Benihana deal makes The One Group one to watch in full-service dining

Acquiring the 86-unit teppanyaki chain will make the owner of STK and Kona Grill a $1 billion company. And it's just the beginning of an ambitious long-term growth plan.
Benihana Japanese steakhouse exterior signage
The One Group plans to start opening three to five Benihanas a year. | Photo: Shutterstock

The One Group is about to get a lot bigger.

By adding the iconic teppanyaki chain Benihana to the fold for $365 million, which One expects to do sometime in the next three months, the owner of upscale full-service brands STK and Kona Grill will nearly triple its unit count to 168 locations worldwide and more than double its annual revenue to over $1 billion. 

In doing so, One becomes the scaled, publicly traded full-service restaurant company that it has long aimed to be, but could not have done with its own relatively small base of restaurants, CEO Manny Hilario said during a call with investors Tuesday.

One will now have outlets across the U.S. and in 12 countries and territories around the world, unlocking economies of scale in supply chain, technology and operations that are expected to eventually generate $20 million worth of cost savings a year.

And One does not plan to stop there. The Denver-based company sees room for a total of 800 locations globally and a path to $5 billion in systemwide revenue, which would put it in league with major full-service conglomerates like Bloomin’ Brands, Brinker International and Texas Roadhouse Inc. 

To do that, of course, One will need to open a lot more restaurants. Long term, it is charting an annual unit growth cadence of three to five STKs, three to five Kona Grills and three to five Benihanas, with a focus on building up existing markets and regions. 

That road map represents a significant shift for the 86-unit Benihana, which has actually shrunk by 15 stores since 2019, according to Technomic Ignite data.

One is also forecasting 3% to 5% annual same-store sales growth en route to that $5 billion goal. That will require it to reverse recent sales declines at all of its concepts, which have come back to earth after demand soared in 2021 and 2022.

At Benihana, comp growth slowed in each quarter of 2023, falling to flat in Q3 and negative 2.8% in Q4. Same-store sales across One’s existing concepts, meanwhile, were down 2.7% year over year. 

That comes amid a difficult environment for full-service chains as menu prices rise and lower-income consumers pull back on their spending. But Hilario said Benihana is built for times like these.

“The brand has a history of doing really well in different sales environments,” he said. “Frankly, every single [location] is performing really well.” 

A natural fit

Benihana and its 19-unit sister concept, RA Sushi, should slide easily into One’s so-called vibe dining model, which includes eye-catching restaurant designs, mood lighting and music as well as high-quality cocktails and food.

Both Benihana and RA focus on giving customers a capital-E Experience and tend to be destinations for groups and special occasions. At Benihana, chefs prepare guests’ food in front of them on sizzling flat-top grills, making for a highly interactive meal.

“Outside of what we do at The One Group, I would say that Benihana would be the other restaurant brand that really, truly lives that experiential component of dining,” Hilario said. “So there’s a natural fit to that.”

If One changes anything at Benihana, it will likely be related to the brand’s alcohol mix and music, Hilario said. In 2023, beverages made up 13% of Benihana’s total sales, compared to 27% at STK and 24% at Kona. 

And though Benihana is much older than either of One’s brands, being founded in 1964, Hilario said most of its restaurants are in great shape today.

“There will be a couple that will get a normal refresh just like we typically do,” he said, but “there’s not any significant, one-time program that will be needed to refresh the assets.”

Investors seemed to feel good about the impending marriage. As of Wednesday, One shares, which trade on NASDAQ under the ticker symbol STKS, were up nearly 25%, to just under $5 apiece.

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