GENK GEN Restaurant Group Inc

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 12, 2024

GEN Restaurant Group, Inc.

(Exact name of Registrant as Specified in Its Charter)

Delaware	001-41727	87-3424935
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
11480 South Street, Suite 205 Cerritos, CA		90703
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (562) 356-9929

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Class A Common stock, par value $0.001 per share		GENK		The Nasdaq Stock Market LLC (The Nasdaq Global Market)

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

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Item 2.02 Results of Operations and Financial Condition

On November 12, 2024, GEN Restaurant Group, Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended September 30, 2024. A copy of the press release is furnished as Exhibit 99.1 to this report.

The information included or incorporated by reference in this Item 2.02, including Exhibit 99.1, is being furnished to the Securities and Exchange Commission (the “SEC”) and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits. The following exhibits are filed herewith.

 

Exhibit Number		Description
99.1		Press release, dated November 12, 2024, issued by GEN Restaurant Group, Inc.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

		GEN RESTAURANT GROUP, INC.
Date: November 12, 2024		By:	/s/ Thomas V. Croal
			Thomas V. Croal
			Chief Financial Officer

 

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Exhibit 99.1

GEN Restaurant Group, Inc. Announces Third Quarter 2024 Financial Results

Cerritos, CA, November 12, 2024 - 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 third quarter ended September 30, 2024.

 

Third Quarter 2024 Financial and Recent Operational Highlights

 

 

(1) Adjusted EBITDA, restaurant-level adjusted EBITDA, and adjusted net income are non-GAAP measures. For reconciliations of adjusted EBITDA, restaurant-level adjusted EBITDA, and adjusted net income to the most directly comparable GAAP measure see the accompanying financial tables. For definitions and a discussion of why we consider them useful, see “Non-GAAP Measures” below.

Management Commentary

“Our third quarter results reflect GEN's commitment to maintaining robust operational performance as we prepared our organization for a slate of new openings to close out the year,” said David Kim, Co-Chief Executive Officer of GEN. “We delivered an 8% increase year-over-year in total revenue with restaurant-level adjusted EBITDA margin above 18%, reflecting strong performance across our new restaurants. Furthermore, our premium menu is continuing to gain traction as we drive up-selling at the restaurant level. We also launched GEN gift cards at Costco, which have been selling exceptionally well, demonstrating the heightened demand for not only Korean BBQ but also the high-quality value we provide consumers.

“As we approach the end of 2024, our focus remains on executing our growth strategy while providing unparalleled customer value. With the addition of our three most recently opened restaurants, we remain on pace to reach our goal of opening a total of 10 to 11 new locations in 2024 and generating restaurant-level adjusted EBITDA margin of approximately 18%. Backed by over $22 million in cash and cash equivalents, we’re confident we can achieve our expansion and operational goals that will drive sustained growth and profitability, ensuring long-term value creation for our shareholders as we continue to scale GEN Korean BBQ into new markets.”

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Third Quarter 2024 Financial Results

Total revenue increased 7.8% to $49.1 million in the third quarter of 2024 compared to $45.6 million in the third quarter of 2023. Comparable restaurant sales decreased 9.6% in the third quarter of 2024 compared to the same period last year.

Total restaurant operating expenses (excluding pre-opening expenses) as a percentage of revenue increased 80 basis points to 85.4% in the third quarter of 2024 from 84.6% in the third quarter of 2023. The year-over-year and quarter-over-quarter changes as a percentage of revenue are primarily driven by the following:

General and administrative expenses increased to $4.5 million, or 9.1% as a percentage of total revenue, excluding non-cash stock compensation expense, for the third quarter of 2024, largely due to additional personnel required for new restaurant development as well as increased insurance costs related to the Company’s growth.

Net income was $0.2 million or $0.01 per diluted share of Class A common stock for the third quarter of 2024 compared to $2.6 million or $0.08 per diluted share of Class A common stock in the third quarter of 2023. The decrease was primarily due to increased expenses for new restaurant development. Adjusted net income, which represents net income plus non-cash stock-based compensation, was $0.9 million or $0.03 per diluted share of Class A common stock for the third quarter of 2024.

Adjusted EBITDA was $3.4 million or 7.0% of revenue, inclusive of pre-opening expense of approximately $1.8 million for the third quarter of 2024, compared to $5.0 million or 11.0% of revenue, inclusive of pre-opening expenses of $0.7 million in the prior year period.

As of September 30, 2024, the Company had $22.1 million in cash and cash equivalents compared to $29.2 million at June 30, 2024, the decline is primarily due to internally financing new restaurant openings, which are continuing to generate positive free cash flow. The Company continues to operate with no long-term debt, aside from approximately $4.4 million in government-funded EIDL loans.

Non-GAAP Measures

Restaurant-level adjusted EBITDA represents income (loss) from operations plus adjustments to add-back the following expenses: depreciation and amortization, pre-opening costs, general and administrative expenses, related party consulting fees, management fees and non-cash lease expense. Management believes that restaurant-level adjusted EBITDA is useful to investors because this measure highlights trends in our core business that may not otherwise be apparent to investors when relying solely on GAAP financial measures and enabling investors to more effectively compare the Company’s performance to prior and future periods.

Adjusted EBITDA represents net income (loss) before net interest expense, income taxes, depreciation and amortization, and consulting fees paid to a related party and we also exclude non-recurring items, such as stock-based

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compensation expense, gain on extinguishment of debt, and Restaurant Revitalization Fund, or RRF, grants, employee retention credits, litigation accruals, aborted deferred IPO costs written off, non-cash lease expenses and non-cash lease expense related to pre-opening costs. Management believes that restaurant-level adjusted EBITDA is useful to investors because this measure highlights trends in our core business that may not otherwise be apparent to investors when relying solely on GAAP financial measures and enabling investors to more effectively compare the Company’s performance to prior and future periods.

Adjusted net income represents net income plus non-cash stock-based compensation. Management believes that adjusted net income is useful to investors because this measure highlights trends in our core business that may not otherwise be apparent to investors when relying solely on GAAP financial measures and enabling investors to more effectively compare the Company’s performance to prior and future periods.

Conference Call

GEN will conduct a conference call today at 5:00 p.m. Eastern time to discuss its results for the third quarter ended September 30, 2024.

David Kim, Co-Chief Executive Officer, and Tom Croal, Chief Financial Officer, will host the conference call, followed by a question-and-answer session.

Date: Tuesday, November 12, 2024

Time: 5:00 p.m. Eastern time (2:00 p.m. Pacific time)

Toll-free dial-in number: 1-844-825-9789

International dial-in number: 1-412-317-5180

Conference ID: 10193281

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Group at 949-574-3860.

The conference call will be broadcast live and available for replay here and via the investor relations section of the Company’s website at www.genkoreanbbq.com.

A telephonic replay of the conference call will also be available after 8:00 p.m. Eastern Time on the same day through November 19, 2024.

Toll-free replay number: 1-844-512-2921

International replay number: 1-412-317-6671

Replay ID: 10193281

About GEN Restaurant Group, Inc.

GEN Korean BBQ is one of the largest Asian casual dining restaurant concepts in the United States. Founded in 2011 by two Korean immigrants in Los Angeles, the brand has now grown to 43 company-owned locations where guests serve as their own chefs, preparing meals on embedded grills in the center of each table. The extensive menu consists of traditional Korean and Korean-American food, including high-quality meats, poultry, seafood and mixed vegetables. With its unique culinary experience alongside its modern décor and lively atmosphere, GEN Korean BBQ delivers an engaging and interactive dining experience that appeals to a vast segment of the population. For more information, visit GenKoreanBBQ.com and follow the brand on Facebook and Instagram.

Forward-Looking Statements

This press release contains forward-looking statements. Forward-looking statements may be identified by the use of words such as “believe,” “intend,” “expect”, “will,” “may”, and other similar words or expressions that predict or indicate future events. All statements that are not statements of historical fact are forward-looking statements, including any statements regarding our strategy, future operations, and growth prospects, any statements regarding

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future economic conditions or performance, any statements of belief or expectation, and any statements of assumptions underlying any of the foregoing or other future events. Forward-looking statements are based on current information available at the time the statements are made and on management’s reasonable belief or expectations with respect to future events, and are subject to risks and uncertainties, many of which are beyond the Company’s control, that could cause actual performance or results to differ materially from the belief or expectations expressed in or suggested by the forward-looking statements. Additional factors or events that could cause actual results to differ may also emerge from time to time, and it is not possible for the Company to predict all of them. Forward-looking statements speak only as of the date on which they are made, and the Company undertakes no obligation to update any forward-looking statement to reflect future events, developments or otherwise, except as may be required by applicable law. Investors are referred to the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, and in our subsequent filings with the Securities and Exchange Commission (“SEC”), which are available on the SEC’s website at www.sec.gov, for additional information regarding the risks and uncertainties that may cause actual results to differ materially from those expressed in any forward-looking statement.

Investor Relations Contact:

Cody Slach and Cody Cree

Gateway Group, Inc.

1-949-574-3860

GENK@gateway-grp.com

 

Media Relations Contact:

Zach Kadletz and Anna Rutter

Gateway Group, Inc.

1-949-574-3860

GENK@gateway-grp.com

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GEN RESTAURANT GROUP

Condensed Consolidated Income Statements

(in thousands, except per share amounts)

 

		Three months ended September 30,								Nine months ended September 30,
		2024				2023				2024				2023
		(unaudited)								(unaudited)
Revenue		$	49,105			$	45,564			$	153,726			$	135,899
Restaurant operating expenses:
Food cost			15,442				14,523				50,110				43,614
Payroll and benefits			14,977				14,444				47,491				42,419
Occupancy expenses			4,116				3,772				12,799				10,876
Operating expenses			5,728				4,582				16,185				13,007
Depreciation and amortization			1,695				1,232				4,938				3,476
Pre-opening costs			1,807				723				5,354				2,123
Total restaurant operating expenses			43,765				39,276				136,877				115,515
General and administrative			5,221				3,802				14,952				7,815
Consulting fees - related party			—				—				—				2,325
Management fees			—				—				—				1,176
Depreciation and amortization - corporate			31				21				89				58
Total costs and expenses			49,017				43,099				151,918				126,889
Income from operations			88				2,465				1,808				9,010
Employee retention credits			—				—				200				2,483
Other income (loss)			—				—				—				(7	)
Gain on remeasurement of previously held interest			—				—				3,402				—
Interest income (expense), net			196				190				734				(206	)
Equity in income (loss) of equity method investee			—				53				(17	)			520
Net income before income taxes			284				2,708				6,127				11,800
Provision for income taxes			(115	)			(74	)			(198	)			(171	)
Net income			169				2,634				5,929				11,629
Less: Net income attributable to noncontrolling interest			144				2,297				5,133				3,198
Net income attributable to GEN Restaurant Group, Inc.			25				337				796				8,431
Net income attributable to Class A common stock per share - basic and diluted (1)		$	25				337			$	796				348
Weighted-average shares of Class A common stock outstanding - basic (1)			4,861				4,140				4,585				4,140
Weighted-average shares of Class A common stock outstanding - diluted (2)			4,861				4,140				4,585				4,140
Net income per share of Class A common stock - basic		$	0.01			$	0.08			$	0.17			$	0.08
Net income per share of Class A common stock - diluted		$	0.01			$	0.08			$	0.17			$	0.08

 

(1) (2) Basic and diluted net income per share of Class A common stock is presented only for the period after the Company’s organization transactions.

 

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GEN RESTAURANT GROUP

Selected Balance Sheet Data and Selected Operating Data

(in thousands, except restaurants and percentages; unaudited)

 

		For the period ending
		September 30, 2024				December 31, 2023
Selected Balance Sheet Data:
Cash and cash equivalents		$	22,053			$	32,631
Total assets		$	225,706			$	183,870
Total liabilities		$	177,739			$	146,352
Total Stockholders' equity		$	46,468			$	36,018

		Three months ended September 30,								Nine months ended September 30,
		2024				2023				2024				2023
Selected Operating Data
Restaurants at end of period			41				34				41				34
Comparable restaurant sales performance			-9.6	%			-1.2	%			-5.7	%		n/a
Net income		$	169			$	2,634			$	5,929			$	11,629
Net income margin			0.3	%			5.8	%			3.9	%			8.6	%
Adjusted EBITDA		$	3,436			$	5,012			$	14,678			$	17,207
Adjusted EBITDA margin			7.0	%			11.0	%			9.5	%			12.7	%
Income from operations		$	88			$	2,465			$	1,808			$	9,010
Income from operations margin			0.2	%			5.4	%			1.2	%			6.6	%
Restaurant level Adjusted EBITDA			8,961				8,387				27,636				26,286
Restaurant level Adjusted EBITDA margin			18.2	%			18.4	%			18.0	%			19.3	%

 

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GEN RESTAURANT GROUP

Reconciliation of Net Income to EBITDA and Adjusted EBITDA

(in thousands, except percentages; unaudited)

		Three months ended September 30,								Nine months ended September 30,
		2024				2023				2024				2023
EBITDA:
Net income		$	169			$	2,634			$	5,929			$	11,629
Net Income Margin			0.3	%			5.8	%			3.9	%			8.6	%
Interest income (expense), net			(196	)			(190	)			(734	)			206
Provision for income taxes			115				74				198				171
Depreciation and amortization			1,726				1,253				5,027				3,534
EBITDA		$	1,814			$	3,771			$	10,420			$	15,540
EBITDA Margin			3.7	%			8.3	%			6.8	%			11.4	%
Adjustments to EBITDA:
EBITDA		$	1,814			$	3,771			$	10,420			$	15,540
Stock-based compensation expense (1)			734				759				2,252				759
Consulting fees - related party (2)			—				—				—				2,325
Employee retention credits (3)			—				—				(200	)			(2,483	)
Non-cash lease expense (4)			119				144				495				303
Non-cash lease expense related to pre-opening costs (5)			769				338				1,711				763
Adjusted EBITDA		$	3,436			$	5,012			$	14,678			$	17,207
Adjusted EBITDA Margin			7.0	%			11.0	%			9.5	%			12.7	%

 

Reconciliation of Income from Operations to Restaurant-level Adjusted EBITDA

(in thousands, except percentages; unaudited)

		Three months ended September 30,								Nine Months Ended September 30,
		2024				2023				2024				2023
Income from Operations		$	88			$	2,465			$	1,808			$	9,010
Income Margin from Operations			0.2	%			5.4	%			1.2	%			6.6	%
Depreciation and amortization			1,726				1,253				5,027				3,534
Pre-opening costs			1,807				723				5,354				2,123
General and administrative			5,221				3,802				14,952				7,815
Consulting fees - related party			—				—				—				2,325
Management Fees			—				—				—				1,176
Non-cash lease expense			119				144				495				303
Restaurant-Level Adjusted EBITDA		$	8,961			$	8,387			$	27,636			$	26,286
Restaurant-Level Adjusted EBITDA Margin			18.2	%			18.4	%			18.0	%			19.3	%

(1) Stock-based compensation expense: During the three and nine months ended September 30, 2024, we incurred expenses related to the granting of Restricted Stock Units (“RSUs”) to employees.

(2) Consulting fees—related party: These costs ended following the completion of the IPO.

(3) Employee retention credits: These are refundable credits recognized under the provisions of the CARES Act.

(4) Non-cash lease expense: This reflects the extent to which lease expense is greater than or less than contractual rent.

(5) Non-cash lease expense related to pre-opening costs: This reflects cost for stores in development in which the lease expense is greater than the contractual rent.

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v3.24.3

Document and Entity Information	Nov. 12, 2024
Cover [Abstract]
Amendment Flag	false
Entity Central Index Key	0001891856
Document Type	8-K
Document Period End Date	Nov. 12, 2024
Entity Registrant Name	GEN Restaurant Group, Inc.
Entity Incorporation State Country Code	DE
Entity File Number	001-41727
Entity Tax Identification Number	87-3424935
Entity Address, Address Line One	11480 South Street
Entity Address, Address Line Two	Suite 205
Entity Address, City or Town	Cerritos
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	90703
City Area Code	(562)
Local Phone Number	356-9929
Written Communications	false
Soliciting Material	false
Pre Commencement Tender Offer	false
Pre Commencement Issuer Tender Offer	false
Security 12b Title	Class A Common stock, par value $0.001 per share
Trading Symbol	GENK
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	true
Entity Ex Transition Period	false

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