ONE GROUP HOSPITALITY INC/TH (NASDAQ:STKS) Reports Q3 2025 Earnings Miss and Sharp Stock Decline

The ONE Group Hospitality Inc (NASDAQ:STKS) reported financial results for the third quarter of 2025 that fell significantly short of Wall Street's expectations, triggering a negative reaction from investors. The upscale restaurant company faced considerable headwinds during the quarter, resulting in both revenue and earnings missing analyst forecasts by wide margins.

Third Quarter Performance Versus Estimates

The company's third quarter results revealed substantial challenges in both top-line performance and profitability. Total GAAP revenues decreased 7.1% year-over-year to $180.2 million, well below the $195.1 million analysts had projected. This revenue shortfall was accompanied by a deeper-than-expected loss, with the company reporting a non-GAAP EPS of -$0.66 compared to the estimated -$0.18.

Key performance metrics from the quarter include:

• Total GAAP revenues: $180.2 million (versus $195.1 million estimate)
• Consolidated comparable sales: decreased 5.9%
• GAAP net loss attributable to The ONE Group: $76.7 million
• Adjusted EBITDA: $10.6 million (down from $14.9 million in Q3 2024)

Market Reaction and Stock Performance

Investors responded negatively to the earnings miss and the company's revised outlook. The stock has experienced substantial declines across multiple time frames, reflecting market concerns about the company's near-term prospects:

• Last month performance: -21.5%
• Last two weeks: -24.9%
• Last week: -20.2%

This consistent downward pressure indicates sustained investor skepticism following the earnings release and suggests the market views the quarterly results as fundamentally disappointing rather than a temporary setback.

Strategic Initiatives and Portfolio Optimization

Despite the challenging quarter, management outlined several strategic moves aimed at improving future performance. The company completed a comprehensive review of its Grill portfolio, closing six underperforming locations and planning to convert up to nine additional Grill units to either Benihana or STK formats by the end of 2026. These conversions are expected to take approximately eight to twelve weeks with a payback period of about one year.

President and CEO Emanuel "Manny" Hilario attributed the quarter's challenges to "external factors that temporarily reduced traffic in certain markets among our target demographics" and noted that "rising commodity costs outpaced our pricing adjustments, putting further pressure on profitability." The company also recorded a non-cash loss on impairment of $3.4 million related to the Grill optimization strategy and established a non-cash tax valuation allowance of $64.0 million.

Updated 2025 Guidance and Analyst Expectations

The company provided updated full-year 2025 targets that also came in below analyst expectations. Management now projects:

• Total GAAP revenues: $820 to $825 million
• Consolidated comparable sales: -3% to -2%
• Consolidated Adjusted EBITDA: $95 to $100 million

The revenue guidance midpoint of $822.5 million falls approximately 1.5% below the analyst consensus estimate of $835.0 million for the full year. For the upcoming fourth quarter, analysts had projected revenue of $230.2 million, though the company did not provide specific Q4 guidance.

Liquidity and Development Pipeline

The company maintained $16.3 million in cash and short-term credit card receivables as of September 28, 2025, with $28.1 million available under its revolving credit facility. The development pipeline remains active with five restaurant openings year-to-date and four additional locations currently under construction in various markets.

Management expressed optimism about improving sales trends since the beginning of the fourth quarter and the upcoming holiday season, noting "robust advance bookings already secured." The strategic portfolio optimization, combined with benefits from the Benihana integration, positions the company to "navigate current market challenges while building long-term value for our shareholders from current levels."

For detailed historical earnings data and future estimates, review the complete earnings and estimates information for STKS.

Disclaimer: This article presents financial information for educational purposes only and does not constitute investment advice, recommendation, or endorsement of any security or investment strategy. Readers should conduct their own research and consult with a qualified financial advisor before making investment decisions.