ONE GROUP HOSPITALITY, INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

This Quarterly Report on Form 10-Q and certain information incorporated herein
by reference contain forward-looking statements within the meaning of Section
21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and
Section 27A of the Securities Act of 1933, as amended (the "Securities Act").
Forward-looking statements speak only as of the date thereof and involve risks
and uncertainties that may cause our actual results, performance or achievements
to be materially different from the results, performance or achievements
expressed or implied by the forward-looking statements. These risk and
uncertainties include the risk factors discussed under Item 1A. "Risk Factors"
of the Company's Annual Report on Form 10-K for the year ended December 31,
2021. A number of factors could cause actual results or outcomes to differ
materially from those indicated by such forward-looking statements, including
but not limited to: (1) the effects of the COVID-19 pandemic on our business,
including government restrictions on our ability to operate our restaurants and
changes in customer behavior; (2) our ability to open new restaurants and food
and beverage locations in current and additional markets, grow and manage growth
profitably, maintain relationships with suppliers and obtain adequate supply of
products and retain our key employees; (3) factors beyond our control that
affect the number and timing of new restaurant openings, including weather
conditions and factors under the control of landlords, contractors and
regulatory and/or licensing authorities; (4) our ability to successfully improve
performance and cost, realize the benefits of our marketing efforts and achieve
improved results as we focus on developing new management and license deals; (5)
changes in applicable laws or regulations; (6) the possibility that The ONE
Group may be adversely affected by other economic, business, and/or competitive
factors; and (7) other risks and uncertainties. We have attempted to identify
forward-looking statements by terminology including "anticipates," "believes,"
"can," "continue," "ongoing," "could," "estimates," "expects," "intends," "may,"
"appears," "suggests," "future," "likely," "goal," "plans," "potential,"
"projects," "predicts," "should," "targets," "would," "will" and similar
expressions that convey the uncertainty of future events or outcomes. You should
not place undue reliance on any forward-looking statement. We do not undertake
any obligation to update or revise any forward-looking statements to reflect
events or circumstances after the date of this report or to reflect the
occurrence of unanticipated events, except as required under applicable law.

General

This information should be read in conjunction with the condensed consolidated
financial statements and the notes included in Item 1 of Part I of this
Quarterly Report on Form 10-Q and the audited consolidated financial statements
and notes, and Management's Discussion and Analysis of Financial Condition and
Results of Operations, contained in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2021.

As used in this report, the terms "Company," "we," "our," or "us," refer to The
ONE Group Hospitality, Inc. and its consolidated subsidiaries, taken as a whole,
unless the context otherwise indicates.

Company Summary

We are a global hospitality company that develops, owns and operates, manages
and licenses upscale and polished casual, high-energy restaurants and lounges
and provides turn-key food and beverage ("F&B") services and consulting service
for hospitality venues including hotels, casinos and other high-end locations.
Turn-key F&B services are food and beverage services that can be scaled,
customized and implemented by us for the client at a particular hospitality
venue. Our vision is to be a global market leader in the hospitality industry by
melding high-quality service, ambiance, high-energy and cuisine into one great
experience that we refer to as "Vibe Dining". We design all our restaurants,
lounges and F&B services to create a social dining and high-energy entertainment
experience within a destination location. We believe that this design and
operating philosophy separates us from more traditional restaurant and
foodservice competitors.

Our primary restaurant brands are STK, a multi-unit steakhouse concept that
combines a high-energy, social atmosphere with the quality and service of a
traditional upscale steakhouse, and Kona Grill, a polished casual bar-centric
grill concept featuring American favorites, award-winning sushi, and specialty
cocktails in a polished casual atmosphere. Our F&B hospitality management
services are marketed as ONE Hospitality and include developing, managing and
operating restaurants, bars, rooftop lounges, pools, banqueting and catering
facilities, private dining rooms, room service and mini bars tailored to the
specific needs of high-end hotels and casinos. We also provide hospitality
advisory and consulting services to certain clients. Our F&B hospitality clients
operate global hospitality brands such as the W Hotel, ME Hotels, Hippodrome
Casino, and Curio Collection by Hilton.

We opened our first restaurant in January 2004 in New York, New York, and, as of
March 31, 2022, we owned, operated, managed or licensed 59 venues including 22
STKs and 24 Kona Grills in major metropolitan cities in North America, Europe
and the Middle East and 13 F&B venues operated under ONE Hospitality in seven
hotels and casinos throughout the United States and

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Europe. For managed or licensed restaurants and venues, we generate management fee revenue based on turnover revenue and incentive fee revenue based on a percentage of the location’s net revenue and profit.

The table below reflects our locations by restaurant brand and geographic location in March 31, 2022:

                                             Venues
                       STK(1)    Kona Grill    ONE Hospitality(2)    Total
Domestic
Owned                      11            24                     2       37
Managed                     2             -                     1        3
Licensed                    1             -                     -        1
Total domestic             14            24                     3       41
International
Owned                       -             -                     -        -
Managed                     4             -                    10       14
Licensed                    4             -                     -        4
Total international         8             -                    10       18
Total venues               22            24                    13       59

(1) Pitches with an STK and an STK Rooftop are considered as one pitch. This

includes STK roof in San Diego, Californiawhich is a licensed location.

Includes concepts under the company’s F&B hotel management agreements (2) and other site brands such as ANGEL, Bao YumHeliot, Cachette, Marconi,

Radio and Bar and grill by the river.

Our growth strategies and outlook

Our growth model is mainly based on the following elements:

? Expansion of our STK Restaurants and Kona Grill

? Expansion through new F&B hospitality projects

? Increase comparable store sales and increase our operational efficiency

? Acquisitions

We intend to open at least nine new venues in 2022. There are currently two
Company-owned STK restaurants (San Francisco, CA and Dallas, TX), two
Company-owned Kona Grill restaurants (Riverton, UT and Columbus, OH) and one
managed STK restaurant (Stratford, UK) under development. In addition, in
conjunction with REEF Kitchens, we plan to test and open three licensed units in
Texas for takeout and delivery only. These units will feature offerings from our
STK, Kona Grill and Bao Yum concepts. As our footprint increases, we expect to
benefit by leveraging system-wide operating efficiencies and best practices
through the management of our general and administrative expenses as a
percentage of overall revenue.

COVID-19[feminine]

The COVID-19 pandemic has significantly impacted and will continue to adversely
affect operations and financial results for the foreseeable future. In response
to COVID-19, we have taken significant steps to adapt our business to increase
sales while providing a safe environment for guests and employees. Currently,
all restaurants are open for in-person dining. Our continuation of normal dining
operations is subject to events beyond our control, including the effectiveness
of governmental efforts to halt the spread of COVID-19.

We regularly communicate with our major suppliers and have not experienced any
significant disruption in our supply chain. We have enhanced programs to attract
and retain both restaurant managers and hourly employees. We have increased
cleaning protocols, including a role which is focused on sanitation in
high-touch and high-traffic areas, implemented daily health and safety
checklists, provided additional personal protective equipment and cleaning
supplies and engaged third party vendors to perform electrostatic cleaning of
our restaurants.

In the first quarter of 2022, one of our licensees permanently closed an STK restaurant in Mexico City following COVID-19.

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Executive Summary

Total revenue increased $23.7 million, or 46.9% to $74.2 million for the three
months ended March 31, 2022 compared to $50.5 million for the three months ended
March 31, 2021 primarily due to strong execution of our sales initiatives.
Same-store sales increased 45.1% in the first quarter of 2022 compared to the
first quarter of 2021. STK same store sales increased 66.5% while Kona Grill
same store sales increased 21.9%. On a three-year basis, same store sales for
the first quarter of 2022 increased 45.3% compared to the first quarter of 2019.
STK same store sales increased 62.9% on a three-year basis while Kona Grill same
store sales increased 27.5% reflecting the strong execution of our sales
initiatives.

Restaurant operating profit increased $3.8 million, or 40.8% to $13.0 million
for the three months ended March 31, 2022 compared to $9.3 million for the three
months ended March 31, 2021. Restaurant operating profit as a percentage of
owned restaurant net revenue was 18.5% in the first quarter of 2022 compared to
18.8% in the first quarter of 2021.

Operating income increased $3.3 million to $4.2 million for the three months
ended March 31, 2022 compared to operating income of $0.9 million for the three
months ended March 31, 2021. The increase was primarily driven by strong sales
momentum.

Results of Operations

The following table shows certain income statement data for the periods indicated (in thousands):

                                                                For the three months ended March 31,
                                                                    2022                     2021
Revenues:
Owned restaurant net revenue                                 $           70,516       $           49,168
Management, license and incentive fee revenue                             3,665                    1,314
Total revenues                                                           74,181                   50,482
Cost and expenses:
Owned operating expenses:
Owned restaurant cost of sales                                           18,099                   12,001
Owned restaurant operating expenses                                      39,373                   27,906
Total owned operating expenses                                           57,472                   39,907

General and administrative (including stock-based compensation for $879 and $1,022 for the three months ended March 31, 2022 and 2021, respectively)

                              6,879                    5,174
Depreciation and amortization                                             2,715                    2,699
COVID-19 related expenses                                                 2,313                    1,557
Pre-opening expenses                                                        345                      101
Lease termination expenses                                                  255                      187
Total costs and expenses                                                 69,979                   49,625
Operating income                                                          4,202                      857
Other expenses, net:
Interest expense, net of interest income                                    508                    1,246
Total other expenses, net                                                   508                    1,246
Income (loss) before provision (benefit) for income taxes                 3,694                    (389)
Provision (benefit) for income taxes                                        173                    (329)
Net income (loss)                                                         3,521                     (60)
Less: net loss attributable to noncontrolling interest                    (149)                    (130)
Net income attributable to The One Group Hospitality,
Inc.                                                         $            3,670       $               70


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The following table shows selected income statement data as a percentage of total revenue for the periods indicated. Some percentages may not add up to the total due to rounding.

                                                            For the three months ended March 31,
                                                                 2022                   2021
Revenues:
Owned restaurant net revenue                                          95.1 %                 97.4 %
Management, license and incentive fee revenue                          4.9
%                  2.6 %
Total revenues                                                       100.0 %                100.0 %
Cost and expenses:
Owned operating expenses:
Owned restaurant cost of sales (1)                                    25.7 %                 24.4 %
Owned restaurant operating expenses (1)                               55.8 %                 56.8 %
Total owned operating expenses (1)                                    81.5 %                 81.2 %

General and administrative (including stock-based compensation of 1.2% and 2.0% for the three months ended March 31, 2022 and 2021, respectively)

                           9.3 %                 10.2 %
Depreciation and amortization                                          3.7
%                  5.3 %
COVID-19 related expenses                                              3.1 %                  3.1 %
Pre-opening expenses                                                   0.5 %                  0.2 %
Lease termination expenses                                             0.3 %                  0.4 %
Total costs and expenses                                              94.3 %                 98.3 %
Operating income                                                       5.7 %                  1.7 %
Other expenses, net:
Interest expense, net of interest income                               0.7 %                  2.5 %
Total other expenses, net                                              0.7 %                  2.5 %
Income (loss) before provision (benefit) for income
taxes                                                                  5.0 %                 (0.8)%
Provision (benefit) for income taxes                                   0.2 %                 (0.7)%
Net income (loss)                                                      4.7 %                 (0.1)%
Less: net loss attributable to noncontrolling interest                (0.2)%                 (0.2)%
Net income attributable to The One Group Hospitality,
Inc.                                                                   4.9 %                  0.1 %


(1) These expenses are presented as a percentage of the restaurant’s net

    revenue.


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The following tables show our operating results by segment for the periods
indicated (in thousands).

                                    STK        Kona Grill      ONE Hospitality      Corporate       Total
For the three months ended
March 31, 2022
Total revenues                   $  42,499          31,212                   343           127       74,181
Operating income (loss)          $  10,718           3,037                   (9)       (9,544)        4,202
Capital asset additions          $   2,279           1,803                    37           331        4,450
As of March 31, 2022
Total assets                     $  96,022          94,988                 5,489        40,075      236,574


                                   STK        Kona Grill      ONE Hospitality      Corporate       Total
For the three months ended
March 31, 2021
Total revenues                  $  24,691          25,577                    33           181       50,482
Operating income (loss)         $   5,596           2,450                 (118)       (7,071)          857
Capital asset additions         $   1,476             529                    15           595        2,615
As of December 31, 2021
Total assets                    $  95,510          91,323                 

6,117 36,885 229,835


EBITDA, Adjusted EBITDA and Restaurant Operating Profit are presented in this
Quarterly Report on Form 10-Q to supplement other measures of financial
performance. EBITDA, Adjusted EBITDA and Restaurant Operating Profit are not
required by, or presented in accordance with, accounting principles generally
accepted in the United States of America ("GAAP"). We define EBITDA as net
income before interest expense, provision for income taxes and depreciation and
amortization. We define Adjusted EBITDA as net income before interest expense,
provision for income taxes, depreciation and amortization, non-cash rent
expense, pre-opening expenses, lease termination expenses, stock-based
compensation, COVID-19 related expenses and non-recurring gains and losses. Not
all of the items defining Adjusted EBITDA occur in each reporting period but
have been included in our definitions of these terms based on our historical
activity. We define Restaurant Operating Profit as owned restaurant net revenue
minus owned restaurant cost of sales and owned restaurant operating expenses.

We believe that EBITDA, Adjusted EBITDA and Restaurant Operating Profit are
appropriate measures of our operating performance because they eliminate
non-cash or non-recurring expenses that do not reflect our underlying business
performance. We believe Restaurant Operating Profit is an important component of
financial results because: (i) it is a widely used metric within the restaurant
industry to evaluate restaurant-level productivity, efficiency, and performance,
and (ii) we use Restaurant Operating Profit as a key metric to evaluate our
restaurant financial performance compared to our competitors. We use these
metrics to facilitate a comparison of our operating performance on a consistent
basis from period to period, to analyze the factors and trends affecting our
business and to evaluate the performance of our restaurants. Adjusted EBITDA has
limitations as an analytical tool and our calculation of Adjusted EBITDA may not
be comparable to that reported by other companies; accordingly, you should not
consider it in isolation or as a substitute for analysis of our results as
reported under GAAP. Adjusted EBITDA is a key measure used by management.
Additionally, Adjusted EBITDA and Restaurant Operating Profit are frequently
used by analysts, investors and other interested parties to evaluate companies
in our industry. We use Adjusted EBITDA and Restaurant Operating Profit,
alongside other GAAP measures such as net income, to measure profitability, as a
key profitability target in our budgets, and to compare our performance against
that of peer companies despite possible differences in calculation.

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The following table provides a reconciliation of net earnings to EBITDA and Adjusted EBITDA for the periods indicated (in thousands):

                                                              For the three 

months ended March, 31st,

                                                                  2022                     2021

Net income attributable to One Group Hospitality, Inc.

                                                       $             3,670       $              70
Net loss attributable to noncontrolling interest                         (149)                   (130)
Net income (loss)                                                        3,521                    (60)
Interest expense, net of interest income                                   508                   1,246
Provision (benefit) for income taxes                                       173                   (329)
Depreciation and amortization                                            2,715                   2,699
EBITDA                                                                   6,917                   3,556
COVID-19 related expenses                                                2,313                   1,557
Stock-based compensation                                                   879                   1,022
Lease termination expense (1)                                              255                     187
Non-cash rent expense (2)                                                 (31)                      23
Pre-opening expenses                                                       345                     101
Adjusted EBITDA                                                         10,678                   6,446
Adjusted EBITDA attributable to noncontrolling interest                   (78)                    (53)
Adjusted EBITDA attributable to The ONE Group
Hospitality, Inc.                                          $            10,756       $           6,499


(1) Lease termination fees are the costs associated with buildings that are closed, abandoned and

pitches or disputed leases.

Non-cash rent expense is included in directly owned restaurant operating expenses and (2) general and administrative expenses in the condensed consolidated statements

operations and comprehensive income.

The following table provides a reconciliation between operating profit and restaurant operating profit for the periods indicated (in thousands):

                                                                        For 

the three months have ended March, 31st,

                                                                           2022                      2021
Operating income as reported                                                      4,202                       857
Management, license and incentive fee revenue                                   (3,665)                   (1,314)
General and administrative                                                        6,879                     5,174
Depreciation and amortization                                              
      2,715                     2,699
COVID-19 related expenses                                                         2,313                     1,557
Pre-opening expenses                                                                345                       101
Lease termination expense                                                           255                       187
Restaurant Operating Profit                                         $            13,044       $             9,261
Restaurant Operating Profit as a percentage of owned restaurant
net revenue                                                                       18.5%                     18.8%


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Restaurant operating income by brand is as follows (in thousands):

                                                                   For the 

three months completed March, 31st,

                                                                             2022                     2021
STK restaurant operating profit (Company owned)                                            8,813        5,477

STK (corporate-owned) restaurant operating profit as a percentage of STK (corporate-owned) revenue

                                                  22.6%        23.4%
Kona Grill restaurant operating profit                                                     4,276        3,737

Kona Grill restaurant operating income as a percentage of
Kona Grill revenue

                                                                         13.7%        14.6%


Results of operations for the three months ended March 31, 2022 and 2021

Revenue

Owned restaurant net revenue. Owned restaurant net revenue increased
$21.3 million, or 43.4%, to $70.5 million for the three months ended March 31,
2022 from $49.2 million for the three months ended March 31, 2021. The increase
was primarily attributable to strong execution of our sales initiatives.
Comparable restaurant sales increased 45.1% in the first quarter of 2022.

Management and license fee revenue. Management and license fee revenues
increased $2.4 million, or 178.9% to $3.7 million for the three months ended
March 31, 2022 from $1.3 million for the three months ended March 31, 2021. The
increase was primarily attributable to local governments lifting stay at home
orders and easing seating capacity restrictions in the markets in which we
operate as well as revenue generated from the opening of two managed STKs, one
licensed STK and three managed F&B venues during 2021.

Costs and expenses

Owned restaurant cost of sales. Food and beverage costs for owned restaurants
increased $6.1 million, or 50.8%, to $18.1 million for the three months ended
March 31, 2022 from $12.0 million for the three months ended March 31, 2021. The
increase was due to the incremental sales increases. As a percentage of owned
restaurant net revenue, cost of sales increased 130 basis points from 24.4% in
the three months ended March 31, 2021 to 25.7% for the three months ended March
31, 2022 primarily due to increased commodity prices partly offset by
operational cost reduction initiatives.

Owned restaurant operating expenses. Owned restaurant operating expenses
increased $11.5 million to $39.4 million for the three months ended March 31,
2022 from $27.9 million for the three months ended March 31, 2021. Owned
restaurant operating costs as a percentage of owned restaurant net revenue
decreased 100 basis points from 56.8% in the three months ended March 31, 2021
to 55.8% for the three months ended March 31, 2022 due to leverage on higher
average weekly sales and actively managing operating costs.

General and administrative. General and administrative costs increased
$1.7 million, or 32.7%, to $6.9 million for the three months ended March 31,
2022 from $5.2 million for the three months ended March 31, 2021. The increase
was attributable to increased activity as our restaurants are generating strong
average weekly sales. As a percentage of revenues, general and administrative
costs were 9.3% for the three months ended March 31, 2022 compared to 10.2% for
the three months ended March 31, 2021.

Depreciation and amortization. The depreciation charge was $2.7 million for the three months ended March 31, 2022 and 2021.

Pre-opening expenses. In the three months ended March 31, 2022, we incurred
$0.3 million of pre-opening expenses primarily related to non-cash pre-open rent
for STK Dallas, STK San Francisco, Kona Grill Riverton, and Kona Grill Columbus
which are currently under construction. Pre-opening expenses for the three
months ended March 31, 2021 were $0.1 million.

COVID-19 related expenses. COVID-19 related expenses were $2.3 million for the
three months ended March 31, 2022 compared to $1.6 million in the prior year
period. COVID-19 related expenses are composed primarily of sanitation, supplies
and safety precautions taken to prevent the spread of COVID-19.

Debit interest, net of credit interest. Debit interest, net of credit interest, has been $0.5 million and $1.2 million for each of the three months ended
March 31, 2022 and 2021, respectively.

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Provision (benefit) for income taxes. The provision for income taxes for the
three months ended March 31, 2022 was $0.2 million compared to a benefit for
income taxes of $0.3 million for the three months ended March 31, 2021. Our 2022
annualized effective tax rate is estimated at 19.5%.

Net income (loss) attributable to noncontrolling interest. Net loss attributable
to noncontrolling interest was $0.1 million for the three months ended March 31,
2022 and 2021.

Cash and capital resources

Summary

Our principal liquidity requirements are to meet our lease obligations, working
capital and capital expenditure needs and to pay principal and interest on
outstanding debt. Subject to our operating performance, which, if significantly
adversely affected, would adversely affect the availability of funds, we expect
to finance our operations for at least the next 12 months, including the costs
of opening currently planned new restaurants, through cash provided by
operations and construction allowances provided by landlords of certain
locations. We also may borrow on our revolving credit facility or issue equity
to support ongoing business and fund additional expansion. We believe these
sources of financing are adequate to support our immediate business operations
and plans. As of March 31, 2022, we had cash and cash equivalents of
$28.6 million and $24.6 million in long-term debt, which consisted of borrowings
under our Credit Agreement. As of March 31, 2022, the availability on our
revolving credit facility was $10.6 million, subject to certain conditions.

In the three months ended March 31, 2022, capital expenditures were $4.5 million
of which $1.7 million related to the construction of new STK and Kona Grill
restaurants and $2.8 million for existing restaurants and technology
initiatives. Our future cash requirements will depend on many factors, including
the pace of expansion, conditions in the retail property development market,
construction costs, the nature of the specific sites selected for new
restaurants, and the nature of the specific leases and associated tenant
improvement allowances available, if any, as negotiated with landlords.

Our operations have not required significant working capital, and, like many
restaurant companies, we may have negative working capital during the year.
Revenues are received primarily in credit card or cash receipts, and restaurant
operations do not require significant receivables or inventories, other than our
wine inventory. In addition, we receive trade credit for the purchase of food,
beverages and supplies, thereby reducing the need for incremental working
capital to support growth.

In the event that the Company should temporarily suspend all operations due to COVID-19 restrictions, the ongoing operating costs per month are expected to be as follows:

Minimum rents                           $ 1,600
Insurance                                   200
Interest                                    100
Minimum general & administrative costs      500
Total                                   $ 2,400


Credit Agreement

On October 4, 2019, in conjunction with the acquisition of Kona Grill, we
entered into our Credit Agreement with Goldman Sachs Bank USA. On August 6,
2021, we entered into the Third Amendment to the Credit Agreement to extend the
maturity date for both the term loan and revolving credit facility to August
2026, to eliminate all financial covenants except a maximum net leverage ratio
of 2.00 to 1.00, and to eliminate restrictions on the maximum amount of capital
expenditures, the maximum number of Company-owned new locations, and credit
extensions under the revolving credit facility. As amended, the Credit Agreement
provides for a secured revolving credit facility of $12.0 million and a $25.0
million term loan (reduced from $48.0 million). The term loan is payable in
quarterly installments of $0.1 million, with the final payment due in August
2026.

The amended Credit Agreement has several borrowing and interest rate options,
including the following: (a) a LIBOR rate (or a comparable successor rate)
subject to a 1.00% floor from a 1.75% floor or (b) a base rate equal to the
greatest of (i) the prime rate, (ii) the federal funds rate plus 0.50%, (iii)
the LIBOR rate for a one-month period plus 1.00% or (iv) 4.00%. Loans under
the
amended

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Credit Agreement bear interest at a rate per annum using the applicable indices
plus an interest rate margin of 5.00% from a variable interest rate margin of
5.75 to 6.75% (for LIBOR rate loans) and 4.00% from 4.75% to 5.75% (for base
rate loans).

From March 31, 2022, we complied with the covenants required by the amended credit agreement. Based on current projections, we estimate that we will continue to comply with the covenants of the credit agreement, as amended, throughout the twelve months following the publication of the financial statements.

Refer to Notes 5 and 14 of our condensed consolidated financial statements presented in Item 1 of this Quarterly Report on Form 10-Q for more information on the terms of our long-term debt agreements and information on our covenants. and contingencies.

Capital expenditures and rental agreements

When we open new Company-owned restaurants, our capital expenditures for
construction increase. For owned restaurants, where we build from a shell state,
we have typically targeted an average cash investment of approximately
$3.8 million for a 10,000 square-foot STK restaurant and anticipate
approximately $2.5 million for an 8,000 square-foot Kona Grill restaurant, in
each case, net of landlord contributions and excluding pre-opening costs. For
STK locations where we may be the successor restaurant tenant, we anticipate
total cash investment in the $2.0 million to $3.0 million range. Typical
pre-opening costs are $0.3 million to $0.5 million. In addition, some of our
existing restaurants will require capital improvements to either maintain or
improve the facilities. We may add seating or provide enclosures for outdoor
space in the next twelve months for some of our locations, which we expect will
increase revenues for those locations.

Our hospitality F&B venues typically require limited capital investment from us.
Capital expenditures for these projects will primarily be funded by cash flows
from operations depending upon the timing of these expenditures and cash
availability.

We typically seek to lease our restaurant locations for periods of 10 to
20 years under operating lease arrangements, with a limited number of renewal
options. Our rent structure varies, but our leases generally provide for the
payment of both minimum and contingent rent based on sales, as well as other
expenses related to the leases such as our pro-rata share of common area
maintenance, property tax and insurance expenses. Many of our lease arrangements
include the opportunity to secure tenant improvement allowances to partially
offset the cost of developing and opening the related restaurants. Generally,
landlords recover the cost of such allowances from increased minimum rents.
However, there can be no assurance that such allowances will be available to us
on each project that we select for development.

Cash flow

The following table summarizes the statement of cash flows for the three months ended March 31, 2022 and 2021 (in thousands):

                                                                 For the 

three months completed March, 31st,

                                                                    2022                      2021
Net cash provided by (used in):
Operating activities                                         $             9,823       $             6,986
Investing activities                                                     (4,450)                   (2,615)
Financing activities                                                       (253)                     (304)
Effect of exchange rate changes on cash                                     (90)                      (17)
Net increase in cash and cash equivalents                    $             5,030       $             4,050


Operating Activities. Net cash provided by operating activities was $9.8 million
for the three months ended March 31, 2022, compared to net cash provided by
operating activities of $7.0 million for the three months ended March 31, 2021.
The increase was primarily attributable to net income generated for the three
months ended March 31, 2022 driven by strong sales.

Investing Activities. Net cash used in investing activities for the three months
ended March 31, 2022 was $4.5 million primarily for the construction of STK
restaurants in Dallas, Texas and San Francisco, California, and Kona Grill
restaurants in Riverton, Utah and Columbus, Ohio, as well as capital
expenditures for existing restaurants and technology initiatives compared to
$2.6 million for the three months ended March 31, 2021.

Fundraising activities. Net cash used in financing activities for the three months ended March 31, 2022 and 2021 was $0.3 million.

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Recent accounting pronouncements

See Note 1 to our condensed consolidated financial statements set forth in Item
1 of this Quarterly Report on Form 10-Q for a detailed description of recent
accounting pronouncements. We do not expect the recent accounting pronouncements
discussed in Note 1 to have a significant impact on our consolidated financial
position or results of operations.

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