GEN Restaurant Group, Inc.

Good afternoon everyone and welcome to the Gen Restaurant Group, Incorporated First Quarter 2025 earnings call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one on your touchtone phones. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. At this time, I would like to turn the floor over to Tom Kroll, the company's chief financial officer. Sir,

you may begin. Thank you, operator, and good afternoon. By now, everyone should have access to our first quarter 2025 earnings release. If not, it can be found at .genkoreanbbq.com in the investor relations section. Before we begin our formal remarks, I need to remind everyone that our discussions today will include forward-looking statements within the meaning of federal securities laws, including but not limited to statements regarding growth plans and potential new store openings, as well as those types of statements identified in our quarterly report on form 10Q for the period ended March 31, 2025, and our subsequent reports filed with the SEC. These forward-looking statements are not guarantees of future performance, and therefore, you should not put undue reliance on them. These statements represent our views only as of the date of this call and are also subject to numerous risks and uncertainties that could cause actual results to differ materially from what we currently expect. We refer you to our recent SEC filings, including our annual report on form 10K, for a more of the risks that could impact our future operating results and financial condition. Except as required by law, we undertake no obligation to update or revise these forward-looking statements in light of new information or future events. During today's call, we will discuss some non-GAAP financial measures which we believe can be useful in evaluating our performance. The presentation of this information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are available in our earnings press release and our SEC filings, which are available in the investor relations section of our website. Now I'd like to turn it over to our chairman and CEO, David Kim. Thank

you, Tom, and good afternoon, everyone. In the first quarter of 2025, despite economic pressures and slow consumer demand, we generated a 13% -over-year increase in total revenues to $57.3 million. This increase was driven by our growing footprint of restaurants and the continued success of our existing locations. We're pleased with our execution in the first quarter and the continued progress we're making across our strategic priorities. We believe our value-price, all-inclusive dining model continues to resonate with guests and positions us for durable long-term growth. We opened six restaurants in the first quarter, bringing Jen's footprint to 49 stores. These new openings represent a balanced geographic mix, including both new and existing markets. With this latest round of openings, we remain on pace to meet our target of 12 to 13 total new stores by the end of 2025. We have six restaurants under construction in addition to the six we opened in the first quarter. We made significant improvements both -over-year and sequentially in same-store sales growth. For the first quarter, same-store sales were down a very small, modest 0.7%, compared to being down .6% for all of 2024. This is a tremendous improvement. Restaurant-level adjusted EBITDA margin for the quarter was slightly off our overall annual goal of 17 to 18%, coming in at around .6% due to higher costs for new restaurant openings. While our same-store sales have dramatically improved -over-year and are presently better than many of our competitors in the industry, it's not the metrics that we believe captures our success. I can't stress enough. Our business model revolves around growing our footprint to capitalize on the strong EBITDA and resulting swift payback of our initial investment for new restaurants and the extraordinary ROI new stores generate. We have an impressive .1-year payback period run rate on our 2024 new stores, which equates to 40% plus ROI. Our shorter payback period than most competitors allows us to provide a more consistent and efficient return for our investors. Get another way. At the time we went public in June of 2023, we had 33 stores. We have added 16 new stores since then, roughly increasing our store count by 50%. But because of strong internal cash flow, we haven't needed to take any debt or equity to do this. This proves the value of our high free cash flow model. Having said this, we still deeply focus on ways to drive growth at existing locations and have a number of initiatives to share. First, we only took a .8% price increase at the end of 2024 when most companies took -10% price increases. We're happy to report that our increase has not influenced customers at all. We remain a high quality value dining experience for our customers. Second, we've continued to enhance our training programs. We're spending more time and effort on training in order to build the bench strength necessary to expand new restaurant development and openings around the country and into South Korea. And third, our incubator projects. Last year we announced the launch of JED and gift cards at 78 Costco locations all within a five-mile radius of most of our restaurants across the US. The gift card continuously sells exceptionally well. This quarter we're testing e-gift cards which will be sold through Costco's website. We have also recently signed an agreement to sell gift cards at Sam's Clubs, which we expect to begin by the end of the second quarter or the beginning of third quarter. Our success in expanding this initiative is a testament to JED's brand strength and position as a leader in Korean barbecue. We look forward to expanding this avenue with even more big box retail partners in the near future. Also, I'm pleased to announce one of our incubator projects was the creation of our new dual concept store in Texas. That includes a restaurant we're calling Khan Sushi. Khan is a contemporary medium to high-end sushi restaurant at an average price point of $39, which compares to our JED price point of $30. Khan is an -can-eat concept, which like JED, is a value-based restaurant concept. The two restaurants are attached but have separate entrances and completely different interiors. Most importantly, they've been engineered to create an extremely efficient -the-house setup with one bar, one kitchen, one storage area, and one area for bathrooms for both restaurants. This model uses one labor force to run two restaurants, which results in a significant improvement in operating margin. Now, instead of waiting in long lines, they can choose between two unique concepts that provide value-based design. The two restaurants together, Jen and Khan, invite more crowds and create an epicenter for consumers. While still early days, we're evaluating a number of additional opportunities to roll out this dual concept. Finally, as a result of another incubator project, we have recently reached an agreement with Cisco for them to sell our proprietary JED Korean BBQ meat products to third parties such as grocery and big store retailers. This is in the early stages and will provide more information on future calls. Turning back to new restaurant expansion, we're also making tangible progress on our international expansion into South Korea, where we plan to open three new restaurants in 2025. The first one is on track to open at the end of second quarter, with the other two expected later in the year. These units will be built at approximately one-third the cost of our U.S. stores, offering even more compelling potential returns, which are not subject to the volatility of the current tariffs. Additionally, by opening in Korea, we hope to see early culinary, cultural, and experimental trends that might translate well for us in our U.S. locations. Given the strong momentum in our development pipeline, we remain on pace to open 12 to 13 new restaurants in 2025. We expect to achieve restaurant-level adjusted EBITDA margins between 17 and 18 percent, and revenue between $245 and $250 million for full year of 2025. By the end of 2025, we anticipate being at an annual run rate approaching $300 million of revenue when all new restaurants are opened. Another topic I want to address is the potential impact of recent announced tariffs. There could be a material impact on equipment costs and construction materials sourced from China, but still at very early stage to quantify the extent. If tariffs begin to significantly affect our new restaurant development costs, which would reduce our ROI, we may decide to slow or pause the pace of unit expansion until conditions improve or stabilize. Overall, our first quarter marks a strong start to the year and reinforces the strategic foundation we've built to build and support the long-term growth. Backed by a healthy balance sheet, strong unit-level returns, and rising brand momentum, we believe GEN is well positioned to deliver on our 2025 goals and continue expanding our presence across both domestic and international markets. Thank you for your continued support. We remain excited about the opportunities ahead and confident in the road we're on. Tom will now provide a detailed look at our first quarter financial performance.