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GEN Restaurant Group, Inc. (GENK)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue grew 21.2% year-over-year to $54.7M; adjusted EBITDA rose 25% to $2.1M, while EPS was -$0.04 on higher pre-opening and growth-related costs .
  • Full-year 2024 revenue reached $208.4M, exceeding both the company’s guidance ($200–$205M) and “analysts’ expectations”; restaurant-level adjusted EBITDA margin was 17.7% for the year, in line with outlook .
  • Management guided 2025 revenue to $245–$250M and restaurant-level adjusted EBITDA margin of 18%+, with 10–13 new unit openings; Q1 2025 quarter-to-date comps were +1% through February, a ~6pt improvement vs Q4 comps (-4.8%) .
  • Strategic catalysts: $5M stock buyback approved; international expansion into South Korea with at least two company-owned locations planned in 2025 .

What Went Well and What Went Wrong

What Went Well

  • Strong top-line growth and margin execution: Q4 revenue +21.2% y/y to $54.7M; Q4 restaurant-level adjusted EBITDA margin at 17.0% and full-year 17.7% in line with outlook .
  • 2024 revenue beat: “Driven by the success of new restaurants, … we delivered an impressive 15% increase in total revenue to $208.4 million, exceeding both our 2024 guidance and analysts’ expectations” — CEO David Kim .
  • Early 2025 comp inflection: “First quarter comparable restaurant sales … returned to positive growth of 1% … as a result of continued success with our premium menu and modest pricing adjustments” .

What Went Wrong

  • Negative comps persisted in Q4 2024: comparable restaurant sales -4.8% y/y; full-year comps -5.6% .
  • Profitability impacted by growth investments: Q4 pre-opening costs increased to $2.3M vs $1.6M y/y; net loss before taxes was -$1.2M driven by opening cadence and development timing .
  • Cost pressures: Cost of goods sold up 146 bps y/y in Q4 on higher restaurant count and premium menu; G&A up to $5.6M (10.3% of revenue, ex-stock comp) amid scaling of personnel and public company costs .

Financial Results

Core Financials vs Prior Year and Prior Quarter

MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD Millions)$45.1 $49.1 $54.7
Diluted EPS ($USD)-$0.01 $0.01 -$0.04
Adjusted EBITDA ($USD Millions)$1.6 $3.4 $2.1
Adjusted EBITDA Margin %3.6% 7.0% 3.8%
Restaurant-level Adjusted EBITDA ($USD Millions)$7.2 $9.0 $9.3
Restaurant-level Adjusted EBITDA Margin %16.0% 18.2% 17.0%
Net Income Margin %-0.4% 0.3% -2.6%
Comparable Restaurant Sales (%)-0.2% -9.6% -4.8%
Restaurant Pre-opening Costs ($USD Millions)$1.6 $1.8 $2.3

KPIs and Operating Data

KPIQ4 2023Q3 2024Q4 2024
Restaurants at End of Period (count)37 41 43
Cash and Cash Equivalents ($USD Millions)$32.6 $22.1 $23.7
Total Assets ($USD Millions)$183.9 $225.7 $240.4
Total Liabilities ($USD Millions)$146.4 $177.7 $194.8
Total Stockholders’ Equity ($USD Millions)$36.0 $46.5 $44.1

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total RevenueFY 2024$200–$205M Actual: $208.4M Exceeded
Restaurant-level Adj. EBITDA MarginFY 2024“Approaching 18%” Actual: 17.7% Met (in line)
Total RevenueFY 2025n/a$245–$250M New
Restaurant-level Adj. EBITDA MarginFY 2025n/a18%+ New
New Unit OpeningsFY 2025n/a10–13 new units New
International ExpansionFY 2025n/a≥2 South Korea company-owned locations New
Capital ReturnOngoingn/aUp to $5M stock buyback approved New
Comps (quarter-to-date)Q1 2025n/a+1% through February New

Earnings Call Themes & Trends

TopicQ2 2024 (Q-2)Q3 2024 (Q-1)Q4 2024 (Current)Trend
Same-store sales-5.6% comps; softness concentrated in 5 locations; macro inflation headwinds -9.6% comps; hurricanes, extreme heat, cannibalization; October/November improved vs Q3 Q4 comps -4.8%; Q1’25 QTD +1% on pricing/premium menu Improving sequentially into Q1’25
Premium menuRolled out; drove slight food cost increase; attachment inconsistent; training ramping -Mix ~5%; goal 10%; upselling improving Continued success cited supporting comps and AUV Execution improving
PricingNo broad pricing in Q2; evaluating n/a3% price increase end of 2024; traffic unaffected Positive impact
Gift cards (Costco)Initiated; strong sales 76 locations; best-selling; lower-than-typical redemption aiding cash and average check -Continued success; program “successful” in 2024 Expanding (potential additional retailers)
New unit developmentRaised 2024 openings to 10–11; pipeline building 1 opened in Q3; 2 in Oct; top revenue performers 6 opened in 2024; 3 shifted to Jan’25; 10–13 planned for 2025 Accelerating
International expansionUnder evaluation n/aAnnounced South Korea (≥2 locations in 2025) New vector
Macro/costsFood cost stable sequentially; labor efficiencies; public company costs -G&A higher with scaling; utilities in hot summer COGS +146 bps y/y; G&A 10.3% ex-SBC; pre-opening costs elevated Near-term pressure from growth costs
Liquidity/leverageCash $29.2M; self-funding dev.; EIDL ~$5M Cash $22.1M; strong FCF; note ASC 842 lease accounting optics Cash $23.7M; access to ~$40.7M liquidity; EIDL ~$4.3M Adequate liquidity

Management Commentary

  • “Closing out 2024, we achieved our highest total annual revenue figure as a public company… delivering an impressive 15% increase… exceeding both our 2024 guidance and analysts’ expectations. We also achieved a restaurant-level adjusted EBITDA margin approaching 18%” — David Kim, CEO .
  • “First quarter comparable restaurant sales… returned to positive growth of 1% as a result of continued success with our premium menu and modest pricing adjustments” .
  • “We expect to open a total of 10 to 13 new units in 2025… We also expect to generate total revenue between $245 million and $250 million and restaurant level adjusted EBITDA margin of 18-plus percent for 2025” — CFO Tom Croal .
  • “As a sign of confidence in the Company’s future, the Board of Directors have approved a stock buyback program for up to $5 million” .
  • “We will be bringing the GEN experience to South Korea with at least 2 locations planned for 2025” .

Q&A Highlights

  • The published Q4 2024 transcript did not include the detailed Q&A segment; management’s prepared remarks clarified drivers of Q4 loss (pre-opening costs) and provided 2025 guidance and liquidity context -.
  • Relevant prior-quarter Q&A themes: drivers of Q3 comp weakness (hurricanes, extreme heat, cannibalization, competition), premium menu mix around 5% with goal of 10%, and gift card redemption below typical industry rates supporting cash/average check -.

Estimates Context

  • S&P Global consensus estimates for Q4 2024 and FY2024 were unavailable due to data access limits at time of request; numeric beat/miss vs consensus cannot be quantified. Management stated FY2024 revenue exceeded “analysts’ expectations” .
  • Prior quarters’ commentary: Q2 2024 results “exceeded nearly all consensus estimate[s]” per management and Q3 2024 EPS was positive while “estimates had us losing money,” suggesting continued estimate-outperformance in 2H24 .

Key Takeaways for Investors

  • New unit growth is the principal driver: robust AUVs and ~18% restaurant-level adjusted EBITDA margins are intact; pre-opening and scaling costs will pressure GAAP EPS near-term as openings accelerate .
  • Sequential comp trajectory is improving (+1% Q1’25 QTD) with a 3% late-2024 price increase and premium menu upselling; watch sustained comp momentum into peak periods .
  • 2025 guide implies ~18% top-line growth at midpoint ($247.5M) and sustained unit-level margin profile; execution on 10–13 openings is key to hitting targets .
  • Balance sheet supports self-funded growth: $23.7M cash, no material long-term debt (aside from ~$4.3M EIDL), and access to ~$40.7M liquidity; lease obligations under ASC 842 may appear as debt on some platforms but are offset by operating lease assets .
  • Shareholder return introduced: $5M buyback aligns with confidence and may provide technical support to shares as new units ramp .
  • Strategic optionality: international expansion (South Korea) and big-box retail gift cards (strong sell-through, favorable redemption dynamics) broaden brand reach and could enhance mix/average check .
  • Risk watch: continued comp headwinds, premium menu/COGS mix, G&A scaling, and permitting delays that can shift opening timing; monitor food cost trends and labor efficiency, especially as footprint expands outside California - .