GEN Restaurant Group targets $220M–$225M in 2025 revenue as grocery expansion accelerates

Earnings Call Insights: GEN Restaurant Group, Inc. (GENK) Q3 2025

MANAGEMENT VIEW

* CEO Wook Kim stated that, "The third quarter continued to be a very challenging environment for the restaurant business," but emphasized ongoing implementation of the business plan, new store openings, and an expanding brand ecosystem. He highlighted the opening of 15 restaurants in the first nine months of 2025, including six in South Korea, resulting in 57 total restaurants in operation. Kim noted that "we have exceeded our initial estimate of 12 to 13 stores for a total of 17 stores in 2025."
* Kim announced the launch of ready-to-cook Korean branded meats in 600 grocery stores, including Albertsons, Vons, and Pavilions. He forecasted, "we anticipate annual revenues from grocery store could exceed $100 million over the next 4 to 5 years."
* Kim underscored the resilience of the GEN model despite macro pressures, stating, "we remain confident in our strategy, our team, and our ability to drive long-term growth."
* CFO Thomas Croal reported, "Cost of goods sold as a percentage of company restaurant sales increased by 334 basis points to 34.8% in the third quarter of 2025 compared to the third quarter last year." He added, "Payroll and benefits as a percentage of company restaurant sales decreased by 196 basis points in the third quarter of 2025 to 28.5%."

OUTLOOK

* Management said, "We anticipate opening 2 stores by the end of the year for a total of 17 new restaurants for all of 2025, which includes our 6 international units in South Korea."
* Croal provided forward guidance: "We're targeting full year revenue of $220 million to $225 million and achieving restaurant-level adjusted EBITDA margins in the 15% to 15.5% range."
* The company is aiming for an annual run rate of approximately $250 million of revenue when all new restaurants are open by the end of 2025.
* Kim indicated that if economic conditions do not improve, GEN may slow growth plans in 2026 and focus on operational improvements and grocery initiatives.

FINANCIAL RESULTS

* GEN Restaurant Group reported a 2.7% year-over-year increase in total revenue to $50.4 million for Q3 2025, attributed to new restaurant openings.
* Same-store sales declined by 9.9% for the quarter, which management linked to macroeconomic pressures and reduced customer traffic following global tariffs.
* Restaurant level adjusted EBITDA margin was 15% in Q3 2025 and 15.6% year-to-date.
* The company recorded a net loss before income taxes of $3.9 million, or ($0.11) per diluted share, compared to net income of $300,000, or $0.01 per diluted share, in Q3 2024. Adjusted net loss was $700,000, or ($0.02) per diluted share.
* Restaurant level adjusted EBITDA was $7.6 million, while total adjusted EBITDA was $200,000. After removing preopening costs, adjusted EBITDA was $1.8 million.
* GEN had approximately $5 million in cash and cash equivalents as of September 30, 2025, with full access to a $20 million revolving credit facility.

Q&A

* Jeremy Hamblin, Craig-Hallum: Asked about Korean unit economics and anticipated AUVs. Kim responded, "The Kans are way outpacing the sales of GENs at this point... Kans to do around, I would say, $3 million to $4 million... GEN side... about $2 million to $3 million... cost of build is coming out to be about less than $1 million a store."
* Hamblin queried about softness in existing locations and Q4 trends. Kim confirmed softness continued, noting, "we're seeing softness. It started from the tariff days to the ICE crack down... mostly California."
* Hamblin asked about the grocery initiative's current run rate and costs. Kim explained, "The 31 store data came in high in terms of new products going into their shelves without any discounting," and that slotting fees were minimal.
* Hamblin inquired about slowing growth. Kim said, "If we can maintain the year's numbers, we will continue if we think that the slowdown... gets a little behind and continuously slow, yes, we will, for sure, consider pausing the opening of new restaurants."
* Todd Brooks, Benchmark: Asked about Q4 trends. Kim noted, "Some weeks are better, some weeks are worse... the true number actually for us starts in the second week of November."
* Brooks probed for details on the $100 million grocery revenue target. Kim referenced expansion of SKUs and additional products as drivers but did not give precise operational targets.
* Brooks asked about labor efficiency. Kim said, "we are actually deploying those [technologies] right now. But there's going to be a certain point where I cannot run a store with no humans..."
* George Kelly, ROTH Capital: Asked for South Korea unit margin detail. Kim replied, "I don't have that. We've probably been open 2, 2.5 months. We had some changeover in senior management... our margins are not good right now because we need to stabilize it."
* Kelly asked about premium menu impact. Kim said, "The current penetration of the offering is about 4% to 5%... I think you rolled about 1% in food cost."

SENTIMENT ANALYSIS

* Analysts expressed persistent concerns on softness in same-store sales, viability of new units, and grocery expansion velocity, often probing for more granular data and contingency planning.
* Management maintained a confident but cautious tone, frequently referencing brand strength, adaptability, and a willingness to adjust growth plans if softness persists. Kim stated, "we remain confident in our strategy, our team, and our ability to drive long-term growth."
* Compared to last quarter, management's tone shifted slightly more toward caution, with increased emphasis on monitoring economic conditions and readiness to pause growth.

QUARTER-OVER-QUARTER COMPARISON

* Guidance shifted from a prior target of 17%–18% four-wall margins to a revised 15%–15.5% restaurant-level adjusted EBITDA margin.
* New restaurant openings exceeded previous estimates, with 17 now planned for 2025 versus prior guidance of 12–13, including an acceleration of South Korea units.
* Revenue grew modestly, but same-store sales decline deepened from sharp declines post-tariffs in Q2 to a 9.9% drop in Q3.
* Cash position decreased from $9.6 million at the end of Q2 to $5 million at the end of Q3.
* Analysts' focus shifted toward the sustainability of grocery revenue targets and the impact of macroeconomic softness on future growth.
* Management appeared more defensive on cost controls and more open to pausing growth depending on future trends.

RISKS AND CONCERNS

* Ongoing macroeconomic headwinds, including tariffs and ICE actions in key customer regions, have led to significant same-store sales declines.
* Cost of goods sold increased due to inflation and premium menu impacts, while restaurant labor efficiencies only partially offset these pressures.
* The company faces risk from rising occupancy expenses and increased G&A costs tied to growth.
* Management is considering slowing new restaurant openings in 2026 if economic softness persists, focusing instead on operational improvements and grocery initiatives.
* Analysts questioned the velocity and scalability of the grocery initiative and the long-term economics of international expansion.

FINAL TAKEAWAY

GEN Restaurant Group closed Q3 2025 with softening same-store sales and tighter margins amid persistent macroeconomic pressures, but management remains focused on expanding both physical locations and branded grocery products. With an increased target of 17 new restaurants for the year and a full-year revenue goal of $220 million to $225 million, the company aims to diversify through grocery partnerships and product innovation. Management signaled readiness to adjust its growth trajectory if softness continues, underscoring a commitment to long-term brand value and operational discipline.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/genk/earnings/transcripts]

MORE ON GEN RESTAURANT GROUP, INC.

* GEN Restaurant Group, Inc. (GENK) Q3 2025 Earnings Call Transcript [https://seekingalpha.com/article/4840704-gen-restaurant-group-inc-genk-q3-2025-earnings-call-transcript]
* GEN Restaurant Group: 3 Strategic Paths [https://seekingalpha.com/article/4822937-gen-restaurant-group-three-strategic-paths]
* GEN Restaurant Group: Strong Balance Sheet, But Worrisome Sales Trend [https://seekingalpha.com/article/4814326-gen-restaurant-group-strong-balance-sheet-worrisome-sales-trend]
* Seeking Alpha’s Quant Rating on GEN Restaurant Group, Inc. [https://seekingalpha.com/symbol/GENK/ratings/quant-ratings]
* Historical earnings data for GEN Restaurant Group, Inc. [https://seekingalpha.com/symbol/GENK/earnings]