Q1 2025 GEN Restaurant Group Inc Earnings Call

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Speaker Change: At this time I would like to turn the floor over to Tom Kouril, The company's Chief Financial Officer, Sir you may begin thank.

Thank you operator and good afternoon.

Speaker Change: By now everyone should have access to our first quarter 2025 earnings release.

Thomas Croal: payroll and benefits as a percentage of company restaurant sales decreased by 10 basis points in the first quarter of 2025 to 31.7% compared to the first quarter of last year. occupancy expenses as a percentage of company restaurant sales increased by 40 basis points to 8.9 percent compared to the first quarter of last year due to new restaurant Other operating expenses as a percentage of company restaurant sales increased 30 basis points to 10.3% compared to the first quarter of last year. GNA excluding stock-based compensation during the first quarter was $5.6 million or 9.8% of revenue. compared to 3.9 million or 7.7% of revenue in the year ago period.

Not it can be found at www Dot Gen Korean BBC dot com in the Investor Relations section.

Speaker Change: Before we begin our formal remarks I need to remind everyone that our discussions today will include forward looking statements within the meaning of federal securities laws, including but not limited to statements regarding growth plans and potential new store openings.

Speaker Change: Well if those types of statements identified in our quarterly report on Form 10-Q for the period ended March 31 2025.

Speaker Change: And our subsequent reports filed with the SEC.

These forward looking statements are not guarantees of future performance and therefore, you should not put undue reliance on them.

Speaker Change: These statements represent our views only as of the date of this call.

Thomas Croal: During the first quarter of 2025, we opened six new restaurants compared to only two new restaurants in the first quarter last year. This tripling of new store openings is a main driver of hire GNA and includes hires across construction, regional operations, and training. To a much lesser extent, the first quarter also reflected increased marketing expenses. In the first quarter, we had a net loss before income taxes of $2.1 million which equated to a loss per share of $0.06. compared to net income before income taxes of $3.8 million, which equated to an EPS of $0.11 per share in the first quarter of 2024.

Speaker Change: We're also subject to numerous risks and uncertainties that could cause actual results to differ materially from what we currently expect.

Speaker Change: We refer you to our recent SEC filings, including our annual report on Form 10-K for a more detailed discussion of the risks that could impact our future operating results and financial condition.

Speaker Change: Except as required by law, we undertake no obligation to update or revise these forward looking statements in light of new information or future events.

Speaker Change: During today's call, we will discuss some non-GAAP financial measures, which we believe can be useful in evaluating our performance.

Speaker Change: The presentation of this information.

Speaker Change: It should not be considered in isolation or as a substitute for results prepared in accordance with GAAP.

Thomas Croal: However, 2024 included a one-time gain related to the buyout of our partner in Hawaii of $3.4 million. In addition, the first quarter of 2025 reflects higher costs associated with new restaurant development, including $2.6 million in pre-opening costs. If you look at adjusted net income, a non-GAAP measure, we generated net income of $1.4 million or an EPS of $0.04 per share in the first quarter of 2025 compared to net income of $2.9 million or an EPS of $0.09 per share in the first quarter last year. Since going public in 2023, we have grown GEN from 33 restaurants to 49, a 50% increase, without incurring any long-term debt.

Speaker Change: Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are available in our earnings press release, and our SEC filings, which are available in the Investor Relations section of our website.

Speaker Change: Now I'd like to turn it over to our chairman and CEO David Kim.

Speaker Change: Okay.

Speaker Change: Thank you Tom and good afternoon, everyone.

Operator: paired in accordance with GAAP.

In the first quarter of 2025, despite economic.

Operator: Reconciliations of the Non-Gap Financial Measures to the Most Directly Comparable Gap Financial Measures are available in our earnings press release and our SEC filings, which are available in the Investor Relations section of our website.

Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are available in our earnings press release, and our SEC filings, which are available in the Investor Relations section of our website.

Speaker Change: Amit pressures and slow consumer demand.

Speaker Change: Generated a 13% year over year increase in total revenues to $57 $3 million.

Speaker Change: This increase was driven by our growing footprint of restaurants, and the continued success of our existing locations.

David Kim: Now I'd like to turn it over to our Chairman and CEO, David Kim. Thank you, Tom, and good afternoon, everyone. In the first quarter of 2025, despite economic pressures and slow consumer demand, we generated a 13% year over year increase in total revenues to $57.3 million. This increase was driven by our growing footprint of restaurants and the continued success of our existing location. We're pleased with our execution in the first quarter and the continued progress we're making across our strategic priority.

Speaker Change: Now I'd like to turn it over to our chairman and CEO David Kim.

Okay.

David Kim: Thank you Tom and good afternoon, everyone.

Thomas Croal: If we stopped all new restaurant development, we estimate we could have generated a $2.5 million profit in the first quarter, along with an additional $4 million of EBITDA or cash flow. This figure strips out all pre-opening costs and a reduction in GNA. Total adjusted EBITDA for the first quarter of 2025 was $1.2 million, down from $6.4 million in the first quarter of 2024. However, excluding the one-time gain of $3.4 million I just discussed, adjusted EBITDA for the first quarter of 2024 was only $3 million. Additionally, after removing pre-opening costs, adjusted EBITDA for the first quarter of 2025 decreased only slightly to $3.3 million, compared to $3.6 million in the fourth quarter of 2024.

Speaker Change: We're pleased with our execution in the first quarter and the continued progress, we're making across our strategic priorities.

David Kim: In the first quarter of 2025, despite economic pressures and slow consumer demand, we generated a 13% year over year increase in total revenues to $57.3 million.

Speaker Change: We believe our value price.

All inclusive dining model continues to resonate with guests and positions us for durable long term growth.

David Kim: This increase was driven by our growing footprint of restaurants, and the continued success of our existing locations.

Speaker Change: We opened six restaurants in the first quarter, bringing jens footprint to 49 stores.

David Kim: We're pleased with our execution in the first quarter and the continued progress, we're making across our strategic priorities.

Speaker Change: These new openings represent a balanced geographic mix, including both new and existing markets.

David Kim: We believe our value price. all-inclusive dining model continues to resonate with guests and positions us for durable long-term growth. We opened six restaurants in the first quarter, bringing GEN's footprint to 49 stores. These new openings represent a balanced geographic mix, including both new and existing markets. With this latest round of openings, we remain on pace to meet our target of 12 to 13 total new stores by the end of 2025. We have six restaurants under construction in addition to the six we opened in the first quarter. We made significant improvements both year over year and sequentially in same store sales group.

David Kim: We believe our value price.

Speaker Change: With this latest round of openings, we remain on pace to meet our target of 12.

David Kim: All inclusive dining model continues to resonate with guests and positions us for a girl bold long term growth.

Speaker Change: 12 to 13 total knee storage by the end of 2025.

David Kim: We opened six restaurants in the first quarter, bringing jens footprint to 49 stores.

We have six restaurants under construction in addition to the six we opened in the first quarter.

Speaker Change: We made significant improvements both year over year and.

David Kim: These new openings represent a balanced geographic mix, including both new and existing markets.

Thomas Croal: turning to our liquidity position. As of March 31st, 2025, we had $15.4 million in cash and cash equivalents. and only long-term debt we carry is $5 million. We have fully available all of our $20 million revolving line of credit. During the first quarter, we repurchased 33,400 shares of our Class A common stock at an average cost of $5.94 per share. As of March 31st, 2025, we had $4.8 million remaining under our repurchase authorization. Remember that we have 33 million shares outstanding, including our A and B shares. The founding group continues to own 85% of the company.

Sequentially in same store sales growth.

David Kim: With this latest round of openings, we remain on pace to meet our target of 12.

Speaker Change: For the first quarter.

Speaker Change: Same store sales were down.

Very small modest.

David Kim: 12 to 13 total knee storage by the end of 2025.

Speaker Change: <unk>, 7%.

Speaker Change: Parakeet being down five 6% for all of 2024.

David Kim: We have six restaurants under construction in addition to the six we opened in the first quarter.

Speaker Change: This is a tremendous improvement.

David Kim: We made significant improvements both year over year and.

Speaker Change: Restaurant level adjusted EBITDA margin for the quarter was slightly off our overall annual goal of 17% to 18% coming in at around 15, 6% due to higher costs from new restaurant openings.

David Kim: Sequentially in same store sales growth.

David Kim: For the first quarter, same store sales were down a very small, modest 0.7%. compared to being down 5.6% for all of 2024. This is a tremendous improvement.

For the first quarter.

David Kim: Same store sales were down.

David Kim: Very small modest.

David Kim: <unk>, 7%.

David Kim: Compared to being down five 6% for all of 2024.

Speaker Change: While our same store sales have dramatically improved year over year.

Speaker Change: Presumably better than many of our competitors in the industry.

David Kim: This is a tremendous improvement.

David Kim: Restaurant level adjusted even a margin for the quarter was slightly off our overall annual goal of 17 to 18 percent coming in at around 15.6 percent due to higher cost from new restaurant While our same source sales have dramatically improved year over year and are presently better than many of our competitors in the industry, It's not the metrics that we believe captures our success.

David Kim: Restaurant level adjusted EBITDA margin for the quarter was slightly off our overall annual goal of 17% to 18% coming in at around 15, 6% due to higher costs from new restaurant openings.

Thomas Croal: Because of the founder's strong ownership position, their interests are consistently aligned with those of the public shareholders, and they are fully vested in successfully growing GEN.

Speaker Change: It's not the metrics that we believe captures our success.

Speaker Change: I can't stress enough.

Speaker Change: Our business model revolves around growing our footprint to capitalize on the strong EBITDA and resulting swift payback of our initial investment for new restaurants, and the extraordinary or why new storage generate.

Thomas Croal: Before concluding I want to address investor questions we've received recently regarding long-term lease obligations. to reiterate what we said on our last call. GAP accounting under ASC 842 requires us to record our restaurant lease obligations as a liability with an offsetting operating lease asset. The $147 million in lease liabilities are offset by $130 million in operating lease assets on our balance sheet. This is a gap requirement.

David Kim: While our same store sales have dramatically improved year over year at.

David Kim: Presumably better than many of our competitors in the industry.

David Kim: It's not the metrics that we believe captures our success.

Speaker Change: We have an impressive 2.1 year payback pretty good run rate on our 2024, new stores, which equates to a 40% plus ROI.

David Kim: I can't stress enough. Our business model revolves around growing our footprint to capitalize on the strong EBITDA and resulting swift payback of our initial investment for new restaurants and the extraordinary ROI new stores generate. We have an impressive 2.1-year payback period run rate on our 2024 new stores, which equates to 40% plus ROI. Our shorter payback period than most competitors allows us to provide a more consistent and efficient return for our investors.

David Kim: I can't stress enough.

David Kim: Our business model revolves around growing our footprint to capitalize on the strong EBITDA and resulting swift payback of our initial investment for new restaurants, and the extraordinary or why new storage generate.

Speaker Change: Our shorter payback period than most competitors allows us to provide a more consistent and efficient return for our investors.

Thomas Croal: These lease liabilities are not bank or institutional long-term debt and should not be considered as such when evaluating our company. We have only $5 million of long-term debt.

Speaker Change: Said another way.

Speaker Change: The time, we went public in June of 2023, we had 33 stores.

David Kim: We have an impressive 2.1 year payback period run rate on our 2024, new stores, which equates to a 40% plus R O y.

Speaker Change: We have added 16, new stores since then.

Thomas Croal: We also receive questions about our return on tangible asset.

Speaker Change: Our fleet, increasing our store count by 50%.

David Kim: Our shorter payback period than most competitors allows us to provide a more consistent and efficient return for our investors.

Thomas Croal: It's important to note that using total assets as a proxy for invested capital is inflated because it includes the operating lease asset of $126 million. This incorrect assumption artificially lowers our tangible asset return method. All of these points highlight the fact that GEN has no material long-term debt and produces strong returns from restaurant development.

Speaker Change: But because of strong internal cash flow, we haven't needed to take any debt or equity to do this.

Speaker Change: This proves the value of our high free cash flow model.

David Kim: Said another way.

David Kim: At the time we went public in June of 2023, we had 33 stores. We have added 16 new stores since then, roughly increasing our store count by 50%.

David Kim: At the time, we went public in June of 2023, we had 33 stores.

Speaker Change: Having said this.

Speaker Change: We still deeply focused on ways to drive growth at existing locations and have a number of initiatives to share.

David Kim: We have added 16, new stores since then.

David Kim: Our fleet, increasing our store count by 50%.

Speaker Change: First.

David Kim: But because of strong internal cash flow, we haven't needed to take any debt or equity to do this. This proves the value of our high free cash flow model.

Speaker Change: We only took a two 8% price increase at the end of 2024, when most companies took 4% to 10% price increases.

David Kim: But because of strong internal cash flow, we haven't needed to take any debt or equity to do this.

Thomas Croal: To reiterate what David said earlier, our financial outlook for the remainder of 2025 remains strong. We continue to anticipate opening between 12 and 13 new restaurants, which includes our first three international units in South Korea. We're targeting full-year revenues of $245 to $250 million and achieving restaurant-level adjusted EBITDA margins in the 17 to 18 percent range. By the end of 2025, we anticipate being at an annual run rate approaching $300 million in revenue when all the new restaurants are open.

David Kim: This proves the value of our high free cash flow model.

Speaker Change: We're happy to report that.

David Kim: having said.

Speaker Change: Our increase has not influenced customers at all.

David Kim: Having said this.

David Kim: We still deeply focus on ways to drive growth at existing locations and have a number of initiatives to share. First, we only took a 2.8% price increase at the end of 2024 when most companies took four to 10% price increase. We're happy to report that our increase has not influenced customers at all. We remain a high quality value dining experience for our customers.

David Kim: We still deeply focused on ways to drive growth at existing locations and have a number of initiatives to share.

We remain a high quality value dining experience for our customers.

David Kim: First.

Speaker Change: Second.

David Kim: We only took a two 8% price increase at the end of 2024, when most companies took 410% price increases.

Speaker Change: We've continued to enhance our training programs.

We're spending more time.

Speaker Change: An effort on training in order to build the bench strength necessary to expand new restaurant development and openings around the country and into South Korea.

David Kim: We're happy to report.

David Kim: Our increase has not influence customers at all.

Thomas Croal: This concludes our prepared remarks. We'd like to thank you again for joining us on the call today.

Speaker Change: And third our incubator projects.

David Kim: We remain a high quality value dining experience for our customers.

Operator: We are now happy to answer any questions that you may have.

Speaker Change: Last year, we announced the launch of Gen gift cards at 78 posture locations all within a five mile radius of most of our restaurants across the U S.

David Kim: Thank you.

David Kim: Thank you.

David Kim: We've continued to enhance our training program. We're spending more time. and effort on training in order to build the bench strength necessary to expand new restaurant developments and openings around the country and into South Korea.

Operator: Operator, please open the line for questions. Ladies and gentlemen, at this time, we'll be... session. To ask a question you may press star and then one using a touch-tone telephone. To withdraw your questions you may press star and two. If you are using a speaker phone, we do ask that you please pick up the handset prior to pressing the keys to ensure the best sound quality. Once again, that is star and then one to join the question.

David Kim: We've continued to enhance our training programs.

David Kim: We're spending more time.

David Kim: An effort on training in order to build the bench strength necessary to expand new restaurant developments and openings around the country and into South Korea.

Speaker Change: The gift card continuously selling exceptionally well.

Speaker Change: This quarter, we're testing E gift card, which will be sold through cost goes website. We.

David Kim: And third, our incubator project. Last year, we announced the launch of GEN gift cards at 78 Costco locations, all within a five-mile radius of most of our restaurants across the U.S. The gift card continuously sells exceptionally well. This quarter we're testing e-gift cards which will be sold through Costco's website. We have also recently signed an agreement to sell gift cards at Sam's Club. which we expect to begin by the end of the second quarter or the beginning of third quarter. Our success in expanding this initiative is a testament to GEN's brand strength and position as a leader in Korean barbecue.

David Kim: And third our incubator projects.

Speaker Change: We have also recently signed an agreement to sell gift cards at Sam's clubs.

David Kim: Last year, we announced the launch of Gen gift cards at 78, Costco locations all within a five mile radius of most of our restaurants across the U S.

Which we expect to begin by the end of the second quarter or the beginning of third quarter.

Operator: We'll pause momentarily to assemble the roster.

Speaker Change: Our success in expanding this initiative is a testament to Jens brand strength and position as a leader in Korean barbecue.

David Kim: The gift card continuously itself exceptionally well.

Todd Brooks: Our first question today comes from Todd Brooks from The Benchmark Company.

David Kim: This quarter, we're testing E gift card, which will be sold through Costco's website. We.

Todd Brooks: Please go ahead with your question. Hey, thanks for taking my questions. Good to speak with you both. I want to lead off, Tom, if you could talk to Maybe the same store sales progression across the course of the first quarter. I know a lot of companies saw material dips in business in February, so I didn't know if you were willing to give us any color there. And then maybe quarter-to-date commentary on what you've seen so far in fiscal year. Yeah, hi, Todd. January and February were pretty strong months. I think we talked about those on our last call.

Speaker Change: We look forward to expanding this avenue here with even more big box retail partners in the near future.

David Kim: We have also recently signed an agreement to sell gift cards at Sam's clubs.

Speaker Change: Also I'm pleased to announce one of our incubator projects was the creation of a new dual concept store in Texas.

David Kim: Which we expect to begin by the end of the second quarter or the beginning of third quarter.

David Kim: Our success in expanding this initiative is a testament to <unk> brand strength and position as a leader in Korean barbecue.

Speaker Change: That includes a restaurant, we're calling con sushi.

Speaker Change: <unk> is a contemporary medium to high end sushi, a restaurant at an average price point of $39, which compares to our agenda price point of $30.

David Kim: We look forward to expanding this avenue with even more big box retail partners in the near future.

David Kim: We look forward to expanding this AD when you hit with even more big box retail partners in the near future.

David Kim: Also, I'm pleased to announce one of our incubator projects was the creation of our new dual concept store in Texas. that includes a restaurant we're calling Kon Sushi. Khan is a contemporary medium to high-end sushi restaurant at an average price point of $39, which compares to our GEN price point of $30. CON is an all-you-can-eat concept, which, like GEN, is a value-based restaurant concept. The two restaurants are attached. but have separate entrances and completely different interiors. Most importantly, they've been engineered to create an extremely efficient back-of-the-house setup with one bar, one... one storage area and one area for bathrooms for both restaurants.

David Kim: Also I am pleased to announce one of our incubator projects was the creation of our new dual concept store in Texas.

Speaker Change: <unk> is an all you can eat concept, which like Jim.

Thomas Croal: March, things dipped. I think through February, we were positive. And at the end of March, we ended up being slightly negative. And it has continued negative in April and the beginning of May. Okay, and if you're looking at kind of causality, does it just feel macro to you or? I guess speculation, but what are you guys attributing the recent weakness over the last couple months? Yeah, it's macro. It definitely is macro based on what's going on in the economy and in the world. the impact of how our customers are feeling. Okay, fair enough.

Speaker Change: The value based restaurant concept.

David Kim: That includes a restaurant, we're calling con sushi.

Speaker Change: The two restaurants are attached.

Speaker Change: Have separate entrances and completely different interiors.

David Kim: Corn is a contemporary medium to high end sushi restaurant at an average price point of $39, which compares to our agenda price point of $30.

Speaker Change: Most importantly, they've been engineered to create an extremely efficient back of the house setup.

Speaker Change: With one bar one kitchen, one storage area in one area for bathrooms, where both restaurants.

David Kim: <unk> is an all you can eat concept, which like Jim.

Speaker Change: Is there a value based restaurant concept.

Speaker Change: This model uses one labor force, who run two restaurants, which results in a significant improvement in operating margin.

David Kim: The two restaurants are attached.

David Kim: We have separate entrances and completely different interiors.

David Kim: Most importantly, they've been engineered to create an extremely efficient back of the house setup.

David Kim: And then David, for you. I was wondering if you could give us a framework, a lot of exciting initiatives within the incubator. When you guys are talking to a $300 million revenue run rate exiting 2025, how should we think about that as kind of new revenue opportunities driven by the incubator versus revenue that's generated by the core GEN.

Speaker Change: Now instead of waiting in long lines.

Speaker Change: They can choose between two unique concepts that provide value based thing.

David Kim: With one bar, one kitchen, one storage area and one every year for bathrooms, where both restaurants.

Speaker Change: The Cuda restaurant together Jan in Con.

Speaker Change: Invite more crowds and create an F B center for consumers.

David Kim: This model uses one labor force to run two restaurants, which results in a significant improvement in operating margins. Now, instead of weeding in long lines, they can choose between two unique concepts that provide value-based dining.

David Kim: This model uses one labor force grew one.

Speaker Change: While still early days, we're evaluating a number of additional opportunities for rollout this dual concept.

David Kim: Two restaurants, which results in a significant improvement.

David Kim: So the incubators are just new projects that we want to try and see if we can enhance our brand. But all that growth of incremental sales reaching the 300 million is purely all coming from new store restaurants and existing restaurants. That's great to hear. Thanks.

David Kim: <unk> operating margin.

David Kim: Now instead of waiting in long lines.

Speaker Change: Finally.

Speaker Change: As a result of another incubator projects. We have recently reached an agreement with Cisco for them to sell our proprietary.

They can choose between two unique concepts that provide value based thing.

David Kim: The two restaurants together, GEN and CON, invite more crowds and create an epicenter for consumers.

David Kim: The Cuda restaurant together Jan any con.

Speaker Change: Jen Korean barbecue meat products through third parties, such as grocery and big store retailers.

David Kim: More crowds and create an F B center for consumers.

David Kim: While still early days, we're evaluating a number of additional opportunities to roll out this dual concept.

David Kim: While still early days.

Speaker Change: This is in the early stages, and we will provide more information on future calls.

David Kim: We're evaluating a number of additional opportunities to roll out this dual concept.

Todd Brooks: And then just quickly, and I'll hop back in queue, if we think about Kahn Sushi and the dual blended restaurant, I know it's early.

Speaker Change: Turning back to new restaurant expansion.

David Kim: Finally, as a result of another incubator project, we have recently reached an agreement with Cisco for them to sell our proprietary GEN Korean BBQ meat products to third parties such as grocery and big store retailers. This is in the early stages and we'll provide more information on future calls.

Finally, as a result of another incubator project.

Speaker Change: Also making tangible progress on our international expansion into South Korea, where we plan to open three new restaurants in 2025.

David Kim: We have recently reached an agreement with Cisco for them to sell our proprietary.

David Kim: I think you spoke, I'm just wondering operationally, I think you spoke about both menus being available, but does Kahn Sushi actually have grills in the tables in them? Or how do you make the GEN menu and the GEN experience available to that customer? And then just how many of these Kahn Sushi's do you foresee the market support?

Jen: Jen Korean barbecue meat products through third parties, such as grocery and big store retailers.

Speaker Change: The first one is on track to open at the end of second quarter.

Speaker Change: With the other two expected later in the year.

Jen: This is in the early stages, and we will provide more information on future calls.

Speaker Change: These units will be built at approximately one third the cost of our U S stores offering even more compelling potential returns.

David Kim: Turning Back Your New Year Restaurant Expansion. We're also making tangible progress on our international expansion into South Korea, where we plan to open three new restaurants in 2025. The first one is on track to open at the end of second quarter. with the other two expected later in the year. These units will be built at approximately one-third the cost of our U.S. stores, offering even more compelling potential returns, which are not subject to the volatility of the current tariffs. Additionally, by opening in Korea. We hope to see early culinary, cultural, and experimental trends. that might translate well for us in our U.S.

Jen: Turning back to your new restaurant expansion.

David Kim: In the past experience before GEN, there's a lot of national concepts and smaller concepts that I was involved with where dual concepts did not work and there's a lot of studies done on why it doesn't work. So with that experience knowing what I know of what didn't work for most concepts, it's a very different model where When a guest comes in, it's a very different restaurant. One cannot tell that one is a con all you can eat and one is a gen all you can eat. It's very different. There are no grills. on the con side, because you don't cook anything.

Jen: We're also making tangible progress on our international expansion into South Korea, where we plan to open three new restaurants in 2025.

Speaker Change: Try not subject to the volatility of the current tariffs.

Speaker Change: Additionally by opening in Korea.

Jen: First one is on track to open at the end of second quarter.

Speaker Change: We hope to see early culinary cultural and experimental trends.

Jen: With the other two you expected later in the year.

Speaker Change: That might translate well.

Jen: These units will be built at approximately one third of the cost of our U S sports offering even more compelling potential returns, which are not subject to the volatility of the current tariffs.

Speaker Change: US in our U S locations.

Speaker Change: Given the strong momentum in our development pipeline, we remain on pace to open 12 to 13, new restaurants in 2025.

Jen: Additionally by opening in Korea.

Speaker Change: We expect to achieve restaurant level adjusted EBITDA margin between 17, and 18% in revenue between 245 and $250 million.

Jen: We hope to see early culinary cultural and experimental trends.

David Kim: So there's a little bit of complexity in making sushi, but we've deployed a lot of technology to where we can cut down a lot of the labor side to execute our operations on the con side. But in terms of numbers coming in, they're coming in much better than we thought. It's a very short number, but we're extremely optimistic on it.

Jen: That might translate well for us in our U S locations.

Speaker Change: For full year of 2025.

David Kim: location. Given this strong momentum in our development pipeline, we remain on pace to open 12 to 13 new restaurants in 2025. We expect to achieve restaurant level adjusted EBITDA margin between 17 and 18 percent and revenue between 245 and 250 million dollars. for full year of 2025. By the end of 2025, we anticipate being at an annual run rate approaching 300 million of revenue when all new restaurants are open.

Speaker Change: By the end of 2025, we anticipate being at an annual run rate.

Jen: Given the strong momentum in our development pipeline, we remain on pace to open 12 to 13, new restaurants in 2025.

Speaker Change: <unk> 300 million of revenue when all new restaurants were opened.

Speaker Change: And another topic I want to address is the potential impact of recent.

Jen: We expect to achieve restaurant level adjusted EBITDA margin between 17, and 18% in revenue between 245 and $250 million for full year of 2025.

Speaker Change: Announced tariffs.

Speaker Change: There could be a material impact on equipment costs and construction materials sourced from China.

David Kim: Why this was created is... I want to try to explain it in a simpler way. It's like the wingman for GEN. Many times we come across larger spaces that we have to let go and not do because the landlord wants us to take a bigger space. And to achieve this, if we were to have two concepts where one concept supports the, let's say, the long line of GEN Korean BBQ, instead of losing those customers to another competitor, being that we can capture those customers by coming into our concept that's right next door. And this is not all theory.

Speaker Change: But still.

Jen: By the end of 2025, we anticipate being at an annual run rate approaching 300 million of revenue when all new restaurants were opened.

Speaker Change: At very early stage to quantify the extent.

Speaker Change: If terrorists she began to significantly affect our new restaurant development costs, which would reduce our ROI, we may decide to slow or pause the pace of new unit expansion until conditions improve.

David Kim: Another topic I want to address is the potential impact of recent announced tariff There could be a material impact on equipment costs and construction materials sourced from China, but still, at very early stage to quantify the expense.

Jen: And then another topic I want to address is the potential impact of recent.

Jen: Announced tariffs.

Jen: There could be a material impact on equipment costs and construction materials Schwartz from China, but still.

Speaker Change: Or.

Speaker Change: All of our lives.

Speaker Change: Overall.

Jen: At very early stage to quantify the extent.

Speaker Change: First quarter marks a strong start to the year and reinforces the strategic foundation, we have built.

David Kim: If tariffs begin to significantly affect our new restaurant development costs, which would reduce our ROI, we may decide to slow or pause the pace of new unit expansion until conditions improve For more information, visit www.genrestaurant.com or be able. overall.

Jen: If terrorists began to significantly affect our new restaurant development costs, which would reduce our rois, we may decide to slow or pause the pace of new unit expansion until conditions improve.

Speaker Change: Ill and support the long term growth.

David Kim: These were all thought through, planned through, looked at a sample of some of our restaurants, especially our headquartered restaurant where another all-you-can-eat sushi is, and our customers, we were losing to them. So we said, let's try this and see if it will work. So operationally wise, construction wise, it's a little more expensive, not that expensive. And it's basically, we're getting two for one in terms of labor costs. The food cost is almost the same in terms of percentage. It's slightly higher on the sushi side.

Speaker Change: Backed by a healthy balance sheet strong unit level returns and rising brand momentum.

Jen: Or stabilize.

Speaker Change: We believe <unk> is well positioned to deliver on our 2025 goals and continue expanding our presence across both domestic and international markets.

Jen: Overall.

David Kim: Our first quarter marks a strong start to the year and reinforce the strategic foundation we have built to build and support the long-term growth. backed by a healthy balance strong unit level returns and rising brand momentum.

Jen: Our first quarter March.

Jen: <unk> start to the year and reinforces the strategic foundation, we have built to scale and support the long term growth.

Speaker Change: Thank you for your continued support.

Speaker Change: We remain excited about the opportunities ahead and confident in their road we're on.

Jen: Backed by a healthy balance sheet.

Jen: Our unit level returns and rising brand momentum.

Tom Kouril: Tom will now provide a detailed look at our first quarter financial performance.

David Kim: We believe GEN is well positioned to deliver on our 2025 goals and continue expanding our presence across both domestic and international markets.

Todd Brooks: So are we going to test more of these? We are going to test more of these because in case there is a GEN where it doesn't perform as much, we can always counter that with and hedge it with another concept right next to it. Okay, perfect. Thanks, guys.

Jen: We believe <unk> is well positioned to deliver on our 2025 goals and continue expanding our presence across both domestic and international markets.

Thank you David Dave.

Speaker Change: David discussed revenue in his opening remarks, so I will start with expenses.

Cost of goods sold as a percentage of company restaurant sales increased by 20 basis points to 33, 6% in the first quarter of 2025.

David Kim: Thank you for your continued support. We remain excited about the opportunities ahead and confident in the road we're on.

Jen: Thank you for your continued support we remain excited about the opportunities ahead and confident in their road we're on.

Speaker Change: Paired with the first quarter last year.

Tom Croal: Tom will now provide a detailed look at our first quarter financial performance. Thank you, David. David discussed revenue in his opening remarks, so I will start with expenses. Cost of goods sold as a percentage of company restaurant sales increased by 20 basis points to 33.6% in the first quarter of 2025, compared to the first quarter last year. This minor increase is primarily attributable to inflationary pressure and a minor impact from our premium menu. cost of goods sold decreased by 50 basis points compared to the fourth quarter of 2024, primarily due to improved margin from our premium ending.

Tom: Tom will now provide a detailed look at our first quarter financial performance.

George Kelly: Our next question comes from George Kelly from Roth Capital Partners. Please go ahead with your question. Hey everybody, thanks for taking my questions.

Speaker Change: This minor increase is primarily attributable to inflationary pressure and a minor impact from our premium menu.

Tom: Thank you David.

Tom: David discussed revenue in his opening remarks, so I will start with expenses.

Speaker Change: Cost of goods sold decreased by 50 basis points compared to the fourth quarter of 2024, primarily due to improved margins from our premium menu.

Thomas Croal: Maybe to start one for Tom, I'm just curious, the four-wall target that you gave 17 to 18 percent for fiscal year 25, Just wondering what gives you confidence in that number? One Q was below target, and you just commented that accounts were negative in April and May. So I'm just curious what you're seeing or planning that gives you confidence that it'll build up during the year. Yeah, there's a couple of things. One is, last year, our first quarter was our lowest quarter as well. And this year, our first quarter is lower. So we know that we'll make up for it as the year goes on.

Tom: Cost of goods sold as a percentage of company restaurant sales increased by 20 basis points to 33, 6% in the first quarter of 2025.

Payroll and benefits as a percentage of company restaurant sales decreased by 10 basis points in the first quarter of 2025 to 31, 7% compared to the first quarter of last year.

Tom: Third to the first quarter last year.

This minor increase is primarily attributable to inflationary pressure and a minor impact from our premium menu.

Speaker Change: Occupancy expenses as a percentage of company restaurant sales increased by 40 basis points to eight 9% compared to the first quarter of last year due to new restaurant openings.

Tom: Cost of goods sold decreased by 50 basis points compared to the fourth quarter of 2024, primarily due to improved margins from our premium menu.

Tom Croal: Payroll and benefits as a percentage of company restaurant sales decreased by 10 basis points in the first quarter of 2025 to 31.7% compared to the first quarter of last year. Occupancy expenses as a percentage of company restaurant sales increased by 40 basis points to 8.9 percent compared to the first quarter of last year due to new restaurant open. Other operating expenses as a percentage of company restaurant sales increased 30 basis points to 10.3% compared to the first quarter of last year. GNA excluding stock-based compensation during the first quarter was $5.6 million or 9.8% of revenue.

Tom: Payroll and benefits as a percentage of company restaurant sales decreased by 10 basis points in the first quarter of 2025 to 31, 7% compared to the first quarter of last year.

Speaker Change: Other operating expenses as a percentage of company restaurant sales increased 30 basis points to 10, 3% compared to the first quarter of last year.

Thomas Croal: We are managing labor costs very tightly, and we believe that there's room to improve in the margins there, like we did last year. And we'll do the same thing this year. Okay, understood.

Speaker Change: G&A, excluding stock based compensation during the first quarter was $5 6 million or nine 8% of revenue.

Tom: Occupancy expenses as a percentage of company restaurant sales increased by 40 basis points to eight 9% compared to the first quarter of last year due to new restaurant openings.

David Kim: And then, second question on the potential Chinese tariff impact on new builds, David, that you were talking about. What is your expectation for per unit build costs in 2025? And what kind of risk do you see around your target? Just curious, like, if you're getting close to having a better sense of how it's going to shake out and what that means for for unit growth, et cetera. So if you could just elaborate on that topic a bit, that would be helpful.

Speaker Change: Paired with $3 9 million or seven 7% of revenue in the year ago period.

Tom: Yes.

Tom: Other operating expenses as a percentage of company restaurant sales increased 30 basis points to 10, 3% compared to the first quarter of last year.

Speaker Change: During the first quarter 2025, we opened six new restaurants compared to only two new restaurants in the first quarter of last year.

Speaker Change: This tripling of new store openings is a main driver of higher G&A and includes hires across construction regional operations and training.

Tom: G&A, excluding stock based compensation during the first quarter was $5 6 million or nine 8% of revenue.

Tom Croal: compared to $3.9 million or 7.7% of revenue in the year-ago period. During the first quarter of 2025, we opened six new restaurants compared to only two new restaurants in the first quarter last year. This tripling of new store openings is a main driver of hire GNA and includes hires across construction, regional operations, and training. To a much lesser extent, the first quarter also reflected increased marketing expenses.

Speaker Change: To a much lesser extent the first quarter also reflected increased marketing expenses.

Tom: Compared to $3 9 million or seven 7% of revenue in the year ago period.

David Kim: The month of April when President Trump announced the tariffs, we have had vendors approach us in all directions with uncertainties of price increases from a lot in the equipment side because most of the kitchen equipment are coming from China. construction materials are coming from China, so we're not sure whether these were just increases because the industry is just taking advantage of the news, or actually prices have actually going to be increasing. This is such a fluid, every week changes here, and I wish I had a crystal ball myself into where things will settle. But we are prepared that if prices don't settle down to our projection of cost, meaning cost of materials, especially the kitchen and construction, we will pause some construction until there is settlement on pricing.

Tom: During the first quarter 2025, we opened six new restaurants compared to only two new restaurants in the first quarter of last year.

Speaker Change: In the first quarter, we had a net loss before income taxes of $2 1 million, which equated to a loss per share of six cents.

Tom: This tripling of new store openings is the main driver of higher G&A and includes hires across construction regional operations and training.

Speaker Change: Compared to net income before income taxes of $3 8 million, which equated to an EPS of <unk> 11 per share in the first quarter of 2024.

Tom: To a much lesser extent the first quarter also reflected increased marketing expenses.

Speaker Change: However, 2024 included a onetime gain related to the buyout of our partner in the Hawaii, a $3 4 million.

Tom Croal: In the first quarter we had a net loss before income taxes of $2.1 million, which equated to a loss per share of $0.06.

Tom: In the first quarter, we had a net loss before income taxes of $2 1 million, which equated to a loss per share of six cents.

Speaker Change: In addition, the first quarter of 2025 reflects higher costs associated with new restaurant development, including $2 $6 million in Preopening costs.

Tom Croal: compared to net income before income taxes of $3.8 million, which equated to an EPS of 11 cents per share in the first quarter of 2024. However, 2024 included a one-time gain related to the buyout of our partner in Hawaii of $3.4 million.

Tom: Compared to net income before income taxes of $3 8 million, which equated to an EPS of <unk> 11 per share in the first quarter of 2024.

Speaker Change: If you look at adjusted net income a non-GAAP measure we generated net income of $1 4 million or EPS of <unk> <unk> per share in the first quarter of 2025.

Tom: However, 2024 included a onetime gain related to the buyout of our partner in Hawaii, a $3 4 million.

Speaker Change: Compared to net income of $2 9 million or EPS of nine cents per share in the first quarter last year.

Tom Croal: In addition, the first quarter of 2025 reflects higher costs associated with new restaurant development, including $2.6 million in pre-opening costs. If you look at adjusted net income, a non-GAAP measure, we generated net income of $1.4 million or an EPS of $0.04 per share in the first quarter of 2025 compared to net income of $2.9 million or an EPS of $0.09 per share in the first quarter last year.

Tom: In addition, the first quarter of 2025 reflects higher costs associated with new restaurant development.

Speaker Change: Since going public in 2023.

David Kim: Because some pricings, we are quoted 100%, some pricing we're quoted 15%, it's all over the map right now. So I think with the news that are coming, starting last week and this week, I think the consensus is, it's gonna settle down. Once it settles down, we can start evaluating what next steps we can take. Okay, okay, understood.

Tom: Including $2 $6 million in Preopening costs.

Speaker Change: Grown gem from 33 restaurants to 49% to 50% increase without incurring any long term debt.

If you look at adjusted net income a non-GAAP measure we generated net income of $1 4 million or EPS of <unk> <unk> per share in the first quarter of 2025.

Speaker Change: If we stopped all new restaurant development, we estimate we could have generated a $2 5 million profit in the first quarter.

Tom: Compared to net income of $2 9 million or EPS of nine cents per share in the first quarter last year.

Speaker Change: Along with an additional $4 million of EBIDTA or cash flow.

Tom Croal: Since going public in 2023, we have grown GEN from 33 restaurants to 49, a 50% increase, without incurring any long-term debt. If we stopped all new restaurant development, we estimate we could have generated a $2.5 million profit in the first quarter, along with an additional $4 million of EBITDA or cash flow. This figure strips out all pre-opening costs and a reduction in GNA.

Speaker Change: This figure strips out all preopening costs and a reduction in G&A.

Tom: Since going public in 2023.

Thomas Croal: And then one last one is just on the openings that just happened in 1Q, the six openings. Can you just broadly talk about how they're performing? It's too early to tell. It's a mixture. Some are average, some are above, some are below.

Speaker Change: Rone Jen from 33 restaurants to 49% to 50% increase without incurring any long term debt.

Speaker Change: Total adjusted EBITDA for the first quarter of 2025 was $1 2 million down from $6 4 million in the first quarter of 2024, however, excluding the onetime gain of $3 4 million I just discussed adjusted EBITDA for the first quarter.

Speaker Change: If we stopped all new restaurant development, we estimate we could have generated a $2 5 million profit in the first quarter.

Operator: All right, we'll head back to you. Thank you.

Along with an additional $4 million of EBITDA or cash flow.

Speaker Change: 2024 was only $3 million.

Speaker Change: This figure strips out all preopening costs and a reduction in G&A.

Speaker Change: Additionally, after removing preopening costs adjusted EBITDA for the first quarter of 2025 decreased only slightly to $3 3 million.

Operator: Once again, if you would like to ask a question, please press star and then 1. To withdraw your questions, you may press star.

Tom Croal: Total adjusted EBITDA for the first quarter of 2025 was $1.2 million, down from $6.4 million in the first quarter of 2024. However, excluding the one-time gain of $3.4 million I just discussed, adjusted EBITDA for the first quarter of 2024 was only $3 million. Additionally, after removing pre-opening costs, adjusted EBITDA for the first quarter of 2025 decreased only slightly to $3.3 million, compared to $3.6 million in the fourth quarter of 2024.

Speaker Change: Total adjusted EBITDA for the first quarter of 2025 was $1 2 million.

William Forsberg: Our next question comes from Will Forsberg from Craig Hallam. Please go ahead with your question. Hey guys, this is Will on for Jeremy.

Speaker Change: <unk> from $6 4 million in the first quarter of 2024, however, excluding the one time gain of $3 4 million I just discussed adjusted EBITDA for the first quarter of 2024 was only $3 million.

<unk> to $3 6 million in the fourth quarter of 2024.

Speaker Change: Turning to our liquidity position.

Speaker Change: As of March 31, 2025, we had $15 4 million in cash and cash equivalents.

William Forsberg: questions. I'd just like to jump back to the comp trends you guys have seen. Could you maybe break out what you saw in Q1 in terms of average check versus traffic? And then I guess how that's progressed into Q2 so far. Yeah, I think overall, we did see as we talked about a, you know, two, two and a half percent plus increase because of our price. We saw about a 10% to 11% reduction in our just overall customer base, but we saw a 7% improvement from our premium menu. So all in all, we ended up less than 1% off.

Speaker Change: Additionally, after removing preopening costs adjusted EBITDA for the first quarter of 2025 decreased only slightly to $3 3 million.

Speaker Change: And only long term debt, we carry is $5 million.

We have fully available all of our $20 million revolving line of credit.

Speaker Change: During the first quarter we.

Speaker Change: <unk> to $3 6 million in the fourth quarter of 2024.

Speaker Change: We repurchased 33400 shares of our class a common stock at an average cost of $5 94 per share.

Tom Croal: turning to our liquidity position. As of March 31st, 2025, we had $15.4 million in cash and cash equivalents. and only long-term debt we carry is $5 million. We have fully available all of our $20 million revolving line of credit. During the first quarter, we repurchased 33,400 shares of our Class A common stock at an average cost of $5.94 per share. As of March 31st, 2025, we had $4.8 million remaining under our repurchase authorization. Remember that we have 33 million shares outstanding, including our A and B shares. The founding group continues to own 85% of the company.

Speaker Change: Turning to our liquidity position.

Speaker Change: As of March 31, 2025, we had $15 4 million in cash and cash equivalents.

Speaker Change: As of March 31, 2025, we had $4 8 million remaining under our repurchase authorization.

Speaker Change: And only long term debt, we carry is $5 million.

Speaker Change: We have fully available all of our $20 million revolving line of credit.

Speaker Change: Remember that we have 33 million shares outstanding, including our a and B shares.

Speaker Change: During the first quarter we.

Speaker Change: The founding group continues to 185% of the company.

Speaker Change: We repurchased 33400 shares of our class a common stock at an average cost of <unk>.

Thomas Croal: Got it. That's a great color.

Speaker Change: Because of the founder strong ownership position their interests are consistently aligned with those of the public shareholders and they are fully vested and successfully growing jobs.

David Kim: Unit Growth For more information, visit www.genrestaurant.com And then I guess in the South Korea market, what are you seeing there that led you to add another unit to expectations? And I guess also, would there be anything to note on expected AUVs there? The market that we found in South Korea, although it's a very competitive market, there is no sizable size 5,000 square feet or larger that is offering GEN's model of all-you-can-eat beef, so we'll be the first ones going in. We will open the first one in June 10th, and we'll see how those numbers move, but There's a good and a bad about markets like that.

Speaker Change: $5 94 per share.

Speaker Change: As of March 31, 2025, we had $4 8 million remaining under our repurchase authorization.

Speaker Change: Before concluding.

I want to address Investor questions. We've received recently regarding long term lease obligations.

Speaker Change: Remember that we have 33 million shares outstanding, including our a and b shares with <unk>.

Speaker Change: To reiterate what we said on our last call.

Speaker Change: Rounding group continues to 185% of the company.

Speaker Change: GAAP accounting under ASC 842 requires us to record our restaurant lease obligations as a liability with an offsetting operating lease asset.

Tom Croal: Because of the founder's strong ownership position, their interests are consistently aligned with those of the public shareholders, and they are fully vested in successfully growing GEN.

Speaker Change: Because of the founder strong ownership position their interests are consistently aligned with those of the public shareholders and they are fully vested and successfully growing Jeff.

Speaker Change: The 147 million and lease liabilities are offset by a $130 million in operating lease assets on our balance sheet.

Tom Croal: Before concluding I want to address investor questions we've received recently regarding long-term lease obligations. To reiterate what we said on our last call. GAP accounting under ASC 842 requires us to record our restaurant lease obligations as a liability with an offsetting operating lease asset. The $147 million in lease liabilities are offset by $130 million in operating lease assets on our balance sheet. This is a gap requirement.

Speaker Change: Before concluding.

Speaker Change: I want to address Investor questions. We've received recently regarding long term lease obligations.

Speaker Change: This is a GAAP requirement. These lease liabilities are not bank or institutional long term debt and should not be considered as such when evaluating our company.

Speaker Change: To reiterate what we said on our last call.

Speaker Change: GAAP accounting under ASC 842 requires us to record our restaurant lease obligations as a liability with an offsetting operating lease asset.

Speaker Change: We have only $5 million of long term debt.

David Kim: The good is it is a it's in a it's on the bottom of their cycle of economic pressure with all the election issues and all that so we're able to perhaps get better deals in Korea in terms of occupancy. Although the sales might be lower than the U.S. depending on how our sales come in. The construction of opening a restaurant in South Korea for the same square footage is about 25 to 30%. So for every dollar that we spend in the US, it only costs us 25 to 30 cents. So we are always looking at an internal rate of return.

Speaker Change: We also received questions about our return on tangible asset metrics.

Speaker Change: The 147 million and lease liabilities are offset by a $130 million in operating lease assets on our balance sheet.

Speaker Change: It's important to note that using total assets as a proxy for invested capital is inflated because it includes the operating lease asset of $126 million.

Speaker Change: This is a GAAP requirement. These lease liabilities are not bank or institutional long term debt.

Tom Croal: These lease liabilities are not bank or institutional long-term debt and should not be considered as such when evaluating our company. We have only $5 million of long-term debt.

Speaker Change: This incorrect assumption artificially lowers our tangible asset return metrics.

Speaker Change: Should not be considered as such when evaluating our company.

Speaker Change: We have only $5 million of long term debt.

Speaker Change: All of these points highlight the fact that Jen has no material long term debt and produces strong returns from restaurant development.

Tom Croal: We also receive questions about our return on tangible asset.

Speaker Change: We also received questions about our return on tangible asset metrics.

Tom Croal: It's important to note that using total assets as a proxy for invested capital is inflated because it includes the operating lease asset of $126 million. This incorrect assumption artificially lowers our tangible asset return method. All of these points highlight the fact that GEN has no material long-term debt and produces strong returns from restaurant development.

Speaker Change: It's important to note that using total assets as a proxy for invested capital is inflated because it includes the operating lease asset of $126 million.

Speaker Change: To reiterate what David said earlier, our financial outlook for the remainder of 2025 remains strong.

Speaker Change: We continue to anticipate opening between 12 and 13, new restaurants, which includes our first three international units in South Korea.

Speaker Change: This incorrect assumption artificially lowers our tangible asset return metrics.

David Kim: So so for example, if the sales number comes in lower and our margins are lower than the U.S. If we do the mathematics and we can pull our money out in the same projections we gave the street of 2 1⁄2 years, we'll continue to look at that and see if that's... better model. But again, it is a very big market. People are very ignorant about some of these markets thinking that they're small. They're not a small market. That market, the way our data has come in, is about 100 to 200 store market. So it's just way too early to tell.

Speaker Change: All of these points highlight the fact that Jen has no material long term debt and produces strong returns from restaurant development.

Speaker Change: We're targeting full year revenues of $245 million to $250 million and achieving restaurant level adjusted EBITDA margins in the 17% to 18% range.

Tom Croal: To reiterate what David said earlier, our financial outlook for the remainder of 2025 remains strong. We continue to anticipate opening between 12 and 13 new restaurants, which includes our first three international units in South Korea. We're targeting full-year revenues of $245 to $250 million and achieving restaurant-level adjusted EBITDA margins in the 17 to 18 percent range. By the end of 2025, we anticipate being at an annual run rate approaching $300 million in revenue when all the new restaurants are open.

David Kim: To reiterate what David said earlier, our financial outlook for the remainder of 2025 remains strong.

Speaker Change: By the end of 2025, we anticipate being.

Speaker Change: At an annual run rate approaching $300 million in revenue when all the new restaurants are open.

David Kim: We continue to anticipate opening between 12 and 13, new restaurants, which includes our first three international units in South Korea.

Yeah.

Speaker Change: This concludes our prepared remarks, we'd like to thank you again for joining us on the call. Today. We are now happy to answer any questions that you may have.

David Kim: We're targeting full year revenues of $245 million to $250 million and achieving restaurant level adjusted EBITDA margins in 17% to 18% range.

Speaker Change: Operator, please open the line for questions.

Speaker Change: Oh.

David Kim: By the end of 2025, we anticipate being at.

Ladies and gentlemen at this time.

David Kim: Even if we misjudged the South Korean market, the labor cost is substantially lower. Everything it costs is lower. So if we took a very bad approach and everything just failed and didn't go our way, the losses that GEN will be taking will be very small. So that it is worth taking the risk. Got it.

Speaker Change: Session to ask a question you May press Star and then one using a touchtone telephone.

David Kim: On an annual run rate approaching $300 million in revenue.

David Kim: When all the new restaurants are open.

Speaker Change: All your questions you May press star two.

Tom Croal: This concludes our prepared remarks. We'd like to thank you again for joining us on the call today.

David Kim: This concludes our prepared remarks, we'd like to thank you again for joining us on the call. Today. We are now happy to answer any questions that you may have.

Speaker Change: If you are using a speaker phone we do ask you. Please pick up the handset prior to pressing the keys to ensure the best sound quality.

Operator: We are now happy to answer any questions that you may have.

Operator: Operator, please open the line for questions. Ladies and gentlemen, at this time, we'll be... session. To ask a question you may press star and then 1 using a touch-tone telephone. To withdraw your questions you may press star and 2. If you are using a speakerphone, we do ask that you please pick up the handset prior to pressing the keys to ensure the best sound quality. Once again, that is star and then one to join the question. We'll pause momentarily to assemble the roster.

Speaker Change: Operator, please open the line for questions.

Speaker Change: Once again that is star and then one.

Speaker Change: And the question queue.

David Kim: Okay.

Speaker Change: We'll pause momentarily to assemble the roster.

David Kim: Ladies and gentlemen at this time.

Session to ask a question you May press Star and then one using a touchtone telephone switch all your questions you May press star two.

William Forsberg: One last one for me on the gift cards. I know redemption had been around 50%, I believe. Have you gotten to a point now where you've kind of seen a more normalized redemption rate that you could share? And also, at this time, are you able to quantify the lift, an average check from GIF users versus the baseline customer base? The answer to the first question, it's stabilized. We think it's going to stabilize around 60-65%. The industry is about 70-75%. So we're ahead of the industry. It has stabilized a lot.

Speaker Change: Our first question today comes from Todd Brooks from the Benchmark Company. Please go ahead with your question.

Todd Brooks: Hey, Thanks for taking my questions good to speak with you both.

David Kim: If you are using a speaker phone, we do ask that you. Please pick up the handset prior to pressing the keys to ensure the best sound quality.

Speaker Change: One to lead off Tom if you could talk to.

Speaker Change: Maybe the same the same store sales progression across the course of the first quarter I know a lot of companies saw.

David Kim: Again that is star and then one to join the question queue.

David Kim: Pause momentarily to assemble the roster.

Material gypsum business in February so I didn't know if you were willing to give us any color there and then maybe quarter to date commentary on what you've seen so far in fiscal.

Todd Brooks: Our first question today comes from Todd Brooks from The Benchmark Company. Please go ahead with your question. Hey, thanks for taking my questions.

Speaker Change: Our first question today comes from Todd Brooks from the Benchmark Company. Please go ahead with your question.

Hey, Thanks for taking my questions good to speak with you both.

Speaker Change: Fiscal Q2.

Todd Brooks: Good to speak with you both.

Tom Kouril: Yes, Hi, Todd.

Todd Brooks: I wanted to lead off, Tom, if you could talk to Maybe the same store sales progression across the course of the first quarter. I know a lot of companies saw... material dips in business in February, so I didn't know if you were willing to give us any color there, and then maybe quarter-to-date commentary on what you've seen so far in fiscal year 2020.

David Kim: In terms of whether we got incremental sales from that, we don't have that data. But some of the discussions we have with the managers is that consumers that are using the gift card are actually spending more money. when they are dining at our place. How do we know that? Is we see more sales in premium menus and we see more sales in drinks for the ones who are using those cards. We don't have raw data on that. We don't track that, but that is what we're hearing from the managers.

Speaker Change: Want to lead off Tom if you could talk to.

Tom Kouril: January and February were pretty strong months I think we've talked about those on our last call.

Speaker Change: Maybe the same the same store sales progression across the course of the first quarter I know a lot of companies saw.

Tom Kouril: March things dip I think through February we were positive at.

Speaker Change: Material gypsum business in February so I didn't know if you were willing to give us any color there and then maybe quarter to date commentary on what you've seen so far in.

Tom Kouril: At the end of March we ended up being slightly negative.

Tom Kouril: And it has continued negative in April and the beginning of May.

Speaker Change: Okay, and if youre looking at kind of.

Speaker Change: Fiscal Q2.

Tom Croal: Yeah, hi, Todd. January and February were pretty strong months. I think we talked about those on our last call. March, things dipped. I think through February, we were positive. And at the end of March, we ended up being slightly negative. And it has continued negative in April and the beginning of May.

Speaker Change: Yes, Hi, Todd.

Tom Kouril: Causality doesn't just feel macro to you or.

Speaker Change: January and February were pretty strong months I think we've talked about those on our last call.

Tom Kouril: I guess speculation, but what are you what are you guys attributing the recent weakness over the last couple of months.

Speaker Change: March things dip I.

Speaker Change: I think through February we were positive.

Tom Kouril: Yeah.

William Forsberg: Got it. Appreciate the color.

Tom Kouril: Its macro.

William Forsberg: Best of luck. Thanks a lot.

Tom Kouril: It definitely is a macro based on what's going on in the.

Speaker Change: And at the end of March we ended up being slightly negative.

Tom Kouril: The economy in the world.

Speaker Change: And it has continued negative in April and the beginning of May.

Operator: And ladies and gentlemen, with that, we'll be concluding our question and answer session at this time.

Tom Kouril: The impact of how our customers are feeling.

David Kim: This concludes this portion of the conference call, and I'd like to turn the floor back over to Mr. Kim for closing remarks. Thank you very much for continuously believing in our company. We are we will continue to grow this brand. And despite some macroeconomics of issues with the tariffs, we think that we'll all get be behind us and we are not shifting our focus. We're we're focused on what we're doing every day. Thank you very much. Thank you.

Tom Croal: Okay, and if you're looking at kind of causality, does it just feel macro to you or? I guess it's speculation, but what are you guys attributing the recent weakness over the last couple months? Yeah, we it's it's macro. It definitely is macro based on what's going on in the economy and in the world. the impact of how our customers are feeling. Okay, fair enough.

David Kim: Okay Fair enough and then David for you.

Speaker Change: Okay, and if youre looking at kind of.

Speaker Change: Causality doesn't just feel macro to you or.

David Kim: I was wondering if you can give us a framework that a lot of exciting initiatives within the incubator. When you guys are talking to a $300 million revenue run rate exiting 2025.

Speaker Change: I guess a speculation but what are you what are you guys attributing the recent weakness over the last couple of months.

Speaker Change: Yes.

Speaker Change: It's macro it definitely is a macro based on what's going on.

David Kim: Should we think about that as kind of a new revenue opportunities driven by the incubator versus revenue that's generated by the core Gen franchise.

Speaker Change: The economy in the world.

Speaker Change: The impact of how our customers are feeling.

David Kim: So the incubators or.

David Kim: Okay Fair enough and then David for you.

David Kim: And then, David, for you... I was wondering if you could give us a framework, a lot of exciting initiatives within the incubator. When you guys are talking to a $300 million revenue run rate exiting 2025, how should we think about that as kind of new revenue opportunities driven by the incubator versus revenue that's generated by the core GEN.

David Kim: Just new projects that we want to try and see if we can enhance our brand, but all of that growth.

Speaker Change: I was wondering if you could give us a framework that a lot of exciting initiatives within the incubator. When you guys are talking to a $300 million revenue run rate exiting 2025.

Operator: And ladies and gentlemen, the conference has now concluded. We do thank you for attending today's presentation.

David Kim: Incremental sales reached 300 million is purely all coming from new store restaurants and existing restaurants.

Operator: You may now disconnect your line.

Speaker Change: Should we think about that as kind of a new revenue opportunity is driven by the incubator versus revenue that's generated by the core Gen franchise.

Speaker Change: Okay. That's great to hear thanks, and then just quickly and I'll hop back in queue. If we think about con sushi and the dual branded restaurant I know it's early.

David Kim: So the incubators are just new projects that we want to try and see if we can enhance our brand. But all that growth of incremental sales reaching the 300 million is purely all coming from new store, restaurants, and existing restaurants.

Speaker Change: So the incubators or.

Speaker Change: Just new projects that we want to try and see if we can enhance our brand, but all of that growth.

Speaker Change: I think you spoke I am just wondering operationally I think you spoke about both menus being available, but as con sushi actually have grilles in the tables in number or how do you make the gen menu Imogen experience available to that customer and then just how many of these concert. She is do you foresee.

Speaker Change: Incremental sales reached over 300 million is purely all coming from new store restaurants and existing restaurants.

Speaker Change: Okay. That's great to hear thanks, and then just quickly and I'll hop back in queue. If we think about con sushi and the dual branded restaurant I know it's early.

David Kim: And then just quickly, and I'll hop back in queue, if we think about Kahn Sushi and the dual-blended restaurant, I know it's early, I think you spoke, I'm just wondering operationally, I think you spoke about both menus being available, but does Kahn Sushi actually have grills in the tables in them? Or how do you make the GEN menu and the GEN experience available to that customer?

Speaker Change: The market supporting thanks.

Speaker Change: In the past.

Speaker Change: Experience.

Speaker Change: Before Jim there's a lot of national concepts and smaller concepts that I was involved with where dual concepts did not work and theres a lot of studies done and why it doesn't work so with that experience.

Speaker Change: I think you spoke I am just wondering operationally I think you spoke about both menus being available, but as con sushi actually have grilles in the tables in them or how do you make the gen menu Imogen experience available to that customer and then just how many of these <unk> do you foresee.

David Kim: And then just how many of these Kahn Sushis do you foresee the market supporting?

Speaker Change: Knowing what I know what didn't work for most concepts.

Speaker Change: The market supporting.

David Kim: In the past experience before GEN, there's a lot of national concepts and smaller concepts that I was involved with where dual concepts did not work and there's a lot of studies done on why it doesn't work. So with that experience knowing what I know of what didn't work for most concepts. It's a very different model where When a guest comes in, it's a very different restaurant. One cannot tell that one is a con all you can eat and one is a gen all you can eat. It's very different. There are no grills. on the con side, because you don't cook anything.

Speaker Change: <unk>, a very different model, where we.

Speaker Change: Okay.

Speaker Change: In the past.

Speaker Change: Experience.

Speaker Change: When a guest comes in it's a very different restaurant one cannot tell that one is a con all you can eat and one is a gen argue Kenny is very different.

Speaker Change: Before Jim there was a lot of national concepts and smaller concepts that I was involved with where dual concepts did not work and theres a lot of <unk>.

Speaker Change: There are no grills.

Speaker Change: Studies done on why it doesn't work so with that experience.

Speaker Change: On the Con side cause you don't Cook anything so theres a little bit of.

Speaker Change: Knowing what I know what didn't work for most concepts.

Speaker Change:

Speaker Change: Complexity in.

Speaker Change: <unk>, a very different model where.

Speaker Change: Making sure see but we've deployed a lot of technology to where we can cut down a lot of the labor side to execute our operations on the con side, but in terms of numbers coming in they're coming in much better than we thought it's a very short number but we're extremely.

Speaker Change: When a guest comes in it's a very different restaurant, one cannot tell that one it is a con all you can eat and one is a general you Kenny is very different.

Speaker Change: There are no grills.

Speaker Change: The con side, because you don't Cook anything so theres a little bit of.

Speaker Change: Really optimistic on it why this was created.

David Kim: So there's a little bit of complexity in making sushi, but we've deployed a lot of technology to where we can cut down a lot of the labor side to execute our operations on the con side. But in terms of numbers coming in, they're coming in much better than we thought. It's a very short number, but we're extremely optimistic on it.

Speaker Change: Uh huh.

Speaker Change: Is.

Speaker Change: Complexity in Ma.

Speaker Change: I I I wanted to try to explain it in a simpler way.

Speaker Change: Making sure see but we've deployed a lot of technology to where we can cut down a lot of the labor side to execute our operations on the con side.

Speaker Change: It's like the wing man four jets.

Speaker Change: Many times, we come across larger spaces that we have to let go and not do it because the landlord wants us to take a bigger space.

Speaker Change: But in terms of numbers coming in they're coming in much better than we thought it was a very short number but we're extremely optimistic on it.

Speaker Change: And to achieve this if we were to have two concepts, where one concept supports the less seemed a long line of Gen Korean barbecue instead of losing those customers to another competitor base that we can capture those customers by coming into our.

David Kim: Why this was created is I want to try to explain it in a simpler way. It's like the wingman for GEN. Many times we come across larger spaces that we have to let go and not do because the landlord wants us to take a bigger space. And to achieve this, if we were to have two concepts where one concept supports the, let's say, the long line of GEN Korean BBQ, instead of losing those customers to another competitor, we can capture those customers by coming into our concept that's right next door. And this is not all theory.

Why this was created is.

Speaker Change: I I I wanted to try to explain it in a simpler way.

Speaker Change: Like the wing man four jets.

Speaker Change: Many times, we come across larger spaces that we have to let go and not do it because the landlord wants us to take a bigger space.

Speaker Change: Concept, that's right next door and we've this is not all theory. These were all thought through plan through looked at a sample of some of our restaurants, especially are headquartered restaurant, where another all you can eat sushi.

Speaker Change: To achieve this if we were to have two concepts, where one concept supports the less seemed a long line of Gen Korean barbecue instead of losing those customers to another competitor base that we can capture those customers by coming into our.

Speaker Change: And our customers we were losing to them. So we said we said, let's try this and see if it will work so operationally wise.

Speaker Change: Structure wise, it's a little more expensive.

Concept Thats right next door and we've this is not all theory. These were all thought through plan through looked at a sample of some of our restaurants, especially are headquartered restaurant, where another all you can eat sushi.

Speaker Change: That expensive and it's basically we're getting two for one in terms of labor cost. The food cost is almost the same in terms of percentage is slightly higher than the sushi side. So are we going to test. Some more of these we would we are going to test more of these because <unk>.

David Kim: These were all thought through, planned through, looked at a sample of some of our restaurants, especially our headquartered restaurant where another all-you-can-eat sushi is, and our customers, we were losing to them. So we said, let's try this and see if it will work. So operationally-wise, construction-wise, it's a little more expensive, not that expensive. And it's basically, we're getting two for one in terms of labor costs. The food cost is almost the same in terms of percentage. It's slightly higher on the sushi side.

Speaker Change: Is and our customers we were losing to them. So we said, let's try this and see if it will work so operationally wise construction wise, it's a little more expensive not that expensive and.

Speaker Change: <unk> there is.

Jen where it doesn't perform as much we can always countered that with and hedge it with another concept right next to us.

Speaker Change: It's basically we're getting two for one in terms of labor cost. The food cost is almost the same in terms of percentage as well.

Speaker Change: Okay perfect. Thanks, guys.

Todd Brooks: Thank you Todd.

Speaker Change: The higher on distribution side.

Speaker Change: Our next question comes from George Kelly from Roth Capital Partners. Please go ahead with your question.

David Kim: So are we going to test more of these? We are going to test more of these because in case there is a GEN where it doesn't perform as much, we can always counter that and hedge it with another concept right next to it.

So.

Are we going to test some more of these we would we are going to test more of these because in case there is.

George Kelly: Hey, everybody thanks for taking my questions.

Speaker Change: Maybe to start one.

Speaker Change: Jen where it doesn't perform as much we can always countered that with and hedge it with another concept right next to us.

One for Tom just curious that the four wall target that you gave 17% to 18% for fiscal year 'twenty five.

Speaker Change: Okay perfect. Thanks, guys.

Speaker Change: Wondering what gives you confidence in that number <unk> was below target and.

Todd Brooks: Thanks, guys. Thank you, Todd.

Speaker Change: Thank you Todd.

George Kelly: Our next question comes from George Kelly from Roth Capital Partners.

Speaker Change: Our next question comes from George Kelly from Roth Capital Partners. Please go ahead with your question.

Speaker Change: You just commented that comps were negative in April and May So just curious what you're seeing or planning.

George Kelly: Please go ahead with your question. Hey, everybody. Thanks for taking my questions.

George Kelly: Hey, everybody thanks for taking my questions.

Speaker Change: Is your confidence that it will.

Speaker Change: Yes. There is there is there is a couple of things. One is you know last year, our first quarter was our lowest quarter as well and this year. Our first quarter is lower so we know that will make up for it as the year goes on.

Tom Croal: Maybe to start one for Tom, just curious, the four-wall target that you gave, 17% to 18% for fiscal year 25, Just wondering what gives you confidence in that number? One Q was below target, and you just commented that accounts were negative in April and May. So just curious what you're seeing or planning that gives you confidence that it'll go up during the year.

Speaker Change: Maybe to start one by.

Speaker Change: One for Tom just curious that the four wall targets that you gave 17% to 18% for fiscal year 'twenty five.

Speaker Change: Just wondering what gives you confidence in that number <unk> was below target.

Speaker Change: We are managing our labor costs, very tightly and we believe that there's room to improve and the margins there.

Speaker Change: And.

Speaker Change: You just commented that comps were negative in April and May So just curious what you're seeing or planning.

Like we did last year and we will do the same thing this year.

Speaker Change: Gives you confidence that it will.

Speaker Change: Yes. There is there is there is a.

Tom Croal: Yeah, there's a couple of things. One is, last year, our first quarter was our lowest quarter as well. And this year, our first quarter is lower. So we know that we'll make up for it as the year goes on. We are managing labor costs very tightly, and we believe that there's room to improve in the margins there, like we did last year. And we'll do the same thing this year.

Speaker Change: Okay, Okay understood and then.

Speaker Change: Couple of things. One is you know last year, our first quarter was our lowest quarter as well and this year. Our first quarter is lower so we know that will make up for it as the year goes on.

Second question.

Speaker Change: On.

Speaker Change: The potential Chinese tariff impact on our Newbuild, David that you were talking about.

Speaker Change: What is your expectation for per unit builds costs in 2025.

Speaker Change: We are managing our labor costs very tightly and we believe that there is room to improve and the margins there.

Speaker Change: And.

Speaker Change: What kind of risk do you see around your target I'm, just curious like if youre getting close to having a better sensitive.

Speaker Change: Like we did last year and we'll do the same thing this year.

Speaker Change: Okay, Okay understood.

Speaker Change: Going to shake out and what that means for.

David Kim: And then, second question on the potential Chinese tariff impact on new builds, David, that you were talking about. What is your expectation for per unit build costs in 2025? And what kind of risk do you see around your target? Just curious, like, if you're getting close to having a better sense of how it's going to shake out and what that means for for unit growth, et cetera.

Speaker Change: And then.

Speaker Change: Sure unit growth et cetera. So if you could just elaborate on that topic a bit that would be helpful.

Speaker Change: Second question.

Speaker Change: On the.

Speaker Change: The potential Chinese tariff impact on our Newbuild, David that you were talking about.

Speaker Change: The month of April win.

Speaker Change: What is your expectation for per unit builds costs in 2025.

Speaker Change: President Trump announced the tariffs.

Speaker Change: We have had vendors approach us in all directions.

Speaker Change: <unk>.

Speaker Change: What kind of risk do you see around your target I'm, just curious like if youre getting close to having a better sensitive.

Speaker Change: With uncertainties of <unk>.

Speaker Change: This increase is from a lot in the equipment side, because most of the kitchen equipment are coming from China.

Speaker Change: Going to shake out and what that means for.

Speaker Change: For unit growth et cetera. So if you could just elaborate on that topic a bit that would be helpful.

David Kim: So if you could just elaborate on that topic a bit, that would be helpful. The month of April when President Trump announced the tariffs, we have had vendors approach us in all directions with uncertainties of price increases from a lot in the equipment side because most of the kitchen equipment are coming from China. construction materials are coming from China, so we're not sure whether these were just increases because the industry is just taking advantage of the news, or actually prices have actually going to be increasing. This is such a fluid, every week changes here, and I wish I had a crystal ball myself into where things will settle.

Speaker Change: Traction in our materials are coming from China. So we're not sure whether these were addressed.

Speaker Change: The months of April win.

Speaker Change: Increases because the industry is just taking advantage of the news or actually.

Speaker Change: President Trump announced the tariffs.

Speaker Change: We have had vendors approaches in all directions.

Speaker Change: It would have.

Speaker Change: Actually going to be increasing this is such a fluid every week changes here and I wish I had a crystal ball.

Speaker Change: With uncertainties of price increases from <unk>.

Speaker Change: A lot in the equipment side, because most of the kitchen equipment are coming from China.

Speaker Change: Self into where things will settle but we are prepared that if.

Speaker Change: Traction in our materials are coming from China. So we're not sure whether these were addressed.

Speaker Change: Prices doesn't settle down to our projection of cost meaning cost of materials.

Speaker Change: Increases because the industry is just taking advantage of the news or actually.

Speaker Change: Especially in the kitchen and construction.

Speaker Change: We have.

Speaker Change: Actually going to be increasing this is such a fluid every week changes here.

Speaker Change: We will pause some construction until there are settlements on pricing because some pricings were quoted 100% some pricing recorded.

Speaker Change: I wish I had a crystal ball.

Speaker Change: Self into where things will settle but we are prepared.

David Kim: But we are prepared that if prices don't settle down to our projection of cost, meaning cost of materials, especially the kitchen and construction, we will pause some construction until there is settlement on pricing. Because some pricings, we are quoted 100%, some pricing we're quoted 15%, it's all over the map right now. So I think with the news that are coming, starting last week and this week, I think the consensus is it's gonna settle down. Once it settles down, we can start evaluating what next steps we can take.

Speaker Change: <unk> percent is all over the map right now so I think.

Speaker Change: If prices doesn't settle down.

Speaker Change: The news that are coming are starting last week and this week.

Speaker Change: Our projection of cost, meaning cost of materials, especially the kitchen and construction, we will pause some construction until there are settlements on pricing because some pricings were quoted 100%.

Speaker Change: I think the consensus is it's going to settle down once it settles down we can start evaluating what next steps we can take.

Speaker Change: Okay. Okay understood and then one last one is just on the openings.

Speaker Change: Pricing recorded.

Speaker Change: That just.

Speaker Change: 15% is all over the map right now so I think.

Speaker Change: It just happened in <unk>. The six openings can you just broadly talk about how they're performing.

Speaker Change: With the news that are coming.

Speaker Change: It's too early to tell its a mixture summer average some are above some are below.

Last week this week.

Speaker Change: I think the consensus is it's going to settle down once it settles down we can start evaluating what next steps we can take.

Speaker Change: Alright.

Speaker Change: All of them are always good often firm up.

Speaker Change: Okay.

Speaker Change: Thanks.

Speaker Change: Okay. Okay understood and then one last one is just on the openings.

Tom Croal: And then one last one is just on the openings that just happened in 1Q, the six openings. Can you just broadly talk about how they're performing? It's too early to tell it's a mixture, some are average, some are above, some are below.

Speaker Change: Once again, if he would like to ask a question. Please press star and then one to withdraw your question you May press Star and two.

Speaker Change: That just.

Speaker Change: It just happened in <unk>. The six openings can you just broadly talk about how they're performing.

Speaker Change: Our next question comes from well Forsberg from Craig Hallum. Please go ahead with your question.

Speaker Change: It's too early to tell its a mixture summer average some are above somewhere below.

Well Forsberg: Hey, guys. This is a well on for Jeremy Thanks for taking my questions.

Tom Croal: All right, I'll head back to you. That's a lot of them. I've only been off them for a month. Yeah.

Speaker Change: Alright.

All of them are always good often firm up.

Well Forsberg: Just like to jump back to the comp trends you guys have seen could you maybe breakout what you saw in Q1 in terms of average check versus traffic.

Speaker Change: Okay.

Speaker Change: Thanks.

Operator: Once again, if you would like to ask a question, please press star and then 1.

Once again, if you would like to ask a question. Please press star and then one to withdraw your question you May Press Star two.

Operator: To withdraw your questions, you may press star.

Well Forsberg: And then I guess, how that's progressing into Q2 so far.

Will Forsberg: Our next question comes from Will Forsberg from Craig Hallam. Please go ahead with your question.

Speaker Change: Our next question comes from well Forsberg from Craig Hallum. Please go ahead with your question.

Well Forsberg: Yeah, I think overall, we did see as we've talked about it you know.

Will Forsberg: Hey guys, this is Will on for Jeremy.

Will Forsberg: Hey, guys. This is will on for Jeremy Thanks for taking my questions.

Well Forsberg: Two 2.5% plus increase because of our price.

Will Forsberg: questions. I'd just like to jump back to the comp trends you guys have seen. Could you maybe break out what you saw in Q1 in terms of average check versus traffic? And then I guess how that's progressed into Q2 so far. Yeah, I think it overall, we did see as we talked about a, you know, two, two and a half percent plus increase because of our price. We saw about a 10 to 11% reduction in our just overall customer base, but we saw a 7% improvement from our premium menu.

Speaker Change: Just like to jump back to the <unk>.

Well Forsberg: We saw about a 10% to 11% reduction in our just overall.

Speaker Change: Comp trends you guys have seen could you maybe breakout what you saw in Q1 in terms of average check versus traffic.

Well Forsberg: <unk> customer base.

Well Forsberg: But we saw a 7% improvement from our premium menu. So all in all we ended up less than 1%.

Speaker Change: And then I guess, how that's progressing into Q2 so far.

Speaker Change: Yeah, I think overall, we did see as we've talked about it you know.

Well Forsberg: Yeah.

Speaker Change: Got it that's great color.

Speaker Change: Two 2.5% plus increase because of our price.

Well Forsberg: And then going back to unit growth so.

Well Forsberg: Had a schedule here to start the year I guess, how can we think of.

Speaker Change: We saw about a 10% to 11% reduction in our just overall.

Well Forsberg: Cadence the remainder of the year.

Well Forsberg: And then I guess in the South Korea market.

Speaker Change: Customer base, but we saw a 7% improvement from our premium menu. So all in all we ended up less than 1%.

Speaker Change: What are you seeing there that led to you.

Well Forsberg: Add another unit to expectations.

Tom Croal: So all in all, we ended up less than 1% off. Got it.

Well Forsberg: I guess also would there be anything to note on an expected <unk> there.

Okay.

Speaker Change: Got it that's great color.

Tom Croal: That's a great color.

Well Forsberg: The market that we found in South Korea, although it's a very competitive market there.

David Kim: And then going back to unit growth, so a little ahead of schedule here, start the year, I guess, how can we think of... and Hayden for the remainder of the year.

Speaker Change: And then going back to unit growth.

Speaker Change: Well ahead of schedule here to start the year I guess, how can we think of.

Well Forsberg: There is no.

Well Forsberg: <unk>, both size 5000 square feet or larger debt is.

Speaker Change: Cadence the remainder of the year.

David Kim: And I guess in the South Korea market, what are you seeing there that led you to add another unit to expectations? And I guess also, would there be anything to note on expected AUVs there? The market that we found in South Korea, although it's a very competitive market, there is no sizable size 5,000 square feet or larger that is offering GEN's model of all-you-can-eat beef, so we'll be the first ones going in. We will open the first one in June 10th and we'll see how those numbers move. There's a good and a bad about markets like that.

And then I guess in the South Korea market.

Well Forsberg: Offering jan's model of all you can eat beef. So we will be the first one is going in.

Speaker Change: What are you seeing there that led to you.

Speaker Change: Add another unit to expectations.

Speaker Change: I guess also would there be anything to note on expected Suvs there.

Well Forsberg: We don't we will open the first one in June 10th and we'll see how those numbers move but.

Speaker Change: The market that we found in South Korea, although it's a very competitive market there.

Well Forsberg: There's a good and a bad about markets like that the good is.

Speaker Change: There is no.

It is a it's sort of it's on the bottom of their cycle of economic.

Speaker Change: Risible size 5000 square feet or larger debt is.

Speaker Change: Offering jan's model of all you can eat beef. So we will be the first ones going in.

Well Forsberg: Pressure with all the election issues and all of that so we're able to perhaps get better deals in Korea in terms of occupancy.

Speaker Change: We don't we will open the first one in June 10th and we will see how those numbers move but.

Well Forsberg: Although the sales might be lowered in the U S. Depending on how our sales.

Speaker Change: There is a good and a bad about markets like that the good is.

David Kim: The good is it is a it's in a it's on the bottom of their cycle of economic pressure with all the election issues and all that so we're able to perhaps get better deals in Korea in terms of occupancy. Although the sales might be lower than the US depending on how our sales come in. The construction of opening a restaurant in South Korea for the same square footage is about 25 to 30%. So, for every dollar that we spend in the U.S., it only costs us 25 to 30 cents. So, we are always looking at an internal rate of return.

Some in the construction of opening a restaurant in South Korea for the same square footage is about 25.

Speaker Change: It is a it's sort of it's on the bottom of their cycle of economic.

Speaker Change: Pressure with all the election issues and all of that so we're able to perhaps get better deals in Korea in terms of occupancy.

To 30% so for every dollar that we spend in the U S. It only causes US 25 to 30. So we are always looking at an internal rate of return.

Speaker Change: Although the sales might be lowered in the U S. Depending on how our sales.

Well Forsberg: So for example, if the sales number comes in lower.

Speaker Change: Come in.

Speaker Change: Construction of opening a restaurant in South Korea for the same square footage is about 25 to.

Well Forsberg: And our margins are lower than the U S. If we do the mathematics, and we can pull our money out and the same.

Well Forsberg: The projections we gave.

Speaker Change: To 30% so for every dollar that we spend in the U S. It only cost US 25 to 30.

Well Forsberg: Treat of two and a half years.

Well Forsberg: We will continue to look at that and see if thats.

Speaker Change: So we are always looking at an internal rate of return.

Better model, but again it is a very big market people people are very ignorant about some of these markets thinking that they're small they're not a small market that market the way our data has come in.

David Kim: So, for example, if the sales number comes in lower, and our margins are lower than the U.S. If we do the mathematics and we can pull our money out in the same projections we gave the street of two and a half years, we'll continue to look at that and see if that's... better model. But again, it is a very big market. People are very ignorant about some of these markets thinking that they're small. They're not a small market. That market, the way our data has come in, is about 100 to 200 store market. So it's just way too early to tell.

Speaker Change: So so for example, if the sales number comes in lower.

Speaker Change: And our margins are lower than the U S. If we do the mathematics, and we can pull our money out and saying.

Well Forsberg: By the 100 to 200 store market so.

Speaker Change: The projections we gave.

Well Forsberg: It's just way too early to tell even if we misjudged the south Korean market.

Speaker Change: Treat of two and a half years.

Speaker Change: We will continue to look at that and see if thats.

Well Forsberg: Labor cost is substantially lower everything cost is lower so if you. If we took a very bad approach and everything just failed and didn't go our way.

Speaker Change: Better model, but again it is a very big market people people are very ignorant about some of these markets thinking that they're small they're not a small market that market the way our data has come in.

Speaker Change: <unk> says that Jen will be taking it will be very small so that it is worth taking the risk.

Speaker Change: About 100 to 200 store market so.

Speaker Change: It's just way too early to tell.

Well Forsberg: Got it.

David Kim: Even if we misjudged the South Korean market, the labor cost is substantially lower. Everything, the cost is lower.

Speaker Change: Even if we misjudged the south Korean market the labor cost is substantially lower everything it cost is lower so yeah.

Well Forsberg: And then just one last one for me on on the gift cards I know redemption had been around 50% I believe have you gotten to a point now where you've kind of seen a more normalized redemption rate that you could share.

David Kim: So if we took a very bad approach and everything just failed and didn't go our way, the losses that GEN will be taking will be very small, so that it is worth taking the risk.

Speaker Change: If we took a very bad approach and everything just failed and didn't go our way.

Well Forsberg: And then also at this time are you able to quantify the lift in average check from gift users versus the baseline customer base.

Speaker Change: Losses that Jen will be taking it will be very small so that it is worth taking the risk.

Well Forsberg: If the answer to your first question. It's stabilized we think it's going to stabilize around 60%, 65%. The industry is about 70% to 75%. So we're ahead of the industry. It has stabilized a lot.

Speaker Change: Got it.

Speaker Change: And then just one last one for me on on the gift cards.

David Kim: One last one for me on the gift cards. I know redemption had been around 50%, I believe. Have you gotten to a point now where you've kind of seen a more normalized redemption rate that you could share? And also, at this time, are you able to quantify the lift, an average check from gift users versus the baseline customer base? The answer to the first question, it's stabilized. We think it's going to stabilize around 60-65%. The industry is about 70-75%. So we're ahead of the industry. It has stabilized a lot.

Speaker Change: Now.

Speaker Change: The redemption had been around 50% I believe have you gotten to a point now where you've kind of seen a more normalized redemption rate that you could share.

Well Forsberg: In terms of whether we got incremental sales from that we don't have that data.

Speaker Change: And then also at this time are you able to quantify the lift in average check from gift users versus the baseline customer base.

Well Forsberg: Some of the.

Well Forsberg: Discussions we have with the managers is that.

Speaker Change: If the answer to your first question. It's stabilized we think it's going to stabilize around 60% 65%.

Well Forsberg: Consumers that are using the gift card are actually spending more money.

Well Forsberg: Wednesday or dining at our place how do we know that is we see more sales in.

Speaker Change: Industry is about 70% to 75%. So we're ahead of the industry. It has stabilized a lot.

Well Forsberg: Premium menus, and we see more sales or drinks for the ones who are using those cards.

David Kim: In terms of whether we got incremental sales from that, we don't have that data. But some of the discussions we have with the managers is that consumers that are using the gift card are actually spending more money. when they are dining at our place. How do we know that is we see more sales in premium menus and we see more sales in drinks for the ones who are using those cards. We don't have raw data on that. We don't track that, but that is what we're hearing from the managers.

Speaker Change: In terms of whether we got incremental sales from that we don't have that data.

Well Forsberg: We don't have raw data on that we don't track that but that is what we're hearing from the managers.

But some of the disc.

Speaker Change: Discussions we have with the managers is that.

Speaker Change: Got it appreciate the color best of luck.

Speaker Change: Consumers that are using the gift card are actually spending more money.

Well Forsberg: Thanks will.

Speaker Change: And ladies and gentlemen, with that we'll be concluding our question and answer session. At this time. This concludes this portion of the conference call and I'd like to turn the floor back over to Mr. King for closing remarks.

Wednesday or dining at our place how do we know that as we see more sales in.

Speaker Change: Premium menus, and we see more sales and drinks for the ones who are using those cards.

Mr. King: Thank you very much we're continuously believing in our company.

Speaker Change: We don't have raw data on that we don't track that but that is what we're hearing from the managers.

Mr. King: We will continue to grow this brand.

Speaker Change: Got it appreciate the color best of luck.

Will Forsberg: Appreciate the color. Best of luck.

Mr. King: Despite some.

Mr. King: Macro economics of issues with the tariffs.

Speaker Change: Thanks will.

Operator: And ladies and gentlemen, with that, we'll be concluding our question and answer session at this time.

Speaker Change: And ladies and gentlemen, with that we'll be concluding our question and answer session. At this time. This concludes this portion of the conference call and I'd like to turn the floor back over to Mr. King for closing remarks.

Mr. King: We think that will all be behind us and we are not shifting our focus where we're focusing on what we're doing every day. Thank you very much.

David Kim: This concludes this portion of the conference call, and I'd like to turn the floor back over to Mr. Kim for closing remarks. Thank you very much for continuously believing in our company. We are we will continue to grow this brand. And despite some macroeconomics of issues with the tariffs, we think that will all get be behind us. And we are not shifting our focus. We're we're focused on what we're doing every day.

Mr. King: Do you.

King: Thank you very much we're continuously believing in our company.

Mr. King: And ladies and gentlemen, the conference has now concluded we do thank you for attending today's presentation. You may now disconnect your lines.

King: We will continue to grow this brand and despite some.

King: Macroeconomics of.

King: Issues with the tariffs.

King: We think that will all be behind us and we are not shifting our focus where we're focusing on what we're doing every day. Thank you very much.

David Kim: Thank you very much. Thank you.

King: <unk>.

Operator: And ladies and gentlemen, the conference has now concluded. We do thank you for attending today's presentation. You may now disconnect your line.

Speaker Change: And ladies and gentlemen, the conference has now concluded we do thank you for attending today's presentation. You may now disconnect your lines.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: [music].