Just three years after declaring bankruptcy and closing more than a third of its stores, upscale restaurant chain Kona Grill is back and better than ever. The American cuisine/sushi concept shared its most recent financial results a few weeks ago and reported pretty impressive growth in sales, currently up 27.5% compared to 2019.
Kona's restaurants averaged $101,000 per week in the most recent quarter, for annualized revenue of $5.3 million—more than a million in additional sales per store over a three-year period. Sales also improved substantially compared to 2021, with a growth of nearly 22%.
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Kona's prospects were very different three years ago. In 2019, the chain appeared to be on its way out, with a bankruptcy filing in May and a suspension of its stock listing. The chain had gone through four CEOs in less than 12 months and was consulting with investment company Piper Jaffray about a possible sale.
By October, however, Kona had reached a turning point: it finally closed on a sale to ONE Group Hospitality (parent company of STK Steakhouse), valued at $25 million, and, in fairly short order, began to right its ship. Following sales declines between 2016 and 2018, the chain finally reversed the trend in 2021, reporting 23% growth over a two-year period.
Kona has maintained that momentum in 2022. The chain is so far lapping its 2021 numbers and, despite recent increases in menu prices, shows no signs of slowing down. Customer traffic at the chain is as strong as ever, which CEO Manny Hilario attributes to Kona's investment in its "value layer"—doubling down on crowd-pleasers like happy hour deals and brunch.
"At Kona Grill our emphasis has been experiential…[and] our emphasis on growth has been the value layer," Hilario told investors during an earnings call. "So we have put a lot of emphasis on brunch as well as returning to happy hour. So we've seen a lot of success on those dayparts. So to a certain degree, I would say that any difference in check has been driven by our emphasis on strategy."
In the coming year, Kona will expand its footprint by as many as six restaurants, with plans for licensing up to three ghost kitchens and new locations in Utah, Ohio, and Arizona. While expansion has been somewhat hampered in 2022 due to supply chain difficulties, the chain has had no trouble finding real estate for its new builds, reporting "fantastic deals" from malls and retail centers.
Kona currently has 24 restaurants in the U.S. but plans to open as many as 200 in the coming years.