Benihana is finding new ways to bring customers into its restaurants, and its parent company sees an opportunity to take the brand into an entirely different segment of the industry.
The Japanese steakhouse chain delivered 2.7 percent comparable traffic growth during the third quarter, helping The ONE Group Hospitality record its second consecutive quarter of positive consolidated transactions. Benihana’s same-store sales increased 0.7 percent, even as the company’s overall comparable sales declined 0.4 percent.
The results come as The ONE Group works to improve restaurant efficiency, expand its value offerings, and convert underperforming Kona Grill and RA Sushi locations into Benihana and other concepts. An even bigger opportunity could come from Benihana Express, a smaller, counter-service concept that is becoming a priority for the company’s franchise development efforts.
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CEO Manny Hilario sees the brand’s established reputation, strong takeout demand, and relatively inexpensive development model as advantages that could support expansion into new markets and nontraditional real estate.
The company recently opened its second company-operated Benihana Express in Denver, Colorado, following the launch of its Miami prototype; it is the first ground-up prototype for Benihana Express. A third company-owned location is planned for Topanga Mall in Canoga Park, California, and a licensed restaurant featuring the concept’s first drive-thru is expected to open in the Florida Keys before the end of 2026.
Benihana Express operates in approximately 800–1,000 square feet, with estimated construction costs of $400–$500 per square foot. The Miami location is pacing at $1.8 million in annual revenue, according to Hilario, and sales continue to improve.
The concept also benefits from a relatively lean operating model. Food costs are approximately 20 percent of sales, and labor costs are approximately 25 percent, creating favorable unit economics compared with traditional full-service restaurants.
“We are very excited with the progress of the Benihana Express brand. You’re Benihana fix on the go,” Hilario said during the company’s third-quarter earnings call.
Interest from prospective franchisees has prompted The ONE Group to shift development resources toward the concept. The company is temporarily deferring other licensing activities to prioritize Benihana Express.
“Of course, people love getting their Benihana fix on the go, which is the same great food from Benihana and getting it at the counter service,” Hilario said.
The opportunity builds on existing consumer behavior. Takeout and delivery account for approximately 10 percent of The ONE Group’s business year to date, with Benihana’s fried rice and other signature items proving popular outside the dining room.
The company sees room to expand that channel through improved order accuracy, shorter driver wait times, and additional curbside pickup opportunities. Benihana and RA Sushi have also found success with portable fried rice burritos.
Inside Benihana’s traditional restaurants, the company is concentrating on increasing traffic and improving table turnover. One of its most successful initiatives is a weekday lunch offering starting at $15.95, accompanied by a 45-minute service guarantee. The promotion is intended to make Benihana a more accessible option for customers who might otherwise associate the brand primarily with special occasions or lengthy dining experiences. Hilario said the offer has resonated with customers seeking affordable meals without sacrificing convenience.
“The $15.95 lunch program has become very successful, not just because of the price point, but also by the fact that we try to get people in 45 minutes,” he said.
The company is also seeing favorable results from its $3, $6, and $9 happy hour program and weekday date-night promotions. Those offerings help attract guests during traditionally slower periods, complementing premium dining experiences that draw customers on weekends and holidays.
Consumer behavior continues to vary by occasion. Hilario said guests are carefully considering discretionary spending, but they are still willing to purchase premium items when celebrating birthdays, anniversaries, and other milestones.
Benihana’s theatrical dining experience gives it an opportunity to serve those occasions, although the format also creates operational challenges. The company reduced average table turn times to approximately 105 minutes during last year’s fourth quarter, down from approximately 120 minutes. Its current goal is to move closer to 90 minutes during the upcoming holiday season.
Tablets that allow employees to take orders directly at the table are being deployed throughout the system. The technology eliminates trips to stationary point-of-sale terminals and sends beverage orders directly to the bar, helping reduce delays. The ONE Group expects the improvements to be particularly valuable during the busiest holiday dining periods, when additional table turns can create meaningful sales opportunities without adding restaurant capacity.
The company is also expanding Benihana’s footprint through conversions of existing restaurants.
A former Kona Grill in Riverton, Utah, reopened as a Benihana during Q3 and has already recorded substantially higher sales than the previous concept. Hilario said the early revenue performance is encouraging, although additional time is needed to determine the restaurant’s long-term profitability.
Seven additional Kona Grill and RA Sushi restaurants are awaiting conversion. One is expected to reopen before the end of 2026, with the other six anticipated throughout 2027.
Each conversion is expected to cost approximately $1 million–$1.5 million net. The strategy is part of a larger effort to improve returns across the company’s portfolio. The ONE Group currently operates 20 Kona Grill restaurants and 12 RA Sushi locations, including temporarily closed restaurants. Its first conversion in Scottsdale, Arizona, replaced an RA Sushi with an STK and has delivered sales and profitability consistent with expectations.
The company completed another project in Baltimore during Q3, converting a former Kona Grill into an STK and a smaller Kona Grill. The new STK is producing approximately twice the sales of the previous Kona Grill restaurant. Hilario said the results support continued investment in conversions, despite temporary revenue losses when restaurants close for construction.
“I would say that if I check the box on the revenue and how Scottsdale has done in profitability, I think that we’re on track or even slightly better than what we thought these conversions could do,” he said.
Elsewhere in the portfolio, STK and Kona Grill are expanding their brunch offerings to attract more weekend customers. STK recently introduced a new brunch menu, with Kona Grill preparing to follow.
The company also continues to introduce seasonal food and beverage offerings at least four times annually. Recent additions include cauliflower fried rice at Benihana and premium nonalcoholic cocktails at STK, responding to consumer interest in wellness-oriented dining.
The ONE Group’s Friends with Benefits loyalty program has surpassed 9 million members, and the company expects to add approximately 1 million organic members by year-end. Loyalty customers spend more per visit and dine more frequently than nonmembers, providing another opportunity to foster repeat business.
The improvements are contributing to stronger restaurant profitability despite lower consolidated revenue.
Third-quarter revenue declined to $177 million from $180.2 million a year earlier, partly because of approximately $4.5 million in sales lost through planned restaurant closures and conversions.
Consolidated traffic increased 1.8 percent, marking the second consecutive quarter of positive transactions. Comparable sales were tracking positively through Labor Day before storms disrupted operations in several East Coast markets during September.
Restaurant operating profit increased 14.7 percent to $23.1 million, with margins expanding 190 basis points to 13.2 percent. Food costs improved 160 basis points to 19.5 percent of company-owned restaurant revenue, supported by supply chain initiatives, menu changes, and beef purchasing agreements. The company has secured beef pricing visibility into 2027, helping protect restaurant economics against commodity volatility.
Adjusted EBITDA increased 5.4 percent to $11.1 million, despite approximately $2 million in additional preopening expenses associated with new restaurants and conversions.
The ONE Group expects full-year revenue of $800 million–$810 million and adjusted EBITDA of $95 million–$100 million. It plans to open six to eight restaurants systemwide in 2026.
Looking toward the fourth quarter, traditionally its strongest period, the company is seeing solid holiday reservations and increased event bookings at STK.
The near-term development schedule will continue to feature restaurant conversions, but Benihana Express represents a potentially different growth opportunity. Its small footprint and franchise appeal could allow the company to expand the Benihana name without assuming the full capital requirements of traditional development.
Hilario expects development activity in 2027 to be comparable to 2026, with the possibility of additional openings depending on franchise demand and project timing.
