Domestic STK restaurant sales rose 154.6 percent year-over-year to an unprecedented $195.1 million in 2021.
A busy holiday season, improving staffing levels, and timely promotions all led to record numbers for The ONE Group Hospitality, the parent company of STK Steakhouse and Kona Grill.
Consolidated comp sales increased 49.8 percent compared to 2019 in the fourth quarter. STK’s same-store sales rose 60 percent while Kona's comps lifted 38.2 percent.
Total revenues grew about 86.4 percent to $83.9 million in Q4, compared to the year-ago period. For the full year, revenue is expected to be roughly $277 million, a 95.1 percent increase from 2020. Domestic STK restaurant sales rose 154.6 percent year-over-year to a record-breaking $195.1 million in 2021.
The ONE Group CEO Manny Hilario attributed these eye-popping numbers to several factors, one of them being an uptick in business between Thanksgiving and New Year’s Eve. He said while other restaurants struggle during this time, The ONE Group likes to “own the holidays.”
The CEO was particularly impressed with customers wanting to enjoy restaurants in the face of uncertainty, noting that even with rising cases due to Omicron, “customers still came out.”
“We generated substantial comparable sales increases compared to both 2020 and 2019 as guests chose to celebrate their holidays experiencing our highly differentiated VIBE dining offerings,” Hilario said.
The weekly numbers back up the CEO’s position. STK saw $338,000 in average weekly volume in Q4, which equates to a $17.5 million AUV on an annualized basis. For Kona, average weekly volume was $108,000, or a $5.6 million AUV on an annualized basis.
Hilario said boosting the workforce was one of the company’s main competitive advantages in the fourth quarter. Staffing levels were up to 100 percent for management and at 104 percent for hourly workers. He owed the success of STK’s new premium steak program to workers who were properly trained by a full management team.
Elevated staff levels also allowed the hospitality group to explore additional channels of revenue like to-go and delivery orders. Having the necessary staff on hand made it possible to execute off-premises business “seamlessly," Hilario said. The Midtown Manhattan STK location was able to activate a second cookline dedicated solely to off-premises orders because of staffing, he added.
The CEO said takeout and delivery have become such an important part of business that new builds will incorporate specific lines of access for off-premise orders.
Staffing will remain a priority in the coming year, with Hilario calling it “the year of retention.”
Promotions were another key in Q4, driving “record demands.” Hilario said while other businesses limited hours and pared back menus, STK and Kona did the opposite. Customers were enticed by new offerings such as Dungeness Crab, which appeared on STK menus for the first time last year and received positive reviews.
Pushing premium products provided great margins and mitigated inflationary pressure, the CEO said. He believes customers appreciate that STK and Kona are bucking the trend of reducing menu items, leading to more frequency.
“We have a tremendous amount of power when it comes to pricing,” he said
As the company looks toward the future, Hilario said the pipeline for growth in the coming years is “the most robust pipeline they’ve ever had.”
He said the brand’s reputation for getting results is attractive to developers, which has led to plenty of inventory in the pipeline. With business booming, expectations for new units are high. The hospitality group is targeting ROIs of 50 percent and 40 percent for new STK and Kona Grill units, respectively.
The most recent four STK units are experiencing better sales than the ONE Group could have hoped for, Hilario said, averaging around $10 million per unit. The ROI for those units is at or better than 100 percent.
The brand is also expanding its international presence. A third London STK location is under construction and the hospitality group has its eyes set on Mediterranean markets, as well.
“We’re getting a lot of looks in Italy and Spain,” he said.
The success of the recently opened STK in the Los Cabos International Airport (Mexico) has also led the group to exploring more options in other international airports, with the CEO noting the potential opportunities in these spaces was “very large.”
The ONE Group has 47 total units between STK and Kona Grill. There are 23 STK restaurants spread across domestic and international markets and 24 Kona Grill locations domestically.