GEN Restaurant Group (NASDAQ:GENK) executives said the company faced a “very challenging environment” in the fourth quarter of 2025, pointing to pressure on customer traffic and higher costs, while outlining a strategic pivot that emphasizes operational initiatives and a rapidly expanding consumer packaged goods (CPG) business.
Management cites traffic pressures and weaker same-store sales
Chairman and CEO David Kim said customer behavior deteriorated in many of the company’s markets, where he described the customer base as predominantly Hispanic. “They have been put under extreme pressure through the immigration enforcement,” Kim said, adding that customers “have retreated and are very afraid to come out,” which he said significantly reduced traffic.
Restaurant development slows as portfolio actions and initiatives roll out
Kim said GEN opened 15 restaurants in 2025, including six in South Korea, bringing the system to 57 restaurants in operation. He added that in the first quarter of 2026, the company opened two additional restaurants in Tucson, Arizona, and Denton, Texas.
As economic conditions shifted, Kim said the company made “several directional changes” to improve its value proposition. Among them was a joint venture with Chubby Cattle International involving five non-performing restaurants. Kim said GEN will own 49% and Chubby Cattle will own 51%, and the locations will operate under the Chubby Cattle brand. He said the transaction creates a $4.5 million write-down but is intended to turn the five restaurants profitable, with GEN entitled to 49% of the profits.
Kim also outlined operational and brand initiatives, including:
- Menu adjustments intended to streamline options amid “stubborn” increases in food costs
- An enhanced restaurant manager incentive program focused on near-term financial results
- Tests of new boba drinks and soju drinks, which management said showed “promising sales”
- Exploration of a new digital platform to enhance the online customer experience
- Launch of the GEN loyalty program and acceptance of cryptocurrency for payments
- An enhanced e-commerce website aimed at selling more GEN-branded products
- An AI program to create efficiencies and reduce corporate overhead as restaurant development slows
Kim also highlighted momentum in the company’s Costco gift card program, saying GEN sold approximately $29 million in gift cards to Costco in 2025, a 150% increase from the prior year.
CPG expansion becomes a central growth narrative
Kim said the company’s goal of expanding GEN’s Korean products and experience “without the heavy capital outlay to build restaurants everywhere” helped drive its move into CPG. He said the company began by offering “fresh, frozen, ready-to-cook Korean branded meats,” using the same meats and recipes as in its restaurants.
GEN created a division to develop and sell CPG products to grocery stores and started with four SKUs tested at more than 30 locations in Southern California in October 2025. Kim said the response was “incredible,” and that earlier in March the company expanded the business to more than 800 locations in various supermarkets.
Kim said GEN has used its restaurant labor force to conduct in-store demos, arguing that trained staff with product knowledge can outperform typical demo labor. He described the concept as bringing the restaurant’s “hands-on dining experience” into consumers’ homes.
Looking ahead, Kim said the company projected its CPG products would be in 1,500 to 2,000 U.S. locations by the end of 2026 and 7,000 to 8,000 locations by the end of 2027. He said management believes the business could reach a run rate of over $100 million in annual revenue “as soon as 3 years.” After slotting fees and promotional investments, the company projects an EBITDA margin in the high teens for the CPG business.
Kim added that GEN plans to work with “investment bankers in the CPG space” to explore potential investments and logistics and supply chain partners.
Fourth-quarter results reflect lower revenue, higher costs, and impairment
CFO Thomas Croal reported fourth-quarter revenue of $49.7 million, down from $54.6 million in the year-ago period. Croal said same-store sales declined 11.6% in the quarter, attributing the downturn to earlier global tariffs and the same traffic pressures management cited elsewhere on the call.
For the full year 2025, Croal said revenue rose 2% to $212.5 million from $208.4 million in 2024, driven by about $14 million from new openings and offset by an approximate $10 million decline tied to lower same-store sales.
“Same-store sales are not the metric that defines our success,” Croal said, emphasizing that average unit volume remained “over $5 million per restaurant in the casual dining space.”
On costs, Croal said cost of goods sold rose to 36.9% of company restaurant sales in the fourth quarter, up 285 basis points year over year, citing inflation, a higher mix of new restaurants, and “a minor impact” from the premium menu. For full-year 2025, cost of goods sold increased to 34.7% of revenue from 33% in 2024. Croal said the company implemented a $1 price increase at most restaurants in the first quarter of 2026, equating to roughly a 2.5% overall increase.
Payroll and benefits rose to 31.8% of company restaurant sales in the fourth quarter, up 97 basis points, while occupancy costs increased to 11.2%, up 253 basis points. Other operating expenses increased to 12.4% of sales, up 261 basis points.
General and administrative expenses excluding stock-based compensation were $6.0 million in the quarter, compared with $5.7 million a year earlier. For full-year 2025, G&A excluding stock-based compensation rose to $23.0 million from $18.4 million, driven by personnel for restaurant development and higher advertising, marketing, and legal spending. Croal said the company expects G&A to decline as new restaurant openings decrease in 2026.
GEN recorded a net loss before income taxes of $12.5 million in the fourth quarter, or $0.36 per diluted share, compared to a loss of $1.2 million, or $0.04 per diluted share, in the fourth quarter of 2024. Croal said fourth-quarter 2025 results reflected higher new-restaurant development costs as well as a $5.5 million provision for asset impairment and $1.3 million in pre-opening costs.
On a non-GAAP basis, the company posted an adjusted net loss of $5.0 million, or $0.09 per diluted share, for the quarter, compared with adjusted net income of $1.4 million, or $0.04 per share, in the year-ago period.
Restaurant-level adjusted EBITDA fell to $3.9 million, or 7.9% of revenue, from $9.3 million, or 17%, in the prior-year quarter. Total adjusted EBITDA was negative $2.7 million in the quarter, compared with $2.1 million a year earlier. For the full year, total adjusted EBITDA was $0.7 million, down from $13.3 million in 2024.
Liquidity, balance sheet items, and 2026 outlook
Croal said the company ended 2025 with approximately $2.8 million in cash and cash equivalents and had the majority of its $20 million revolving credit facility available. He said GEN anticipates using a portion of the revolver as it opens “limited” new restaurants and expands its grocery initiatives.
Croal also addressed the company’s lease accounting, noting the balance sheet reflected $173 million in lease liabilities under ASC 842, which he said were “not financial obligations in the form of long-term debt,” and were offset by $146 million in operating lease assets.
For 2026, Croal said the company is targeting $215 million to $225 million in revenue and restaurant-level adjusted EBITDA margins of 15% to 15.5%. During the Q&A, management said the outlook includes an expectation of being around $10 million in retail revenue for the year, with restaurant revenue around $205 million at the low end of the range.
On development plans, management said it opened two restaurants in early 2026, has five under construction expected to be completed this year, and “maybe” could add one or two more toward the end of 2026 or early 2027. Management said closures were not contemplated in the outlook outside of the Chubby Cattle transaction.
Discussing the CPG ramp, management said it does not anticipate significant infrastructure costs because it is leveraging existing restaurant infrastructure, and described working capital needs as largely inventory-related due to timing between orders and supply sources.
About GEN Restaurant Group (NASDAQ:GENK)
GEN Restaurant Group, Inc, operating as Gen Korean BBQ House, is a restaurant operator specializing in an all-you-can-eat Korean barbecue dining concept. The company offers patrons a hands-on grilling experience with a selection of premium meats, seafood, and vegetables cooked tableside, alongside traditional Korean side dishes and beverages. Gen Korean BBQ House locations feature modern décor and a fast-casual service style designed to appeal to a broad demographic of consumers seeking experiential dining.
The company’s restaurants serve a core menu of marinated and non-marinated proteins, including beef, pork, chicken and plant-based alternatives, complemented by signature banchan (side dishes), sauces and dessert offerings.
