Financial Data and Key Metrics Changes - The company generated a 2.2% year-over-year increase in total revenue to $55 million for Q2 2025, attributed to new restaurant openings [15][61] - Cost of goods sold as a percentage of restaurant sales increased by 97 basis points to 33.8% in Q2 2025, reflecting inflationary cost increases and more new restaurants in operation [16][61] - The company reported a net loss before income taxes of $1.8 million, equating to $0.05 per diluted share, compared to a net income of $2.1 million or $0.06 per diluted share in Q2 2024 [18][63] - Adjusted net income was $1.2 million or $0.04 per diluted share in Q2 2025, down from $4.4 million or $0.13 per share in the same period last year [19][64] - Restaurant level adjusted EBITDA was 16.3% for Q2 2025, an increase of 70 basis points from the previous year [20][65] Business Line Data and Key Metrics Changes - The company opened seven new restaurants in 2025, with a total of nine new restaurants opened year-to-date, on pace to exceed the target of 12 to 13 new stores [5][51] - The average unit volume (AUV) revenue is $5.3 million per restaurant, which is considered elite in the casual dining space [9][53] Market Data and Key Metrics Changes - The company experienced a sharp downturn in customer traffic in April due to global tariffs and immigration policies affecting regions with a large Hispanic customer base, which accounts for 35 of its 52 restaurants [6][52] - Improvements in sales and costs were noted starting in July, indicating a recovery from the downturn [8][52] Company Strategy and Development Direction - The company is focused on a value-oriented experimental dining model, which is believed to resonate with guests and support long-term growth [5][50] - Plans for international expansion include additional restaurant openings in South Korea, with the first store opened in a suburb of Seoul [5][50] - The company is enhancing its product offerings, including gift cards and packaged products, to diversify revenue streams beyond restaurant sales [12][58] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing macro pressures but expressed confidence in the company's growth strategy and operational efficiencies [4][5] - The company is implementing automation and AI tools to improve labor efficiency and overall margins [36][83] - Management remains committed to their guidance of 17% to 18% on four-wall margins despite recent challenges [81][82] Other Important Information - As of June 30, 2025, the company had $9.6 million in cash and cash equivalents, with only $7 million in long-term bank debt [20][66] - The balance sheet reflects $166 million in lease liabilities, offset by $142 million in operating lease assets, indicating no material debt [21][67] Q&A Session Summary Question: Can you quantify the same store sales progression throughout the quarter and the improvement seen in July? - Management noted a significant decline in sales during April, May, and June, with a bounce back in July, aided by a 2.8% price increase at the beginning of the year [25][28][73] Question: How have the new units from Q1 been performing, and what is the status of the South Korea location? - The new openings from Q1 are performing at an average level, while the South Korea location is seeing slow but improving sales [29][30][76] Question: What is the tracking of premium menu adoption and its implications for COGS? - Management indicated a COGS differential of 0.5% to 1% with an expected sales increase of 5% to 7% as premium menu items are rolled out [31][32][77] Question: Any updates on guidance for revenue and four-wall margin? - Management confirmed that projections for 17% to 18% on four-wall margins remain unchanged despite the challenging quarter [35][81] Question: What operational efficiencies are being implemented to offset macro challenges? - The company is deploying automation and AI tools to enhance labor efficiency, expecting to see benefits in margins in the upcoming quarters [36][83] Question: Is the quality of general managers the biggest challenge to accelerating unit development? - Management stated that the challenge is multifaceted, including the need for quality managers, real estate, and capital [37][85]

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The unaudited statements present the company's financial position, results of operations, and cash flows for the recent three and six-month periods [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased to $246.3 million, driven by new property and equipment, while cash and cash equivalents decreased significantly | Balance Sheet Highlights (in thousands) | June 30, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $9,610 | $23,675 | | Property and equipment, net | $63,978 | $52,639 | | Operating lease assets | $142,025 | $131,542 | | **Total assets** | **$246,327** | **$240,415** | | **Liabilities & Equity** | | | | Total current liabilities | $37,880 | $41,069 | | Operating lease liabilities, net of current | $159,898 | $147,898 | | **Total liabilities** | **$203,801** | **$194,798** | | **Total permanent equity** | **$41,026** | **$44,117** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Revenue grew slightly in Q2 2025, but rising operating expenses led to a net loss of $1.7 million, reversing a prior-year profit | Income Statement Summary (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | **$55,041** | **$53,860** | **$112,377** | **$104,620** | | Total costs and expenses | $56,921 | $52,247 | $116,433 | $102,899 | | (Loss) income from operations | ($1,880) | $1,613 | ($4,056) | $1,721 | | **Net (loss) income** | **($1,698)** | **$2,064** | **($3,662)** | **$5,761** | | Net (loss) income per share (diluted) | ($0.05) | $0.06 | ($0.11) | $0.17 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the first half of 2025, significant cash usage in investing activities for expansion led to a net decrease in cash of $14.1 million | Cash Flow Summary (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $5,480 | $9,070 | | Net cash used in investing activities | ($16,467) | ($11,383) | | Net cash used in financing activities | ($3,228) | ($1,089) | | **Net change in cash and cash equivalents** | **($14,065)** | **($3,402)** | | Cash and cash equivalents at end of period | $9,610 | $29,229 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's expansion to 50 restaurants, significant supplier concentration, and total lease and TRA liabilities - The company expanded to **50 restaurants** in operation as of June 30, 2025, up from 43 at the end of 2024, with six new leases signed in Q2 2025[26](index=26&type=chunk) - The company has a significant concentration risk with its food supplier, Sysco, which accounted for **71.8% of total food costs** for the six months ended June 30, 2025[44](index=44&type=chunk) - Total operating lease liabilities amounted to **$166.2 million** as of June 30, 2025, with a weighted-average remaining lease term of 15.3 years[104](index=104&type=chunk)[106](index=106&type=chunk) - The liability related to the Tax Receivable Agreement (TRA) increased to **$1.1 million** as of June 30, 2025, from $691 thousand at the end of 2024[121](index=121&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses revenue growth from new stores offset by declining comparable sales and rising costs, leading to a net loss and reduced liquidity [Business Trends and Overview](index=36&type=section&id=Business%20Trends%20and%20Overview) The company is focused on aggressive expansion, opening seven new restaurants in the first half of 2025 with seven more under development - The company has grown to **52 company-owned restaurants** across 12 states and South Korea[144](index=144&type=chunk) - In the first half of 2025, **seven new restaurants were opened**, with an additional seven under development for completion by year-end[146](index=146&type=chunk) [Key Performance Indicators](index=38&type=section&id=Key%20Performance%20Indicators) Key performance indicators showed negative trends, with declines in Average Unit Volume, revenue per square foot, and comparable restaurant sales | Key Metrics | Twelve Months Ended June 30, 2025 | Twelve Months Ended June 30, 2024 | | :--- | :--- | :--- | | Average Unit Volume (in thousands) | $5,342 | $5,706 | | Revenue per square foot | $797 | $841 | | Comparable Restaurant Sales Change | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--- | :--- | :--- | | Change (%) | (7.2)% | (4.4)% | | Comparable restaurant base | 36 | 36 | [Results of Operations](index=42&type=section&id=Results%20of%20Operations) Revenue growth from new stores was outpaced by rising operating and administrative expenses, resulting in an operating loss of $4.1 million for H1 2025 - Q2 2025 revenue increased **2.2% YoY**, primarily due to operating 50 restaurants versus 40 in the prior year[179](index=179&type=chunk) - Q2 2025 food costs rose **5.2% YoY**, increasing as a percentage of revenue to 33.8% from 32.9% due to inflation and more restaurants[180](index=180&type=chunk) - General and administrative expenses for H1 2025 increased by **31.3% to $12.8 million**, driven by marketing and personnel costs for expansion[197](index=197&type=chunk) [Non-GAAP Financial Measures](index=47&type=section&id=Non-GAAP%20Financial%20Measures) Non-GAAP metrics like Adjusted EBITDA and Restaurant-Level Adjusted EBITDA showed significant year-over-year declines in both absolute value and margin percentage | Reconciliation to Adjusted EBITDA (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net (loss) income | ($1,698) | $2,064 | | EBITDA | $376 | $3,548 | | **Adjusted EBITDA** | **$1,854** | **$4,875** | | Adjusted EBITDA Margin | 3.4% | 9.1% | | Reconciliation to Restaurant-Level Adjusted EBITDA (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | (Loss) income from Operations | ($1,880) | $1,613 | | **Restaurant-Level Adjusted EBITDA** | **$8,958** | **$10,243** | | Restaurant-Level Adjusted EBITDA Margin | 16.3% | 19.0% | [Liquidity and Capital Resources](index=50&type=section&id=Liquidity%20and%20Capital%20Resources) The company's cash position declined to $9.6 million due to $16.4 million in capital expenditures for new restaurants, resulting in a working capital deficit - Cash and cash equivalents decreased to **$9.6 million** as of June 30, 2025, from $23.7 million at December 31, 2024[209](index=209&type=chunk) - Net cash used in investing activities for H1 2025 was **$16.4 million**, reflecting the purchase of property and equipment for expansion[221](index=221&type=chunk) - In May 2025, the Board declared a **$0.03 per share dividend**, which was paid in June 2025 for a total of $988 thousand[216](index=216&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=56&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from commodity price volatility, broad inflation impacting costs, and interest rate changes on its variable-rate debt - Profitability is dependent on reacting to changes in food and beverage costs, which are affected by exchange rates, tariffs, and commodity prices[236](index=236&type=chunk) - Inflation impacts food, labor, and energy costs, and the ability to mitigate this through price increases may be limited[237](index=237&type=chunk)[238](index=238&type=chunk) - The company is exposed to interest rate risk through its line of credit and a **$2.0 million loan**, both with variable interest rates[239](index=239&type=chunk) [Item 4. Controls and Procedures](index=56&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal controls during the quarter - Based on an evaluation, management concluded that disclosure controls and procedures were **effective** as of June 30, 2025[241](index=241&type=chunk) - **No material changes** were made to the company's internal control over financial reporting during the quarter ended June 30, 2025[242](index=242&type=chunk) [PART II. OTHER INFORMATION](index=58&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=58&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course legal claims, including several lawsuits from ex-employees, none of which are expected to be materially adverse - The company is a party to several lawsuits brought by ex-employees in Los Angeles County, California, alleging labor law violations[113](index=113&type=chunk) - Management does not expect the outcome of current legal proceedings to have a **material impact** on the company's financial statements[113](index=113&type=chunk)[245](index=245&type=chunk) [Item 1A. Risk Factors](index=58&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to previously disclosed risk factors, except for the removal of the risk related to not paying dividends - The risk factor stating the company does not intend to pay dividends has been **deleted**, reflecting the recent dividend declaration[246](index=246&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=58&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item is not applicable for the reporting period - Not Applicable[247](index=247&type=chunk) [Item 5. Other Information](index=58&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted, modified, or terminated any Rule 10b5-1 trading plans during the most recent fiscal quarter - No directors or officers adopted, modified, or terminated any **Rule 10b5-1 trading plans** during the quarter[250](index=250&type=chunk) [Item 6. Exhibits](index=59&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including required CEO and CFO certifications and Inline XBRL data files - Exhibits filed include CEO and CFO certifications pursuant to **Sarbanes-Oxley Sections 302 and 906**[253](index=253&type=chunk)

[GEN Restaurant Group Q2 2025 Earnings Release](index=1&type=section&id=GEN%20Restaurant%20Group%20Q2%202025%20Earnings%20Release) The company reports a slight revenue increase alongside a net loss, driven by aggressive expansion and rising operating costs [Financial & Operational Highlights](index=1&type=section&id=Financial%20%26%20Operational%20Highlights) The company reports a 2.2% revenue increase to $55.0 million, a loss from operations, and significant expansion to 52 stores Q2 2025 Key Financial Metrics | Metric | Value | Percentage of Revenue | | :--- | :--- | :--- | | Total Revenue | $55.0 million | 100% | | Loss from Operations | $1.9 million | 3.4% | | Restaurant-level adjusted EBITDA | $9.0 million | 16.3% | - The company is expanding rapidly, opening its first restaurant in South Korea and seven new locations in the first half of 2025, bringing the **total store count to 52**[7](index=7&type=chunk) - GEN is on pace to **exceed its target of opening 12 to 13 new restaurants** by the end of 2025[6](index=6&type=chunk)[7](index=7&type=chunk) - The company maintained a cash and cash equivalents balance of **$9.6 million** as of June 30, 2025, and paid its first dividend of $0.03 per share during the quarter[7](index=7&type=chunk) [Management Commentary & Business Outlook](index=1&type=section&id=Management%20Commentary%20%26%20Business%20Outlook) Management highlights successful international expansion but acknowledges near-term economic headwinds impacting sales - The company successfully opened its first restaurant in South Korea, demonstrating its **ability to expand internationally**[5](index=5&type=chunk) - Management acknowledged economic headwinds, including tariffs and immigration concerns, which led to a **decrease in same-store sales traffic** in May and June, though customer traffic began to return in July[5](index=5&type=chunk) - The development pipeline remains strong, with plans to exceed the target of 12-13 new restaurants in 2025, supported by **7 additional restaurants currently under development**[6](index=6&type=chunk) - The company is in a strong financial position with **$9.6 million in cash**, no material long-term debt, and full availability of a $20 million line of credit, enabling it to execute strategic priorities[6](index=6&type=chunk)[8](index=8&type=chunk) [Detailed Financial Performance Analysis](index=2&type=section&id=Detailed%20Financial%20Performance%20Analysis) An analysis of revenue growth, rising operating expenses, and the resulting decline in profitability and net income [Revenue Analysis](index=2&type=section&id=Revenue%20Analysis) Total revenue increased 2.2% year-over-year to $55.0 million, driven by the addition of new restaurant locations Revenue Comparison (Q2 2025 vs Q2 2024) | Period | Revenue | Year-over-Year Growth | | :--- | :--- | :--- | | Q2 2025 | $55.0 million | 2.2% | | Q2 2024 | $53.9 million | - | - The revenue growth was a result of having **50 restaurants open in Q2 2025** versus 40 restaurants in Q2 2024[9](index=9&type=chunk) [Operating Expenses & Profitability](index=2&type=section&id=Operating%20Expenses%20%26%20Profitability) Higher costs for goods, occupancy, and pre-opening activities drove operating expenses up and led to a loss from operations - Total restaurant operating expenses as a percentage of revenue **increased by 416 basis points** year-over-year, from 87.6% to 91.7%[10](index=10&type=chunk) Year-over-Year Change in Operating Expense Components (as % of Revenue) | Expense Category | Basis Point Change (YoY) | Primary Driver | | :--- | :--- | :--- | | Cost of goods sold | +97 bps | New restaurants and inflation | | Payroll and benefits | -29 bps | Labor efficiencies | | Occupancy costs | +116 bps | New restaurant openings | | Other operating costs | +78 bps | N/A | | Depreciation and amortization | +87 bps | N/A | Profitability Comparison (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | (Loss) Income from Operations | $(1.9) million | $1.6 million | | (Loss) Income from Operations Margin | (3.4)% | 3.0% | | Adjusted EBITDA | $1.9 million | $4.9 million | | Adjusted EBITDA Margin | 3.4% | 9.1% | [Net Income (Loss) & EPS](index=2&type=section&id=Net%20Income%20(Loss)%20%26%20EPS) The company reported a net loss before taxes of $1.8 million, a significant decline from the prior year's net income Net (Loss) Income & EPS Comparison (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net (Loss) Income before Taxes | $(1.8) million | $2.1 million | | Net (Loss) per Share (Diluted) | $(0.05) | $0.06 | | Adjusted Net Income | $1.2 million | $4.4 million (recalculated from table) | | Adjusted Net Income per Share (Diluted) | $0.04 | $0.13 | - The decrease in net income was primarily due to **higher costs related to new restaurant development**, including pre-opening and occupancy expenses for ten additional stores[12](index=12&type=chunk) [Balance Sheet & Liquidity](index=3&type=section&id=Balance%20Sheet%20%26%20Liquidity) The company maintains a solid liquidity position with $9.6 million in cash, no material long-term debt, and a full credit line - The company had **$9.6 million in cash and cash equivalents** as of June 30, 2025[15](index=15&type=chunk) - GEN operates with **no material long-term debt** and has access to $20.0 million in total available liquidity through its line of credit[15](index=15&type=chunk) [Financial Statements & Reconciliations](index=5&type=section&id=Financial%20Statements%20%26%20Reconciliations) This section provides detailed unaudited financial statements and reconciliations of GAAP to non-GAAP measures [Condensed Consolidated Income Statements](index=5&type=section&id=Condensed%20Consolidated%20Income%20Statements) The income statement details a shift from a $2.1 million net income in Q2 2024 to a $1.7 million net loss in Q2 2025 Q2 Income Statement Highlights (in thousands) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Revenue | $55,041 | $53,860 | | Total costs and expenses | $56,921 | $52,247 | | (Loss) income from operations | $(1,880) | $1,613 | | Net (loss) income | $(1,698) | $2,064 | [Selected Balance Sheet & Operating Data](index=6&type=section&id=Selected%20Balance%20Sheet%20%26%20Operating%20Data) Key balance sheet data shows total assets of $246.3 million, while operating data reveals a 7.2% decline in comparable sales Selected Balance Sheet Data (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $9,610 | $23,675 | | Total assets | $246,327 | $240,415 | | Total liabilities | $203,801 | $194,798 | Q2 Selected Operating Data | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Restaurants at end of period | 50 | 40 | | Comparable restaurant sales | (7.2)% | (5.6)% | | Restaurant level Adj. EBITDA margin | 16.3% | 19.0% | [Non-GAAP Reconciliations](index=7&type=section&id=Non-GAAP%20Reconciliations) Tables reconcile GAAP measures like Net Loss to non-GAAP metrics such as Adjusted EBITDA and Adjusted Net Income Q2 2025 Non-GAAP Reconciliation Summary (in thousands) | GAAP Measure | GAAP Value | Non-GAAP Measure | Non-GAAP Value | | :--- | :--- | :--- | :--- | | Net (loss) income | $(1,698) | Adjusted EBITDA | $1,854 | | (Loss) income from Operations | $(1,880) | Restaurant-Level Adjusted EBITDA | $8,958 | | Net (loss) income | $(1,698) | Adjusted Net income | $1,244 | [Non-GAAP Financial Measures Definitions](index=3&type=section&id=Non-GAAP%20Financial%20Measures%20Definitions) The company defines non-GAAP metrics used to help investors understand core business performance trends - **Restaurant-level adjusted EBITDA** is defined as income from operations adjusted for depreciation and amortization, pre-opening costs, general and administrative expenses, and non-cash lease expense[16](index=16&type=chunk) - **Adjusted EBITDA** is defined as net income before net interest expense, income taxes, depreciation and amortization, and other specific adjustments like stock-based compensation and litigation accruals[17](index=17&type=chunk) - **Adjusted Net Income** is defined as net income adjusted for items such as pre-opening costs, non-cash stock-based compensation, and their related tax impacts[18](index=18&type=chunk) [Conference Call Information](index=3&type=section&id=Conference%20Call%20Information) Details for the Q2 2025 earnings conference call, including date, time, and access information, are provided - A conference call was scheduled for **August 6, 2025, at 5:00 p.m. ET** to discuss Q2 2025 results[20](index=20&type=chunk)[21](index=21&type=chunk)

Core Insights - GEN Restaurant Group, Inc. reported a total revenue increase of 2.2% year-over-year to $55.0 million for Q2 2025, driven by the expansion of its restaurant count from 40 to 50 locations [6][7][23] - The company opened its first restaurant in South Korea and plans to exceed its target of 12 to 13 new restaurants by the end of 2025, with 7 additional locations currently under development [4][5][7] - Despite facing economic headwinds, including tariffs and immigration concerns, the company remains optimistic about its growth trajectory, supported by strong cash flow and a robust development pipeline [4][5] Financial Performance - The loss from operations for Q2 2025 was $1.9 million, representing 3.4% of revenue, compared to an income from operations of $1.6 million in Q2 2024 [7][10][28] - Restaurant-level adjusted EBITDA was $9.0 million, or 16.3% of revenue, for the quarter, showing an improvement from 15.6% in Q1 2025 [7][8][28] - General and administrative expenses increased to $6.4 million, or 11.6% of revenue, in Q2 2025, up from $5.1 million, or 9.4% of revenue, in Q2 2024 [9][10] Operational Highlights - The company has a total of 52 locations across eleven states and South Korea as of July 2025, with plans for further expansion [7][19] - Cash and cash equivalents stood at $9.6 million as of June 30, 2025, with no material long-term debt and full access to a $20 million line of credit [5][11][27] - The company paid its first dividend of $0.03 per share during the second quarter [7][11] Cost Structure - Total restaurant operating expenses as a percentage of revenue increased to 91.7% in Q2 2025 from 87.6% in Q2 2024, primarily due to higher costs associated with new restaurant openings [8][9] - Payroll and benefits decreased by 29 basis points compared to Q2 2024, indicating improved labor efficiencies [13][28] - Pre-opening expenses rose to $2.1 million in Q2 2025 from $1.6 million in Q2 2024, reflecting the company's aggressive expansion strategy [13][28]

Core Insights - GEN Restaurant Group, Inc. has opened its 13th location in Texas, specifically in El Paso, marking it as the 9th new restaurant opened by the company this year, indicating strong growth momentum [1][2] Company Overview - 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, and has expanded to over 50 company-owned locations [3] - The restaurant offers a unique dining experience where guests serve as their own chefs, cooking meals on embedded grills at their tables, featuring a menu that includes traditional Korean and Korean-American dishes [3] Strategic Importance - The El Paso location is strategically positioned to attract customers from both Texas and the surrounding communities, including New Mexico and Mexico, enhancing the company's reach [2] - The CEO of GEN highlighted the strong demand for the brand's cuisine and value proposition in Texas, emphasizing the significance of this new location [2]

Core Viewpoint - GEN Restaurant Group, Inc. will hold a conference call on August 6, 2025, to discuss its financial results for Q2 2025, which ended on June 30, 2025 [1] Group 1: Conference Call Details - The conference call will be hosted by Chairman and CEO David Kim and CFO Tom Croal [2] - The call is scheduled for 5:00 p.m. Eastern time (2:00 p.m. Pacific time) [2] - Participants can join via a toll-free dial-in number or an international dial-in number, with a conference ID provided [2] Group 2: Webcast and Replay Information - The conference call will be broadcast live via webcast and will be available for replay on the company's investor relations website [3] - A telephonic replay will be available after 8:00 p.m. Eastern time on the same day through August 13, 2025 [3] Group 3: Company Overview - GEN Korean BBQ is one of the largest Asian casual dining restaurant concepts in the U.S., founded in 2011 [3] - The brand has over 50 company-owned locations, offering a unique "grill at your table" dining experience [3] - The menu features traditional Korean and Korean-American food, including high-quality meats, poultry, seafood, and mixed vegetables [3]

Core Viewpoint - GEN Restaurant Group, Inc. continues its expansion in Texas, opening its eighth restaurant in 2025, indicating strong performance and progress towards its expansion goals [1][2]. Group 1: Expansion and Growth - The new GEN Korean BBQ location in Waco, Texas, is part of the company's strategy to share its all-inclusive, value-focused dining experience with more communities [2]. - The Waco location is strategically positioned near Baylor University, allowing access to a diverse demographic [2]. Group 2: Company Overview - GEN Korean BBQ is one of the largest Asian casual dining concepts in the U.S., founded in 2011, and has grown to over 40 company-owned locations [3]. - The restaurant offers a unique dining experience where guests prepare their meals on embedded grills, featuring a menu that includes traditional Korean and Korean-American dishes [3].

Core Insights - GEN Restaurant Group, Inc. has opened its first international location in Ilsan, South Korea, marking a significant milestone in its global expansion strategy [1][2] - The company aims to honor its cultural heritage while enhancing its domestic offerings by introducing authentic Korean flavors to the international market [2] - The Ilsan location is the first of three planned international sites in South Korea, indicating a strategic approach to growth in a competitive dining market [3] Company Overview - GEN Korean BBQ is one of the largest Asian casual dining concepts in the United States, founded in 2011 by two Korean immigrants in Los Angeles [3] - The brand operates over 40 company-owned locations, offering a unique dining experience where guests grill their own meals at the table [3] - The menu features a wide range of traditional Korean and Korean-American dishes, appealing to a diverse customer base [3]

Financial Data and Key Metrics Changes - In Q1 2025, the company reported a 13% year-over-year increase in total revenues to $57.3 million, driven by restaurant expansion and existing location success [5][18] - Same store sales decreased by 0.7% in Q1 2025, a significant improvement from a 5.6% decline in 2024 [6][7] - Restaurant level adjusted EBITDA margin was 15.6%, slightly below the annual goal of 17-18% due to costs from new openings [7][20] - The company experienced a net loss before income taxes of $2.1 million in Q1 2025, compared to a net income of $3.8 million in Q1 2024, which included a one-time gain [22][23] Business Line Data and Key Metrics Changes - The company opened six new restaurants in Q1 2025, increasing the total to 49 locations, with plans for 12-13 new stores by February 2026 [6][28] - Adjusted EBITDA for Q1 2025 was $1.2 million, down from $6.4 million in Q1 2024, but improved when excluding a one-time gain [23][24] Market Data and Key Metrics Changes - The company is expanding into South Korea, planning to open three new restaurants in 2025, with the first expected by the end of Q2 [15][16] - The construction cost for new units in South Korea is projected to be 25-30% lower than in the US, enhancing potential returns [58] Company Strategy and Development Direction - The company focuses on a value-priced all-inclusive dining model, which is expected to support long-term growth [5][18] - Initiatives include enhancing training programs, expanding gift card sales through major retailers, and testing dual concept stores [11][12][13] - The company is prepared to pause new unit expansion if tariffs significantly impact construction costs [17][50] Management's Comments on Operating Environment and Future Outlook - Management acknowledged macroeconomic pressures affecting consumer demand, particularly in recent months [32][33] - The company remains confident in achieving revenue targets of $245-250 million for 2025 and an annual run rate approaching $300 million by year-end [16][28] Other Important Information - The company has a strong liquidity position with $15.4 million in cash and only $5 million in long-term debt [24][27] - The founding group retains 85% ownership, aligning their interests with public shareholders [25] Q&A Session Summary Question: Can you discuss same store sales progression in Q1 and current trends? - Management noted strong performance in January and February, but a slight decline in March and continuing negative trends in April and May [32][33] Question: What gives confidence in achieving the 17-18% EBITDA margin target for 2025? - Management indicated that Q1 is typically the lowest quarter and expects to improve margins as the year progresses [47][48] Question: What are the expectations regarding the impact of tariffs on new builds? - Management expressed uncertainty about price increases for equipment and materials from China but is prepared to pause construction if necessary [50][51] Question: How are the new restaurant openings performing? - Management stated it is too early to assess performance, with mixed results from the new locations [52] Question: Can you break down Q1 performance in terms of average check versus traffic? - Management reported a 2.5% increase in average check but a 10-11% reduction in customer traffic, resulting in a less than 1% overall decline [56] Question: What are the expectations for the South Korean market? - Management highlighted the competitive landscape and lower construction costs, indicating potential for strong returns despite economic pressures [58][60] Question: What is the current redemption rate for gift cards? - Management reported stabilization around 65%, with indications that gift card users tend to spend more during visits [61][62]

Financial Data and Key Metrics Changes - In Q1 2025, the company reported a 13% year-over-year increase in total revenues to $57.3 million, driven by restaurant expansion and success in existing locations [5][19] - Same store sales decreased by 0.7% in Q1 2025, a significant improvement from a 5.6% decline in 2024 [7] - Restaurant level adjusted EBITDA margin was approximately 15.6%, slightly below the annual goal of 17-18% due to costs from new restaurant openings [7][19] - The company reported a net loss before income taxes of $2.1 million, compared to a net income of $3.8 million in Q1 2024, which included a one-time gain [21][22] Business Line Data and Key Metrics Changes - The company opened six new restaurants in Q1 2025, increasing the total to 49, with plans to open 12-13 new stores by February 2026 [6][16] - Adjusted EBITDA for Q1 2025 was $1.2 million, down from $6.4 million in Q1 2024, but adjusted EBITDA excluding one-time gains was $3.3 million, only slightly down from $3.6 million in Q4 2024 [22] Market Data and Key Metrics Changes - The company is expanding into South Korea, planning to open three new restaurants in 2025, with the first expected to open by the end of Q2 [15][16] - The construction cost for new units in South Korea is projected to be 25-30% lower than in the US, providing compelling potential returns [55] Company Strategy and Development Direction - The company focuses on a value-priced all-inclusive dining model, which is expected to support long-term growth [5] - The dual concept store model, combining Jen and Con Sushi, aims to capture more customers and improve operational efficiency [13][14] - The company is exploring partnerships for gift card sales to enhance brand strength and customer engagement [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged macroeconomic pressures affecting consumer demand, particularly in early 2025 [30][31] - The company remains confident in achieving its revenue target of $245-250 million for 2025 and aims for an annual run rate approaching $300 million by the end of the year [16][26] - Management is prepared to pause new restaurant development if tariff-related cost increases significantly impact ROI [17][47] Other Important Information - The company has a strong liquidity position with $15.4 million in cash and only $5 million in long-term debt [23][25] - The founder's ownership of 85% aligns their interests with public shareholders, supporting long-term growth strategies [24] Q&A Session Summary Question: Can you discuss same store sales progression in Q1 and current trends in Q2? - Management noted strong performance in January and February, but a slight decline in March and continued negative trends in April and May [30][31] Question: What gives confidence in achieving the 17-18% EBITDA margin target for 2025? - Management indicated that Q1 is typically the lowest quarter and expects to improve margins as the year progresses [43][44] Question: What are the expectations for build costs in 2025 amid tariff impacts? - Management expressed uncertainty about price increases for kitchen equipment and construction materials from China, indicating a potential pause in construction if costs rise significantly [47][48] Question: How are the new restaurant openings performing? - Management stated it is too early to assess performance, with mixed results from the new locations [49] Question: Can you break down Q1 performance in terms of average check versus traffic? - Management reported a 2.5% increase in average check but a 10-11% reduction in customer traffic, resulting in a net decline of less than 1% [52] Question: What are the prospects for the South Korean market? - Management highlighted the competitive landscape and lower construction costs, indicating a cautious but optimistic approach to expansion in South Korea [55][56] Question: What is the current redemption rate for gift cards? - Management indicated that the redemption rate has stabilized around 65%, which is above the industry average [58]