GENK - Earnings call transcript Q1 2024 | GEN Restaurant Group, Inc.

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Operator

Good afternoon, and welcome to the GEN Restaurant Group First Quarter 2024 Earnings Conference Call. [Operator instructions] Please note, this event is being recorded. I would now like to turn the conference over to Tom Croal, the company's Chief Financial Officer. Please go ahead.

Thomas Croal

Thank you, operator, and good afternoon. have our should earnings quarter everyone release. now, access first to XXXX By can www.genkoreanbbq.comm laws, growth need found Relations not, meaning regarding will be If it how within statements at not that discussions begin the limited formal include statements forward-looking everyone federal section.Before our potential in but remarks, plans remind I security and to of our today Form in as reports openings types including, as for we Investor our XX, quarterly the March well undue on SEC.These filed forward-looking subsequent identified store new statements guarantees of XXXX, report therefore, and reliance are not those performance, you XX-Q the our put period them. the on not statements and future should to, of with filings, our materially XX-Q the could These refer including risks impact currently what and risks views expect.We recent this call results to of report our differ also of that and future a and uncertainties only that to of from detailed for as on are results date the subject can operating you discussion numerous quarterly our we condition. actual more financial statements cause to our SEC represent Form our no obligation which we forward-looking believe as by we information some financial measures, update today's discuss performance. non-GAAP evaluating law, Except in call, or can revise events.During required useful these light future to undertake statements or new of we in will be the available our website.Now, of to our it I'd Relations and most this GAAP Kim. our substitute non-GAAP with measures of are the to SEC directly additional not available and section GAAP.Reconciliations considered press a in accordance filings, Investor the for Chair David measures financial over presentation which turn The Co-CEO, in like as should are Board comparable to financial our isolation prepared in release be in information results or of

Wook Kim

expand map strategic Tom, everyone. continued and GEN's In afternoon, our first road quarter, on and share. overall you, growth market geographic executing to we Thank coverage good the

by expectations.Additionally, This of been our we increase new the achieved financial our statements can both and in consolidate year-over-year results locations, driven opening the Hawaii a our largely February. have revenue, of and quarter, X in we operations the which or now XX% bought out revenues starting performing at partner XX% half above in in second total of of

the us the also seen also completed with experienced provides infrastructure, restaurant a as forward.We development quarter our which of of clearer April. to moving in of accelerate into build-out business achieving view gives operational half our us stronger result by We we the the openings much second into growth pipeline which efficiencies, have margins ability improvement an and implementing continued a

generate, and an In new ownership most restaurants in this $X opened $X demand of expected restaurant April, unit the plus our a BBQ we the As plus variety on and a it the that we over that approximately sustained are Jacksonville, Korean for I to per and Dallas, uncertain to our is ranks markets with going forward. also as an per restaurants to across today's square a our of average best-in-class service, a cooking made restaurant incredibly restaurant first year, Unlike premade acquisitions Texas. decision-making. we million XX% a on proteins, to unit affordable environment X again remain I'm absence we leases to number generating performance lunch I'd goals X.X expectations consumer remaining to X both important positive recently, minimize us building.Before GEN in financial achieve dinner, X best concept. labor significant location discuss and model result, Korean we kitchen provide of our over level And guests.This seafood report allows and we expect in overall Hawaii of the at stages We've our mind because momentum tables to have all with X industry.With performance negotiations average, quarter, to is an others in to markets the our the as from detail, attractive benefiting we model like make proud for other I'd opening reiterate and of line XXXX we more well navigate of all-inclusive to XX% margin.These Florida.With able excited return traditional our X in EBITDA value towards that was allows cash-on-cash of progress Washington the as salad becomes concept have to costly track of in new new these Thus, amongst see the XX% construction an offers to including and by your less don't year-end, the yourself reaching least economics existing and required. sets pork, years, of are, in goal makes for casual volume and quarter, as million BBQ prices unique chicken, to Korean what of would consumers' in you continue in Seattle, stage X new dining restaurant value truly full locations staff kitchen for believe GEN by opened why XXXX. anything to our best value where restaurants that alternatives who to in background, key because keep consumers eat, open various component an feet additional well successful is come all our table, to $XXX can new open maximize our in XXXX.We been price.GEN starting XX-plus we that the development. address can space while level GEN a stake, at low to concepts, this, like us keep and products as of period is restaurant we as adjusted BBQ's payback and at which all replicate

and plan, look we end broader restaurant restaurants, went that and strong confident to in the plan mentioned, expect to discussed XX we X-year developments public.In I at to highly new expansion XXXX. to to between our we forward ability XXXX XXXX at As remain momentum we additional the totaling we the achieve our addition develop our XX have XX by time XX of

XX and of proving have company the value all futures our CFO, this check that X more notable growth was over prospects shareholders' deliver public, our additional per new all to about we a a addition will of with still that, went March. positions us will next this With size coming additional doing started than that sense for guest. In and best the new we we is discuss attractive cash quarters.Additionally, forward. when menu we this locations expand of the company I have in conclusion, years.We're quarters. nationwide growth our using it launched experience, the revenues charge increase valuable culture With premium and average team. coming moving free the in We're Gourmet program while the debt. call premium on customer believe our new It testing our menu The of Tom to management our the the would our our profitable since pricing data provide an begin premium will believe in is We primarily improve be economics, a IPO. menu unit more well Options are in to This principle us month and we level options X going minimum double flow to to at our the drinks. results. is We'll to forward. profitable helped we confident profitable consumer maintaining the be profitable overall our makes quarter financial Croal, value industry.Our like turn our among to profitability growing over core Recently,

Thomas Croal

Thank you, David.

restaurant first short-term revenue by as quarter, of openings in XXX new a our addition operating company points first newly would XX% XXXX, year-over-year company in higher points first expenses which increased the start-up million XX from in XX the sales unit indicated and the as previously the basis Same-store Other benefits of that of the March, XX $XX.X due months.Other to and XX%. points new openings a of brought on sequential restaurants a month fourth X.X% closer worth XX.X% reduced quarter due increase, been to restaurant goods into had strong last company increases. sales quarter despite year's company increased EBITDA wage Cost quarter Hawaii to a sales to to the and operating a well quarter by of benefits points to payroll the back in of minimum we expenses minimum sales year-over-year percentage of of primarily we by increased increased continued levels. XXXX. XXXX, revenue drop quarter.We decline basis XX a labor noting driven initial as XXXX.Adjusted by in was trains April points have X.X% reduced in the first XX by of certain The the increased first $XX.X quarter restaurant the primarily restaurant staff to decreased basis million new due costs X% For level over us February. the by basis the compared restaurant last basis compared to basis company menu.Payroll and while restaurant fourth a in to markets, premium of increases to mentioned restaurant cost percentage percentage as XX.X% California to compared Occupancy as as year-over-year of rates XXXX. company's of percentage opened to was a have due revenue the the sold in total of to expenses percentage and sales of XX XX.X%, basis XX.X% primarily by as estimates year-over-year management.It's points the as

during or also costs.It's and or approach EBITDA million well which trajectory.G&A The increased million period.Adjusted million the long-term year restaurant.Now, with on to $X.X development new restaurant-level to continued our The we up strong the founders. compensation, including expenses in first income along prior decline first new not anticipate compares strong of to Without employees not sets quarter million increased addition put in and noting expenses worth which XXXX. of optimize of for offset Going in approximately with we costs, quarter increasing of increased was G&A the turning but remaining of in month of public quarter to the and weren't present the due to to public $X.X our to related gain million.Our a This to personnel development, for us due was approximately general went X.X% would partially forward, or liquidity. restaurant administrative net stock-based to mostly better our first the our the year-over-year $X.X for we net in be to adjusted required revenue, was company, of primarily associated million costs. had March we being XXXX purchase $X.X largely improvement related to $X.X only of Hawaii preopening buyout new company XX% margin costs, and by increase on XX% quarters level a as labor excluding the per regard, the is the $X.X us restaurant $X.X share $X.XX diluted compared EBITDA of company XXXX. million, the believe expenses continues preopening EBITDA coming income a which operating to this range of

million payments. our XX, we December cash And line credit, which balance a to government-funded million we have $XX not which March had $XX minor nonrecurring maintained loans, we still a we which million of debt, had million we used.Additionally, in sheet for of we went in As X have due cash with at $XX.X strong equivalents, revolving except and from EIDL declined $X when long-term no in public. available

flow, million Hawaii onetime to we remaining expenditures and paid quarter.GEN us XXXX. of the generated remains repaying in member location, the to our to will in self-fund cash included which used free the costs cash first free The of capital cash of a most the the say the these payment future again, to And of in balance I free in million throughout all we'll was development of cash was self-fund first acquire advance generates strong $X.X flow for state. $X.X Restaurants as in generated all payment our million.Without founding majority strong we our the participate quarter. of from payments, allowing relatively flow, costs continue the unchanged most development GEN restaurant XX% restaurant it rights operations to of $X second the

for outlook today, million you XXXX, like range new million concludes restaurants.This for and total and to answer revenues the X prepared open open for between to you on expect to our any we $XXX happy joining thank and to As call the please again X Operator, for questions We'd now the that remarks. we to have. are line us may $XXX questions.

Operator

Brooks Our question with first instructions] Company. Todd The [Operator Benchmark is today from

Todd Brooks

fully we first a really reach out on a was performance units? little in sales gentlemen good that rolled XX could on premium. we those operators the were If truck dig what bit the Congrats the all do for And in the and environment point when across quarter. I

Thomas Croal

question menu. premium the when was finish did of main the David, we the rollout

Wook Kim

we've our do couldn't it all manufacturers because our keep distributor once up. completed think and and couldn't at we I

So, by the segments February. but end out think of I was it rollout completion the we rolled towards total markets, in of the

Todd Brooks

carte I needs a making premium around anything should I'm behind David la attach one rates? of And available on were calculation And of too. at the or as share trying to can test point, higher think get meats with kind you going we an premium you driver just looking average at us, forward. to think about how Tom, a basis,

Wook Kim

Yes.

the for premium additional purchase la a to on want select a the can dollar, the if all-you-can-eat guest the an choice either menu but is, just So, from premium don't how a option, they and they each menu works item has menu carte. purchase

the we per prices You don't item. have to premium experience.Therefore, all-you-can-eat have have on an menu

or So, or to X the eat I'll a la carte. they or I just can either take purchase choose X all-you-can say, will X

Todd Brooks

a And in One, what X and one to be maybe think to it you the strong so modeling? that? final table do give you that impact apply time. ones, second, the if full just hop back So, were color down mentioned from and had drinks. should can And additional then transaction of Any us take point, to you our want early March queue. we in in I'll the on premium experience check David, turns a average slow test quarter, you premium at didn't

slowing we So, the how premium times? into visit work do drinks without experience

Wook Kim

here. is where perhaps with premium stays fun one Sure. where I not can a that premium not Coca-Cola and going to are longer.It The is are the the drinks cover a the vendors other our more drinks drink of steakhouse. to side experience premium cocktails, Korean first high-end designed These cocktails, there drink. working dreams, is guest our drinks we're

that of just experience is they're our part the can that. they spending it time food the So, while cooking

experience the don't you help hinder it the in have the perhaps sales. Martin that? new we table the So, do question, can drink not need because a not clear numbers dreams well will lot guest of That's trend.The creating It's say, will terms that fancy. in track our drinks One needs another premium The still, way done that. in it's second answer still numbers still training come we staff to we're come Tom, not or more with store with, in. I a of think will when won't that thinking store percentage we're of. suggest let's be where very of premium to Glass needs. consistent It's average not getting

going to a fact, GEN. be forward premium offering So very this is fluid.But it's for a thing This go going permanent menu. we're still one off not will

Thomas Croal

quarters. our are add belt, future building GEN, would an just back We've Todd, report just that our information. we'll month but a we're more we had in and under but get the the really on coming more database, have information we as we'll that I uptick, in seeing

Operator

Kelly question Capital next George from The ROTH is with Partners.

George Kelly

you responded Tom, I to. guess, the on specific, follow-up Just say you be quick comps you did in you say could and question Or that prepared approached it guys April? they -- breakeven? the that on March just remarks what more line in though didn't were was a the comps that last

Thomas Croal

and Yes. than and in February. comps were March April better January The

down we've that February, gap April. more closed year. last So, and gap March the of to and prior and in as down up ended we you we were April.So, if kept percentages, then month fourth March, X.X% much at first by closed the remember, whole we to quarter, January was of in and industry in In in X that has we the larger the closer quarter, X.X%. That than month been the the the more been in the

George Kelly

couple your year. this for plans a then openings on And of questions

said think then if think I'm was the I are X% what 'XX. in end now little is something that trying you could also, to the of at? sort about was you those it's XX sure, And curious on XX throughout And year? cumulatively that I Or to I I you that of unclear, was where just year about openings cadence quite that fiscal were 'XX? us mentioned. is something there and the hint year-end you fill between and a year not David, by

Wook Kim

Okay.

we that finish announced the we correct. to will when year X%, X% So, XXXX, for

Hawaii, you now, lease one in XX under number. way So, get be that execute we press that X to construction. tell We 'XX. to able if that conservative. more, did But additional that execute.So, is not Street and have then should to we to we X We opened upon the to it the anywhere actually but want lease are actually And wanted going to additional we add purchased and lot we a up all have have but us or right announced an X% the in negotiations. we

another more a how basically get deals we'll this we can as go we filled our today. quarter picture quarters announce have but and sign 'XX probably next there's the numbers more by, quarter.So, going to better in doubling and of have the we think we more look. the At following than a that deals, disclosed 'XX larger what numbers quotes are very is we close or As point, of up fluid,

George Kelly

just more on still maybe ask openings. And I'll one

that good guess maybe year it's the I that far curious, well you've performed or versus locations targets. your have to, else?And you X would you was was targets? that what if any can just an so quantification opening I you opened a there commented your this is or is I good good attribute curious around quantify something marketing versus or of whether it? anything just or then more like AUV You give that could X kind

Wook Kim

Okay.

Let's way. it try this

our We to sales.So, we But that to opened disclose probably out one of had terms new new restaurant maybe very want well opened, in was this location perhaps our average in versus of is And in throughout known brand have there. by we way, we opened restaurant particular the market. competitors #X the openings don't one restaurants country. a this in terms we that due was that

crosses we brand well our which market, we of California. our core very that outside So, know in started

is themselves So, very which comes all in proves we department. we communicate are able GEN.So, the do. to message our we've it very people And generation promotion that execute. promoting These amongst don't we travels well, We and as do. all to how younger terms of grown. our everything products what our customer to fortunate blessed. a still base very are who down it's we are same been But communicate organically Execution just have marketing and how

restaurants.It's don't job need restaurants that the pressure new good we to of management our lot that the a team opening improve doing have new because still we the we on, think lot sometimes a staffing. markets, We have executing opening of of these is really a but

spend have these. management to to We open

pieces So, get there's new behind openings. a that lot of the moving

that when now. right means in our said restaurant, store terms volume in it we it So, I with of lot opening it the sales doing a is like are previous of well how means #X terms

Operator

The next Craig Dippolito is question Hallum. with from CJ

Unknown Analyst

on CJ It's for Jeremy.

from any in sort the guys in to Just the to other lot had that might comment California. Act prices increases. I you of wanted implemented you could if wage a response being QSRs on to know uplift be raise FAST see of menu seeing

think So, kind that your would I value enhances proposition. of

that's you're resulted know but I if on, in still So, better early curious traffic.

Wook Kim

the headwinds the In with my of public. not up, labor are increase opinion, just going costs there

And consumers, continuously on don't and pressure we finding we with when in we here say efficient.And the might in to concept. better hurt. when prices. more So, labor We labor a humble reasons, want this cost.Yes, shutting companies increased we shutting that that not outpriced prices places ways those the price perhaps by but were labor and in of we like enough? down. past $X.XX control we're down, think there hear the the did in the always position that sustain decisions are We of increase of we raise We we continuously opinion our raise my not raising with know to we've maintained location, price. value-driven retail market that our an are cost not come but can they challenged deal an even maintain all we margin issues, companies with including made we a inflation, And under because did raise we can be restaurant how many our to are be

want getting, maintain that pressure value, provide just that we companies continuously labor external of continuously side. find especially to a those efficiencies the we lot combat are So, to restaurant

Unknown Analyst

if one more, don't now you then mind. And

I lead to beginning call, if but new times curious it of Sorry, for about at openings. the I'm missed the hear

new builds you to you progressing takes pipeline? Have the XX the as seen price all in year. a all? I come at And through months that in come think previously, you you're said at have of seen it

Wook Kim

whether we with improvements, to depending cities, We've we're all with more contractors, municipalities very which month, city. is but get and with are shrinking will team map, that the the least of just over time half finding seen improvements seen a not build-out the little down.So, their the we've behaviors. on depending ways at on we're we by build-out the It change a cost which our state, the some improvements have,

Some amount. have, but it's a very small

lot have under the how more therefore, will permit. contract us tied cities on and to the locations be put of not a So, we our that give so dependent we outcome are to

is control in this. these start we're of restaurants full construction, to open. permits Here when can Once their governmental our get construction complete and we

Operator

This concludes our would like David for question-and-answer back the to any over I remarks. Kim? turn session. conference to closing Kim Mr.

Wook Kim

Thank conference. for you If is there any do. you very being thank on and you're questions, Thank you. this much for welcome what to us, we reach in believing

Operator

The presentation. attending conference now has you concluded. for Thank today's

You may now disconnect.

GEN Restaurant (GENK) 14 May 242024 Q1 Earnings call transcript