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, 2025 and 2024. The terms “we”, “our”, and “us” as used herein refer to the Operating Company and its consolidated subsidiaries prior to the IPO and related transactions described in this Form 10-K and GEN Restaurant Group, Inc. and its consolidated subsidiaries, including the Operating Company, following the IPO and related 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 opening of our first restaurant in September 2011 we have grown to 57 company-owned restaurants located in California, Arizona, Hawaii, Nevada, Texas, New York, Oregon, New Jersey, Washington, North Carolina, Florida and six stores in South Korea. 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. 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 each of 2023 and 2024. During the year 2025, we opened 15 new restaurants, including six in South Korea. Subsequent to December 31, 2025, we opened two new restaurants in Tucson, AZ and Denton, TX. In addition to these opening, as of December 31, 2025 we have entered into leases for 18 new restaurant locations, with openings planned during 2026 and thereafter. The 15 restaurants opened during 2025 are located in Orlando, FL, Edison, NJ, San Antonio TX, Cary, NC, Waco, TX, El Paso, TX, La Jolla, CA and two in Austin, TX. In addition to the Tucson, AZ restaurant we opened in January 2026 and the Denton, TX restaurant we opened in March 2026 , we currently expect to open four to eight other locations during 2026. Additionally, we expanded internationally into South Korea with six Company-owned locations 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.
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Recent Events Concerning Our Financial Position
On September 29, 2023, the Company entered into a $20 million line of credit with PCB bank. The line of credit matures on September 25, 2026 and bears interest at a variable rate per annum equal to 7.0% as of December 31, 2025. As of December 31, 2025 the balance was $1.0 million. On January 12, 2026, the Company paid the $1.0 million balance.
During the third quarter of 2024, the Company entered into a loan agreement with PCB Bank in the amount of $3.0 million with a maturity date of June 26, 2026, at a variable interest rate which is defined as the Wall Street Journal Prime Rate plus 0.25%, resulting in an interest rate of 7.00% and 7.75% as of December 31, 2025 and 2024, respectively. The balance as of December 31, 2025 and 2024 was $0.7 million and $2.3 million, respectively.
On April 25, 2025, the Company entered into a loan agreement for a $2.0 million loan with PCB Bank. The loan matures on April 25, 2027, and bears interest at a variable interest rate per annum equal to 7.00% as of December 31, 2025. The Company makes quarterly payments in the amount of $250,000, in addition to monthly interest payments. The balance as of December 31, 2025 was $1.3 million.
On July 29, 2025, the Company entered into a loan agreement for $4.0 million with PCB Bank. The loan matures on July 29, 2027, and bears interest at a variable rate per annum equal to 0.25% over the Wall Street Journal Index rate (prime rate), which equals 7.00% as of December 31, 2025. The balance as of December 31, 2025 was $3.2 million.
On October 27, 2025, the Company entered into a loan agreement of $4.0 million with PCB Bank. The loan matures on October 27,2027, and bears interest at a variable rate per annum equal to 0.25% over the Wall Street Journal Prime Rate, which equaled 7.00% at December 31, 2025. The balance as of December 31, 2025 was $4.0 million.
The Company impaired fixed assets related to five restaurants in 2025, primarily related to closure decisions on underperforming restaurants. Impairment is based on our current assessment of the expected future cash flows of of various restaurants based on recent results and other specific market factors. During the year ended December 31, 2025, the Company recognized the impairment expense on fixed assets of $5.5 million.
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 (Loss) Income Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted net (loss) income, Adjusted Net (Loss) Income attributable to Class A common stock per share - basic and diluted, Adjusted earnings (loss) per share, (“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 (Loss) 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 income (expense), net, income taxes, depreciation and amortization, stock-based compensation, employee retention credits, litigation accruals, non-cash lease expense, non-cash lease expense included in pre-opening costs and gain on remeasurement of previously held interest. 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.”
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Adjusted Net (Loss) Income and Adjusted EPS
Adjusted Net (Loss) Income and Adjusted EPS represent net (loss) income adjusted for pre-opening costs, gain on remeasurement of previously held interest, stock based compensation, legal settlements, and the related tax impact of the adjustments. Adjusted Net (Loss) Income attributable to Class A common stock per share-basic and diluted, is Adjusted Net (Loss) Income less Adjusted Net (Loss) Income attributable to non-controlling interest. “Adjusted EPS” is Adjusted Net (Loss) Income attributable to Class A common stock per share-basic and diluted, converted to a per share amount. Adjusted Net (Loss) Income, Adjusted Net (Loss) Income attributable to Class A common stock per share-basic and diluted, 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 (loss) income from operations plus adjustments to add-back the following expenses: depreciation and amortization, pre-opening costs, general and administrative expenses, 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, 2025 and 2024:
Twelve months 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.
Twelve months ended December 31,
Comparable restaurant sales change (%) (7.9 )% (5.6 )%
Comparable restaurant base 38 33
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.
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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, 2025 and 2024:
Twelve months ended December 31,
Restaurant activity
Beginning of period 43 37
Closings (1 ) —
During 2026, we opened two new restaurants: in Tucson, Arizona and Denton, Texas.
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 18 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, 2025 and 2024:
Twelve months ended December 31,
Revenue per square foot $ 718 $ 801
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, and revenue earned through retail or wholesale distribution.
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.
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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.
Gain on lease termination. During the third quarter of 2025, we recorded lease termination income of $0.5 million related to the closure of one restaurant.
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.
Employee retention credits. Employee retention credits include refundable credits recognized under the provisions of the CARES Act and extension thereof. During the year ended December 31, 2025, and December 31, 2024, $0.3 million and $0.2 million, respectively, of these credits were received and recorded.
Impairment expense. During the fourth quarter of 2025, we determined that fixed assets at the restaurant level were impaired and we recorded an impairment expense as it was determined that the fair value of these assets was less than the carrying value.
Loss on foreign currency. Represents the foreign currency transaction losses in South Korea.
Gain on remeasurement of previously held interest. This reflects the business acquisition of GKBH (a restaurant in Hawaii) during the first quarter of 2024.
Impairment reserve. During the fourth quarter of 2025, we recorded an impairment reserve in connection with the transfer of five stores to a third party in exchange for a 49% equity interest.
Interest income (expense), net. Interest expense includes cash and non-cash charges related to our debt outstanding and finance lease obligations. Interest income reflects income earned on cash balances.
Equity in loss of equity method investee. Equity in loss of equity method investee reflected our 50% ownership in GKBH that was accounted for using the equity method until the date of acquisition on February 18, 2024.
(Benefit) provision for income taxes. Represents federal, state, and local current and deferred income tax expense (benefit).
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Results of Operations for the Years Ended December 31, 2025 and December 31, 2024
The following table presents selected comparative results of operations from our audited financial statements for the year ended December 31, 2025 and December 31, 2024. Our financial results for these periods are not necessarily indicative of the financial results that we will achieve in future periods.
Year Ended December 31, Increase/(Decrease)
($ amounts in thousands) 2025 2024 Amount %
Restaurant operating expenses:
Depreciation and amortization - corporate 158 122 36 29.5 %
(Gain) loss on lease terminations (471 ) — (471 ) 100%
Gain on remeasurement of previously held interest — 3,402 (3,402 ) (100.0 )%
Loss on foreign currency (47 ) — (47 ) 100%
Equity in loss of equity method investee — (17 ) 17 (100.0 )%
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% of Revenue
Year ended December 31,
Restaurant operating expenses:
Payroll and benefits 30.6 % 30.9 %
Occupancy expenses 10.0 % 8.4 %
Operating expenses 11.4 % 10.3 %
Depreciation and amortization 4.2 % 3.2 %
Pre-opening costs 3.9 % 3.7 %
Total restaurant operating expenses 94.8 % 89.5 %
General and administrative 12.2 % 10.2 %
Impairment expense 2.6 % 0.0 %
Depreciation and amortization - corporate 0.1 % 0.1 %
(Gain) loss on lease terminations (0.2 )% 0.0 %
Total costs and expenses 109.4 % 99.8 %
(Loss) income from operations (9.4 )% 0.2 %
Employee retention credits 0.1 % 0.1 %
Gain on remeasurement of previously held interest 0.0 % 1.6 %
Other loss (0.2 )% 0.0 %
Loss on foreign currency 0.0 % 0.0 %
Interest income (expense), net (0.1 )% 0.4 %
Equity in loss of equity method investee 0.0 % 0.0 %
Net (loss) income before income taxes (9.6 )% 2.3 %
(Benefit) provision for income taxes (0.4 )% 0.2 %
Net (loss) income (9.1 )% 2.2 %
Net (loss) income attributable to non-controlling interest (7.7 )% 1.9 %
Net (loss) income attributable to GEN Restaurant Group, Inc. (1.4 )% 0.3 %
Revenues. Revenues were $212.5 million for the year ended December 31, 2025, compared to $208.4 million for the year ended December 31, 2024, an increase of $4.2 million, or 2.0%. This primarily reflects having 57 restaurants open in the year ended December 31, 2025 compared to 43 restaurants open in the year ended December 31, 2024.
Food costs. Food costs were $73.8 million for the year ended December 31, 2025, compared to $68.7 million for the year ended December 31, 2024, an increase of $5.1 million, or 7.4%. The increase in food costs primarily reflects more restaurants in operation and inflationary cost increases. As a percentage of revenue, food costs increased from 33.0% to 34.6%.
Payroll and benefits. Payroll and benefits costs were $64.9 million for the year ended December 31, 2025, compared to $64.3 million for the year ended December 31, 2024, an increase of $0.6 million, or 1.0%. The increase in payroll and benefits costs is primarily due to new restaurants, partially offset by labor efficiencies implemented. As a percentage of revenue, payroll and benefits costs decreased from 30.9% to 30.4%.
Occupancy expenses. Occupancy expenses were $21.2 million for the year ended December 31, 2025 compared to $17.5 million for the year ended December 31, 2024, an increase of $3.7 million, or 21.0%. The increase in occupancy expenses reflects the addition of 15 new locations in 2025. As a percentage of revenue, occupancy expenses increased from 8.4% in 2024 compared to 10.0% in 2025.
Operating expenses. Operating expenses were $24.2 million for the year ended December 31, 2025 compared to $21.5 million for the year ended December 31, 2024, an increase of $2.6 million, or 12.2%, as expenses increased
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to support revenue growth and reflected inflationary cost increases. As a percentage of revenue, operating expenses were 11.4% in 2025 and 10.3% in 2024.
Depreciation and amortization expenses. Depreciation and amortization expenses were $9.0 million for the year ended December 31, 2025 and $6.7 million for the year ended December 31, 2024. As a percentage of revenue, depreciation and amortization expenses at the restaurant-level were 4.2% in 2025 and 3.2.% in 2024.
Pre-opening costs. Pre-opening costs were $8.3 million for the year ended December 31, 2025 compared to $7.6 million for the year ended December 31, 2024. This increase was due to more restaurants under development and opened in 2025 than in 2024.
General and administrative expenses. General and administrative expenses were $25.9 million for the year ended December 31, 2025 compared to $21.3 million for the year ended December 31, 2024, an increase of $4.6 million, or 21.6%. As a percentage of revenue, general and administrative expenses increased from 10.2% in 2024 to 12.2% in 2025 as marketing and personnel costs increased in connection with the expansion of restaurants in development.
Impairment expense. During the fourth quarter of 2025, we recorded an asset reserve of $5.5 million related to the sale of five restaurants to become equity investments.
Gain on lease terminations. During 2025, we recorded lease termination income of $0.5 million related to the closure of one restaurant.
Employee retention credits. During both the years ended December 31, 2025 and December 31, 2024 we received employee retention credits from the IRS in the amount of $0.3 million and $0.2 million, respectively.
Gain on remeasurement of previously held interest. This reflects the business acquisition of GKBH (a restaurant in Hawaii) during the first quarter of 2024.
Other loss. Other lossconsists of one-time legal accruals and other miscellaneous items. During the years ended December 31, 2025 and 2024, we incurred approximately $346 thousand, and $0 of these expenses, respectively.
Interest income (expense), net. During 2025, interest expense was ($0.2) million due to lower cash on hand during 2025, compared to interest income of $0.8 million in 2024 primarily due to the interest income earned on the proceeds from the IPO transaction and the reduction of proceeds using for development of new restaurants.
Equity in loss of equity method investee. Equity in 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. Equity method investee was a loss of $17 thousand in 2024.
Non-GAAP Financial Measures
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA represents net income excluding interest (income) expense, income taxes, depreciation and amortization, stock-based compensation, and also excludes non-recurring and certain other non-cash items such as employee retention credits, litigation accruals, non-cash lease expense, non-cash lease expense included in pre-opening costs and gain on remeasurement of previously held interest. 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.
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The following table reconciles net (loss) income to Adjusted EBITDA for the years ended December 31, 2025 and December 31, 2024:
(amounts in thousands) Year Ended December 31,
EBITDA:
Net (Loss) Income Margin (9.1 )% 2.2 %
Interest income (expense), net 232 (829 )
(Benefit) provision for income taxes (930 ) 357
Depreciation and amortization 9,120 6,857
EBITDA Margin (5.2 )% 5.2 %
Adjustments to EBITDA:
Stock-based compensation expense(1) 2,936 2,986
Employee retention credits (2) (313 ) (199 )
Litigation accrual (3) 346 —
Non-cash lease expense included in pre-opening costs (5) 2,641 2,354
Impairment expense (6) 5,527 —
Gain on remeasurement of previously held interest (7) — (3,402 )
Adjusted EBITDA Margin 0.3 % 6.4 %
(1)
Stock-based compensation expense: During the years ended December 31, 2025 and 2024,we incurred expenses related to the granting of restricted stock units (“RSUs”) to employees. This was recorded in General and administrative expense.
(2)
Employee retention credits: These are refundable credits recognized under the provisions of the CARES Act.
(3)
Litigation accrual: This is an expense related to specific, one-time litigation claim. See “Note 12 - Commitments and Contingencies” in the consolidated financial statements.
(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.
(6)
Impairment expense. During the fourth quarter of 2025, we recorded an asset reserve related to the partnership agreement to transfer five stores in exchange for a 49% equity interest.
(7)
Gain on remeasurement of previously held interest consists of a one-time gain from the business acquisition of GKBH (a restaurant in Hawaii) during the first quarter of 2024.
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.
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The following table reconciles Net (loss) income before taxes to Adjusted net (loss) income and Adjusted net (loss) income per share attributable to Class A common stock per share-basic and diluted for the years ended December 31, 2025 and 2024:
Twelve months ended December 31,
Gain on remeasurement of previously held interest — (3,402 )
Impairment expense 5,527 —
Legal settlement 346 —
Tax impact of adjustments (782 ) (125 )
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.
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The following table reconciles Income from Operations to Restaurant-Level Adjusted EBITDA for the year ended December 31, 2025 and 2024.
Twelve months ended December 31,
(Loss) income from Operations $ (19,993 ) $ 476
(Loss) Income Margin from Operations (9.4 )% 0.2 %
Depreciation and amortization 9,120 6,857
Impairment expense 5,527 —
Restaurant-Level Adjusted EBITDA Margin 13.8 % 17.7 %
Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted net (loss) income, Adjusted net (loss) income attributable to Class A common stock per share - basic and diluted, 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 (loss) income, Adjusted net (loss) income attributable to Class A common stock per share-basic and diluted, 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 these measures 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, 2025 we had $2.8 million of cash and ($31.3) million of working capital deficit, which is calculated as current assets minus current liabilities, compared with $23.7 million of cash and ($7.2) million of working capital deficit as of December 31, 2024. 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.
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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 $ 3,414 $ 17,827
Net cash used in investing activities (27,734 ) (26,801 )
Net cash provided by financing activities 3,462 18
Cash Provided by Operating Activities
Net cash provided by operating activities during the year ended December 31, 2025 was $3.4 million, the result of net loss of $19.4 million, adjusted by non-cash charges of depreciation and amortization of $9.1 million, amortization of operating lease assets of $6.4 million, impairment expense of $5.5 million and stock-based compensation of $3.0 million, partially offset by the increase of $8.7 million from gift cards and a decrease in accounts receivable of $6.9 million. The net cash inflows from changes in operating assets and liabilities were $196 thousand.
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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.
Cash Used in Investing Activities
Net cash used in investing activities during the year ended December 31, 2025 was $27.7 million, for the purchase of property and equipment.
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.
Cash Flows Provided by Financing Activities
Net cash provided by financing activities during the year ended December 31, 2025 was $3.5 million, primarily due to $10.0 million in proceeds from third party debt and proceeds of $9.0 million from line of credit, partially offset by payments of $11.0 million on the line of credit, payments of $3.1 million on third party loans and dividends and distributions of approximately $1.0 million.
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 distributions, and payments to members for advances of $0.9 million.
Effect of Exchange Rate Changes on Cash
For the year ending December 31, 2025, the effect of exchange rates on cash and cash equivalents primarily reflects the translation impact from fluctuation in the value of the South Korean won relative to the U.S. dollar. During the period, the won experienced modest depreciation against the U.S. dollar, resulting in a loss on foreign currency translation of $7 thousand compared to $0 in the comparative period.
Material Cash Requirements
As of December 31, 2025, we had $12.3 million in contractual obligation relating to debt, including EIDL loans payable. All contractual obligation are expected to be paid during the next 12 months utilizing cash and cash equivalents on hand and provided by operating activities. For operating lease obligations, See “Note 11 - Leases” to the financial statements in this annual report for further details.
Off-Balance Sheet Arrangements
As of December 31, 2025 and December 31, 2024 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.
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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 review long-lived assets, which includes property and equipment and operating lease right-of-use assets, for impairment when events or circumstances indicate the carrying value value of the assets may not be recoverable, in accordance with the provisions of Financial Accounting Standards Board, (“FASB”), Accounting Standards Codification (“ASC”) 360, “Property, Plant and Equipment.” In determining the recoverability of the asset value, an analysis is performed at the individual restaurant level and primarily includes an assessment of historical cash flows and other relevant factors and circumstances.
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.
During the fourth quarter of 2025, an impairment loss reserve was recognized in the amount of $5.5 million.
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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” to the financial statements, 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 2025, 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.
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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 Officer 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. Management’s assessment included evaluation of elements such as the design and operating effectiveness of key financial reporting controls, process documentation, accounting policies, and our overall control environment.
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) to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of consolidated financial statements for external purposes in accordance with GAAP. 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, 2025.
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.
Changes in Internal Control over Financial Reporting
There were no changes in the Company’s internal control over financial reporting during the quarter ended December 31, 2025, 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.
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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, 2025.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
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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 2026 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 Officer 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 2026 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 required by this item is incorporated by reference to the sections titled “Director Compensation” and “Executive Compensation” in our Proxy Statement for our 2026 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.
The information required by this item is incorporated by reference to the sections titled “Compensation Committee Interlocks and Insider Participation” in our Proxy Statement for our 2026 Annual Meeting of Stockholders, which will be filed no later than 120 days after the end of the fiscal 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 required by this item is incorporated by reference to the sections titled “Principal Stockholders” and “Equity Compensation Plan Information” in our Proxy Statement for our 2026 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.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information required by this item is incorporated by reference to the sections titled “Certain Relationships and Related Person Transactions” and “Director Independence” in our Proxy Statement for our 2026 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.
Item 14. Principal Accountant Fees and Services.
The information required by this item is incorporated by reference to the section titled “Proposal 2 - Ratification of Independent Registered Public Accounting Firm” in our Proxy Statement for our 2026 Annual
60
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.
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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
21.1* Subsidiaries of the Registrant
23.1* Consent of CBIZ CPAs P.C., independent registered public accounting firm.
23.2* Consent of Marcum LLP, independent registered public accounting firm.
24.1* Power of Attorney (included on the signature page hereto)
62
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.
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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 31, 2026 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 31, 2026
David Kim (Principal Executive Officer and Director)
/s/ Thomas V. Croal Chief Financial Officer March 31, 2026
Thomas V. Croal (Principal Financial and Accounting Officer)
/s/Jae Chang Jae Chang March 31, 2026
Jae Chang (Director)
/s/ Michael B. Cowan Michael B. Cowan March 31, 2026
Michael B. Cowan (Director)
/s/ Jonathan Gregory Jonathan Gregory March 31, 2026
Jonathan Gregory (Director)
/s/ David Park David Park March 31, 2026
David Park (Director)
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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm (Marcum LLP) F-2
Report of Independent Registered Public Accounting Firm (CBIZ CPAs P.C.) F-3
Consolidated Balance Sheets as of December 31, 2025 and 2024 F-4
Notes to Consolidated Financial Statements F-9
F-1
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 688)
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, the related consolidated statements of comprehensive loss, changes in permanent equity (deficit) and cash flows for the year 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 the results of its operations and its cash flows for the year 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 audit 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 audit 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 audit provides a reasonable basis for our opinion.
/s/ Marcum LLP
Marcum LLP
We have served as the Company’s auditor from 2021 to 2025.
Costa Mesa, California
March 7, 2025
F-2
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 688)
To the Stockholders and Board of Directors of
GEN Restaurant Group, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of GEN Restaurant Group, Inc. (the “Company”) as of December 31, 2025, the related consolidated statements of comprehensive loss, changes in permanent equity (deficit) and cash flows for the year ended December 31, 2025, 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, 2025, in conformity with accounting principles generally accepted in the United States of America.
Basis of 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 audit. 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 audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit 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 audit 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 audit 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 audit 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 audit provides a reasonable basis for our opinion.
/s/ CBIZ CPAs P.C.
CBIZ CPAs P.C.
We have served as the Company’s auditor since 2021 (such date takes into account the acquisition of the attest business of Marcum LLP by CBIZ CPAs P.C. effective November 1, 2024).
Costa Mesa, California
March 31, 2026
F-3
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
GEN RESTAURANT GROUP, INC.
Consolidated Balance Sheets
Current assets:
Income tax receivable 742 —
Prepaid expenses and other current assets 7,546 6,004
Liabilities and equity
Current liabilities
Accrued salaries and benefits 2,450 3,243
Accrued interest 77 60
Obligations under finance leases, current 8 26
Operating lease liabilities, current 6,707 5,221
Deferred Restaurant Revitalization Fund grant 3,806 3,806
Notes payable, net of current portion 10,795 5,140
Tax receivable agreement liability 1,088 691
Obligations under finance leases, net of current 14 —
Operating lease liabilities, net of current portion 165,879 147,898
Commitments and contingencies (Note 11)
Mezzanine equity
Permanent equity
Accumulated other comprehensive income 7 —
Retained Earnings (accumulated deficit) (2,111 ) 915
Treasury stock (201 ) —
Total liabilities, mezzanine equity, and permanent equity $ 259,856 $ 240,415
See accompanying notes to consolidated financial statements.
F-4
GEN RESTAURANT GROUP, INC.
Consolidated Statement of Operations
For the year ended December 31,
(in thousands, except per share amounts) 2025 2024
Restaurant operating expenses:
Depreciation and amortization 8,962 6,735
Impairment expense 5,527 —
Depreciation and amortization - corporate 158 122
Gain on lease terminations (471 ) —
(Loss) income from operations (19,993 ) 476
Employee retention credits 313 199
Gain on remeasurement of previously held interest (see Note 3) — 3,402
Other loss (346 ) —
Loss on foreign currency (47 ) —
Interest (expense) income, net (232 ) 829
Equity in loss of equity method investee — (17 )
Net (loss) income before income taxes (20,305 ) 4,889
(Benefit) provision for income taxes (930 ) 357
Less: Net (loss) income attributable to non-controlling interest (16,349 ) 3,940
Net (loss) income attributable to GEN Restaurant Group, Inc. (3,026 ) 592
Other comprehensive income, net of tax:
Foreign currency translation adjustment $ 7 $ —
See accompanying notes to consolidated financial statements.
F-5
GEN RESTAURANT GROUP, INC.
Consolidated Statements of Changes in Permanent Equity (Deficit)
Year ended December 31, 2025 and December 31, 2024
Shares issued upon RSU vesting 280,817 -
Distributions to members (845 ) (845 )
Contribution by shareholders in final IPO settlement 1,277 1,277
See accompanying notes to consolidated financial statements.
F-6
GEN RESTAURANT GROUP, INC.
Consolidated Statements of Changes in Permanent Equity (Deficit)
Years ended December 31, 2025 and December 31, 2024
Adjustment to tax liabilities and assets under TRA 9 9
Shares issued upon RSU vesting 95,181 - -
Dividends paid $0.03 per share of Class A common stock (157 ) (157 )
Distributions paid to Non-controlling interest - $0.03 per share - (830 ) (830 )
Foreign currency translation adjustment - 7 7
See accompanying notes to consolidated financial statements.
F-7
GEN RESTAURANT GROUP, INC.
Consolidated Statements of Cash Flows
Year Ended December 31,
Cash flows from operating activities
Depreciation and amortization 9,120 6,857
Equity in income of equity method investee, net of distributions — 17
Gain on remeasurement of previously held interest — (3,402 )
Amortization of operating lease assets 6,395 6,814
Gain on lease terminations (471 ) —
Impairment expense 5,527 —
Interest income earned on Notes receivable from related party — (33 )
Deferred tax expense (914 ) 333
Changes in operating assets and liabilities:
Income tax receivable (742 ) —
Prepaid expenses and other current assets (1,542 ) (2,613 )
Accrued salaries and benefits (703 ) 583
Accrued interest 18 18
Operating lease liabilities (1,265 ) (1,014 )
Net cash provided by operating activities 3,414 17,827
Cash flows from investing activities
Purchase of property and equipment (27,734 ) (23,825 )
Acquisition of GKBH, net of cash acquired — (2,976 )
Net cash used in investing activities (27,734 ) (26,801 )
Cash flows from financing activities
Payments to members for advances — (881 )
Payments on EIDL loans (98 ) (90 )
Payments on finance leases (3 ) (100 )
Payments on third party loans (3,159 ) (3,770 )
Payments on related party loans — (296 )
Payment on line of credit (11,000 ) —
Payments under stock repurchase plan (201 ) —
Distributions paid on NCI (830 ) (845 )
Dividends paid on common stock (157 ) —
Acquisition of common stock for tax with withholding obligations (90 ) —
Net provided by financing activities 3,462 18
Effects of exchange rate changes on cash 7 —
Net change in cash and cash equivalents (20,851 ) (8,956 )
Cash and cash equivalents at beginning of period 23,675 32,631
Cash and cash equivalents at end of the period $ 2,824 $ 23,675
Supplemental disclosures of other cash flow information:
Cash paid for interest $ 250 $ 288
Non-cash investing and financing activities:
Reduction due to early lease termination of operating lease asset (1,007 ) —
Conversion of related party loans to equity — 1,436
Issuance of promissory note for business acquisition — 3,000
Adjustments to tax liabilities and assets under TRA 9 —
Exchange of NCI for Class A common stock 226 —
Contribution by stockholder in final IPO settlement — 1,277
See accompanying notes to consolidated financial statements.
F-8
GEN RESTAURANT GROUP, INC.
Notes to Consolidated Financial Statements
December 31, 2025 and 2024
(1) Organization and Description of Business
The accompanying consolidated financial statements represent the consolidated balance sheets, statements of operations, changes in permanent equity (deficit), and cash flows of GEN Restaurant Group, Inc., and its consolidated subsidiaries (the “Company”), including GEN Restaurant Companies, LLC (the “Operating Company”).
The following tables lists the Company’s entities in operation as of December 31, 2025:
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 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 Sacramento, LP GEN Sacramento CA Restaurant
GEN Pearlridge, LLC GEN Pearlridge HI Restaurant
GEN Kapolei, LP GEN Kapolei HI Restaurant
GEN El Paso, LP GEN El Paso TX 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 Waco, LP GEN Waco TX Restaurant
GEN Pflugerville, LP GEN Pflugerville TX Restaurant
GEN Tigard, LP GEN Tigard OR Restaurant
GEN Orlando, LP GEN Orlando FL Restaurant
GEN Edison, LP GEN Edison NJ Restaurant
GEN San Antonio, LP GEN San Antonio TX Restaurant
GEN Austin, LP GEN Austin TX Restaurant
Kan Sushi Austin, LP Kan Sushi TX Restaurant
GEN Cary , LP GEN Cary NC Restaurant
GEN San Diego, LP GEN La Jolla CA Restaurant
GEN K Sadang, LLC GEN Sadang Korea Restaurant
GEN K Ilsan, LLC GEN Ilsan Korea Restaurant
GEN K Incheon Guwol, LLC GEN Guwol Korea Restaurant
Gen Kan Guwol Kan Guwol Korea Restaurant
GEN K Wiyre, LLC GEN Wirye Korea Restaurant
GEN Kan Wiyre GEN Wirye Korea Restaurant
F-9
GEN RESTAURANT GROUP, INC.
Notes to Consolidated Financial Statements
December 31, 2025 and 2024
The Company also has the following entities:
Name Operating Name State Purpose
GEN Hawaii, LLC Investment Company HI Management of GKBH
GEN Grills, LP GEN Grills CA Special Events
GEN Texas, LLC Investment Company TX Management of GEN Houston and GEN Webster
GEN Master, LLC Holding Company NV Management
GEN K, LLC GEN K Korea Management of South Korean Restaurant
GEN Restaurant Management, LLC GRM DE Management
GEN Online, LLC GEN Online CA Website sales
GEN Arizona Gift Cards AZGC AZ Gift card Management 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, North Carolina and New Jersey specializing in a variety of special flavored meats for Korean barbeque.
As of December 31, 2025, 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 for a purchase price of $6.0 million and the Company now controls 100% of GKBH. As of December 31, 2025 and December 31, 2024, there were 57 and 43 restaurants in operation, respectively.
Organization
GEN Restaurant Group, Inc. (“GEN Inc.”) was formed as a Delaware corporation on October 28, 2021 and is based in Cerritos, California. As the managing member of 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 December 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-11, Narrow-Scope Improvements (Topic 270): Interim Reporting. This update makes targeted, narrow-scope improvements to underlying principles of interim reporting. The amendments in this ASU are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. The Company is in the process of evaluating the impact that the adoption of this ASU will have on the consolidated financial statements and related disclosures.
In November 2024, FASB issued 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
F-10
GEN RESTAURANT GROUP, INC.
Notes to Consolidated Financial Statements
December 31, 2025 and 2024
beginning after December 15, 2026. The Company is in the process of evaluating the impact that the adoption of this ASU will have on the consolidated financial statements and related disclosures.
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 adopted the ASU 2023-09 using the prospective approach for 2025.
(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 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, 2025 and 2024, cash and cash equivalents consist principally of cash, money market accounts and short-term investments. Short-term investments 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, 2025 and December 31, 2024, there were deposits in excess of federally insured amounts of $0.8 million and $2.9 million, respectively.
Fair Value Measurements at December 31, 2025
CarryingValue/AmortizedCost GrossUnrealizedGains GrossUnrealizedLosses Total
(in thousands)
Fair Value Measurements at December 31, 2024
CarryingValue/AmortizedCost GrossUnrealizedGains GrossUnrealizedLosses Total