Holiday season

STK and Kona Grill see record success during the holiday season

National STK restaurant sales increased 154.6% year-over-year to an all-time high of $195.1 million in 2021.

A busy holiday season, improved staffing levels and timely promotions have all led to record numbers for The ONE Group Hospitality, the parent company of STK Steakhouse and Kona Grill.

Consolidated model sales increased 49.8% over 2019 in the fourth quarter. STK’s same-store sales increased 60%, while Kona’s increased 38.2%.

Total revenue increased approximately 86.4% to $83.9 million in the fourth quarter, compared to the same period a year earlier. For the full year, revenue is expected to be approximately $277 million, an increase of 95.1% over 2020. Domestic STK restaurant sales increased 154.6% year-over-year other to reach a record high of $195.1 million in 2021.

ONE Group CEO Manny Hilario attributed the eye-popping numbers to several factors, one of them being an increase in business between Thanksgiving and New Years. He said that while other restaurants struggled during this period, The ONE Group likes to “own the holidays”.

The CEO was particularly impressed with customers wanting to take advantage of restaurants in the face of uncertainty, noting that even with the rise in cases due to Omicron, “customers have still come out.”

“We generated substantial comparable sales increases over 2020 and 2019 as customers chose to celebrate their holidays by experiencing our highly differentiated VIBE dining offerings,” said Hilario.

The weekly figures confirm the CEO’s position. STK recorded an average weekly volume of $338,000 in the fourth quarter, which equates to an AUV of $17.5 million on an annualized basis. For Kona, the average weekly volume was $108,000, or an AUV of $5.6 million on an annualized basis.

READ MORE: STK and Kona Grill brace for ‘off the beaten path’ vacation request

Hilario said the increased workforce was one of the company’s key competitive advantages in the fourth quarter. Staffing levels were up to 100 percent for management and 104 percent for hourly workers. He owes the success of STK’s new premium steak program to workers who were properly trained by a full management team.

The high levels of staff have also allowed the hotel group to explore additional revenue channels like take-out and delivery orders. Having the necessary personnel on hand made it possible to run offsite activities “seamlessly,” Hilario said. The Midtown Manhattan STK site was able to activate a second cooking line dedicated only to offsite orders due to staffing, he added.

The CEO said takeout and delivery has become such an important part of the business that new builds will incorporate specific access lines for offsite orders.

Staffing will remain a priority in the coming year, with Hilario calling it “the year of retention.”

Promotions were another key in the fourth quarter, driving “record inquiries.” Hilario said while other companies were limiting hours and reducing menus, STK and Kona were doing the opposite. Customers have been drawn to new offerings such as Dungeness Crab, which first appeared on STK menus last year to positive reviews.

Pushing high-end products provided big margins and eased inflationary pressure, the CEO said. He thinks customers appreciate that STK and Kona are bucking the trend of fewer menu items resulting in more frequency.

“We have tremendous pricing power,” he said.

As the company looks to the future, Hilario said the growth pipeline in the coming years is “the strongest pipeline they’ve ever had.”

He said the brand’s reputation for delivering results is attractive to developers, which has led to many stocks in the pipeline. With business booming, expectations for new units are high. The hotel group is targeting 50% and 40% returns on investment for the new STK and Kona Grill units, respectively.

The four newer STK units are seeing better sales than ONE Group could have hoped for, Hilario said, averaging about $10 million per unit. The return on investment of these units is greater than or equal to 100%.

The brand is also expanding its presence internationally. A third STK site in London is under construction and the hotel group also has its sights set on the Mediterranean markets.

“We get a lot of looks in Italy and Spain,” he said.

The success of the recently opened STK at Los Cabos International Airport (Mexico) has also led the group to explore more options at other international airports, with the CEO noting that the potential opportunities in these spaces are “very significant”. .

The ONE group has 47 units in total between STK and Kona Grill. There are 23 STK restaurants spread across domestic and international markets and 24 Kona Grill locations nationwide.

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