Benihana Express: A Fast-Casual Expansion Play in a High-Growth Culinary Niche

The ONE Group (Nasdaq: STKS) has long been a master of reinvention in the restaurant industry. With a portfolio spanning upscale steakhouses, interactive teppanyaki experiences, and bar-centric grills, the company has consistently balanced innovation with operational rigor. But its most compelling play in 2025 may be Benihana Express, a fast-casual offshoot of the iconic Benihana brand. This strategic move not only diversifies The ONE Group's offerings but also positions it to capitalize on the growing demand for accessible, high-quality dining experiences. For investors, Benihana Express represents a scalable, high-margin opportunity that aligns with the company's broader franchise-driven growth strategy.

Strategic Brand Diversification: From Teppanyaki to Fast-Casual

Benihana, acquired by The ONE Group in May 2024, has traditionally been associated with its theatrical teppanyaki dining format. While this model remains a cornerstone of the brand's identity, it also carries inherent limitations—high labor costs, large real estate requirements, and a niche audience. Benihana Express addresses these challenges by adapting the brand's signature hibachi flavors into a fast-casual format. The 770-square-foot footprint, minimalist design, and made-to-order menu (featuring items like hibachi burritos, yakisoba bowls, and $39 bistro options) make it a more accessible entry point for consumers and franchisees alike.

This diversification is critical in a market where casual dining is outpacing fine dining. The ONE Group's first-quarter 2025 results underscore this shift: Benihana's same-store sales rose 0.7%, while the company's Grill Concepts segment reported a -12.7% operating profit margin, highlighting the risks of overreliance on traditional formats. Benihana Express, by contrast, combines the brand's culinary heritage with the efficiency of fast-casual service, offering a compelling value proposition.

Franchise Scalability: A Blueprint for Explosive Growth

The ONE Group's acquisition of Benihana was not merely about adding a brand to its portfolio—it was about unlocking a franchise engine. Prior to the acquisition, only 8 of Benihana's 81 U.S. locations were franchised. Today, Benihana Express is accelerating this shift. The recent opening of the second Benihana Express in Miami, operated by franchisee Erick Passo, is a case study in scalability. Passo, a multi-concept restaurateur, has already committed to a third location and plans to expand further. The ONE Group's CEO, Emanuel Hilario, has emphasized that Benihana Express is “the linchpin of our long-term growth strategy,” with plans to open five to seven new venues in 2025 alone.

The franchise model's appeal lies in its low capital intensity. With a smaller footprint and streamlined operations, Benihana Express requires significantly less upfront investment than a full-service Benihana or an STK steakhouse. This makes it attractive to a broader range of franchisees, including those new to the restaurant industry. The ONE Group's ability to leverage its existing supply chain and workforce efficiencies (estimated to save $20 million annually post-Benihana/RA Sushi integration) further enhances margins and scalability.

Financial Performance and Strategic Synergies

The ONE Group's financials in Q1 2025 tell a story of disciplined execution. Adjusted EBITDA surged 233% year-over-year to $25.2 million, driven by cost management and economies of scale. This outperformance compared to top-line revenue growth (up 16%) highlights the company's ability to translate operational improvements into profitability. Benihana Express, while still in its infancy, is already contributing to this momentum.

The company's balance sheet provides additional firepower. As of March 30, 2025, The ONE Group held $34.1 million in cash and $33.6 million in available credit, with no covenants on its revolving facility. This liquidity supports both organic growth (e.g., STK relocations) and strategic M&A, while the $5 million share repurchase program signals confidence in its intrinsic value.

Investment Thesis: Why Benihana Express Matters

For investors, Benihana Express encapsulates The ONE Group's dual focus on innovation and scalability. The fast-casual segment is projected to grow at a compound annual rate of 5.2% through 2030, driven by urbanization and shifting consumer preferences. Benihana Express is uniquely positioned to capture this growth, leveraging the brand's heritage while offering a model that is both financially attractive and operationally efficient.

Moreover, the company's emphasis on franchise development reduces capital risk and accelerates unit growth. With 400 Benihana locations as a long-term target, the franchise model could become a major revenue driver. The ONE Group's ability to integrate Benihana Express into its loyalty program (launching in 2025) and digital ecosystem further enhances customer retention and data monetization.

Risks and Considerations

While the outlook is positive, investors should monitor unit economics and competition from other fast-casual players. The success of Benihana Express hinges on maintaining the brand's quality and authenticity while scaling rapidly. Additionally, macroeconomic headwinds, such as labor costs or inflation, could impact margins. However, The ONE Group's track record of navigating challenges—such as its post-pandemic rebound and Benihana integration—suggests it is well-equipped to manage these risks.

Conclusion: A Strategic Bet on Culinary Innovation

Benihana Express is more than a menu tweak—it is a strategic repositioning of a 60-year-old brand for a new era of dining. By combining the allure of teppanyaki with the efficiency of fast-casual, The ONE Group has created a scalable, high-margin concept that aligns with both consumer trends and investor priorities. For those seeking exposure to a restaurant company with a clear growth trajectory and a diversified portfolio, Benihana Express offers a compelling case for long-term investment.