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Second Quarter 2024 Financial Results

Total revenue increased 15.9% to $53.9 million in the second quarter of 2024 compared to $46.5 million in the second quarter of 2023. Comparable restaurant sales decreased 5.6% in the second quarter of 2024 compared to the same period last year.

Total restaurant operating expenses (excluding pre-opening expenses) as a percentage of revenue increased 230 basis points to 84.5% in the second quarter of 2024 from 82.2% in the second quarter of 2023, while declining 230 basis points compared to 86.8% in the first quarter of 2024. The year-over-year and quarter-over-quarter changes as a percentage of revenue are primarily driven by the following:

• Cost of goods sold increased year-over-year by 110 basis points largely due to additional restaurants in operation and the ongoing implementation and integration of the Company's new premium menu. On a sequential basis, cost of goods sold declined by 50 basis points compared to the first quarter of 2024.

• Payroll and benefits decreased 40 basis points year-over-year and 140 basis points sequentially compared to the first quarter of 2024, primarily due to the Company’s continued focus on optimizing costs and headcount.

• Occupancy costs increased 20 basis points primarily due to new restaurant openings over the last twelve months. On a sequential basis, occupancy costs declined by 40 basis points compared to the first quarter of 2024.

• Other operating costs increased 60 basis points. On a sequential basis, other operating costs decreased 10 basis points compared to the first quarter of 2024.

• Depreciation and amortization increased 80 basis points year-over-year and 20 basis points quarter-over-quarter.

• Restaurant pre-opening expenses increased to $1.6 million for the second quarter of 2024 from $0.9 million in the second quarter of 2023 due to a larger number of new store openings in the works compared to the prior year. Compared to the first quarter of 2024, restaurant pre-opening expenses declined by 13.5%.

General and administrative expenses increased to $4.3 million, or 8.0% as a percentage of total revenue, excluding non-cash stock compensation expense, for the second quarter of 2024, primarily due to additional personnel required for new restaurant development as well as public company costs which weren’t present in the prior year period.

Net income was $2.1 million or 3.8% of revenue for the second quarter of 2024 compared to $4.5 million or 9.6% of revenue in the second quarter of 2023. The decrease was primarily due to higher expenses for new restaurant development and increased general and administrative expenses from being a public company.

Adjusted EBITDA was $4.9 million or 9.1% of revenue, inclusive of pre-opening expense of approximately $1.6 million for the second quarter of 2024, compared to $6.3 million or 13.7% of revenue, inclusive of pre-opening expenses of $0.9 million in the prior year period.

As of June 30, 2024, the Company had $29.2 million in cash and cash equivalents compared to $28.1 million at March 31, 2024, as the Company continued to generate positive free cash flow and internally finance new restaurant development. The Company continues to operate with no long-term debt, except for approximately $5 million in government-funded EIDL loans.

Non-GAAP Measures

Restaurant-level adjusted EBITDA represents income (loss) from operations plus adjustments to add-back the following expenses: depreciation and amortization, pre-opening costs, general and administrative expenses, related party consulting fees, management fees and non-cash lease expense. Management believes that restaurant-level adjusted EBITDA is useful to investors because this measure highlights trends in our core business that may not otherwise be apparent to investors when relying solely on GAAP financial measures and enabling investors to more effectively compare the Company’s performance to prior and future periods.

Adjusted EBITDA represents net income (loss) before net interest expense, income taxes, depreciation and amortization, and consulting fees paid to a related party and we also exclude non-recurring items, such as stock-based compensation expense, gain on extinguishment of debt, and Restaurant Revitalization Fund, or RRF, grants, employee retention credits, litigation accruals, aborted deferred IPO costs written off, non-cash lease expenses and non-cash lease expense related to pre-opening costs. Management believes that restaurant-level adjusted EBITDA is useful to investors because this measure highlights trends in our core business that may not otherwise be apparent to investors when relying solely on GAAP financial measures and enabling investors to more effectively compare the Company’s performance to prior and future periods.

Conference Call

GEN will conduct a conference call today at 5:00 p.m. Eastern time to discuss its results for the second quarter ended June 30, 2024.

David Kim, Co-Chief Executive Officer, and Tom Croal, Chief Financial Officer, will host the conference call, followed by a question-and-answer session.

Date: Wednesday, July 31, 2024
Time: 5:00 p.m. Eastern time (2:00 p.m. Pacific time)
Toll-free dial-in number: 1-877-407-0792
International dial-in number: 1-201-689-8263
Conference ID: 13747302

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Group at 949-574-3860.

The conference call will be broadcast live and available for replay here and via the investor relations section of the Company’s website at www.genkoreanbbq.com.

A telephonic replay of the conference call will also be available after 8:00 p.m. Eastern time on the same day through August 7, 2024.

Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 13747302

About GEN Restaurant Group, Inc.

​​GEN Korean BBQ is one of the largest Asian casual dining restaurant concepts in the United States. Founded in 2011 by two Korean immigrants in Los Angeles, the brand has now grown to 40 company-owned locations where guests serve as their own chefs, preparing meals on embedded grills in the center of each table. The extensive menu consists of traditional Korean and Korean-American food, including high-quality meats, poultry, seafood and mixed vegetables. With its unique culinary experience alongside its modern décor and lively atmosphere, GEN Korean BBQ delivers an engaging and interactive dining experience that appeals to a vast segment of the population. For more information, visit GenKoreanBBQ.com and follow the brand on Facebook and Instagram.

Forward-Looking Statements

This press release contains forward-looking statements. Forward-looking statements may be identified by the use of words such as “believe,” “intend,” “expect”, “will,” “may”, and other similar words or expressions that predict or indicate future events. All statements that are not statements of historical fact are forward-looking statements, including any statements regarding our strategy, future operations, and growth prospects, any statements regarding future economic conditions or performance, any statements of belief or expectation, and any statements of assumptions underlying any of the foregoing or other future events. Forward-looking statements are based on current information available at the time the statements are made and on management’s reasonable belief or expectations with respect to future events, and are subject to risks and uncertainties, many of which are beyond the Company’s control, that could cause actual performance or results to differ materially from the belief or expectations expressed in or suggested by the forward-looking statements. Additional factors or events that could cause actual results to differ may also emerge from time to time, and it is not possible for the Company to predict all of them. Forward-looking statements speak only as of the date on which they are made, and the Company undertakes no obligation to update any forward-looking statement to reflect future events, developments or otherwise, except as may be required by applicable law. Investors are referred to the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, and in our subsequent filings with the Securities and Exchange Commission (“SEC”), which are available on the SEC’s website at www.sec.gov, for additional information regarding the risks and uncertainties that may cause actual results to differ materially from those expressed in any forward-looking statement.

Investor Relations Contact:
Cody Slach and Cody Cree
Gateway Group, Inc.
1-949-574-3860
GENK@gateway-grp.com

Media Relations Contact:
Zach Kadletz and Anna Rutter
Gateway Group, Inc.
1-949-574-3860
GENK@gateway-grp.com