating expenses as a percentage of company-owned restaurant net revenue of approximately 83%; total G&A excluding stock based compensation of approximately $11 million; adjusted EBITDA of between $24 million and $26 million; restaurant preopening expenses of between $1.5 million and $2 million. And finally, we plan to add one to two new venues. Based on the information available now and the expectations as of today, we are issuing the following financial targets for 2025. We project total GAAP revenues of between $835 million and $870 million which reflects our anticipation of consolidated comparable sales of minus 3% to plus 1%; Managed franchise and licensee revenues are expected to be between $15 million and $16 million; Total company-owned operating expenses as a percentage of company owned restaurant net revenue of 83.5% to 82.2%; Total G&A excluding stock based compensation of approximately $47 million; Adjusted EBITDA of between $95 million and $115 million; Restaurant preopening expenses of between $7 million and $8 million; An effective income tax rate of approximately 7.5%; Total capital expenditures net of allowances received from landlords between $45 million and $15 million. And finally, we plan to add five to seven new venues. Lastly, beginning this year, we will report financial information on a fiscal quarter basis using four 13 week quarters with the addition of a 53rd week when necessary. For 2025, our fiscal calendar begins on January 1st, 2025 and ends on December 28, 2025 and our first quarter will contain 89 days. I will now turn the call back to Manny.

Thank you, Tyler and thank you all for your time today and interest in The ONE Group. We remain confident in our portfolio of iconic high volume brands and long-term vision to be the undisputed global leader in vibe dining. We are in the early stages of an exciting phase in our company's journey and we appreciate your continued support. Tyler and I are happy to answer any questions that you may have. Operator?

Thank you. [Operator Instructions] And your first question today will come from Jim Salera with Stephens Inc. Please go ahead.

Hi, guys. Good afternoon. Thanks for taking our questions. Manny, I wanted to drill down a little bit on maybe the shape of the year. Obviously, some consumer uncertainty right now, but how can we think about the same-store sales progression? Is it fair to say that, you expect it's going to get gradually better each quarter as the year progresses or just any call outs that's worth that? And then the other piece is, what do you expect from kind of the traffic versus mix component, as the year progresses, as we've heard industry traffic is expected to be kind of flat to down for the year?

Yes, Jim. Thanks. As you can see from our guidance for the quarter, we're looking at a minus four to minus three income in same-store sales for the first quarter. And then for the full year, we're looking at a minus three to plus one. Obviously, the progression has been sequentially better this quarter than it was on the fourth quarter last year. We've seen continued improvement in the fourth quarter, was already an improvement over prior quarters. We're sequencing into much better periods. And then, going out into the year, we think that we'll continue the improvement in the second, third and obviously the fourth quarter is always a great quarter for us in terms of being able to go on sale. Obviously, the environment is what the environment is, the challenges are still out there. But I think, in total, we are making progress for all our brands. In terms of traffic, as we mentioned earlier, in the prepared comments, STK traffic was positive in the fourth quarter, and we feel really good about the traffic for that brand for 2025. So we feel really good about the strategies and initiatives that we've put in place there. And then for Benihana, obviously we're now into our third quarter into working with the brands, and we have made significant amount of initiatives and improvements and changes to both marketing, menu and operations, which we think will continue to yield transactions going forward. So we also feel good about the transaction outlook for the Benihana brand. In terms of the growth, that continues to be a challenged sector in general, but I think as you saw from the numbers, we continue to make improvements there, and we do have a very solid leadership team in place and grow right now. So I feel pretty comfortable about our ability to get to better traffic in 2025.

Great. And then maybe another question just on the kind of sequencing of the new unit openings. Is there anything we should factor in, in terms of equipment availability? I don't know if any of the tariffs impact just your ability to get equipment set up for new restaurant openings and if that should be kind of even throughout the year, if we should expect maybe more in the back half versus the front half?

Yes. I mean, so right now from a sequencing of restaurants, we have three units that are pretty much in final stages. We have our Benihana in San Mateo, which is already in heavy pre-opening operations right now. So that one is very close to getting opened. And then, we also have two STKs that will follow shortly thereafter. We have one in Tampanga, California, which is coming up very soon. We also have West with two in the very near future. So all those three restaurants are currently already in pre-opening operations. So those, we very close to being open here. And then, we also have a franchise, Benihana Express that will be opening here very shortly. And then, expect the balance of the openings to be late third quarter, early fourth quarter with probably the most likely one is the Kona Grill in Seattle. So a bunch of them opening up now, one kind of middle of the year, and then the balance late third quarter, early fourth quarter. In terms of equipment availability and stuff, of course, for those that are opening now, all the equipment is already in place. I think the Kona Grill equipment is pretty much sorted out. And then, for the late end of the year openings, I think we also have a big part of that equipment also sorted out. So I wouldn't say, we'd see any immediate impact in 2025 with anything to do with equipment.

And your next question today will come from Mark Smith with Lake Street Capital. Please go ahead.

Hi, guys. Similar question, just wanted to ask as we look at the tariff front, any impact on commodities, anything that you guys are seeing shifting out there on the commodity front?

I mean, other than the more obvious ones that everybody speaks about today like eggs and some of the stuff we see out there, we don't see any significant shifts. Obviously beef is a big one for us and also frozen seafood as we go through a lot of shrimp and prawns et cetera. So I think those two commodities at least from our perspective are pretty well soft for the remainder of the year. So we don't see any impact, particularly now on the second and third quarter, we don't see anything that would be significant or even the first quarter. But yes, the environment is a little bit more complex in terms of navigating it with all the conversations about tariffs and the potential shifting and supply sources, et cetera. It's a little bit more complex, but I think as I mentioned on my prepared statements, one of our core strengths now is a really strong supply chain team as well as a very strong supply chain process. So I feel pretty good that through the acquisition and integration process of Benihana, we've really gotten our systems and our practices in place for supply chain. Obviously, there'll be some things happening in the environment, but I think that we set ourselves up to be able to navigate through that environment really well with our systems.

Okay. And then you already walked through kind of opening cadence and outlook there. I'm curious as we think about primarily RA maybe with Kona, are there any restaurants coming to end of lease terms or anything that maybe we should look for on the closure front?

I mean, as I said in the earlier calls, obviously portfolio management is really important for the growth side at this point. For RA, we don't have any plants. As a matter of fact, we don't have any plant closures at this point, but obviously we'll continue to evaluate that, but no RA locations on our plant right now to close down.

Okay. And I think the last one from me, just trying to dig in a little bit more into kind of consumer behavior, as we think about kind of traffic ticket mix. Maybe talk about your ability to take price, where necessary and what's maybe built into the guidance here. And then, I'm also curious just in in changes in behavior maybe over the last few months. Are you seeing anything significant like cut back on alcohol or drinks, desserts, anything to call out on consumer behavior would be great.

Yes. I mean, I think there were two questions in there. One of them was the pricing and how we're looking at pricing. Obviously, we do want to be cautious on pricing, just because the consumer is paying close attention to tickets right now, or what the prices are on the tickets. So we have to be thoughtful and cautious about it. We do still have some opportunities. We've been very disciplined with STK. We've been very thoughtful about not going too far ahead in that brand. So, we do have some firepower in pricing there, if we wanted to. But for all intents and purposes, we'll only go to pricing if we get into a commodity or a situation here, where we have to deal with inflation. So we'll be very careful with that. In terms of the consumer behaviors, I think I've reported earlier. I think that the bigger behavior that we've seen from consumers is them opting for alternative dayparts such as happy hour, and we also see particularly on the steakhouse side, we see more people sharing maybe some of the sides, but we haven't really seen anything other than those two megatrends, if you will, within the portfolio.

And your next question today will come from Nick Setyan with Wedbush Securities. Please go ahead.

Thank you. Can we just talk about some of the new openings and how they're doing, if you're happy with sort of the sales trends, particularly the Kona and RA Sushi that opened this year?

Yes. I mean, I think the two openings, one was in Plantation was the RA opening. I think that one is tracking in the $3.5 million, $4 million revenue range, which is for Arise is pretty much on brine. And then our second opening in that category was Tigard, which is in Oregon, fantastic shopping mall right by a fantastic Apple store. I think that's up and coming restaurant. It did really well during season, during the holiday season, which is, you'd expect out of that shopping center. Obviously, the first quarter is a little slower, because of the rains up in Oregon and the fact that we have a beautiful rooftop in that property. So I'm actually been pretty pleased with the progress of both Tigard and Plantation. So I would say that's a good check. I mean, the other openings that we've done are the STKs which continue to be above our model and continue to do extremely well. And then we also opened South Water Social. My view on that restaurant that opening was to be around $85,000 to $100,000 a week. We're in the mid-100s, about $130,000 to $140,000 so that restaurant is actually frankly doing extremely, extremely well for a one-off concept. So I would say that, I look at the 2024 class as a good class of openings and the 25 classes also super exciting class of units. The quality of the real estate is super high and all the properties. So we are looking forward to another strong year in real estate in 2025.

And just please update us on the construction costs and where they are across the concept, the ones that you're developing, like how much it costs to build the new units?

Yes. I mean, I think that, the gross costs on concepts right now is in the high 600s to close 700 per square foot on the space, and then we're getting about $150 in TI, call it, in the mid 500s after TI. I mean, that's just kind of what the environment has been. If I look at the throughout the last two years, obviously with labor having been an issue at some point, construction did go up and then equipment and some other stuff. Obviously, the big pressure point not to really watch out is for steel prices. Some of our properties we use steel in it, so we obviously are managing through it. But again, I think as we've gotten bigger, quality of our development team is really big, is really high. So I have a very high-quality team that spends a significant amount of time on cost engineering, just to make sure that we're getting the right specs and we're doing a good job of only spending, what we need to spend on these projects. So I think that again, our team and our process is very strong in that area right now.

Okay. And then just final question for me. Just given the down only 20 bps for Benihana in Q4, your comments around continued sequential progression, is it fair to assume that Benihana has turned positive in Q1, or we should think about it as positive within the overall guidance, the comp guidance?

I mean, I think in general we didn't provide brand guidance for the quarter, but I would say that looking at the progression, the progression holds well, right. So obviously our overall quarter-over-quarter based on our guidance, I think the midpoint of our guidance is about minus 3.5%, which is an improvement from the fourth quarter. And Benihana was relatively flat in the fourth quarter. I think you mentioned them minus 20 bps, I think that's correct. But I feel good about it. I think the thing I feel really good about Benihana has been the initiatives that we put in place and added emphasis on happy hour, which helps the Monday, Tuesday, Wednesday business. And I think the next big initiative has been our emphasis on throughput on Fridays and Saturdays, because the restaurants do get jammed up on those days of the week. So we've been working with operations and just really making sure that, we put a lot of our knowhow and how we do reservations and utilizing our central logistics process to really enhance throughput at the restaurants and table turn times. So we're emphasizing that on the weekends. And then, the other thing that we're super excited about is we've been adding products innovating with Wagyu for instance and that's done very well in the windows that we put in. For instance, we featured a great white goose steak offering, Surf & Turf for Valentine's and that was really well accepted by the consumer side. I would say that, I'm super pleased with the progress that we've done on sales with Benihana. And then, the other thing that we did in the quarter for Benihana, and this is in our press releases, we've improved the margins of Benihana by 300 basis points quarter-to-quarter on the fourth quarter, although we didn't own them last year, we did own them this year. So I think that really shows not only our ability to get to better sales with Benihana, but we've made significant improvements in the store-level economics of the brand. So I would say that we had a very successful fourth quarter with Benihana brand and I look forward to it. Also want to emphasize that's over 55% of our business now. So it's really good to have a significant of a part of our business operating at a really high level.

This concludes our question-and-answer session. I would like to turn the conference back over to Manny Hilario for any closing remarks.

Thank you, operator. And as I always say, thank you, ONE Group teammates, for living our mission every day. Only through your significant contributions can we be successful and do what we do. So I appreciate everyone's commitment and living that mission every day. And then also for all of you on the conference call, thank you very much for your interest in our company and I always look forward to seeing you all in our restaurants. Everybody have a great day. Thank you.