GEN Restaurant Group's Store Opening Roadmap and Retail Margin Signals Don't Match

Date of Call: Mar 31, 2026

Financials Results

• Revenue: $49.7 million in Q4 2025, down $4.9 million YOY; full year 2025 revenue $212.5 million, up 2% YOY.
• EPS: Q4 2025 net loss per diluted share $0.36 vs. net loss $0.04 prior year; adjusted net loss per diluted share $0.09 vs. adjusted net income $0.04 prior year. Full year 2025 net loss per diluted share $0.59 vs. net loss $0.33 prior year.
• Gross Margin: Cost of goods sold as % of restaurant sales in Q4 2025 increased by 285 basis points to 36.9% vs. prior year. Full year 2025 increased from 33% in 2024 to 34.7%.
• Operating Margin: Restaurant level adjusted EBITDA margin in Q4 2025 7.9% vs. 17% Q4 2024; full year 2025 13.8% vs. 17.7% in 2024.

Guidance:

• Targeting full-year revenues of $215-$225 million in 2026.
• Restaurant level adjusted EBITDA margins in the 15%-15.5% range.
• Anticipate being at an annual run rate approaching $250 million in revenue by end of 2026.

Business Commentary:

Challenging Business Environment:

• GEN Korean BBQ experienced a 11.6% decrease in same-store sales for the fourth quarter, contributing to a total revenue decline of $4.9 million compared to the previous year.
• The downturn was driven by extreme pressure on their Hispanic customer base due to immigration enforcement and increased fuel prices, which reduced customer traffic and discretionary spending.

Strategic Shift and Joint Venture:

• The company completed 15 restaurant openings in 2025, but faced challenges leading to a $4.5 million write-down from a joint venture with Chubby Cattle International.
• This strategic move aimed to transform 5 underperforming restaurants into profitable ones under the Chubby Cattle brand, focusing on improving overall company profitability.

Retail and CPG Business Expansion:

• GEN Korean BBQ's Costco gift card program saw a 150% increase in sales, reaching $29 million in 2025.
• The company expanded its consumer packaged goods (CPG) business to over 800 locations, with plans to reach 1,500-2,000 locations by the end of 2026, leveraging its strong brand recognition and the growing demand for Korean food.

Financial Challenges and Cost Management:

• Cost of goods sold as a percentage of restaurant sales increased by 285 basis points to 36.9% in Q4 2025, and payroll and benefits rose by 97 basis points to 31.8%.
• Inflationary cost increases, new restaurant operations, and a focus on cost management were key factors impacting these financial metrics.

Future Revenue Projections:

• GEN Korean BBQ targets full-year revenues of $215 million-$225 million in 2026, with an adjusted EBITDA margin between 15%-15.5%.
• The projected revenue includes an estimated $10 million contribution from the retail business, highlighting a strategic shift towards grocery store initiatives to drive growth.

Sentiment Analysis:

Overall Tone: Positive

• Management cites strong early momentum in the new CPG grocery business, with expansion to 800+ locations and a projected $100M+ revenue run rate in 3 years. They express confidence in the brand's growth potential, stating, 'we’re executing with focus and discipline' and that the business has a 'solid operating model'.

Q&A:

• Question from George Kelly (Roth Capital Partners): Could you drill into the 2026 revenue guide ($215-$225M), including retail contribution, core restaurant comp expectations, and net openings?
  Response: Retail contribution expected to be ~$10M in 2026, pushing restaurant revenue to ~$205M. New store openings: 2 already opened, 5 under construction to be completed this year, possibly 1-2 more by early 2027. No closures contemplated beyond the Chubby Cattle joint venture.

• Question from George Kelly (Roth Capital Partners): Regarding the retail business, what are near-term profitability expectations and required investments to scale?
  Response: High teens EBITDA margin expected after accounting for slotting fees and promotions. Minimal new infrastructure costs as they leverage existing restaurant operations and reduce construction spend; scaling is primarily inventory-driven with a lag between order and delivery.

• Question from George Kelly (Roth Capital Partners): What gives confidence in the long-term expectations for the retail business (store count, revenue)?
  Response: Confidence is based on strong retailer interest and buy-in from supermarket buyers, high velocity meeting or exceeding shelf requirements, and a cultural tailwind from increased awareness of Korean food via media and consumer trends.

Contradiction Point 1

Store Opening Plans and Pipeline

Contradiction on the number of stores planned for 2025/2026 and the status of the pipeline.

George Kelly (Roth Capital Partners) - George Kelly (Roth Capital Partners)

2025Q4: The company has five stores under construction that will be completed in 2026, with a possibility of opening one or two more towards the end of 2026 or early 2027. - [David Kim](CFO)

Can you break down the 2026 revenue guidance of $215–$225 million, including retail contribution, core restaurant expectations, comparable sales outlook, and net openings? - George Kelly (ROTH Capital)

20251108-2025 Q3: Of the 7 under construction, 2–3 will open in 2025. The remaining 4–5 are for 2026, but the company may pause the next 11 stores in the pipeline (which are not yet under construction) if economic conditions worsen. - [Wook Kim & Thomas Croal](CEO & CFO)

Contradiction Point 2

Retail Business Economic Model and Profitability Outlook

Contradiction on the capital intensity, infrastructure investment, and margin expectations for the retail (CPG) business.

George Kelly (Roth Capital Partners) - George Kelly (Roth Capital Partners)

2025Q4: Growth is capital-intensive for inventory due to lead times... The projected high teens EBITDA margin already accounts for all costs. - [David Kim](CFO)

What is the retail business's scaling strategy, including upfront investments, promotions, G&A infrastructure, and near-term profitability? - Jeremy Hamblin (Craig Hallum)

20251108-2025 Q3: The margin erosion from this business is still being worked out... The company plans to negotiate with other retailers and big-box stores in the coming weeks. - [Thomas Croal](CFO)

Contradiction Point 3

Same-Store Sales Performance

Contradictory statements on the trend and recovery of same-store sales.

N/A - N/A

2025Q4: Same-Store Sales Decline (Q4): 11.6%, driven by immigration enforcement impacts and higher fuel prices. - Summary of Key Financials & Business Updates

N/A - Will (on behalf of Jeremy Hamblin, Craig-Hallum Capital)

2025Q2: Same-store sales were down in April, May, and June, but there was a bounce back in July. - [Thomas V. Croal](CFO)

Contradiction Point 4

Restaurant Revenue Guidance

Contradiction in the projected performance and guidance for the core restaurant business.

Did George Kelly of Roth Capital Partners participate in the earnings call? - George Kelly (Roth Capital Partners)

2025Q4: The core restaurant business would be at the low end of the range, around $205 million. - [David Kim](CFO)

Can you provide details on the 2026 revenue guidance of $215–$225 million, including retail contribution, core restaurant expectations, comparable sales outlook, and net openings? - John-Paul Wollam (ROTH Capital Partners)

2025Q2: The company is holding its full-year projections for 4-wall margins of 17% to 18%. Guidance has not changed despite the challenging quarter. - [Wook Jin Kim](CEO)

Contradiction Point 5

Unit Growth Cadence and Geographical Strategy

The strategy and rationale for international expansion (South Korea) in Q1 is presented as a low-risk, high-return opportunity; in Q4, the focus shifts to domestic U.S. openings.

George Kelly (Roth Capital Partners) - George Kelly (Roth Capital Partners)

2025Q4: The company has five stores under construction that will be completed in 2026, with a possibility of opening one or two more towards the end of 2026 or early 2027. No significant closures are contemplated... - [David Kim](CFO)

Can you break down the 2026 $215–$225 million revenue guidance by retail contribution, core restaurant expectations, comparable sales outlook, and net openings? - Will Forsberg (Craig-Hallum)

2025Q1: South Korea was chosen due to... a market size of ~100-200 stores, and significantly lower build costs (25%-30% of U.S. stores). Even if sales are lower than U.S. stores, the faster payback and lower costs make it an attractive, low-risk opportunity. - [Thomas V. Croal](CEO) and [David Kim](CFO)