GEN Restaurant (GENK) - 2025 Q2 - Quarterly Results

GEN Restaurant Group Q2 2025 Earnings Release The company reports a slight revenue increase alongside a net loss, driven by aggressive expansion and rising operating costs Financial & Operational Highlights 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] - GEN is on pace to exceed its target of opening 12 to 13 new restaurants by the end of 2025[6][7] - 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] Management Commentary & Business Outlook 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] - 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] - 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] - 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][8] Detailed Financial Performance Analysis An analysis of revenue growth, rising operating expenses, and the resulting decline in profitability and net income Revenue Analysis 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] Operating Expenses & Profitability 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] 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 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] Balance Sheet & Liquidity 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] - 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] Financial Statements & Reconciliations This section provides detailed unaudited financial statements and reconciliations of GAAP to non-GAAP measures Condensed Consolidated Income Statements 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 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 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 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] - 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] - 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] Conference Call Information 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][21]