GEN Restaurant (GENK) - 2024 Q3 - Quarterly Report

Restaurant Operations - GEN Restaurant Group operates 43 company-owned restaurants across multiple states as of October 31, 2024[110]. - Six new restaurants were opened in 2023, with an additional eighteen new locations signed for future openings, including four in Texas and three in Florida[112]. - The company opened two new restaurants in October 2024, bringing the total to 41 restaurants by the end of the reporting period[126]. Financial Performance - Revenue for the three months ended September 30, 2024, was $49.1 million, an increase of$3.5 million or 7.8% compared to $45.6 million for the same period in 2023[144]. - Revenue for the nine months ended September 30, 2024, was$153.7 million, an increase of $17.8 million or 13.1$135.9 million for the same period in 2023, driven by an increase in the number of restaurants from 34 to 41[159]. - Net income for the three months ended September 30, 2024, was $169 thousand, a decrease of$2.5 million or 93.6% from $2.6 million in 2023[142]. - Net income for the nine months ended September 30, 2024, was$5.9 million, a decrease of 49.0% from $11.6 million in 2023[1]. - For the nine months ended September 30, 2024, net income attributable to GEN Restaurant Group, Inc. was$1,106,000, down from $9,167,000 in the same period last year[174]. Expenses - Total restaurant operating expenses increased by$4.5 million or 11.4% to $43.8 million for the three months ended September 30, 2024, compared to$39.3 million in 2023[142]. - Total restaurant operating expenses increased to $136.9 million for the nine months ended September 30, 2024, up$21.4 million or 18.5% from $115.5 million in 2023[1]. - General and administrative expenses increased by$1.4 million or 37.3% to $5.2 million for the three months ended September 30, 2024, compared to$3.8 million in 2023[151]. - General and administrative expenses surged to $15.0 million, a 91.3$7.8 million, with the percentage of revenue rising from 5.7% to 9.7%[165]. - Pre-opening costs rose significantly by $1.1 million or 149.9$1.8 million for the three months ended September 30, 2024, compared to $0.7 million in 2023[150]. - Pre-opening costs increased significantly to$5.4 million from $2.1 million, attributed to more restaurants under development[165]. Cash Flow and Financing - Cash as of September 30, 2024, was$22.0 million, down from $32.6 million as of December 31, 2023, with working capital decreasing from$5.5 million to $(2.7) million[180]. - Net cash provided by operating activities for the nine months ended September 30, 2024 was$10.5 million, down from $13.5 million in the same period of 2023, representing a decrease of approximately 22$22.6 million, compared to a net cash provided of $1.4 million in 2023, indicating a significant shift in cash flow[192][193]. - Net cash provided by financing activities for the nine months ended September 30, 2024 was$1.6 million, a decrease of approximately 74% from $6.1 million in the same period of 2023[194][195]. - A$20 million line of credit was established on September 29, 2023, with no amounts borrowed as of September 30, 2024[114]. Economic and Market Conditions - The company is exposed to inflation risks, particularly in food, beverage, labor, and energy costs, which could impact profitability if not managed effectively[207]. - The company has been able to partially offset inflationary pressures by increasing menu prices, but future cost increases may not be fully absorbed by customers[208]. - The company is subject to interest rate risk, with its line of credit bearing an interest rate at the Wall Street Journal Prime Rate plus 0.25%[210]. Grants and Loans - The company received $16.8 million in Restaurant Revitalization Fund grants, with$3.8 million deferred as of September 30, 2024[116]. - As of September 30, 2024, the outstanding balance on Economic Injury Disaster Loans (EIDLs) was approximately $4.4 million, with no additional EIDLs expected[113]. Other Financial Metrics - Average Unit Volume (AUV) decreased to$5,514 for the twelve months ended September 30, 2024, down from $5,963 in the previous year[122]. - Revenue per square foot declined to$783 for the twelve months ended September 30, 2024, compared to $888 for the same period in 2023[127]. - Interest income (expense), net was$196 thousand for the three months ended September 30, 2024, compared to $190 thousand in 2023, reflecting a slight increase of$6 thousand or 3.2%[153]. - Interest income (expense), net was $0.7 million for the nine months ended September 30, 2024, compared to a net expense of$0.2 million in 2023, primarily due to interest income from IPO proceeds[169].