GEN Restaurant Group (GENK) Q1 2025 Earnings Call May 13, 2025 05:00 PM ET Speaker0 Please also note today's event is being recorded. At this time, I would like to turn the floor over to Tom Kearl, the company's Chief Financial Officer. Sir, you may begin. Speaker1 Thank you, operator, and good afternoon. By now, everyone should have access to our first quarter twenty twenty five earnings release. If not, it can be found at www.jenkoreanbbq.com in the Investor Relations section. Before we begin our formal r ...

Restaurant Expansion - GEN Restaurant Group opened six new restaurants in Q1 2025, bringing the total to 49 locations, up from 39 in Q1 2024[155]. - The company expects to open a total of 12 to 13 locations in fiscal year 2025[143]. - The company opened six new restaurants in Q1 2025, all of which were self-funded[192]. - The number of restaurants open increased to 49 in the three months ended March 31, 2025, from 39 in the same period of 2024[172]. Financial Performance - Revenue for the three months ended March 31, 2025, was $57.3 million, an increase of $6.5 million or 13.0% compared to $50.8 million in the same period of 2024[172]. - Comparable restaurant sales decreased by 0.7% for the three months ended March 31, 2025, compared to a decline of 1.8% in the same period of 2024[154]. - Adjusted net income attributable to GEN Restaurant Group, Inc. was $216,000 for Q1 2025, down from $383,000 in Q1 2024, reflecting a decrease of approximately 43.5%[190]. - Net loss for the three months ended March 31, 2025, was $1.964 million, a decrease of $5.662 million or 153.1% compared to a net income of $3.698 million in 2024[172]. Expenses and Costs - Total restaurant operating expenses increased by $7.2 million or 15.6%, reaching $53.1 million for the three months ended March 31, 2025, compared to $45.9 million in 2024[172]. - General and administrative expenses rose by $1.7 million or 36.3%, totaling $6.4 million for the three months ended March 31, 2025, compared to $4.7 million in 2024[179]. - Pre-opening costs increased by $747 thousand or 39.3%, amounting to $2.6 million for the three months ended March 31, 2025, compared to $1.9 million in 2024[178]. - Food costs increased by $2.3 million or 13.5%, totaling $19.3 million for the three months ended March 31, 2025, compared to $17.0 million in 2024[173]. - Occupancy expenses rose by $0.8 million or 18.6%, reaching $5.1 million for the three months ended March 31, 2025, compared to $4.3 million in 2024[175]. Cash Flow and Financing - Net cash provided by operating activities was $2.154 million in Q1 2025, down from $3.514 million in Q1 2024, representing a decrease of approximately 38.7%[201]. - Net cash used in investing activities was $6.829 million in Q1 2025, slightly lower than $7.076 million in Q1 2024[204]. - Net cash used in financing activities was $3.636 million in Q1 2025, compared to $947,000 in Q1 2024, indicating a significant increase in financing outflows[205]. - As of March 31, 2025, the company had $15.4 million in cash and negative working capital of $13.0 million, compared to $23.7 million in cash and negative working capital of $7.2 million as of December 31, 2024[191]. - The company had $9.2 million in contractual obligations related to debt as of March 31, 2025, which are expected to be paid within the next 12 months[206]. Credit and Debt - A $20 million line of credit was established with PCB bank, maturing on September 25, 2025, with a variable interest rate of 7.75%[144]. - The company is exposed to market interest rates through its line of credit, which is tied to the Wall Street Journal Prime Rate plus 0.25%[220]. Strategic Outlook - The company has a target Payback Period of less than 3 years for new restaurant units, equating to an ROI of 33% to 40%[142]. - The company expects to pay approximately $99.6 million under the Tax Receivable Agreement through 2037, based on anticipated tax benefits[196]. - The company assessed its financial condition and results of operations in conjunction with its quarterly and annual reports filed with the SEC[140]. - Adjusted EBITDA and Adjusted EBITDA Margin are key performance measures, although specific figures were not disclosed in the provided content[147]. Market Conditions - The company has partially offset inflation and cost changes by gradually increasing menu prices and improving purchasing practices[219]. - There is uncertainty regarding the ability to continue offsetting future cost increases with menu price increases[219]. - Competitive conditions may limit menu pricing flexibility, impacting sales growth[219]. - Macroeconomic conditions could render additional menu price increases imprudent[219]. - The company is classified as an "emerging growth company" and is utilizing certain exemptions from reporting requirements under the JOBS Act[214]. Performance Metrics - Average Unit Volume (AUV) for the twelve months ended March 31, 2025, was $5,403, a decrease from $5,842 in the previous year[151]. - Restaurant-Level Adjusted EBITDA was $8.959 million for the three months ended March 31, 2025, compared to $8.433 million in 2024, reflecting an increase of $526 thousand or 6.2%[188]. - Adjusted EBITDA for the three months ended March 31, 2025, was $1.249 million, a decrease of $1.715 million or 57.8% compared to $2.964 million in 2024[184]. - No impairment charges were recorded for long-lived assets in any of the periods presented[144].

CERRITOS, Calif., May 13, 2025 (GLOBE NEWSWIRE) -- GEN Restaurant Group, Inc. (“GEN” or the “Company”) (Nasdaq: GENK), owner of GEN Korean BBQ, a fast-growing casual dining concept with an extensive menu and signature “grill at your table” experience, is announcing financial results for the first quarter ended March 31, 2025. First Quarter 2025 Financial and Recent Operational Highlights Total revenue grew 13.0% year-over-year to $57.3 million for the first quarter.Restaurant-level adjusted EBITDA(1) incre ...

Exhibit 99.1 GEN Restaurant Group Announces First Quarter 2025 Financial Results CERRITOS, CA, May 13, 2025 - GEN Restaurant Group, Inc. ("GEN" or the "Company") (Nasdaq: GENK), owner of GEN Korean BBQ, a fast-growing casual dining concept with an extensive menu and signature "grill at your table" experience, is announcing financial results for the first quarter ended March 31, 2025. First Quarter 2025 Financial and Recent Operational Highlights (1) Adjusted EBITDA, restaurant-level adjusted EBITDA, and adj ...

CERRITOS, Calif., April 24, 2025 (GLOBE NEWSWIRE) -- GEN Restaurant Group, Inc. (“GEN” or the “Company”) (Nasdaq: GENK), owner of GEN Korean BBQ, a fast-growing casual dining concept with an extensive menu and signature “grill at your table” experience, will hold a conference call on Tuesday, May 13, 2025, at 5:00 p.m. Eastern time to discuss its financial results for the first quarter ended March 31, 2025. The results will be reported in a press release prior to the conference call. Chairman and Chief Exec ...

CERRITOS, Calif., March 31, 2025 (GLOBE NEWSWIRE) -- GEN Restaurant Group, Inc. ("GEN" or the "Company") (NASDAQ:GENK), owner of GEN Korean BBQ, a fast-growing casual dining concept with an extensive menu and signature "grill at your table" experience, today announced the opening of its first North Carolina location in Cary. "Entering new states is a key milestone in our strategic growth plan, and we're excited to introduce North Carolina as the eleventh state where GEN Korean BBQ now operates," said David ...

GEN is Continuing Texas Expansion with Austin Following Success Across the StateCERRITOS, Calif., March 19, 2025 (GLOBE NEWSWIRE) -- GEN Restaurant Group, Inc. (“GEN” or the “Company”) (Nasdaq: GENK), owner of GEN Korean BBQ, a fast-growing casual dining concept with an extensive menu and signature “grill at your table” experience, today announced a new restaurant location in Austin, Texas, which opened on March 12, 2025. “We are making strong progress in expanding across the state of Texas,” said David Kim ...

CERRITOS, Calif., March 13, 2025 (GLOBE NEWSWIRE) -- GEN Restaurant Group, Inc. (“GEN” or the “Company”) (Nasdaq: GENK), owner of GEN Korean BBQ, a fast-growing casual dining concept with an extensive menu and signature “grill at your table” experience, announced today that its board of directors approved a stock repurchase program authorizing the repurchase of up to $5.0 million worth of shares of the Company’s outstanding Class A common stock, par value $0.001 (“Common Stock”). The stock repurchase progra ...

Expansion Plans - As of December 31, 2024, GEN Inc. operates 43 company-owned restaurants across multiple states, with plans for continued expansion into new markets[21]. - The company plans to open 10 to 13 new locations in 2025, with a long-term goal of opening 10 to 12 new restaurants annually starting in 2026[27]. - GEN Inc. is introducing international expansion into South Korea with at least two company-owned locations slated to open in 2025[28]. - The company opened six new restaurants in 2023 and 2024, indicating ongoing expansion efforts[59]. - The company plans to continue expanding into new markets, which may lead to unpredictable operating results due to unfamiliarity with local conditions and consumer preferences[62]. Financial Performance - New restaurants opened in 2022 generated an average Payback Period of approximately 1.9 years, equating to an ROI of over 50%, while those opened in 2023 and 2024 had a Payback Period of approximately 2.2 years and an ROI of about 45%[22]. - The average Net Build-Out Costs for new restaurants increased from approximately $1.9 million in 2022 to $2.2 million in 2024, with a target of less than $3.0 million going forward[29]. - The percentage of sales for food costs increased from 32.2% in 2023 to 33.0% in 2024, while payroll and benefits costs decreased from 31.4% to 30.9%[58]. - The company’s growth strategy may be impacted by future changes in tax laws or effective tax rates, potentially reducing net returns to stockholders[59]. - The average restaurant sales and comparable restaurant sales may not increase at historical rates, impacting overall business performance[66]. Cost Management - During 2024, Sysco accounted for approximately 76.3% of food costs, highlighting the company's reliance on key suppliers for food products[35]. - The company has established a strong supplier network, with Pacific Global and Wise Universal providing significant portions of total operating expenses and food costs[34]. - The company has experienced inflationary pressures affecting costs for food, labor, and utilities, which may impact revenues and results of operations[55]. - Labor costs are a primary component of operating expenses, and increases in minimum wage could adversely affect profitability[115]. - California's minimum wage has increased routinely over the past three years, significantly impacting labor costs[122]. Regulatory and Compliance Risks - The company is subject to various federal, state, and local regulations that could delay restaurant openings or operations[43]. - Compliance with evolving nutritional labeling laws may incur additional costs and operational challenges for the company[96]. - The company is subject to various federal, state, and local regulations that could affect its ability to open new restaurants[127]. - Compliance with environmental laws may result in significant fines and penalties for noncompliance[130]. Market and Economic Conditions - Economic conditions, including unemployment and consumer confidence, significantly influence consumer discretionary spending, which could adversely affect restaurant traffic and sales[63]. - Economic conditions, such as low consumer confidence and high unemployment, could lead to decreased sales as consumers dine out less frequently[88]. - Intense competition in the restaurant industry may impact the company's financial condition, with competitors increasing their product offerings and opening new locations[84]. Operational Challenges - The company may face challenges in successfully expanding operations due to uncertainties in site selection and market conditions[60]. - The company faces risks related to supply chain disruptions, as reliance on a limited number of suppliers could lead to increased costs and shortages[77][81]. - The company may need to invest more in advertising and promotional activities in new markets to build brand awareness, potentially affecting profitability[62]. - The company relies on technology and equipment for restaurant operations, and mechanical failures could result in significant operational disruptions and financial losses[98]. Internal Controls and Governance - The company has completed remediation of two material weaknesses in internal control over financial reporting as of December 31, 2024[60]. - The company identified two material weaknesses in its internal control over financial reporting in 2023, which were remediated in 2024[185]. - The company may incur additional costs if it fails to maintain effective internal controls, which could adversely affect its financial reporting and market confidence[192]. - The company is classified as an "emerging growth company" and a "smaller reporting company," allowing it to follow reduced disclosure requirements[187]. Tax and Financial Liabilities - GEN Inc. anticipates future payments under the Tax Receivable Agreement to total approximately $99.6 million based on an assumed Class A common stock price of $12.00 per share[145]. - Payments under the Tax Receivable Agreement will be 85% of the net cash tax savings realized by GEN Inc., which could significantly reduce available cash for reinvestment or dividends[144]. - The actual amount and timing of payments under the Tax Receivable Agreement will vary based on multiple factors, including stock price and tax attributes[146]. - Future changes to tax laws could materially and adversely affect the company and reduce net returns to stockholders[153]. Cybersecurity and Data Privacy - The company has faced past security breaches and cyber incidents, highlighting the need for effective cybersecurity measures[200]. - The company is subject to numerous privacy laws, which may require significant changes to data handling practices and incur additional costs[207]. - The company has a risk management program focused on cybersecurity, with oversight from the Board of Directors[214]. Management and Leadership - The company has co-CEOs, which may lead to management challenges and affect operational efficiency[198]. - The company is dependent on the continued service of its senior management team, and their departure could adversely impact business prospects[198].

Financial Data and Key Metrics Changes - For the full year 2024, the company reported revenue of $208 million, exceeding the guidance range of $200 million to $205 million [8] - Restaurant-level adjusted EBITDA for the year was $36.9 million, with a margin of 17.7%, aligning with expectations [31] - Total adjusted EBITDA for 2024 was $16.7 million, a decrease from $18.8 million in 2023, primarily due to increased preopening costs [32] Business Line Data and Key Metrics Changes - The company opened six new restaurants in 2024, with three additional openings in January 2025, bringing the total to 46 locations [15] - Comparable same-store sales for 2024 were down 5.6% year-over-year, but early 2025 saw a return to growth with positive 1% comp figures [17][19] Market Data and Key Metrics Changes - The company experienced a 21% year-over-year total revenue growth in Q4 2024, with revenue reaching $54.7 million [12][26] - The cost of goods sold as a percentage of restaurant sales increased by 160 basis points in Q4 2024 compared to the previous year [26] Company Strategy and Development Direction - The company aims to open 10 to 13 new restaurants in 2025, with a medium-term goal of around 75 total restaurants by the end of 2026 [22][36] - The company is planning international expansion, with at least two locations in South Korea planned for 2025 [22][23] Management's Comments on Operating Environment and Future Outlook - Management noted that the business model does not rely on comparable restaurant sales growth but focuses on expanding store count [17] - The board approved a stock buyback program for up to $5 million, reflecting confidence in the company's future [19] Other Important Information - The company reported a net loss before income taxes of $1.2 million in Q4 2024, attributed to preopening costs [29] - The company maintains a healthy liquidity position with $23.7 million in cash and cash equivalents and no material long-term debt aside from government-funded loans [33][34] Q&A Session Summary - No specific questions or answers were documented in the provided content, indicating that the Q&A session may not have occurred or was not included in the records [38]