The ONE Group's Strategic Turnaround: Capital-Efficient Growth and Portfolio Optimization in a Challenging Market

The restaurant sector in 2025 is defined by a relentless pursuit of capital efficiency and value-driven innovation. For The ONE Group (NYSE: ONE), a company synonymous with Benihana's iconic teppanyaki experience, the path to revitalization hinges on navigating a dual challenge: stabilizing its core brand while reengineering its portfolio to align with sector-wide trends. With Q3 2025 results revealing a 7.1% revenue decline and adjusted EBITDA of $10.6 million-down from $14.9 million in 2024-the urgency for strategic recalibration is palpable, according to a Stock Titan report. This article examines The ONE Group's turnaround strategy through the lens of capital-efficient growth and portfolio optimization, contextualizing its moves within broader industry shifts.

A Fractured Portfolio and the Case for Divestiture

The ONE Group's struggles stem in part from its sprawling portfolio of 12 brands, including STK, The Capital Grille, and Benihana. While Benihana remains the revenue engine, accounting for over 60% of total sales, according to Randian Capital, the company's non-core brands have become liabilities in an inflationary environment. Randian Capital, the activist investor with a 6.5% stake, has aggressively advocated for divesting STK and other underperforming units, estimating $200–300 million in proceeds to fund share repurchases and debt reduction, as Randian Capital reported. This mirrors broader industry trends, such as Denny's private equity-backed restructuring and Yum! Brands' review of Pizza Hut options, where streamlining operations has become a survival tactic, as a Yahoo Finance article noted.

The financial rationale is compelling. By shedding non-core assets, The ONE Group could reduce its capital intensity, a critical factor as commodity inflation pressures persist. Texas Roadhouse, for instance, has offset 6% commodity inflation in 2025 by expanding its to-go business and leveraging high sales volumes, as a Seeking Alpha article reported. For The ONE Group, a similar focus on core strengths-Benihana's cultural cachet and high-margin format-could unlock value. However, management, led by CEO Manny Hilario, argues that its current strategy is yielding progress, citing improved traffic trends and a 2026 loyalty program expansion, according to the Stock Titan report. This divergence highlights the tension between activist-driven urgency and management's incremental approach.

Financializing Influence: A Novel Capital-Efficient Play

Randian Capital's most audacious proposal-offering stock options to celebrities like Kim Kardashian and Rob Gronkowski-reflects a novel approach to aligning brand promotion with financial performance. By tying influencer compensation to stock price performance, The ONE Group could leverage social media virality without upfront costs, a tactic that resonates with the sector's shift toward low-capital marketing. Rave Restaurant Group, for example, drove an 8.1% sales boost via Pizza Inn's $8 value promotion, as a Finimize article reported.

Yet this strategy carries risks. Celebrity endorsements are inherently volatile, and tying their success to stock options could amplify earnings volatility. For now, management appears unconvinced, prioritizing operational fixes over speculative gambles.

Industry-Wide Capital Efficiency: Lessons for The ONE Group

The 2025 restaurant sector is defined by capital discipline. Texas Roadhouse's $400 million 2026 CAPEX plan for 35 new units, as a Seeking Alpha article reported, contrasts with The ONE Group's more modest 5–7 new venue target, underscoring differing approaches to growth. While Texas Roadhouse's scale allows aggressive expansion, The ONE Group must balance reinvestment with debt reduction. Its projected $95–100 million adjusted EBITDA for 2025, as an Investing.com earnings call transcript reported, suggests a path to profitability, but only if it can curb non-core drag and optimize its balance sheet.

The sector's shift toward value-driven offerings also offers a blueprint. Rave Restaurant Group's $8 promotion, as a Finimize article reported, and Texas Roadhouse's $5 beverage specials, as a Seeking Alpha article reported, highlight how low-cost initiatives can drive traffic without eroding margins. For The ONE Group, which operates in premium segments, the challenge lies in maintaining brand equity while introducing value-conscious tweaks-a balancing act that could determine its long-term viability.

Conclusion: A Tenuous Path to Value Creation

The ONE Group's turnaround hinges on resolving its portfolio complexity and aligning with capital-efficient trends. While Randian's divestiture plan offers a clear path to liquidity, management's emphasis on operational improvements and loyalty programs reflects a more cautious, long-term vision. Investors must weigh these competing strategies against the broader sector's embrace of structural change.

In a market where capital efficiency is non-negotiable, The ONE Group's ability to streamline its portfolio and reinvest in high-impact initiatives will define its success. For now, the Q3 2025 results underscore the urgency of action, but also the fragility of progress in a sector where margins are razor-thin and consumer preferences shift rapidly.