GENK · Read the filing

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following management’s discussion and analysis of our financial condition and results of operations should be read in conjunction with the audited consolidated financial statements and related notes of GEN Inc., included in Part II, Item 8 of this Annual Report on Form 10-K, which includes GEN Restaurant Companies, LLC (the “Operating Company”) for the year ended December 31, 2024 and 2023. The terms “we”, “our”, and “us” as used herein refer to the Operating Company and its consolidated subsidiaries prior to the Transactions (as defined in Note 1 to such consolidated financial statements) and to GEN Inc. and its consolidated subsidiaries, including the Operating Company, following the Transactions.

This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. All statements other than statements of historical fact contained in this Annual Report, including, without limitation, statements regarding our future results of operations or financial condition, business strategy, and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “believe,” “consider,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these words or other similar terms or expressions. You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Annual Report primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, and operating results. The forward-looking statements made in this Annual Report relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements to reflect future events or circumstances, new information, or the occurrence of unanticipated events, except as required by law.

Overview

GEN Restaurant Group is an Asian casual dining restaurant concept that offers an extensive menu of traditional Korean and Korean-American food, including high-quality meats, poultry, and seafood, all at a superior value. Founded in 2011 by two Korean immigrants, since the opening of our first restaurant in September 2011 we have grown to 46 company-owned restaurants located in California, Arizona, Hawaii, Nevada, Texas, New York, Oregon, New Jersey, and Florida. Our restaurants have modern décor, lively Korean pop music playing in the background and embedded grills in the center of each table. We believe we offer our customers a unique dining experience in which guests cook the majority of the food themselves, reducing the need for chefs and servers and providing a similar customer experience across the restaurants.

We expect to continue to grow our number of restaurants in the future. In 2022, our new restaurants have generated average Payback Periods of approximately 1.9 years, which equates to an average ROI of over 50%. For the restaurants opened in 2023 and 2024, the average Payback Periods of 2.2 years, which equates to an average ROI of approximately 45%. Going forward, we are targeting for our new restaurant units a Payback Period of less than 3 year, which equates to an ROI of 33% to 40%. Restaurants range in size from 4.7 thousand to 12 thousand square feet, and are typically located in high-activity commercial areas.

Business Trends

Although we temporarily paused our new restaurant opening plans during the COVID-19 pandemic, our long-term growth strategy is to continue to open new restaurants in locations that we believe will achieve profitability levels consistent with our pre-pandemic experience. During 2022, we opened three new restaurants, and we opened six new restaurants during both of 2023 and 2024. Subsequent to December 31, 2024, we opened three new restaurants in San Antonio, TX, Edison, NJ, and Orlando, FL. In addition to these three, as of December 31, 2024 we entered into leases for 18 new restaurant locations, with openings planned during 2025 and thereafter. These locations are in Austin, TX, New York (Sixth Street), NY, Bayside (Queens), NY, El Paso, TX, San Diego, CA, Waco, TX, Kona, HI, Nashville, TN, Boston, MA, Tucson, AZ, Cary, NC, Austin (Southpark) TX, Naperville, IL, Clearwater, FL, McAllen, TX, San Antonio, TX, Cambridge, MA and Sterling Heights, MI. The six restaurants opened during 2024 are our Dallas, Texas, Seattle, Washington, Jacksonville, Florida, Maui, Hawaii, Pflugerville, Texas, and Tigard, Oregon locations. In addition to the three restaurants we opened in January 2025, we currently expect to open 10 to 13 other locations during 2025. Additionally, we are introducing international expansion into

South Korea with at least two Company-owned locations slated to open in 2025. Future sales and profitability levels of our restaurants and our ability to successfully implement our growth strategy in the near term, however, remain uncertain.

Recent Events Concerning Our Financial Position

On September 29, 2023, the Company entered into a $20 million line of credit with a bank. The line of credit matures on September 25, 2025 and bears interest at a variable rate per annum equal to 7.75% as of December 31, 2024. As of December 31, 2024 the balance was $3.0 million, which was subsequently paid in full on January 2, 2025.

We assessed our long-lived assets for potential impairment each quarter with the result that no impairment charges were recorded in any of the periods presented.

Key Performance Indicators

In assessing the performance of our business, we consider a variety of financial and performance measures. The key measures for determining how our business is performing include Net Income Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted net income, Adjusted net income EPS, Restaurant-Level Adjusted EBITDA, Restaurant-Level Adjusted EBITDA Margin, Average Unit Volumes, comparable restaurant sales growth, the number of restaurant openings and revenue per square foot.

Net Income Margin

Net Income Margin is net income measured under accounting principles generally accepted in the United States of America (“GAAP”) divided by revenue.

Adjusted EBITDA and Adjusted EBITDA Margin

Adjusted EBITDA represents net income excluding interest expense, net, income taxes, depreciation and amortization, stock-based compensation, consulting fees paid to a related party, gain on extinguishment of debt, RRF grants, employee retention credits, litigation accruals, non-cash lease expense and non-cash lease expense included in pre-opening costs. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by revenue. Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP measures intended as supplemental measures of our performance and are neither required by, nor presented in accordance with, GAAP. For a discussion of why we consider these measures to be useful and their material risks and limitations, see “Non-GAAP Financial Measures.”

Adjusted Net Income and Adjusted EPS

Adjusted Net Income and Adjusted net income per share represents net income before income taxes, adjusted for stock-based compensation, and the related tax impact of the stock-based compensation adjustment, and provision for income taxes. “Adjusted EPS” is Adjusted Net Income, converted to a per share amount. Adjusted Net Income and Adjusted EPS are non-GAAP measures intended as supplemental measures of our performance and are neither required by, nor presented in accordance with, GAAP. For a discussion of why we consider these measures to be useful and their material risk and limitations, see “Non-GAAP Financial Measures.”

Restaurant-Level Adjusted EBITDA and Restaurant-Level Adjusted EBITDA Margin

Restaurant-Level Adjusted EBITDA is Income 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. Non-cash items such as charges for asset impairments and asset disposals are not included in Restaurant-Level Adjusted EBITDA. Restaurant-Level Adjusted EBITDA Margin is the calculation of Restaurant-Level Adjusted EBITDA divided by revenue. For a discussion of why we consider these measures to be useful and their material risks and limitations, see “Non-GAAP Financial Measures.”

Average Unit Volume

“Average Unit Volume” (“AUV”) means the average annual restaurant sales for all restaurants open for a full 18 months before the end of the period measured. AUV is calculated by dividing annual revenue for the year presented for all such restaurants by the total number of restaurants in that base. This measurement allows management to assess changes in consumer spending patterns at our restaurants and the overall performance of our restaurant base.

The following table shows the AUV for the years ended December 31, 2024 and December 31, 2023 :

Year ended December 31,

(in thousands)

Comparable Restaurant Sales Change

Comparable restaurant sales change refers to the change in year-over-year sales for the comparable restaurant base. We include restaurants in the comparable restaurant base that have been in operation for at least 18 full months prior to the accounting period presented. Once a restaurant has been open 18 full months, it must have had continuous operations during both the current period and the prior year period being measured to remain a comparable restaurant. If operations were to be substantially impacted by unusual events that closed the location or significantly changed its capacity, that location is excluded from the comparable sales calculation until it has been operating continuously under normal conditions for both the current period and the prior year comparison period.

Year Ended December 31,

Comparable restaurant sales change (%) (5.6 )% 0.5 %

Comparable restaurant base 33 29

Since opening new restaurants is expected to be a significant component of our sales growth, comparable restaurant sales change is only one measure of how we evaluate our performance.

Number of Restaurant Openings

The number of restaurant openings reflects the number of restaurants opened during a particular reporting period. Before we open new restaurants, we incur pre-opening costs. New restaurants may not be profitable, and their sales performance may not follow historical patterns. The number and timing of restaurant openings has had, and is expected to continue to have, an impact on our results of operations. The following table shows the change in our restaurant base for the years ended December 31, 2024 and 2023:

Year ended December 31,

Restaurant activity

Beginning of period 37 31

Openings 6 6

Closings — —

During the month of January 2025, we opened three new restaurants.

Revenue Per Square Foot

“Revenue per square foot” means the restaurant sales for all restaurants opened a full 18 months before the end of the eighteen month period measured divided by the average square footage of such restaurants. This measurement allows management to assess the effectiveness of our approach to real estate selection and the overall performance of our restaurant base. The following table shows the revenue per square foot for the year ended December 31, 2024 and 2023:

For the period ending December 31,

Revenue per square foot $ 801 $ 857

Components of Results of Operations

Revenues. Revenues represent sales of food and beverages in restaurants and, to a minor extent, through our online portal. Restaurant revenues in a given period are directly impacted by the number of restaurants we operate, menu pricing, the number of customers visiting and comparable restaurant sales change. Revenue also includes gift card revenue earned.

Food costs. Food costs are variable in nature, change with sales volume and are influenced by menu mix and subject to increases or decreases based upon fluctuations in commodity costs. Another important factor causing fluctuations in food costs includes restaurant management of food waste. Food costs are a substantial expense and are expected to grow proportionally as our sales grow.

Payroll and benefits. Payroll and benefits include all restaurant-level management and hourly labor costs, including wages, employee benefits and payroll taxes. Similar to the food costs that we incur, labor and related expenses at our restaurants are expected to grow proportionally as our sales grow. Factors that influence fluctuations in our labor and related expenses include the volume of sales at our restaurants, minimum wage and payroll tax legislation, payroll rate increases due to labor shortages or inflationary pressures, the frequency and severity of workers’ compensation claims, and healthcare costs.

Occupancy expenses. Occupancy expenses include rent, common area maintenance and taxes for all restaurant locations, but exclude any related pre-opening costs.

Operating expenses. Operating expenses include supplies, utilities, repairs and maintenance, and other costs incurred directly at the restaurant level.

Depreciation and amortization expenses. Depreciation and amortization expenses are periodic non-cash charges at our restaurants that consist of depreciation of fixed assets, including equipment, software and capitalized leasehold improvements. Depreciation is determined using the straight-line method over the assets’ estimated useful lives, ranging from five to ten years.

Pre-opening costs. Pre-opening costs include pre-opening period rent, maintenance, taxes, payroll and benefits costs, advertising and other expenses directly incurred by the new restaurant until the date of the restaurant opening. Pre-opening costs can fluctuate significantly from period to period, based on the number and timing of restaurant openings.

General and administrative expenses. General and administrative expenses include expenses associated with corporate management supervisory functions that support the operations of existing restaurants and development of new restaurants, including compensation and benefits, stock-based compensation, travel expenses, legal and professional fees, marketing costs, information systems, corporate office rent and other related corporate costs. General and administrative expenses are expected to grow as our sales grow, including incremental legal, accounting, insurance and other expenses incurred as a public company including becoming compliant with the requirements of Sarbanes-Oxley and addressing our internal control weaknesses through implementing new accounting systems and hiring additional staff.

Consulting fees — related party. Consulting fees include expenses paid to a related party entity, which provided for annual fees of up to 25% of gross revenue in exchange for various consulting services. The related party is 100% owned by an executive officer, the services were for 21 of the restaurants, and such consulting fees were only paid to the extent we had adequate resources. Following our IPO, these consulting fees were eliminated as services transitioned to us, although corporate general and administrative expenses have increased correspondingly.

Management fees. Management fees included expenses paid to a third-party entity, which provides fixed fees for 12 restaurants and a percentage of gross revenue for one restaurant in exchange for management services. Following the IPO, management fees were phased out, although corporate general and administrative expenses are expected to increase correspondingly.

Depreciation and amortization - corporate. These are periodic non-cash charges at the corporate level that consist of depreciation of fixed assets, including equipment, information systems software and capitalized leasehold improvements, if any. Depreciation is determined using the straight-line method over the assets’ estimated useful lives, ranging from five to seven years.

Restaurant revitalization fund grant. During 2021, we received $16.8 million of grants under the Restaurant Revitalization Fund, of which $13.0 million was recognized in income and $3.8 million was deferred as of December 31, 2024 and December 31, 2023. We do not anticipate receiving additional funds under this program.

Employee retention credits. Employee retention credits include refundable credits recognized under the provisions of the CARES Act and extension thereof. During the years ended December 31, 2024, and December 31, 2023, $0.2 million and $2.5 million, respectively, of these credits were received and recorded.

Other income (loss). Other income (loss) consists of one-time legal accruals and other miscellaneous items.

Gain on remeasurement of previously held interest. This reflects the business acquisition of GKBH (a restaurant in Hawaii) during the first quarter of 2024.

Interest expense, net. Interest expense includes cash and non-cash charges related to our debt outstanding and finance lease obligations. Interest income reflects income earned on notes receivable.

Equity in income of equity method investee. Equity in income (loss) of equity method investee reflected our 50% ownership in GKBH that was accounted for using the equity method until the date of acquisition on February 18, 2024.

Provision for income taxes. Represents federal, state, and local current and deferred income tax expense (benefit).

Results of Operations for the years ended December 31, 2024 and December 31, 2023

The following table presents selected comparative results of operations from our audited financial statements for the year ended December 31, 2024 and December 31, 2023. Our financial results for these periods are not necessarily indicative of the financial results that we will achieve in future periods.

Year Ended December 31, Increase/(decrease)

(amounts in thousands) 2024 2023 Amount %

Restaurant operating expenses:

Depreciation and amortization - corporate 122 84 38 45.2 %

Gain on remeasurement of previously held interest 3,402 — 3,402 100.0 %

Equity in (loss) income of equity method investee (17 ) 535 (552 ) (103.2 )%

Net Income attributable to noncontrolling interest 3,940 3,028 912 30.1 %

% of Revenue

Twelve months ended Dec 31,

Restaurant operating expenses:

Payroll and benefits 30.9 % 31.4 %

Occupancy expenses 8.4 % 8.1 %

Operating expenses 10.3 % 10.0 %

Depreciation and amortization 3.2 % 2.7 %

Pre-opening costs 3.7 % 2.0 %

Total restaurant operating expenses 89.5 % 86.4 %

General and administrative 10.2 % 7.1 %

Consulting fees - related party 0.0 % 1.3 %

Management fees 0.0 % 0.6 %

Depreciation and amortization - corporate 0.1 % 0.0 %

Total costs and expenses 99.8 % 95.5 %

Income from operations 0.2 % 4.5 %

Employee retention credits 0.1 % 1.4 %

Gain on remeasurement of previously held interest 1.6 % 0.0 %

Interest income, net 0.4 % 0.2 %

Equity in (loss) income of equity method investee 0.0 % 0.3 %

Net Income before income taxes 2.3 % 6.3 %

Provision for income taxes 0.2 % 0.0 %

Net income 2.2 % 6.3 %

Net Income attributable to noncontrolling interest 1.9 % 1.7 %

Net income attributable to GEN Restaurant Group, Inc. 0.3 % 4.6 %

Revenues. Revenues were $208.4 million for the year ended December 31, 2024, compared to $181.0 million for the year ended December 31, 2023, an increase of $27.4 million, or 15.1%. This primarily reflects having 43 restaurants open in the year ended December 31, 2024 compared to 37 restaurants open in the year ended December 31, 2023.

Food costs. Food costs were $68.7 million for the year ended December 31, 2024, compared to $58.3 million for the year ended December 31, 2023, an increase of $10.4 million, or 17.8%. The increase in food costs primarily reflects more restaurants in operation and inflationary cost increases. As a percentage of revenue, food costs increased from 32.2% to 33.0%.

Payroll and benefits. Payroll and benefits costs were $64.3 million for the year ended December 31, 2024, compared to $56.9 million for the year ended December 31, 2023, an increase of $7.4 million, or 13.1%. The increase in payroll and benefits costs is primarily due to new restaurants. As a percentage of revenue, payroll and benefits costs decreased from 31.4% to 30.9%.

Occupancy expenses. Occupancy expenses were $17.5 million for the year ended December 31, 2024 compared to $14.7 million for the year ended December 31, 2023, an increase of $2.9 million, or 19.6%. The increase in occupancy expenses reflects the addition of six new locations in 2024. As a percentage of revenue, occupancy expenses were 8.4% in 2024 compared to 8.1% in 2023.

Operating expenses. Operating expenses were $21.5 million for the year ended December 31, 2024 compared to $18.0 million for the year ended December 31, 2023, an increase of $3.5 million, or 19.4%, as expenses increased to support the revenue growth and reflected inflationary cost increases. As a percentage of revenue, operating expenses were 10.3% in 2024 and 10.0% in 2023.

Depreciation and amortization expenses. Depreciation and amortization expenses were $6.7 million for the year ended December 31, 2024 and $4.8 million for the year ended December 31, 2023. As a percentage of revenue, depreciation and amortization expenses at the restaurant-level were 3.2% in 2024 and 2.7% in 2023.

Pre-opening costs. Pre-opening costs were $7.6 million for the year ended December 31, 2024 compared to $3.7 million for the year ended December 31, 2023. This increase was due to more restaurants under development in 2024 than in 2023.

General and administrative expenses. General and administrative expenses were $21.3 million for the year ended December 31, 2024 compared to $14.1 million (including management fees) for the year ended December 31, 2023, an increase of $7.2 million, or 51.1%. As a percentage of revenue, general and administrative expenses increased from 7.8% (including management fees) in 2023 to 10.2% in 2024 as costs shifted post-IPO from consulting and management fees previously paid to related parties.

Consulting fees - related party. Consulting fees were $2.3 million for the year ended December 31, 2023. These fees were eliminated following the IPO in June 2023.

Management Fees. Management fees were $1.2 million for the year ended December 31, 2023. These were paid to a third-party entity and consist of fixed fees for twelve restaurants and a percentage of gross revenue for one restaurant in exchange for management services. These fees were eliminated following the IPO in June 2023.

Employee retention credits. During both the years ended December 31, 2024 and December 31, 2023 we received employee retention credits from the IRS in the amount of $199 thousand and $2.5 million, respectively.

Other income (loss). During the years ended December 31, 2024, and 2023 these expenses were $0.

Gain on remeasurement of previously held interest. This reflects the business acquisition of GKBH (a restaurant in Hawaii) during the first quarter of 2024.

Interest income, net. During 2024, interest income, net was $0.8 million compared to $0.3 million in 2023. The increase in net interest income was primarily due to the interest income earned on the proceeds from the IPO.

Equity in income of equity method investee. Equity in (loss) income of equity method investee reflected our 50% ownership in GKBH that was accounted for using the equity method until the date of acquisition on February 18, 2024. Equity method investee was a loss of $17 thousand in 2024 compared to a $535 thousand gain in 2023.

Non-GAAP Financial Measures

Adjusted EBITDA and Adjusted EBITDA Margin

Adjusted EBITDA represents net income excluding interest expense, income taxes, depreciation and amortization, stock-based compensation and consulting fees paid to a related party and we also exclude non-recurring items such as gain on extinguishment of debt, RRF grants, employee retention credits, litigation accruals, aborted deferred IPO costs written off, non-cash lease expense and non-cash lease expense included in pre-opening costs. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by revenue. We believe that Adjusted EBITDA and Adjusted EBITDA Margin provide useful information to management and investors regarding certain financial and business trends relating to our financial condition and operating results, as these measure depict normal recurring cash operating expenses essential to supporting the operations of our company.

The following table reconciles net income to Adjusted EBITDA for the year ended December 31, 2024 and December 31, 2023:

(amounts in thousands) Year ended December 31,

EBITDA:

Net Income Margin 2.2 % 6.3 %

Interest income , net (829 ) (347 )

Provision for income taxes 357 21

Depreciation and amortization 6,857 4,892

EBITDA Margin 5.2 % 8.8 %

Adjustments to EBITDA:

Stock-based compensation expense(1) 2,986 $ 1,517

Consulting fees - related party (2) — 2,325

Employee retention credits (3) (199 ) (2,483 )

Non-cash lease expense related to pre-opening costs (5) 2,354 1,110

Adjusted EBITDA Margin 8.0 % 10.4 %

(1)

Stock-based compensation expense: During the years ended December 31, 2024 and 2023,we incurred expenses related to the granting of restricted stock units (“RSUs”) to employees. This was recorded in General and administrative expense.

(2)

Consulting fees—related party: These costs ended following the completion of the IPO.

(3)

Employee retention credits: These are refundable credits recognized under the provisions of the CARES Act.

(4)

Non-cash lease expense: This reflects the extent to which lease expense is greater than or less than contractual rent paid.

(5)

Non-cash lease expense related to pre-opening costs: Cost for stores in development in which the lease expense is greater than the contractual rent paid.

Adjusted Net Income and Adjusted EPS

The following table reconciles Net income before taxes to Adjusted net income and Adjusted net income per share for the twelve months ending December 31, 2024 and 2023:

Twelve months ended December 31,

(in thousands, except per share amounts) 2024 2023

Net income before income taxes $ 4,889 $ 11,455

Tax impact of adjustment (125 ) (59 )

Provision for income taxes 357 21

Less: Net income attributable to noncontrolling interest 6,427 3,028

Net income attributable to GEN Restaurant Group, Inc. 966 9,864

Adjusted Net income per share of Class A common stock - basic (1) $ 0.21 $ 0.12

(1)(2) Basic and diluted adjusted net income per share of Class A common stock is presented only for the period after the Company’s organization transactions effective June 30, 2023.

Restaurant-Level Adjusted EBITDA and Restaurant-Level Adjusted EBITDA Margin

We define Restaurant-Level Adjusted EBITDA as Income 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. We define Restaurant-Level Adjusted EBITDA Margin as Restaurant-Level Adjusted EBITDA divided by revenue.

As with Adjusted EBITDA and Adjusted EBITDA Margin, we believe that Restaurant-Level Adjusted EBITDA and Restaurant-Level Adjusted EBITDA Margin provide useful information to management and investors regarding certain financial and business trends relating to our financial condition and operating results, as these measures depict normal, recurring cash operating expenses essential to supporting the operations of our restaurants.

However, you should be aware that Restaurant-Level Adjusted EBITDA and Restaurant-Level Adjusted EBITDA Margin are financial measures that are not indicative of overall results for our company, and Restaurant-Level Adjusted EBITDA and Restaurant-Level Adjusted EBITDA Margin do not accrue directly to the benefit of stockholders because of corporate-level and non-cash expenses excluded from such measures.

The following table reconciles Income from Operations to Restaurant-Level Adjusted EBITDA for the year ended December 31, 2024 and December 31, 2023:

(amounts in thousands) Year ended December 31,

Income from Operations $ 476 $ 8,090

Income Margin from Operations 0.2 % 4.5 %

Depreciation and amortization 6,857 4,892

Consulting fees - related party — 2,325

Management fees — 1,176

Restaurant-Level Adjusted EBITDA Margin 17.7 % 18.5 %

Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted net income, Adjusted net income attributable to Class A common stock per share, Restaurant-Level Adjusted EBITDA, and Restaurant-Level Adjusted EBITDA Margin are non-GAAP measures intended as supplemental measures of our performance and are neither required by, nor presented in accordance with GAAP. Our presentation of these measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Our computation of Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted net income, Restaurant-Level Adjusted EBITDA and Restaurant-Level Adjusted EBITDA Margin may not be comparable to other similarly titled measures presented by other companies, because all companies may not calculate Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted net income, Adjusted net income attributable to Class A common stock per share, Restaurant-Level Adjusted EBITDA, and Restaurant-Level Adjusted EBITDA Margin in the same fashion. These non-GAAP financial measures have limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP.

Liquidity and Capital Resources

As of December 31, 2024 we had $23.7 million of cash and ($7.2) million of working capital deficit, which is calculated as current assets minus current liabilities, compared with $32.6 million of cash and $5.5 million of working capital as of December 31, 2023. On June 30, 2023, we completed the IPO of 4,140,000 shares of Class A common stock. The public offering price of the shares sold in the IPO was $12.00 per share, resulting in aggregate net proceeds to us of approximately $46.2 million after deducting the underwriting discounts and commission and offering expenses payable by us.

Our primary uses of cash are for operational expenditures and capital investments, including new restaurants, costs incurred for restaurant remodels and restaurant equipment and fixtures. There is no guarantee that if we need to raise any additional capital that we will be able to do so.

Prior to the IPO certain companies within GEN Restaurant Group made distributions to their members, which impacted our cash position upon completion of the IPO. The operating agreements of most of the companies within GEN Restaurant Group, as separate private entities prior to the Reorganization, mandated annual or quarterly distributions of available cash and/or tax distributions in an amount sufficient to allow members to pay taxes on income allocated to them. We determined the amount of these distributions based on the operating cash flow of each such entity. During the year ended December 31, 2023, an aggregate of $26.5 million of distributions were made, and during the year ended December 31, 2024, an aggregate of approximately $0.9 million of distributions were made related to income taxes.

We believe that cash provided by operating activities and cash on hand will be sufficient to fund our lease obligations, capital expenditures and working capital needs for at least the next 12 months. Upon the IPO transaction, GEN Inc. became a holding company with no operations of its own. Accordingly, GEN Inc. is dependent on distributions from GEN LLC to pay its taxes, its obligations under the Tax Receivable Agreement and other expenses.

In connection with the Reorganization, certain members of GEN LLC received the right to receive future payments pursuant to the Tax Receivable Agreement. The amount payable under the Tax Receivable Agreement will be based on an annual calculation of the reduction in our U.S. federal, state and local taxes resulting from the utilization of certain tax benefits resulting from sales and exchanges by certain members of GEN LLC. We expect that payments that we may be required to make under the Tax Receivable Agreement may be substantial. Assuming no material changes in the relevant tax law and that we earn sufficient taxable income to realize all tax benefits that are subject to the Tax Receivable Agreement, we expect that the reduction in tax payments for us associated with the federal, state and local tax benefits described above would aggregate to approximately $117.2 million through 2037. Under such scenario we would be required to pay certain members of GEN LLC 85% of such amount, or $99.6 million through 2037.

The actual amounts may materially differ from these hypothetical amounts as potential future reductions in tax payments for us and Tax Receivable Agreement payments by us will be calculated using prevailing tax rates applicable to us over the life of the Tax Receivable Agreement and will be dependent on us generating sufficient future taxable income to realize the benefit.

We cannot reasonably estimate future annual payments under the Tax Receivable Agreement given the difficulty in determining those estimates as they are dependent on a number of factors, including the extent of exchanges by continuing GEN LLC unitholders, the associated fair value of the underlying GEN LLC units at the time of those exchanges, the tax rates applicable, our future income, and the associated tax benefits that might be realized that would trigger a Tax Receivable Agreement payment requirement.

However, a significant portion of any potential future payments under the Tax Receivable Agreement is anticipated to be payable over 15 years, consistent with the period over which the associated tax deductions would be realized by GEN Inc., assuming GEN LLC generates sufficient income to utilize the deductions. If sufficient income is not generated by GEN LLC, the associated taxable income of GEN Inc. will be impacted and the associated tax benefits to be realized will be limited, thereby similarly reducing the associated Tax Receivable Agreement payments to be made. Given the length of time over which payments would be payable, the impact to liquidity in any single year may be greatly reduced.

Summary of Cash Flows

Our primary sources of liquidity are operating cash flows, cash on hand and debt borrowings. We use these sources to fund expenditures for new restaurant openings, reinvest in our existing restaurants, and increase our working capital. Our working capital position benefits from the fact that we generally collect cash from sales to guests the same day, or in the case of credit or debit card transactions, within several days of the related sale, and we typically have at least 30 days to pay our vendors.

The following table summarizes our cash flows for the periods presented:

Year ended December 31,

(amounts in thousands)

Summary of Cash Flows

Net cash provided by operating activities $ 17,827 $ 22,164

Net cash used in investing activities (26,801 ) (6,307 )

Net cash provided by financing activities 18 5,579

Cash Provided by Operating Activities

Net cash provided by operating activities during the year ended December 31, 2024 was $17.8 million, the result of net income of $4.5 million, adjusted by non-cash charges of depreciation and amortization of $6.9 million, amortization of operating lease assets of $6.8 million and stock-based compensation of $3.0 million, partially offset by the gain of $3.4 million. The net cash outflows from changes in operating assets and liabilities were primarily flat.

Net cash provided by operating activities during the year ended December 31, 2023 was $22.2 million, the result of net income of $11.4 million, adjusted by non-cash charges of depreciation and amortization of $4.9 million, amortization of operating lease assets of $4.6 million and stock-based compensation of $1.5 million, partially offset by net cash outflows of approximately $0.3 million from changes in operating assets and liabilities. The net cash outflows from changes in operating assets and liabilities were primarily the result of an increase in prepaid expenses of $2.6 million and a decrease in operating lease liabilities of $3.1 million, partially offset by an increase in accounts payable of $3.0 million and a decrease in inventory of $2.1 million.

Cash Used in Investing Activities

Net cash used in investing activities during the year ended December 31, 2024 was $26.8 million, reflecting $23.8 million for the purchase of property and equipment and $3.0 million for the acquisition of GKBH.

Net cash used in investing activities during the year ended December 31, 2023 was $6.3 million, reflecting $10.9 million in the net recovery of proceeds from advances made to a related party, partially offset by $17.2 million for the purchase of property and equipment.

Cash Flows Provided by Financing Activities

Net cash provided by financing activities during the year ended December 31, 2024 was $18 thousand, primarily due to $3.0 million in proceeds from third party debt and proceeds of $3.0 million from line of credit, partially offset by payments of $3.8 million on third party loans, $0.9 million for member distribution, and payments to members for advances of $0.9 million.

Net cash provided by financing activities during the year ended December 31, 2023 was $5.6 million, primarily due to $46.2 million in proceeds from the issuance of Class A common stock in the IPO, offset partially by $26.5 million in member distributions, and payments on loans of $14.1 million.

Contractual Obligations

The following table presents our commitments and contractual obligations as of December 31, 2024:

Payments Due by Period as of December 31, 2024

Total Less than 1 year 1-3 years 3-5 years More than 5 years

(amounts in thousands)

Finance lease payments (2) 26 26 — — —

(1)

Represents future minimum lease payments for our restaurant operations and corporate office. Operating lease payments exclude contingent rent payments that may be due under certain of our leases based on a percentage of sales in excess of specified thresholds. See “Note 11—Leases” to the financial statements in this annual report for further details.

(2)

Reflects the principal and interest payments during the lease terms. Refer to “Note 11—Leases” to the financial statements included in this annual report.

(3)

Reflects the principal payment on third party notes. Refer to “Note 9—Notes Payable” to the financial statements included elsewhere in this annual report.

(4)

Interest relates to the notes payable through maturity dates. Refer to “Note 9—Notes Payable” to the financial statements included in this annual report.

Off-Balance Sheet Arrangements

As of December 31, 2024 and December 31, 2023 we did not have any material off-balance sheet arrangements.

Critical Accounting Policies and Estimates

Our discussion and analysis of operating results and financial condition are based upon our financial statements. The preparation of our financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, sales, expenses and related disclosures of contingent assets and liabilities. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis.

Our critical accounting estimates are those that materially affect our financial statements and involve subjective or complex judgments by management. Although these estimates are based on management’s best knowledge of current events and actions that may impact us in the future, actual results may be materially different from the estimates. We believe the following are affected by significant judgments and estimates used in the preparation of our financial statements and that the judgments and estimates are reasonable.

Operating and Finance Leases

Our office leases provide for fixed minimum rent payments. Our restaurant leases provide for fixed minimum rent payments and some require additional contingent rent payments based upon sales in excess of specified thresholds. When achievement of such sales thresholds is deemed probable, contingent rent is accrued in proportion to the sales recognized in the period. For operating leases that include free-rent periods and rent escalation clauses, we recognize rent expense based on the straight-line method. For the purpose of calculating rent expenses under the straight-line method, the lease term commences on the date we obtain control of the property. Lease incentives used to fund leasehold improvements are recognized when earned and reduce the operating right-of-use asset related to the lease. These are amortized through the operating right-of-use asset as reductions of expense over the lease term. Restaurant lease expense is included in occupancy expenses, while office lease expense is included in general and administrative expenses on the accompanying financial statements.

We currently lease all of our restaurant locations, corporate office, and some of the equipment used in our restaurants. On January 1, 2022, we adopted ASU 2016-02, Leases ( ASC Topic 842), using a modified retrospective approach. See "Note 11—Leases" to the financial statements. At commencement of the lease, we determine the appropriate classification as an operating lease or a finance lease. All of our restaurant and office leases are classified as operating leases and some of our equipment leases are classified as finance leases.

Assets we acquired under finance lease arrangements were recorded at the lower of the present value of future minimum lease payments or fair value of the assets at the inception of the lease. Finance lease assets were amortized over the shorter of the useful life of the assets or the lease term, and the amortization expense is included in depreciation and amortization on the accompanying financial statements.

Impairment of Long-Lived Assets

We assess potential impairments of our long-lived assets, which includes property and equipment and operating lease right-of-use assets, in accordance with the provisions of Financial Accounting Standards Board, (“FASB”), Accounting Standards Codification, (“ASC”) 360, “Property, Plant and Equipment.” An impairment test is performed on a quarterly basis or whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. In determining the recoverability of the asset value, an analysis is performed at the individual restaurant level. Assets are grouped at the individual restaurant-level for purposes of the impairment assessment because a restaurant represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Recoverability of an asset group is measured by a comparison of the carrying amount of an asset group to its estimated forecasted restaurant cash flows expected to be generated by the asset group. Factors considered by us in estimating future cash flows include, but are not limited to: significant underperformance relative to expected historical or projected future operating results; significant changes in the

manner of use of the acquired assets; and significant negative industry or economic trends. If the carrying amount of the asset group exceeds its estimated undiscounted future cash flows, an impairment charge is recognized as the amount by which the carrying amount of the asset exceeds the fair value of the asset.

No impairment loss was recognized during any of the periods presented.

Emerging Growth Company Status

We are an “emerging growth company,” as defined in the JOBS Act, and we have taken advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies.” We may take advantage of these exemptions until we are no longer an “emerging growth company.” Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards. We have elected to use the extended transition period for complying with new or revised accounting standards and as a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates. We may take advantage of these exemptions up until the last day of the fiscal year following the fifth anniversary of our IPO or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if we have more than $1.235 billion in annual revenue, we have more than $700.0 million in market value of our stock held by non-affiliates (and we have been a public company for at least 12 months and have filed one annual report on Form 10-K) or we issue more than $1.0 billion of non-convertible debt securities over a three-year period.

Recently Adopted Accounting Pronouncements

See Note 2 - Basis of Presentation and Summary of Significant Accounting Policies, for a discussion of recently adopted accounting standard.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Commodity and Food Price Risks

Our profitability is dependent on, among other things, our ability to anticipate and react to changes in the costs of key operating resources, including food and beverage and other commodities. We have been able to partially offset cost increases that resulted from a number of factors, including market conditions, shortages or interruptions in supply due to weather or other conditions beyond our control and governmental regulations and inflation. We accomplished this by increasing our menu prices and making other operational adjustments that increase productivity. However, substantial increases in costs and expenses could impact our operating results to the extent that such increases cannot be offset by menu price increases or operational adjustments.

Inflation Risk

The primary areas where inflation impacts our operations are in food, beverage, labor and energy costs. Our restaurant operations are subject to federal and state minimum wage laws and other laws governing such matters as working conditions, overtime and tip credits. Significant numbers of our restaurant personnel are paid at rates dependent on the federal and/or state minimum wage and, accordingly, increases in the minimum wage increase our labor costs. To the extent permitted by competition and the economy, we have mitigated increased costs by increasing menu prices and may continue to do so if deemed necessary in future years. Substantial increases in costs and expenses could impact our operating results to the extent such increases cannot be passed through to our guests. Historically, until 2024, inflation has not had a material effect on our results of operations. Severe increases in inflation, however, could affect the global and U.S. economies and could have an adverse impact on our business, financial condition or results of operations.

While we have been able to partially offset inflation and other changes in the costs of core operating resources by gradually increasing menu prices, coupled with the implementation of more efficient purchasing practices, productivity improvements and greater economies of scale, there can be no assurance that we will be able to

continue to do so in the future. From time to time, competitive conditions could limit our menu pricing flexibility. In addition, macroeconomic conditions could render additional menu price increases imprudent. There can be no assurance that future cost increases can be offset by increased menu prices or that increased menu prices will be fully absorbed by our guests without any resulting change to their visit frequencies or purchasing patterns. In addition, there can be no assurance that we will generate sales growth in an amount sufficient to offset inflationary or other cost pressures.

Interest Rate Risk

We are exposed to market interest rates by accessing our line of credit, which bears an interest rate at the Wall Street Journal Prime Rate plus 0.25%.

Item 8. Financial Statements and Supplementary Data.

See index to financial statements on page F-1.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management carried out an evaluation, under the supervision and with the participation of our Chief Executive Officers and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined by Rule 13a-15(e) of the Exchange Act) as of the end of the period covered by this Annual Report on Form 10-K. Based on this evaluation, our management concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of the end of the period covered by this report.

Management’s Report on Internal Control over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). The Company’s management has evaluated the effectiveness of its internal control over financial reporting based on the criteria set forth in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s internal control over financial reporting was effective as of December 31, 2024.

This Annual Report does not include an attestation report of our independent registered public accounting firm due to a transition period established by the rules of the SEC for emerging growth companies.

Remediation of Previously Disclosed Material Weakness

We previously reported material weaknesses in our 2023 Annual Report on Form 10-K, as well as in our Quarterly Report on Form 10-Q filed for the quarters ended March 31, 2024, June 30, 2024, and September 30, 2024, a material weakness in our control environment. As of December 31, 2024, management has completed our remediation efforts of these material weaknesses.

Changes in Internal Control over Financial Reporting

Other than described above in “Remediation of Previously Disclosed Material Weakness”, there were no changes in the Company’s internal control over financial reporting during the quarter ended December 31, 2024,

that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Limitations on Effectiveness of Disclosure Controls and Procedures and Internal Control over Financial Reporting

In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Item 9B. Other Information.

None of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted, modified, or terminated any contract, instruction, or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act or any non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K) during the fiscal quarter ended December 31, 2024.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Not applicable.

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

A list of our executive officers and their biological information appears in Part 1, Item 1 of this Annual Report on Form 10-K under the caption “Information About Our Executive Officers.”

Additional information required by this item is incorporated by reference to the section titled “Proposal 1 - Election of Directors” and “Delinquent Section 16(a) Reports” in our Proxy Statement for the 2025 Annual Meeting of Stockholders, which will be filed no later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

Code of Ethics

We have adopted the Code of Business Conduct and Ethics for our Chief Executive Officers and Senior Finance Officers. A copy of the Code can be found on our website at www.genkoreanbbq.com in the “Investor” section. We intend to satisfy the disclosure requirements of the SEC regarding amendments to, or waivers from the Code by posting such information on the same website.

Audit Committee

The information required by this item is incorporated by reference to the section titled “Committees of the Board” in our Proxy Statement for the 2025 Annual Meeting of the Stockholders, which will be filed no later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

Item 11. Executive Compensation.

The information contained under the captions “Director compensation” and “Executive compensation” in our proxy statement for the 2025 annual meeting of stockholders is incorporated herein by reference to such proxy statement, provided that the Compensation Committee report shall not be deemed filed with this Form 10-K.

The information contained under the caption “Compensation committee interlocks and insider participation” in our proxy statement for the 2025 annual meeting of stockholders is incorporated herein by reference to such proxy statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information that is contained under the captions “Security ownership of certain beneficial owners” and “Security ownership of directors and management” in our proxy statement for the 2025 annual meeting of stockholders is incorporated herein by reference to such proxy statement.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

The information contained under the captions “Related person transactions” and “Director independence” in our proxy statement for the 2025 annual meeting of stockholders is incorporated herein by reference to such proxy statement.

Item 14. Principal Accountant Fees and Services.

The information with respect to principal accountant fees and services contained under the caption “Proposal to ratify appointment of independent registered public accounting firm” in our proxy statement for the 2025 annual meeting of stockholders is incorporated herein by reference to such proxy statement.

PART IV

Item 15. Exhibits and Financial Statement Schedules.

(a)

The following documents filed as a part of the report:

(1)

Financial Statements:. See “Index to Consolidated Financial Statements” on page F-1.

(2)

Financial Statements Schedule: Not Applicable.

(3)

Exhibits:

ExhibitNumber Description

19.1* Insider Trading Policy

21.1* Subsidiaries of the Registrant

24.1* Power of Attorney (included on the signature page hereto)

101.SCH+ Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents

104+ Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Filed herewith.

# Denotes management compensatory plan or arrangement.

** These certifications accompany this Annual Report on Form 10-K; they are not deemed “filed” with the SEC and are not to be incorporated by reference in any filing of the Company under the Securities Act of the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any filings, except to the extent that the Company specifically incorporates it by reference.

+ XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act is deemed not filed for purposes of Section 18 of the Exchange Act and otherwise is not subject to liability under these sections.

Item 16. Form 10-K Summary

None.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

GEN RESTAURANT GROUP, INC.

Date: March 7, 2025 By: /s/ Thomas V. Croal

Thomas V. Croal

Chief Financial Officer

(Principal Financial and Accounting Officer)

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS that each individual whose signature appears below constitutes and appoints David Kim and Thomas V. Croal and each them, his true and lawful attorneys-in-fact and agents, with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K and to file the same, with all exhibits thereto and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.

Name Title Date

/s/ David Kim Chief Executive Officer March 7, 2025

David Kim (Principal Executive Officer and Director)

/s/ Thomas V. Croal Chief Financial Officer March 7, 2025

Thomas V. Croal (Principal Financial and Accounting Officer)

/s/Jae Chang Jae Chang March 7, 2025

Jae Chang (Director)

/s/ Michael B. Cowan Michael B. Cowan March 7, 2025

Michael B. Cowan (Director)

/s/ Jonathan Gregory Jonathan Gregory March 7, 2025

Jonathan Gregory (Director)

/s/ David Park David Park March 7, 2025

David Park (Director)

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm F-2

Consolidated Balance Sheets as of December 31, 2024 and 2023 F-3

Notes to Consolidated Financial Statements F-8

F-1

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of

GEN Restaurant Group, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of GEN Restaurant Group, Inc. (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of income, changes in permanent equity (deficit) and cash flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Marcum, LLP

Marcum LLP

We have served as the Company’s auditor since 2021.

March 7, 2025

Costa Mesa, CA

PCAOB ID No. 688

F-2

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

GEN RESTAURANT GROUP, INC.

Consolidated Balance Sheets

Current assets:

Accounts receivable 3,487 —

Prepaid expenses and other current assets 6,004 3,726

Equity method investment — 523

Liabilities and equity

Current liabilities

Accrued salaries and benefits 3,243 2,660

Accrued interest 60 42

Line of credit 3,000 —

Notes payable to related parties — 1,197

Obligations under finance leases, current 26 125

Operating lease liabilities, current 5,221 4,535

Deferred Restaurant Revitalization Fund grant 3,806 3,806

Advances from members — 2,704

Gift card liabilities 5,983 —

Notes payable, net of current portion 5,140 4,547

Tax receivable agreement liability 691 —

Operating lease liabilities, net of current portion 147,898 110,501

Commitments and contingencies (Note 11)

Mezzanine equity

Permanent equity

Total liabilities and stockholders’ equity $ 240,415 $ 183,870

See accompanying notes to consolidated financial statements.

F-3

GEN RESTAURANT GROUP, INC

Consolidated Income Statements

For the year ended December 31,

(in thousands, except per share amounts) 2024 2023

Restaurant operating expenses:

Depreciation and amortization 6,735 4,808

Consulting fees - related party — 2,325

Management fees — 1,176

Depreciation and amortization - corporate 122 84

Employee retention credits 199 2,483

Gain on remeasurement of previously held interest (see Note 3) 3,402 —

Equity in (loss) income of equity method investee (17 ) 535

Provision for income taxes 357 21

Less: Net income attributable to noncontrolling interest 3,940 3,028

Net income attributable to GEN Restaurant Group, Inc. 592 8,406

Net income per share of Class A common stock - basic (1) $ 0.13 $ 0.08

Net income per share of Class A common stock - diluted (2) $ 0.13 $ 0.08

(1) (2)Basic and diluted net income per Class A common stock is presented only for the period after the Company’s organizational transactions.

See Note 1 for a description of the organizational transactions. See Note 16 for calculation of net income per share.

See accompanying notes to consolidated financial statements.

F-4

GEN RESTAURANT GROUP, INC.

Consolidated Statements of Changes in Permanent Equity (Deficit)

Year ended December 31, 2024 and December 31, 2023

Net income prior to the organizational transaction 8,084 827 8,911

Conversion of related party loans to equity 871 871

Effects of initial public offering and related organization transactions: -

Capitalization of initial public offering costs (3,265 ) (3,265 )

See accompanying notes to consolidated financial statements.

F-5

Adjustment to tax liabilities and assets under TRA (1,288 ) (1,288 )

Shares issued upon RSU vesting 280,817 -

Distributions to members - (845 ) (845 )

Contribution by shareholder in final IPO settlement 1,277 1,277

See accompanying notes to consolidated financial statements.

F-6

GEN RESTAURANT GROUP, INC.

Consolidated Statements of Cash Flows

For the year ended December 31,

Cash flows from operating activities

Adjustments to reconcile net income to cash provided by operating activities

Depreciation and amortization 6,857 4,892

Equity in income of equity method investee, net of distributions 17 95

Gain on remeasurement of previously held interest (3,402 ) —

Amortization of operating lease assets 6,814 4,642

Interest income earned on Notes receivable from related party (33 ) (150 )

Deferred tax expense 333 87

Changes in operating assets and liabilities:

Accounts receivable (3,487 ) —

Prepaid expenses and other current assets (2,613 ) (2,584 )

Accrued salaries and benefits 583 684

Accrued interest 18 (133 )

Gift card liabilities 5,983 —

Other current liabilities 221 (228 )

Operating lease liabilities (1,014 ) (3,115 )

Net cash provided by operating activities 17,827 22,164

Cash used in from investing activities

Proceeds from recovery of Notes receivable from related party — 12,950

Advances made to related party — (2,100 )

Purchase of property and equipment (23,825 ) (17,157 )

Acquisition of GKBH, net of cash acquired (2,976 ) —

Net cash (used in) investing activities (26,801 ) (6,307 )

Cash flows from financing activities

Payments to members for advances (881 ) (2,000 )

Advance from members — 262

Payments for deferred offering costs — (2,479 )

Payments on EIDL loans (90 ) (87 )

Payments on finance leases (100 ) (194 )

Payments on third party loans (3,770 ) (2,440 )

Payments on related party loans (296 ) (2,088 )

Payment on line of credit — (7,993 )

Proceeds from third party loans 3,000 1,300

Proceeds from related party loans — 500

Net cash provided by financing activities 18 5,579

Net change in cash and cash equivalents (8,956 ) 21,436

Cash and cash equivalents at beginning of period 32,631 11,195

Cash and cash equivalents at end of the period $ 23,675 $ 32,631

Supplemental disclosures of other cash flow information:

Cash paid for interest $ 288 $ 195

Non-cash investing and financing activities:

Unpaid purchases of property and equipment 1,904 927

Unpaid deferred offering costs - 125

Issuance of promissory note for business acquisition 3,000 —

Contribution by shareholder in final IPO settlement 1,277 —

See accompanying notes to consolidated financial statements.

F-7

GEN RESTAURANT GROUP, INC.

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

(1) Organization and Description of Business

The accompanying consolidated financial statements represent the consolidated balance sheets, income statements, changes in permanent equity (deficit), and cash flows of GEN Restaurant Group, Inc., Gen Restaurant Companies, LLC and its consolidated subsidiaries (the “Company”). All of the operations are owned by Gen Restaurant Companies, LLC. The Company operates restaurants which are located in California, Arizona, Hawaii, Nevada, New York, Washington, Texas, Florida and New Jersey specializing in a variety of special flavored meats for Korean barbeque.

The following tables lists the Company’s entities in operation as of December 31, 2024:

Name Operating Name State Purpose

GEN Restaurant Group, LLC GEN Tustin CA Restaurant

GEN Huntington Beach CA Restaurant

GEN Oxnard CA Restaurant

JC Group International Inc. (S Corp) GEN Henderson NV Restaurant

GEN West Covina CA Restaurant

GEN Corona CA Restaurant

GEN Restaurant Investment, LLC GEN Glendale CA Restaurant

GEN California, LLC GEN Fullerton CA Restaurant

GEN Mira Mesa CA Restaurant

GEN Arizona, LLC GEN Tempe AZ Restaurant

GEN Chandler, LLC GEN Chandler AZ Restaurant

GEN Nevada, LLC GEN Sahara NV Restaurant

GEN Miracle Mile NV Restaurant

GEN Alhambra, LLC GEN Alhambra CA Restaurant

GEN Arlington, LP GEN Arlington TX Restaurant

GEN Cerritos, LLC GEN Cerritos CA Restaurant

GEN Cerritos II, LP Gen Cerritos II CA Restaurant

GEN Torrance, LLC GEN Torrance CA Restaurant

GEN Rancho Cucamonga, LP GEN Rancho Cucamonga CA Restaurant

GEN San Jose, LP GEN San Jose CA Restaurant

GEN Northridge, LP GEN Northridge CA Restaurant

GEN Chino Hills, LP GEN Chino Hills CA Restaurant

GEN Carrollton, LP GEN Carrollton TX Restaurant

GEN Fort Lauderdale, LP GEN Fort Lauderdale FL Restaurant

GEN Fremont, LP GEN Fremont CA Restaurant

GEN Concord, LP GEN Concord CA Restaurant

GEN Webster, LP GEN Webster TX Restaurant

GEN Westgate, LP GEN Westgate CA Restaurant

GEN Westheimer, LLC GEN Westheimer TX Restaurant

GEN Manhattan NYU, LP GEN Manhattan NY Restaurant

GEN Maui, LP GEN Maui HI Restaurant

GEN Mountain View, LP GEN Mountain View CA Restaurant

GKBH Restaurant, LLC GEN Korean BBQ HI Restaurant

GEN Hawaii, LLC Investment Company HI Management of GKBH

GEN Online, LLC GEN Online CA Website sales

GEN Sacramento, LP GEN Sacramento CA Restaurant

GEN Pearlridge, LLC GEN Pearlridge HI Restaurant

GEN Kapolei, LP GEN Kapolei HI Restaurant

GEN Frisco, LP GEN Frisco TX Restaurant

GEN Houston, LLC GEN Houston TX Restaurant

GEN Seattle, LP GEN Seattle WA Restaurant

GEN Jacksonville, LP GEN Jacksonville FL Restaurant

GEN Dallas, LP GEN Dallas TX Restaurant

GEN Pflugerville, LP GEN Pflugerville TX Restaurant

GEN Tigard, LP GEN Tigard OR Restaurant

GEN Texas, LLC Investment Company TX Management of GEN Houston and GEN Webster

GEN Master, LLC Holding Company NV Management

GEN Grills, LP GEN Grills DE Hibachi Concept

GEN Restaurant Management, LLC GRM DE Management

F-8

GEN RESTAURANT GROUP, INC.

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

As of December 31, 2024, the above entities are collectively owned 100% by the controlling group. The Company had an equity method investment through GEN Hawaii, with a 50% ownership share of GKBH Restaurant, LLC (“GKBH”). On February 18, 2024, the Company purchased the other 50% of GKBH and other rights and now controls 100% of GKBH. As of December 31, 2024 and December 31, 2023, there were 43 and 37 restaurants in operation, respectively. During the fourth quarter of 2024, the Company signed two leases for restaurants in San Antonio, Texas and McAllen, Texas for a period of 10 years. During the month of January 2025, we opened three restaurants in Orlando, FL, Edison, NJ, and San Antonio, TX.

Organization

GEN Inc. was formed as a Delaware corporation on October 28, 2021 and is based in Cerritos, California. As the managing member of Gen Restaurant Companies, LLC (the “Operating Company”), GEN Inc. operates and controls all of the business and affairs of the Operating Company, and through the Operating Company and its consolidated subsidiaries, conducts its business. Unless the context otherwise requires, references to the “Company” refer to GEN Inc., and its consolidated subsidiaries, including the Operating Company.

On June 30, 2023, the Company completed an initial public offering (the “IPO”) of 4,140,000 shares of Class A common stock at $12.00 per share that generated an aggregate net proceeds of $46.2 million.

(2)

Basis of Presentation and Summary of Significant Accounting Policies

(a)

Basis of Presentation

The accompanying consolidated financial statements of the Company, collectively, have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”).

(b)

Recently Issued Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, “Disaggregation of Income Statement Expenses” and in January 2025, the FASB issued ASU 2025-01, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures”, which requires public companies additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific type of expense included in the expense captions presented in the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective for fiscal years beginning after December 15, 2026. The Company is in the process of evaluating the impact that the adoption of these ASUs will have on the consolidated financial statements and related disclosures.

In March 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-01, Leases (Topic 842): Common Control Arrangements. The new guidance requires all lessees in a lease with a lessor under common control to amortize leasehold improvement over the useful life of the common control group and provides new guidance for recognizing a transfer of assets between entities under common control as an adjustment to equity when the lessee no longer controls the use of the underlying asset. This guidance is effective for fiscal years beginning after December 15, 2023. ASU 2023-01 became effective for the Company in 2024 and did not have a significant effect on our financial statements.

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” which provides guidance to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The guidance is effective for fiscal years beginning after December 15, 2023, and interim within fiscal years beginning after December 15, 2024. The Company adopted this ASU in the fourth quarter of 2024, and as a result, there was no material impact on the consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740),” “Improvement for Income Tax Disclosure,” which is effective for fiscal years beginning after December 15, 2024. The Company is evaluating the presentational effect that ASU 2023-09 will have on the consolidation financial statements.

F-9

GEN RESTAURANT GROUP, INC.

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

The Company adopted FASB ASC 260, “Earnings per Share” after the IPO. The consolidated income statements of the Company include a presentation of income (loss) per share. The Company calculates this on the income (loss) attributable to the activity after the IPO. As of December 31, 2024 and 2023, the Company did not have any dilutive securities that could, potentially, be exercised or converted into Class A common stock and then share in the earnings of the Company. As a result, diluted income (loss) per share is the same as basic income (loss) per share for the period presented.

(c)

Use of Estimates

The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities in the accompanying consolidated financial statements of the Company. The accompanying consolidated financial statements have been prepared in conformity with GAAP and applicable rules, and regulations of the SEC.

(d)

Equity-Based Compensation

The Company accounts for equity-based compensation grants of equity awards to employees in accordance with ASC Topic 718, “Stock Based Compensation”. The Company issued restricted stock units to its employees in 2023.

The Company estimates the fair value of the restricted stock units on the grant-date and recognizes the resulting fair value over the requisite service period. The fair value of each restricted stock unit or award is determined based upon the value of the common stock granted or sold. The Company has elected to treat stock-based awards with graded vesting schedules and time-based service conditions as a single award and recognizes stock-based compensation on a straight-line basis over the requisite service period. Forfeitures are accounted for as they occur.

(e)

Cash and Cash Equivalents

The Company and its related entities consider all highly liquid instruments with a maturity of three months or less when purchased to be cash equivalents. As of December 31, 2024, cash and cash equivalents consist principally of cash, money market accounts and short-term investments. Short-term investments are classified available for sale securities, which are carried at fair value, with changes in fair value reported in earnings. Cash equivalents also include credit card transactions in transit. As of December 31, 2024 and December 31, 2023, there were deposits in excess of federally insured amounts of $2.9 million and $8.8 million, respectively.

F-10

GEN RESTAURANT GROUP, INC.

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

Fair Value Measurements at December 31, 2024

CarryingValue/AmortizedCost GrossUnrealizedGains GrossUnrealizedLosses Total

(in thousands)

Fair Value Measurements at December 31, 2023

CarryingValue/AmortizedCost GrossUnrealizedGains GrossUnrealizedLosses Total

(f)

Concentration Risk

The Company relies on third parties for specified food products and supplies. In instances where these parties fail to perform their obligation, the Company may be unable to find alternative suppliers.

The Company relies on Sysco Los Angeles, Inc., or Sysco, an unrelated third-party, for a significant portion of its food products. During the fourth quarter of 2023, the Company entered into an agreement with Sysco to purchase certain food supplies. For the year ended December 31, 2024, Sysco accounted for approximately 76.3% of total food costs. For the year ended December 31, 2023, Sysco accounted for approximately 15.1% of total food costs.

The Company previously relied on U.S. Foods, an unrelated third-party for a significant portion of its food products. For the year ended December 31, 2023, U.S. Foods accounted for approximately 36.0% of total food costs, respectively.

The Company relies on Pacific Global Distribution, Inc. (“PGD”), which provides restaurant supplies such as tableware, napkins, soda, and sauces. PGD is owned by a related party. For the years ended December 31, 2024 and December 31, 2023, PGD accounted for approximately 3.2% and 16.4% of total operating expenses, respectively.

The Company previously relied on Wise Universal, Inc. (“Wise”), an entity 60% owned by a related party, which provided food products. For the year ended December 31, 2023, Wise accounted for approximately 21.3% of total food costs.

During the twelve months ended December 31, 2024 and 2023 two third party vendors accounted for 24.2% and 11.0% of total food costs, respectively.

F-11

GEN RESTAURANT GROUP, INC.

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

(g)

Inventories

Inventories consist principally of food and beverages and are valued at the lower of cost or net realizable value. Cost is determined using the first-in, first-out method (FIFO) for all inventories.

(h)

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606, “Revenue from Contracts with Customers.” Revenue from the operation of the restaurants is recognized as food and beverage products are delivered to customers and payment is tendered at the time of sale.

Sales tax amounts collected from customers are remitted to governmental authorities and are excluded from sales.

The Company started selling gift cards primarily during the fourth quarter of 2024. The Company sells gift card which do not have expiration dates. Gift cards balances are initially recorded as unearned income. Revenue from gift cards is recognized when gift cards are redeemed by the guest or, in the event a gift card is not expected to be redeemed, in proportion to actual redemptions of gift cards (“gift card breakage”). Gift card breakage income is included in revenue on the consolidated income statements.

(i)

Property and Equipment

Property and equipment are stated at cost and are depreciated using the straight-line method over the estimated useful lives of the assets. Property and equipment under finance leases are stated at the present value of minimum lease payments.

The estimated useful service lives are as follows:

Equipment 5 - 7 Years

Furniture and fixtures 5 - 7 Years

Leasehold improvements Shorter of useful life or remaining lease term

The Company and its related entities capitalize certain costs in conjunction with improvements to specific sites for planned future restaurants. The Company and its related entities also capitalize certain costs, including interest, in conjunction with constructing new restaurants. These costs are included in property and equipment and are amortized over the shorter of the life of the related leasehold improvements or the remaining lease term. Costs related to abandoned sites and other site selection costs that cannot be identified with specific restaurants are charged to general and administrative expenses in the accompanying consolidated income statements. The Company and its related entities did not capitalize any internal costs related to site preparation and construction activities during the years ended December 31, 2024 and 2023 as any amounts were deemed immaterial.

(j)

Other Assets and Other Current Liabilities

Other assets as of December 31, 2024 and December 31, 2023 consist of the following:

GENK US Equity

GENK · 10-K · period ended 2024-12-31

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Item 8. Financial Statements and Supplementary Data.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

Item 9A. Controls and Procedures.

Item 9B. Other Information.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Item 10. Directors, Executive Officers and Corporate Governance.

Item 11. Executive Compensation.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

Item 14. Principal Accountant Fees and Services.

Item 15. Exhibits and Financial Statement Schedules.

Item 16. Form 10-K Summary

GENK US Equity☆

GENK · 10-K · period ended 2024-12-31

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Item 8. Financial Statements and Supplementary Data.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

Item 9A. Controls and Procedures.

Item 9B. Other Information.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Item 10. Directors, Executive Officers and Corporate Governance.

Item 11. Executive Compensation.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

Item 14. Principal Accountant Fees and Services.

Item 15. Exhibits and Financial Statement Schedules.

Item 16. Form 10-K Summary

GENK US Equity