The ONE Group Experiences Revenue Growth as Comparable Sales Slip
The ONE Group Hospitality, Inc. announced its financial results for the second quarter ended June 30.
Highlights for the second quarter ended June 30 were as follows:
The second quarter marked the ninth consecutive quarter of double-digit revenue growth; Owned unit net revenues increased 19.6 percent to $15.3 million; Total GAAP revenue increased 15.6 percent to $17.2 million; Total food and beverage sales at owned and managed units increased 4.8 percent to $38.4 million; Management and incentive fee revenues were $1.9 million for the quarter.
Jonathan Segal, CEO of The ONE Group says, “The second quarter of 2016 saw us experiencing the same struggles from a top-line perspective as with similarly positioned fine-dining restaurants. When comparing this quarter to the second quarter of 2015 it’s important to note that the second quarter of 2015 included a one-time insurance recovery income of $350,000 in Miami, a non-cash derivative income charge of $3.4 million, and a reversal of a deferred tax allowance benefit of $6.2 million. Included in the six months ended June 30, 2015 was a one-time insurance recovery income of approximately $550,000.”
“Despite the softening sales environment, we continue to position ourselves as one of the leaders in the high-end restaurant and hospitality segment which provides us with a strong foundation to grow the business worldwide. We believe that we have an exciting pipeline of growth through both company owned restaurants and hospitality and licensing deals.”
Segal continues, “During the second quarter, we opened our first STK of 2016 in Orlando’s Disney Springs. Additionally, following the quarter end, we opened our second STK in Miami through a management agreement with our partner, the ME Hotel Group, and our first licensed STK in the holiday island of Ibiza. We believe that our management and licensed deals are important to our future growth strategy as they require low capital and produce high profit margin EBITDA, a franchise-like income stream.”
Second Quarter 2016 Financial Results
Total owned unit net revenues increased 19.6 percent to $15.3 million in the second quarter of 2016 compared to $12.8 million in the second quarter of 2015. The increase was primarily due to the opening of STKs in Orlando, Chicago, and at the W Hotel in West Beverly Hills. Comparable sales from owned STK units decreased 6.6 percent for the quarter. Comparable sales from owned and managed STK units decreased 5.2 percent for the quarter. The decrease in same store sales was driven by a decline in the private events business.
Management and incentive fee revenues were $1.9 million in the second quarter of 2016, a decrease of 8.4 percent compared to $2.1 million in the second quarter of 2015. The decrease was driven by the decline in revenue from the U.K. operations as well as a decline in the currency exchange rates versus the same period a year ago as well as a slight decrease in incentive fees from the STK in Las Vegas.
Total food and beverage sales at owned and managed units increased 4.8 percent to $38.4 million compared to $36.6 million in the second quarter of 2015.
Net loss attributable to The ONE Group Hospitality, Inc. was $1.6 million compared to a net income of $8.4 million in the second quarter of 2015. Included in 2015 was non-cash derivative income of $3.4 million and a reversal of the deferred tax allowance of $6.2 million.