Note 1 – Summary of Business and Significant Accounting Policies

Description of Business

The ONE Group Hospitality, Inc. and its subsidiaries (collectively, the “Company”) is an international restaurant company that develops, owns and operates, manages, franchises and licenses upscale and polished casual, high-energy restaurants. The Company’s primary restaurant brands are STK, a modern twist on the American steakhouse concept featuring premium steaks, seafood and specialty cocktails in an energetic upscale atmosphere, Benihana, an interactive dining destination with highly skilled chefs preparing food in front of guests and served in an energetic atmosphere alongside fresh sushi and innovative cocktails, Kona Grill, a polished casual bar-centric grill concept featuring American favorites, award-winning sushi, and specialty cocktails in a polished casual atmosphere, and RA Sushi, a Japanese cuisine concept that offers a fun-filled, bar-forward, upbeat, and vibrant dining atmosphere anchored by creative sushi, inventive drinks, and outstanding service.

As of September 28, 2025, the Company owned, operated, managed, franchised, or licensed 157 venues, including 29 STKs, 85 Benihanas, 23 Kona Grills and 14 RA Sushis in major metropolitan cities in North America, Europe, Latin America and the Middle East and 6 food and beverage (“F&B“) venues in three hotels and casinos in the United States and Europe. For those restaurants and venues that are managed, licensed or franchised, the Company generates management fees and franchise fees based on top-line revenues and incentive fee revenue based on a percentage of the location’s revenues and profits.

On January 1, 2025, the Company transitioned from a calendar-based fiscal year to a 52/53-week fiscal year. Beginning in 2025, the Company’s fiscal year will end on the last Sunday in December. The Company’s third quarter of 2025 was the 91-day period of June 30, 2025 through September 28, 2025 compared to the third quarter of 2024 which was the 92-day period of July 1, 2024 through September 30, 2024. The nine periods ended September 28, 2025 and the nine months ended September 30, 2024 consisted of the first 271 and 273 days of the 2025 and 2024 fiscal years, respectively. The Company’s fiscal year ending December 28, 2025 will contain 362 days due to the transition. The fiscal year ending December 31, 2024 contained 365 days.

Basis of Presentation

The accompanying condensed consolidated balance sheet as of December 31, 2024, which has been derived from audited financial statements, and the accompanying unaudited interim condensed consolidated financial statements (“condensed consolidated financial statements”) of the Company have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and in accordance with accounting principles generally accepted in the U.S. (“GAAP”). Certain information and footnote disclosures normally included in annual audited financial statements have been omitted pursuant to SEC rules and regulations. These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

In the Company’s opinion, the accompanying unaudited interim financial statements reflect all adjustments (consisting only of normal recurring accruals and adjustments) necessary for a fair presentation of the results for the interim periods presented. The results of operations for any interim period are not necessarily indicative of the results expected for the full year. Additionally, the Company believes that the disclosures are sufficient for interim financial reporting purposes.

Immaterial Prior Period Restatement

As disclosed in the Form 10-Q for the three periods ended March 30, 2025, subsequent to the issuance of the Company’s Consolidated Financial statements filed on Form 10-K for the period ended December 31, 2024, the Company identified an error in its calculation and recognition of non-cash rent expense for Benihana and RA Sushi from the date of its acquisitions through December 31, 2024, which resulted in the Company understating net loss by $1.3 million. The Company has evaluated the impact of the error and determined that it was not material to the 2024 interim or annual financial statements. However, the cumulative effect of the error in the first quarter of 2025 would have had a material effect on the results of operations for the period. Therefore, the Company has made these immaterial corrections in the comparative prior period within the Condensed Consolidated Financial Statements and related footnotes. The Company has corrected previously reported financial information for related immaterial errors in this Form 10-Q, as applicable.

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The following table reflects the correction on the affected line items in the Company’s previously reported Condensed Consolidated Balance Sheet for the year ended December 31, 2024.

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The following table reflects the correction on the affected line items in the Company’s previously reported Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2024.

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Prior Period Reclassifications

The Company reclassified $0.5 million from transaction and exit costs on the Condensed Consolidated Statements of Operations to lease termination and exit costs related to a Kona Grill location closed in 2024 to conform to current year presentation.

Certain reclassifications were made to conform the prior period segment reporting to the current year presentation. Refer to Note 15 – Segment Reporting for additional information regarding the Company’s reportable operating segments.

Significant Accounting Policies

Goodwill. Goodwill consists of goodwill associated with the Benihana Acquisition (as definited below). Goodwill is not amortized and is tested for impairment annually as of the last day of our tenth fiscal period or on an interim basis whenever events or changes in circumstances indicate a potential impairment.

Recent Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” This ASU requires detailed qualitative and quantitative disclosures for certain costs and expenses on the income statement. The amendment is effective for fiscal years beginning after December 15, 2026, with early adoption permitted. The Company is evaluating the impact of adopting this ASU on its disclosures.

In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” The ASU includes amendments requiring enhanced income tax disclosures, primarily related to standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The guidance is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company will adopt this ASU in the 2025 Form 10-K.

The Company reviewed all other recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact to its condensed consolidated financial statements.