• Revenue: $208.4 million for the full year 2024, a 15.1% increase from 2023.
• Fourth Quarter Revenue: $54.7 million, up 21.2% year-over-year.
• Restaurant Level Adjusted EBITDA: $36.9 million for 2024, representing 17.7% of total revenue.
• Total Adjusted EBITDA: $16.7 million for 2024; $22 million excluding preopening costs.
• Net Income Before Taxes: $4.9 million for 2024, equating to $0.13 per diluted share.
• Adjusted Net Income: $7.4 million for 2024, equating to $0.21 per diluted share.
• Same-Store Sales: Decreased 5.6% year-over-year for 2024.
• New Restaurant Openings: 6 in 2024, 3 in January 2025, with a total of 46 locations nationwide.
• Cash and Cash Equivalents: $23.7 million as of December 31, 2024.
• Long-term Debt: Approximately $4.3 million in government-funded EIDL loans.
• Free Cash Flow: Self-funded approximately $18 million in new restaurant development costs.
• 2025 Outlook: Expected revenue between $245 million and $250 million, with 10 to 13 new units planned.

• Warning! GuruFocus has detected 3 Warning Sign with GENK.

Release Date: March 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• GEN Restaurant Group Inc (NASDAQ:GENK) exceeded its revenue guidance for 2024, achieving $208 million compared to the projected range of $200 million to $205 million.
• The company reported a 21% year-over-year increase in total revenue for the fourth quarter and a 25% increase in total adjusted EBITDA.
• GENK successfully opened nine new restaurants since the previous year-end call, contributing to a total of 46 locations nationwide.
• The company implemented a 3% menu price increase without negatively impacting customer traffic, demonstrating strong brand loyalty.
• GENK announced a stock buyback program of up to $5 million, indicating confidence in the company's future prospects.

Negative Points

• Comparable sales, or same-store sales, for 2024 were down 5.6% year-over-year, highlighting challenges in maintaining growth in existing locations.
• The company faced delays in opening new restaurants due to local and state government permit issues, affecting the timing of revenue generation.
• Cost of goods sold as a percentage of company restaurant sales increased by 80 basis points for the full year, impacting profit margins.
• General and administrative expenses increased significantly due to additional personnel and costs associated with being a public company.
• GENK reported a net loss before income taxes of $1.2 million in the fourth quarter, partly due to preopening costs for new restaurants.

Q & A Highlights

Q: Can you provide more details on the factors contributing to the 21% year-over-year revenue growth in the fourth quarter? A: David Kim, Co-Chief Executive Officer, explained that the revenue growth was primarily driven by new restaurant openings and the success of existing locations. The holiday season also contributed positively to the revenue increase.

Q: What challenges did you face in opening new restaurants, and how did they impact your targets? A: David Kim noted that delays in local and state government permits caused a one-month delay in opening some restaurants. Despite this, they still achieved their overall revenue goals for the year.

Q: How did the recent menu price increase affect customer traffic and sales? A: David Kim stated that the 3% menu price increase did not negatively impact customer traffic. In fact, it contributed to a return to positive comparable restaurant sales growth, with a 1% increase in the first two months of 2025.

Q: Can you elaborate on the international expansion plans mentioned during the call? A: David Kim announced plans to expand internationally by opening at least two locations in South Korea in 2025, marking the company's first foray into international markets.

Q: What are the expectations for new restaurant openings and revenue growth in 2025? A: Thomas Croal, Chief Financial Officer, stated that they expect to open 10 to 13 new units in 2025, with projected total revenue between $245 million and $250 million, and a restaurant-level adjusted EBITDA margin of 18% or higher.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.