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GEN Restaurant Group, Inc. (GENK)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue grew 13.0% year-over-year to $57.3M as unit expansion offset modest comps; adjusted EPS was $0.04 while GAAP diluted EPS was -$0.06, reflecting higher pre-opening costs and non-GAAP adjustments .
  • Versus S&P Global consensus, revenue was essentially in-line ($57.34M actual vs $57.42M estimate), EPS was a significant beat (Primary EPS 0.04 vs -0.01 estimate), while EBITDA missed materially (actual EBITDA -$0.15M vs $3.71M estimate). Values retrieved from S&P Global.
  • Management reaffirmed FY 2025 revenue guidance at $245–$250M and narrowed margin guidance to 17–18% restaurant-level adjusted EBITDA (from “18%+” previously); target openings increased to 12–13 units, including three in South Korea, and annual revenue run rate approaching $300M once all openings are live .
  • Near-term watch items: comps turned negative in April/early May (macro-driven), potential tariff-driven build-cost inflation could slow the pace of new unit openings, and launch of a dual-concept (GEN + Kan Sushi) with early promising returns .

What Went Well and What Went Wrong

What Went Well

  • Revenue +13.0% YoY to $57.3M; restaurant-level adjusted EBITDA increased YoY to $9.0M (+6%), with comps improving to -0.7% from -5.6% in 2024; “strong start to 2025” with six new openings and 49 stores .
  • Strategic initiatives gaining traction: premium menu upsell and modest pricing actions drove sequential comp improvement; “value-based, high-quality experience” resonating with consumers .
  • New concepts and distribution: inaugural dual-concept in Austin (GEN + Kan Sushi) and agreement with Sysco to sell proprietary GEN meat products; “dual-concept engineered to improve operating margin” .

Direct quotes:

  • “We’re pleased to report a strong start to 2025…successful launch of this new format…we believe this new all-you-can-eat concept can open the door to compelling growth opportunities” — David Kim, CEO .
  • “We expect to achieve restaurant-level adjusted EBITDA margin between 17% and 18% and revenue between $245 million and $250 million for full year of 2025” — Prepared remarks .

What Went Wrong

  • GAAP profitability pressured by growth investments: net loss before taxes -$2.1M; GAAP diluted EPS -$0.06; adjusted EBITDA margin fell to 2.2% due to ~$2.6M pre-opening costs and higher G&A to support development .
  • April/early May comp softness: management cited macro-driven demand weakness; QTD comps negative after ending March slightly negative .
  • Tariff uncertainty: vendors quoting wide-ranging cost increases; management could pause or slow new unit expansion if ROI is impaired .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$49.1 $54.7 $57.3
GAAP Diluted EPS ($)$0.01 -$0.04 -$0.06
Adjusted EPS ($)$0.03 -$0.02 $0.04
Adjusted EBITDA ($USD Millions)$3.44 $2.06 $1.25
Adjusted EBITDA Margin (%)7.0% 3.8% 2.2%
Restaurant-level Adjusted EBITDA ($USD Millions)$8.96 $9.31 $8.96
Restaurant-level Adjusted EBITDA Margin (%)18.2% 17.0% 15.6%
Pre-opening Costs ($USD Millions)$1.81 $2.25 $2.65
G&A excl. SBC ($USD Millions)$4.5 $5.6 $5.6
Comparable Restaurant Sales (%)-9.6% -4.8% -0.7%

Versus S&P Global consensus (Q1 2025):

  • Revenue: Estimate $57.42M; Actual $57.34M. Values retrieved from S&P Global.
  • Primary EPS: Estimate -$0.01; Actual $0.04. Values retrieved from S&P Global.
  • EBITDA: Estimate $3.71M; Actual -$0.15M. Values retrieved from S&P Global.

  • of Estimates: EPS 3; Revenue 3. Values retrieved from S&P Global.

S&P Global Consensus vs Actual (Q1 2025)EstimateActual
Revenue ($USD Millions)57.4257.34
Primary EPS ($)-0.010.04
EBITDA ($USD Millions)3.71-0.15
EPS - # of Estimates3—
Revenue - # of Estimates3—

Values retrieved from S&P Global.

KPIs

KPIQ3 2024Q4 2024Q1 2025
Restaurants at End of Period41 43 49
Cash & Cash Equivalents ($USD Millions)$22.1 $23.7 $15.4
Net (Loss) Income Margin (%)0.3% -2.6% -3.4%

Note: Company does not report multiple operating segments; all reported amounts relate to company-operated restaurants .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($USD Millions)FY 2025$245–$250 $245–$250 Maintained
Restaurant-level Adjusted EBITDA Margin (%)FY 2025“18%+” 17–18 Lowered/Narrowed
New Unit Openings (count)FY 202510–13 (excl. 3 delayed) 12–13 (incl. 3 in South Korea) Raised
Annual Revenue Run-Rate ($USD Millions)Exit 2025Not specified~$300 once openings are live Introduced
Liquidity/LeverageFY 2025No material LT debt; $20M revolver largely available No material LT debt; $20M available Maintained
Capital ReturnsFY 2025$5M buyback authorization Repurchased ~33,400 shares at $5.94 avg in Q1; $4.8M remaining Executed buyback tranche

Contingency commentary: Management may pause/slow new unit expansion if tariffs materially inflate build costs and reduce ROI .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
Comparable sales trajectoryQ3: -9.6% comps, weather/hurricanes/cannibalization; improvement in Oct/Nov Q1: -0.7% comps; Jan/Feb positive, March slightly negative; April/May negative (macro) Improving YoY, softening intra-quarter
Premium menu & pricingQ3/Q4: 3% price increase; premium mix ~5% aiming for 10% Q1: 2.5–2.8% price action; +7% uplift from premium menu offsetting traffic declines Positive mix benefit
Unit growth & ROIQ3/Q4: pipeline for 10–13 in 2025; ROI ~40%, payback ~2–2.5 years Q1: 6 openings, 49 units; payback ~2.1 years on 2024 stores, ROI 40%+ Accelerating openings
Dual-concept (GEN + Kan Sushi)Not previously launchedDebut in Austin; shared back-of-house, labor efficiency; early performance better than expected New positive lever
Tariffs & build costsNot a focusPotential China-sourced equipment/material cost inflation; could slow openings if ROI pressured Emerging headwind
South Korea expansionQ4: at least 2 units planned Q1: plan for 3 units; first opening ~June 10; build cost ~25–30% of U.S. Expanded scope
Gift cards & distributionQ3: Costco gift cards launched Q1: testing e-gift with Costco; Sam’s rollout; Sysco meat product distribution agreement; redemption stabilizing 60–65% Brand monetization expanding
Balance sheet & leasesQ4: lease liabilities under ASC 842; low LT debt Q1: reiteration; lease liabilities ~$147M offset by ~$130M assets; LT debt ~$5M Stable framework
Capital returnsQ4: $5M buyback authorization Q1: ~33,400 shares repurchased at $5.94 avg; $4.8M remaining Executing

Management Commentary

  • Strategic priorities: “With strong cash flow and over $15 million in cash and cash equivalents, no material long-term debt, and full availability of our $20 million line of credit, we are in excellent position to execute our strategic priorities.” — Press release .
  • Value proposition & comps: “This reflects growing traction from our strategic pricing actions, premium menu offerings, and the continued success of our recent openings.” — Press release .
  • Margin outlook & tariff contingency: “We expect…17% to 18% [restaurant-level adjusted EBITDA margin]…If tariffs…reduce our ROI we may decide to slow or pause the pace of new unit expansion.” — Prepared remarks .

Q&A Highlights

  • Comp progression: Jan/Feb strong; March dipped; April/early May negative; attributed primarily to macro demand softness .
  • Margin confidence: Despite Q1 below the 17–18% target, management expects margin improvement as year progresses via tight labor management; seasonality noted .
  • Tariffs/build costs: Vendor quotes highly variable (15% to 100%); management may pause construction until costs settle, then reassess .
  • Dual-concept operations: Kan Sushi has no grills; shared BOH and labor improves operating margin; early traffic better than expected; will test more locations .
  • Check vs traffic: ~2.5% price increase; ~10–11% customer decline offset by ~7% premium menu mix improvement, resulting in <1% net decline .
  • South Korea AUV/build cost: Build cost ~25–30% of U.S.; first unit opening ~June 10; market opportunity potentially 100–200 stores; risk-adjusted ROI logic .
  • Gift card redemption: Stabilizing around 60–65% vs industry ~70–75%; anecdotal evidence of higher spend among gift card users (premium menu and drinks) .

Estimates Context

  • Revenue in-line: $57.34M actual vs $57.42M consensus; minimal variance. Values retrieved from S&P Global.
  • EPS beat: Primary EPS 0.04 vs -0.01 consensus; note company-reported GAAP diluted EPS was -$0.06 and adjusted EPS was $0.04, aligning with SPGI “Primary EPS” actual. Values retrieved from S&P Global and company filings .
  • EBITDA miss: Actual EBITDA -$0.15M vs $3.71M consensus, driven by pre-opening costs ($2.65M), higher D&A, and G&A to support development . Values retrieved from S&P Global.

Where estimates may adjust:

  • EBITDA and margin trajectory likely revised lower in near-term models to reflect heavier pre-opening expense cadence and margin guidance narrowing to 17–18% (from “18%+”) .
  • Revenue trajectory remains supported by unit openings; consensus may modestly lift new unit cadence given 12–13 target and South Korea additions .

Values retrieved from S&P Global.

Key Takeaways for Investors

  • Unit-driven growth intact: Six Q1 openings and 12–13 targeted for 2025 (including three in Korea) sustain revenue growth; annual run-rate approaching ~$300M once all new restaurants are open .
  • Margin guide narrowed: FY 2025 restaurant-level adjusted EBITDA margin now 17–18% (vs “18%+” previously); near-term margin pressure tied to pre-opening and development G&A .
  • Mixed intra-quarter comp signals: Despite YoY comp improvement (-0.7%), April/May softness suggests macro sensitivity; monitor Q2 comp trajectory and premium mix gains .
  • New dual-concept lever: Early results from GEN + Kan Sushi suggest operating leverage via shared labor/back-of-house; potential to capture overflow demand and improve margins .
  • Tariffs a tangible risk: Build-cost uncertainty could slow/pace openings to preserve ROI; watch vendor pricing and management’s construction cadence decisions .
  • Capital returns & balance sheet: Buyback execution (~33,400 shares at $5.94) and low LT debt profile provide flexibility; ASC 842 lease liabilities should not be viewed as bank debt .
  • Trade implications: Near-term stock drivers include margin guide change, intra-quarter comp tone, dual-concept scaling updates, South Korea execution, and any tariff-related development changes .

Citations:

  • Q1 2025 8-K press release and financial tables .
  • Q1 2025 earnings call transcript (remarks and Q&A) and –, –.
  • Q4 2024 8-K press release and call –.
  • Q3 2024 8-K press release and call .

Values retrieved from S&P Global.