ONE Group Hospitality, Inc. Q2 FY2024 Earnings Call

Greetings, and welcome to the ONE Group Second Quarter 2021 Earnings Conference Call. At this time, all participants are in listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference call over to Tyler Loy, Chief Financial Officer. 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 in light of 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 conditions. 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 have totally been managed to 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 would like to turn the call over to Emanuel Hilario.

Thank you, Tyler, and hello, everyone. We sincerely appreciate you joining us today and for your interest in the ONE Group. Let me start by thanking our dedicated team members and extending a warm welcome to the approximately 6,500 new teammates who joined the ONE Group in May, following our acquisition of the Benihana and RA Sushi brands. The acquisition marks the beginning of an exciting new chapter for the ONE Group as we now operate four distinct brands: FTK, Benihana, Kona Grill, and RA Sushi. Together, these brands, along with our hospitality venues, comprise 167 highly differentiated experiential restaurants offering craveable, high-quality food across 32 states and 12 countries. The second quarter was a busy one for us as we accomplished a great deal in setting ourselves up for long-term success. This included making significant headway integrating Benihana and RA Sushi into the company. And we have already started realizing synergies in G&A, purchasing, and operations. For example, we have already completed approximately $9 million in G&A synergies. And over the next three years, we expect to achieve a total of $20 million annually in synergies covering G&A, purchasing, and operations as we leverage our larger scale, combine our expertise, and enhance our capabilities to develop a best-in-class business across our now expanded portfolio. Now let us discuss some highlights from the second quarter 2024 and provide an update on our key strategic initiatives. First, with the addition of Benihana and RA Sushi, we increased revenue 107% to $172.5 million. Had we owned Benihana and RA Sushi for the entire quarter, we would have delivered approximately $213 million in revenue, an increase of $129 million or 155%. Second, despite a challenging consumer environment, we improved restaurant level margins for Kona Grill, grew restaurant-level profit for STK, and kept restaurant margins relatively flat for STK driven by the cost-saving initiatives we implemented during the second half of last year, coupled with the strength of the six new restaurants opened since July of last year. Next, together, Benihana and RA Sushi added $88.7 million in additional company-owned revenue and $17.7 million in additional restaurant level profit or approximately 20% restaurant level margin to our second quarter income statement. All of this is just two months of contributions. This, along with the STK and Kona Grill performance I just described, drove consolidated restaurant operating margin to a robust 17.7% for the quarter. Next, as previously discussed, we have already realized approximately $9 million in G&A synergies, and we continue to effectively manage support costs. SG&A as a percentage of revenue, adjusted for stock-based compensation, improved 290 basis points to 5.3% compared to 8.2% of revenue last year. All of this resulted in $23.9 million in adjusted EBITDA, which keeps us on track to achieve adjusted EBITDA of between $95 million and $100 million for the full year. Looking ahead, we remain laser-focused on continuing to drive top line growth while further enhancing operational efficiencies. Key strategic priorities for 2024 include: first, a focus on driving sales through execution and restaurant basics. Although we are facing a challenging consumer environment, we are committed to creating great guest memories by providing exceptional unforgettable experiences to every guest every time. This commitment is core to our operating model, distinguishes us from our competitors, and is why our customer satisfaction metrics are at record levels. Given the current operating environment, we have been focused on promoting everyday value across our brand portfolio. Our $3, $6, $9 Happy Hour program, which will soon be available at Benihana and RA Sushi, offers menu quality items at attractive entry price points, and we are seeing accelerated growth in this daypart. In addition to Happy Hour, our Night Op menu also provides exceptional value at $69 per person at STK and $39 per person at Kona Grill. Both offers include drinks, appetizer, entree, side, and dessert. These are a couple of examples of our commitment to delivering value in the ONE Group way - no discounting, no sacrifice of quality of service, and value offerings across all dayparts and occasions such as Power Lunch, weekend brunch, late nights, and special pre-theater and restaurant week menus. We will continue to drive value to our experience and create guest memories regardless of whether our customers are focused on our value-driven offerings or opt-in to our full-price dining experiences. Our second key priority is to improve restaurant level margins. I'm pleased to report we have done just that during the second quarter, despite challenging same-store sales at STK and Kona Grill. Combined restaurant operating profit and restaurant level margins improved year-over-year. This was driven by the cost-saving initiatives put in place during the second half of last year, coupled with the strength of our new restaurants. With the addition of Benihana and RA Sushi, our year-over-year margins improved to 17.7% for the quarter. Next, we are focused on executing our self-funded growth plan. We have a strong pipeline for unit growth in 2024 and beyond. This year, we plan to open eight to 11 new venues consisting of three to four STKs, two to three Kona Grills, one to two Benihanas, one Salt Water Social, and one RA Sushi. In March, we opened an STK in Washington, D.C., and in July, we celebrated the opening of RA Sushi's newest location in Plantation, Florida, marking the second RA Sushi in the Fort Lauderdale market. In the coming weeks, we plan to open an STK at Aventura Mall. In addition to the STK Aventura, there are currently four company-owned restaurants under construction in the following cities: our Salt Water Social, which is a high-end seafood and fine dining restaurant that will be located in Denver, Colorado, and the Cherry Creek neighborhood; a Kona Grill restaurant in Tigard, Oregon, at Bridgeport Village; an STK at the Westfield Topanga mall in Topanga, California; and a Benihana in San Mateo, California. Over the long term, we plan to grow three to five new units per year for STK, three to five units per year for Benihana, and three to five units for Kona Grill and RA Sushi per year. We view this as a proven and scalable platform with compelling white space with an addressable market of over 800 venues, which includes 400 restaurants for Benihana in the U.S., 200 STK restaurants globally, and over 200 Kona Grill and RA Sushi restaurants in the U.S. We are clearly in the early innings of a robust growth strategy. Next, our fourth key priority is the successful integration of Benihana. I have spoken about it previously, and while we are in the early stages of integration, I'm pleased with the progress we have made in onboarding Benihana and RA Sushi to our platform of vibe dining restaurants. It has been exciting to bring on board the 90 company-owned restaurants and the 6,500 new teammates to our family. The teams are dedicated, passionate, and focused on creating great guest memories, which makes them a perfect fit for the ONE Group. This acquisition not only aligns with our vision of being the undisputed global leader in vibe dining, but it also generates tremendous synergies. Our ability to manage commodity costs at scale, drive many mixed engineering through our culinary innovation, leverage our digital database footprint, and utilize our robust reservation management capabilities creates a tremendous opportunity to drive value for our shareholders through this combination of top entertainment brands. Lastly, our fifth key priority is to continue to return value to our shareholders through share repurchases. This quarter, we returned roughly $1 million to the shareholders through share repurchases, and this is on top of the $15 million repurchase program we completed last year. We will continue to evaluate opportunistic share repurchases under our already board-authorized program. A new chapter has begun at the ONE Group, and we are now on our path to $5 billion in system-wide sales. We are excited for the future, and we will remain focused on executing our strategy and creating shareholder value. I will now return the call over to Tyler Loy.

Thank you, Manny. Let me start by discussing our second quarter financials in greater detail. Please note the prior year quarter excludes any contribution from the recent acquisition of Benihana, which closed in May 2024. The second quarter of 2024 has two months of contributions from Benihana and RA Sushi. Total consolidated GAAP revenues were $172.5 million, increasing 106.8% from $83.4 million for the same quarter last year. Included in our total revenues are owned restaurant net revenue of $169 million, which increased 111.5% from $79.9 million for the same quarter last year. The increase is due primarily to $89.1 million in contributions from Benihana and RA Sushi, which we acquired on May 1, 2024. The increase was also attributable to the opening of fixed STK and Kona Grill restaurants since July 2023, partially offset by a 7% reduction in comparable sales. Comparable sales decreased 1% at Benihana, 10.6% at STK, 14% at Kona Grill, and 10.3% at RA Sushi. Management, license, and incentive fee revenues were flat at $3.5 million in both the second quarter of 2024 and 2023. Owned restaurant cost of sales as a percentage of owned restaurant net revenue improved 280 basis points to 21.2% in the second quarter of 2024 compared to 24% in the prior year. This was primarily due to the operational cost reduction initiatives, product mix management, and pricing that was partially offset by cost inflation at STK and Kona Grill. This also includes the addition of Benihana and RA Sushi, which contributed positively to cost of sales as a percentage of revenue. Owned restaurant operating expenses as a percentage of owned restaurant net revenue increased 10 basis points to 61.1% in the second quarter of 2024 from 61% in the second quarter of 2023 due to cost inflation and fixed operating costs, partially offset by operational cost reduction initiatives and pricing at STK and Kona Grill. This also includes the addition of Benihana and RA Sushi, which contributed positively to operating expenses as a percentage of revenue. Restaurant operating profit increased 280 basis points to 17.7% for the second quarter of 2024 compared to 14.9% in the second quarter of 2023. Combined restaurant operating profit grew to 15.2% from 14.9% in the previous year for STK and Kona Grill. The remaining increase was driven by nearly 20% restaurant operating profit for Benihana and RA Sushi. On a total reported basis, general and administrative costs increased $2.6 million or 32.1% to $10.6 million in the second quarter of 2024 from $8 million in the second quarter of 2023. Since May, we have realized approximately $170,000 per week in G&A synergies or approximately $9 million annually. As a reminder, that leaves approximately $11 million to be realized over the next two years to achieve our $20 million target across G&A, purchasing, and operations. When adjusting for stock-based compensation, adjusted general and administrative expenses were $9.1 million and $6.8 million in the second quarter of 2024 and 2023, respectively. As a percentage of revenues, adjusted general and administrative costs improved 290 basis points to 5.3% compared to 8.2%. The improvement is due to the sales leverage realized through the Benihana acquisition. Preopening expenses were $2.5 million compared to $1.6 million in the prior year. The increase was related to payroll, training, and noncash preopening rent for the raw Plantation along with the restaurants currently under development. We incurred nonrecurring costs totaling $10.6 million in the second quarter of 2024, consisting of transaction and exit costs of $6.8 million and transition and integration costs of $3.8 million, both related to the acquisition of Benihana. Interest expense was $7.9 million in the second quarter of 2024 compared to $1.6 million in the second quarter of 2023. In addition, we incurred a $4.1 million loss on debt extinguishment due to the refinancing of our credit facility related to the acquisition of Benihana. Benefit in the provision for income taxes was $3.3 million in the second quarter of 2024 compared to a benefit of $13,000 in the second quarter of 2023. Net loss available to common stockholders was $11.5 million or $0.36 net loss per share compared to a net income available to common stockholders of $0.6 million in the second quarter of 2023, or $0.02 net income per share. Adjusted net income available to common stockholders was $2.8 million or $0.08 adjusted net income per share compared to an adjusted net income available to common stockholders of $1.8 million in the second quarter of 2023 or $0.06 adjusted net income per share. Adjusted EBITDA for the second quarter attributable to the ONE Group Hospitality, Inc. was $23.9 million compared to $8.5 million in the second quarter of 2023. We have included a reconciliation of adjusted EBITDA and adjusted net income in the tables in our second quarter 2024 earnings release. During the first quarter, our Board of Directors authorized an additional $5 million share repurchase program. During the second quarter of 2024, the company spent $0.9 million for the repurchase of 0.2 million shares. 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 that 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 the control of landlords, contractors, licensees, and regulatory and licensing authorities. Based on the information available now and the expectations as of today, we are reaffirming our 2024 guidance. The guidance includes projections for Benihana from May 1, the date of the acquisition until the end of the year. Beginning with revenues, we project total GAAP revenues of between $700 million and $740 million. Managed franchise and license fee revenues are expected to be between $17 million and $19 million. Total owned operating expenses as a percentage of owned restaurant net revenue of approximately 83%, total G&A, excluding stock-based compensation of approximately $40 million, adjusted EBITDA of between $95 million and $100 million; restaurant preopening expenses of between $7 million and $9 million, an effective income tax rate between 5% and 10%. Total capital expenditures, net of allowances received from landlords of between $50 million and $60 million. And finally, we plan to add eight to 11 new venues in 2024. 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. Our long-term growth strategy is just beginning to unfold as we expand our portfolio of high-volume brands, aiming to deliver attractive returns for our shareholders. The recent addition of Benihana and RA Sushi has significantly diversified and reinforced our already impressive array of experiential dining concepts. These new additions complement our existing STK and Kona Grill brands perfectly, further solidifying our position as an industry leader. We are entering an exciting phase in our company's journey, and we appreciate your continued support. Tyler and I would be happy to answer any questions that you may have. Operator?

Thank you. We will now begin the question-and-answer session. The first question comes from Jim Salera with Stephens Inc. Please go ahead.

Hi guys. Good afternoon. Thanks for taking our question. I wanted to dig in on maintaining the revenue guidance. Manny if it's possible, could you maybe just detail for us the expectations for the legacy STK portfolio versus the new Benihana as we work into the back half of the year and maybe the puts and takes from what you're seeing on consumer demand for each concept.

I think we've posted that in our press release. I think Benihana in general, is doing very well on same-store sales for the quarter. We were down one for Benihana, and I think there's a lot of levers that we've identified with the brand that we are working on, for instance, reservation systems in terms of bringing the Benihana concept into our call center structure and reservation models. We also are rolling out Wagyu, a premium offering at Benihana, which they haven't had before. So I think the outlook for Benihana is very strong for the back end of the year, and in the new business model, Benihana is over 55% of our same-store sales. So I see a lot of velocity and momentum on that. Keeping in mind that a big portion of the Benihana business model is around celebrations of birthdays and date nights. So I think that business, particularly on Fridays, Saturdays, and Sundays has been very good. STK is a little different, more urban in terms of our footprint there. We've seen a very interesting phenomenon. For the quarter, we were down around 10 points on same-store sales. 7.5% of that was in trade-down on PMIC. So what we're seeing mostly on STK is a pretty interesting just trade-down of products in store. And I think that emphasis on happy hour actually over the next couple of quarters will be very positive because that means that we've maintained pretty good traffic at STK in the current environment. In terms of Kona Grill and RA, they are less meaningful numbers in our overall portfolio, but I think that the fact that they are in the sushi business and sushi's a bit of a less consumed product in slower economies, people tend to shed off the lesser of the cuisines. I think it’s a more challenged proposition right now, and also, particularly for Kona Grill, we have a high exposure to the industry, meaning a lot of people working in restaurants use the brand. So the overall restaurant industry being challenged is not a good overall outcome. But overall, I would say the fact that Benihana is positive or had a relatively good two months since we've taken over, and we have a lot of initiatives that we're putting in place. I feel pretty good about it now. It doesn't mean that the environment isn't super challenging out there. So hopefully, that provides a little bit of color. In terms of the new stores, I think that the new STKs are still performing in the $9 million to $10 million AUV in the second quarter, which is pretty good. I mean, right now, having new restaurants that can have that kind of AUV really helps your revenue mix.

That's great. And I appreciate all the detail there. Maybe one follow-up on Benihana in particular. I know it's still relatively early days. But as you look across the Benihana portfolio, do you have any sense if there's additional CapEx needed across the restaurant base? I mean I know some of them are well-established restaurants that either have maybe been underinvested in? Or do you feel that there's a pretty stable base level across the Benihana portfolio that you don't need incremental CapEx from where they are now?

I would say that's a great question. So first of all, it is Benihana's 60th birthday. So the brand is turning 60 this year. That's one of the big marketing items that we're super proud to celebrate. In terms of one of the things that was very interesting to me when we brought on Benihana is how well the facilities program was. If you go through the restaurants, some of them are aged, but they're clean and very functional. Our predecessor company, or the predecessor leadership, had a very good facilities program in place. But of course, what we will start doing going forward is we are opening new Benihanas, and part of the vision is to elevate the look and feel of the new restaurants just as we did with Kona Grill. I think what will happen over time is that we will adapt some of the new design elements. But right now, we don't have any particular immediate lag, that we need to go back and refresh the whole system. It's not that kind of, if you will, strategy. But we will keep the facilities program working well, and we'll keep refreshing the restaurants so that customers will want to spend with us. So I feel pretty good about the facilities program. The only thing I would say that we have to do in the third quarter, it's been a very warm summer. So we've had to make sure that our air conditioning units are working really well in the units. So we did put a lot of extra emphasis on just making sure that temperature management was critical.

That's great. I appreciate all the detail. Manny I'll hop back in the queue.

The next question comes from Mark Smith with Lake Street Capital. Please go ahead.

Hi, guys. A couple of questions from me. First off, I just wanted to dig into the kind of restaurant level margin guidance. Q2 came in above our expectations, really solid, especially Benihana is the 17% guidance may be conservative given what these restaurants did in the two months that you had them during the quarter? Or is there some seasonality or mix shift that maybe could bring margins down in the second half of the year?

That's a very good observation, Mark. For the quarter, our restaurant level margin was around 17.2% consolidated. Our guidance is 17% for the year, right? So I think that's the inverse of the 82% rational level costs. As you know, the fourth quarter is really our margin quarter, and the third quarter, historically, is a little bit more pressure because of the lower volume. So I do think that obviously, we issued the guidance, so it's a number that we feel reasonably good about. I would say 17, in my view, is an achievable number. Obviously, you noticed from the numbers that we've made tremendous progress with the margins at Kona Grill, which we said we would in a down revenue environment. So that's a gift to us. The Benihana margin is very robust in the first two months under our leadership. It did very well, and we see a tremendous amount of upside in terms of supply chain still ahead of us as well as other areas. So I would say that we feel very good about our margin outlook for the rest of the year.

Okay. And then in the release, you guys talk and break down some noncore Kona Grills and noncore RA Sushi units. Can you give us more insight into maybe the number of these units and what we should be looking at or what we should read into the data that you gave us on these units?

It's very interesting. We have four Kona Grills, almost four, let's say, three Kona Grills and three RA Sushi. They are in a very tight geographical area, meaning they’re very close to each other. We knew that when we did this deal. Here's an interesting dynamic: when I used to compete with RA, and they were not part of the portfolio, I was always left to go after their business. Now there's a problem now. They're both in the portfolio. I have three RAs and three Kona Grills that I have to sort of sort out from a real estate perspective, and sometimes they might just be as simple as getting some concessions from the landlords or some of the stuff, but that's just part of what happened with the acquisition. So that's how we define those noncore restaurants, a bit of an overlap for our Kona Grill plus now we have a couple of them that we just need to get better rents and structure.

No, that's helpful. Next, just looking at same-store sales, obviously, a tough quarter on the comp side. Manny, could you give us any more insight into what you're seeing in the restaurants from customer behavior, traffic versus ticket, or people not coming out? Are they cutting their check, managing maybe drinks? Any insight you can give us from the higher end of STK to maybe lower tickets at Kona and what you're seeing in consumer behavior?

Yes. So great question. I think I mentioned this earlier in one of my answers to, I think, Jim's question earlier. So STK, we actually saw it was down 10% in same-store sales. And I said earlier, 7.5% was in mix. So as you can see there, that means checks were relatively mellow compared to the high end of the industry. The brand has really shown very good resilience. Obviously, there are some markets that we are closely working on. For instance, Vegas. There's been a bit of a shift on consumers there because with now people traveling internationally and some of the things, people have a lot more to do. So we're trying to work on the Vegas market in a couple of the markets. But overall, I'd say that STK is up very well on same-store sales and on traffic relative to the industry. I already commented on Benihana being 55% of our same-store sales base is obviously super critical now as we manage that. It was down only one point, so we're pretty optimistic about its potential. Obviously, there’s a tremendous amount of upside on there. And so right now, we’re really working on volume management and capacity management, which, as you know, we’re pretty good at. The bigger problems I mentioned earlier are Kona Grill and RA with some overlap in real estate that we've got to sort that out and figure that out. The other thing that’s interesting about Kona Grill brand is that 15% to 20% of our sales comes from industry people, and that is not a good sector right now because they’re very price-sensitive since a lot of the industry is challenged right now. We have to retool that and work on promotions to really support that brand. Out of all the days of the week, I think Sundays for Kona Grill have been challenged a little bit. Some of the things we're doing differently on RA, we're rolling out a more active happy hour program, which I think will help those restaurants. So it’s really more about navigating the reality that the restaurant space is more challenged right now, and we have to deal with some marketing and more initiatives. One of the things that we’re really pushing is our loyalty program. Historically, we haven’t pushed loyalty as hard as we should. The next couple of quarters, you’re going to see us really putting out more emphasis on activating our loyalty program. We have Konavore at Kona Grill, and we have other more birthday-related clubs at the other brands, but we're going to roll out a more formalized loyalty program for all brands.

Okay. And then the last one for me, just looking at the managed license and franchise business. That came in a little lower than expected. It looks like guidance implies a decent ramp in revenues from that business in the second half. Just maybe walk us through the puts and takes in the quarter and expectations in the second half.

Yes. I mean, another great question. We’re really going to shore up the Benihana franchise business. We picked that up as part of this deal, and I’m a big fan of the franchise business. So we’re going to really support them with marketing and elevate that. I think there’s a nice boost coming through our franchising programs. We also got our license program with stadiums, and I think there are some things we can do better there. We’re actively working with our partner for the product that we have in grocery. We’ll be putting some more emphasis on that. That should help that line a bit. The big difference in the fourth quarter for us on that line is one of our licensed stores is in Scottsdale, which is a very seasonal restaurant. At the end of the third quarter, beginning of the fourth quarter, that restaurant really ramps up. In general, the fourth quarter performance on the management locations yields a lot more profit from those locations. It’s a little bit of all of that: seasonality and us upping some of the business we’ve got as part of the acquisitions. And overall, we’re really focused on the asset-light business and putting resources behind marketing and supporting those businesses.

The next question comes from Michael Symington with Wedbush Securities. Please go ahead.

Hi. Thanks for the question. Wondering, could you perhaps provide the comp breakdown at Kona, via the pricing and mix that you saw there in traffic?

Yes, Michael, it's Tyler. The sales were minus 14%. Checks were minus 19%, and then average chart was up 5%.

Got it. And was there anything notable to call out in terms of monthly cadence that you saw at STK and Kona? Or were trends fairly consistent throughout the quarter?

I think the trends were fairly consistent throughout the quarter. I don't think there's anything notable.

Mike, would you need the breakout for Q2 or just need Kona Grill?

Just speaking to Kona. And I guess just the last one for me right now. Could you provide the commodity and labor inflation you saw in Q2? And has there been any shift in your thinking towards the second half?

Yes. So labor inflation was low single digits, consistent with the industry, and then commodity inflation was kind of in that same range of low to mid-single digits.

Got it.

For the back half of the year, we don't expect anything much differently except I think we've seen a little bit of favorability in beef coming in over the last month or so.

The next question comes from Roger Lipton with Lipton Financial Services. Please go ahead.

Yes, hi Tyler. Hi Manny. Forgive me for a bit of a bookkeeping question here, but I just wanted to make sure my understanding of this warrant registration is correct. While the company does not get any proceeds from the sale of the warrants, you would receive proceeds when those warrants are exercised, and those would then increase the shares outstanding. Is that correct?

Yes, Roger. There are two different types of warrants. There’s a penny warrant and a market warrant. All the penny warrant have a nominal impact, but the market warrant would be paid in cash.

But the penny warrants would you be issuing 1.9 million shares of common stock, would you not? So you have a new 1.9 million shares outstanding.

Yes, that's right.

Is that correct?

Yes, that's right.

Right. So that would obviously increase. You get $10 million on the market warrants you'd get $10 a share. So you get $10 million roughly for the extra side of those one million warrants. Is that correct?

Yes, I think that's right. Remember, we’ve also reduced the share count quite a bit over the last couple of years through the share repurchase.

Right. Understood. Okay. Sorry for taking up the time with this bookkeeping aspect.

Of course.

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

Thank you, everyone, for your interest in the ONE Group and for taking the time today to join us. As I always say, thank you to all our teammates in the restaurants and in our support offices that make our business come to life every day. I truly appreciate everybody's engagements and frankly, fantastic engagements in really getting us through what are some interesting times and challenging times in the space. We appreciate that. We are focused on growth and vibe dining, and I look forward to running into all of you in the restaurants. Everybody, have a great day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.