GENK 10-K & 10-Q changes, risk factors and insider trading

Significant reliance on the continued proper operation of our equipment, such that any mechanical failure could prevent us from effectively operating our restaurants.

The Internal Revenue Service, (“ the “IRS”), might challenge the tax basis step-ups and other tax benefits we receive in connection with this offering and the related transactions and in connection with future acquisitions of GEN LLC units.

The strength of our revenues and results of operations are dependent upon, among other things, the price and availability of food, ingredients, labor, construction and utilities. In the years ended 20232024 and 2024,2025, the costs of commodities, labor, energy and other inputs necessary to operate our restaurants increased. Fluctuations in economic conditions, weather, demand and other factors also affect the cost of the ingredients and products that we buy. From 20232024 to 2024,2025, thefood costs as a percentage of sales of food costs increased from 32.2%33.0% to 33.0%34.6% and the percentage of sales of payroll and benefits costs as a percentage of sales decreased from 31.4%30.9% to 30.9%.30.4%. Our inability to anticipate and respond effectively to one or more adverse changes in any of these factors could have a significant adverse effect on our results of operations. We expect the inflationary pressures and other fluctuations impacting the cost of these items to continue to impact our business through 2025.2026. Our attempts to offset cost pressures, such as through menu price increases and operational improvements, may not be successful. We initiated modest price increases in 2024 and in 2023 with no discernible change in guest behavior. We seek to provide a moderately priced product, and, as a result, we may not seek to or be able to pass along price increases to our customers sufficient to completely offset cost increases. Traffic may also be negatively impacted by menu price increases as consumers may be less willing to pay our menu prices and may increasingly visit lower-priced competitors, may reduce the frequency of their visits, or may forgo some purchases altogether. To the extent that price increases are not sufficient to offset higher costs adequately or in a timely manner, and/or if they result in significant decreases in revenue volume, our revenues and results of operations may be adversely affected.

One of the key means of achieving our growth strategies will be through opening and operating new restaurants on a profitable basis for the foreseeable future. We opened 15 and six new restaurants in 20232025 and 2024.2024, respectively. We identify target markets where we can enter or expand, taking into account numerous factors such as the locations of our current restaurants, demographics, traffic patterns and information gathered from various sources. We may not be able to open our planned new restaurants within budget or on a timely basis, if at all, given the uncertainty of these factors, which could adversely affect our business, financial condition and results of operations. As we operate more restaurants, our rate of expansion relative to the size of our restaurant base will eventually decline.

Our new restaurants have opened with strong volumes, which then typically decline after the initial sales surge that comes with interest in a new restaurant opening. New restaurants may not be profitable and their sales performance may not follow historical patterns. In addition, our average restaurant sales and comparable restaurant sales may not increase at the rates achieved in the past. Our business depends on the success of new restaurants as well as the success of existing restaurants. If sales at existing restaurant locations do not meet expectations and our new restaurants are not profitable, our business and results of operations may be harmed.

As of December 31, 2024,2025, we operated 4357 restaurants. We opened 15 and six new restaurants in both 20232025 and 2024.2024, respectively. The capital resources required to develop each new restaurant are significant. During 2022, we opened three restaurants with average Net Build-Out Costs of approximately $1.9 million. During 2023 and 2024, we opened twelve restaurants total with average Net Build-Out Costs of approximately $2.2 million. We are targeting average net build-out costs of less than $3.0 million for new restaurants. However, actual costs may vary significantly depending upon a variety of factors, including the site and size of the restaurant and conditions in the local real estate and labor markets. Our estimates for improvements, fixtures and furnishings may also be incorrect, which may cause us to incur certain impairment charges. Our relatively small number of existing restaurants, the significant investment associated with each new restaurant, variance in the operating results in any one restaurant, a delay or cancellation in the planned opening of a restaurant, or any combination of the preceding factors could materially affect our business, financial condition or results of operations.

As of December 31, 2024,2025, approximately 49%42% of our domestic restaurants are located in California, with 35%30% of our restaurants located in Southern California specifically. Adverse changes in demographic, unemployment, economic, regulatory or weather conditions in California and Texas have had, and may continue to have, material adverse effects on our business, financial condition or results of operations. As a result of our concentration in these markets, we have been, and in the future may be, disproportionately affected by adverse conditions in these markets compared to other chain restaurants with a national footprint.

Our ability to maintain consistent price and quality throughout our restaurants depends in part upon our ability to acquire specified food products and supplies in sufficient quantities from third-party vendors and suppliers at a reasonable cost. In addition, we are dependent upon a few suppliers for certain specialized equipment used in our restaurants, such as the embedded grills in our tables. U.S. Foods, an unrelated third party, provided us with food products equaling approximately 36.0% of our total food and beverage costs in 2023; we did not purchase any products from U.S. Foods during the year 2024. Pacific Global Distribution, Inc. (“Pacific Global”), a subsidiary of a related party, provided restaurant supplies such as tableware, napkins, soda, and sauces, and accounted for approximately 3.2% and 16.4% of total operating expenses in 2024 and 2023, respectively. Wise Universal Inc. (“Wise Universal”), provided us with food products and supplies equaling approximately 21.3% of our total food and beverage costs in 2023. Each of Fast Fabrications, Pacific GlobalLLC and WiseIgnite UniversalEnterprises, areLLC, which provide services related to restaurant interior construction and travel, respectivelyare controlled by parties affiliated with the Company. See Part II,III, Item 13. “Certain Relationships and Related Transactions, and Director Independence” for additional information on our relationship with these suppliers. We do not currently control the businesses of our vendors and suppliers and our efforts to specify and monitor the standards under which they perform may not be successful. In addition, we did not have written contracts with any of any suppliers until the third quarter of 2023. During the third quarter of 2023, we signed a contract with a specific vendor, Sysco Los Angeles, Inc. (“Sysco”), for allmost of our restaurant food products. If Sysco is unable to satisfy our product requirements and we turn to another supplier, they may demand terms that are more advantageous to them at a higher cost to us. Sysco accounted for approximately 76.3%57.4% and 15.1%76.3% of food costs for the yearyears 20242025 and 2023,2024, respectively. Furthermore, certain food items are perishable, and we have limited control over whether these items will be delivered to us in appropriate condition for use in our restaurants. If any of our vendors or other suppliers are unable to fulfill their obligations to our standards, if our informal arrangements with our suppliers break down or if we are unable to find replacement providers in the event of a supply or service disruption, we could encounter supply shortages and incur higher costs to secure adequate supplies, which could materially adversely affect our business, financial condition or results of operations.

If any of our distributors or suppliers performs inadequately, or our distribution or supply relationships are disrupted for any reason, our business, financial condition, results of operations or cash flows could be adversely affected. If we cannot replace or engage distributors or suppliers who meet our specifications in a short period of time, that could increase our expenses and cause shortages of food and other items at our restaurants, which could cause aone restaurantor more of our restaurants to remove items from its menu. If that were to happen, affected restaurants could experience significant reductions in sales during the shortage or thereafter, if guests change their dining habits as a result. In addition, because we provide moderately priced food, we may choose not to, or may be unable to, pass along commodity price increases to consumers. These potential changes in food and supply costs could materially adversely affect our business, financial condition or results of operations.

The restaurant and retail industries are intensely competitive, and we face many well-established competitors. We compete within each market with national and regional restaurant and retail chains and locally owned restaurants and retailers. We face significant competition from a variety of casual dining restaurants offering both Asian and non-Asian cuisine, as well as takeout offerings from grocery stores and other outlets where Asian food is sold. These segments are highly competitive with respect to, among other things, product quality, dining experience, ambience, location, convenience, value perception, and price. Our competition continues to intensify as competitors increase the breadth and depth of their product offerings and open new locations. These competitors may have, among other things, chefs who are widely known to the publicpublic, thatwhich may generate more notoriety for those competitors as compared to our brand. We also compete with many restaurant and retail establishments for site locations and restaurant-level employees.

We face competition as a result of the convergence of grocery, deli, retail, and restaurant services, particularly in the supermarket industry. We also face competition from various off-premise meal replacement offerings, including, but not limited to, the rapid growth of home meal kit delivery, third party meal delivery,cateringdelivery, and catering by our competitors. Moreover, our competitors can harm our business even if they are not successful in their own operations by taking away customers or employees through aggressive and costly advertising, promotions or hiring practices. We anticipate that intense competition will continue with respect to all of the factors described above.

We cannot guarantee that our internal controls and training will be fully effective in preventing all food safety issues at our restaurants, including any occurrences of food-borne illnesses such as salmonella, E. coli and hepatitis A. In addition, there is no guarantee that our restaurant locations will maintain the high levels of internal controls and training we require at our restaurants. Furthermore, we rely on third-party vendors, making it difficult to monitor food safety compliance and increasing the risk that food-borne illness would affect multiple locations rather than a single restaurant. Some food-borne illness incidents could be caused by third-party vendors and transporters outside of our control. New illnesses resistant to our current precautions may develop in the future, or diseases with long incubation periods could arise, that could give rise to claims or allegations on a retroactive basis. One or more instances of food-borne illness in any of our restaurants or markets or related to food products we sell could negatively affect our restaurant sales nationwide if highly publicized on national media outlets or through social media. This risk exists even if it were later determined that the illness was wrongly attributed to us or one of our restaurants. A number of other restaurant chains have experienced incidents related to food-borne illnesses that have had a material adverse effect on their operations. The occurrence of a similar incident at one or more of our restaurants, or negative publicity or public speculation about an incident, could materially adversely affect our business, financial condition or results of operations.

We rely significantly on the continued proper operation of our equipment, and any mechanical failure could prevent us from effectively operating our restaurants.

Our marketing efforts rely heavily on the use of social media. In recent years, there has been a marked increase in the use of social media platforms, including weblogs (blogs),mini-blogs,, mini-blogs, chat platforms, social media websites, and other forms of Internet-based communications which allow individuals access to a broad audience of consumers and other interested persons. Many of our competitors are expanding their use of social media, and new social media platforms are rapidly being developed, potentially making more traditional social media platforms obsolete. As a result, we need to continuously innovate and develop our social media strategies in order to maintain broad appeal with guests and brand relevance. We also continue to invest in other digital marketing initiatives that allow us to reach our guests across multiple digital channels and build their awareness of, engagement with, and loyalty to our brand. These initiatives may not be successful, resulting in expenses incurred without the benefit of higher sales or increased brand recognition.

If we are unable to continue to recruit and retain sufficiently qualified individuals, our business and our growth could be adversely affected. Competition for these employees could require us to pay higher wages, or minimum wage could be increased, which could result in higher labor costs. The minimum wage, particularly in California, continues to increase and is subject to factors outside of our control. In addition, increases in the minimum wage would increase our labor costs. Additionally, costs associated with workers’ compensation are rising, and these costs may continue to rise in the future. We may be unable to increase our menu prices in order to pass these increased labor costs on to consumers, in which case our profit margins would be negatively affected, which could materially adversely affect our business, financial condition or results of operations.

Further, environmental laws, and the administration, interpretationinterpretation, and enforcement thereof, are subject to change and may become more stringent in the future, each of which could materially adversely affect our business, financial condition or results of operations.

In recent years,years our company and other restaurant companies, including us,companies have been subject to lawsuits alleging violations of federal and state laws regarding workplace and employment conditions, discrimination and similar matters, and some restaurants have been subject to class action lawsuits in respect of such matters. A number of these lawsuits have resulted in the payment of substantial damages by the defendants. Similar lawsuits have been brought alleging violations of various federal and state wage and hour laws regarding, among other things, employee meal deductions, overtime eligibility of managers and failure to pay for all hours worked. We have been named in lawsuits like this, and there can be no assurance that we will not be named in any such lawsuits in the future or that we would not be required to pay substantial expenses and/or damages.

Pursuant to a registration rights agreement, holders of our Class B common stock have rights to require us to file registration statements covering the sale of shares of Class A common stock issuable upon exchange of the corresponding Class B units or to include such shares in registration statements that we may file for ourselves or other stockholder.stockholder, and accordingly, we filed a registration statement on Form S-3 under the Securities Act of 1933, as amended (the “Securities Act”), to register 28,223,836 shares of Class A common stock in May 2025. We have also registered the offer and sale of all shares of common stock that we may issue under our equity compensation plans.

Our charter documents and the Delaware General Corporation Law, (the “DGCL”), could discourage takeover attempts and other corporate governance changes.

Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for any complaint asserting any internal corporate claims, including claims in the right of the Company that are based upon a violation of a duty by a current or former director, officer, employee or stockholder in such capacity, or as to which the DGCL confers jurisdiction upon the Court of Chancery. In addition, our amended and restated certificate of incorporation provide that the federal district courts of the United States will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act of 1933 (the “Securities Act”).Act. We note, however, that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. Section 22 of the Securities Act creates concurrent jurisdiction for state and federal courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. This forum selection provision will not apply to claims brought to enforce a duty or liability created by the Securities and Exchange Act of 19341934, as amended (the “Exchange Act”).

We have a $20.0 million revolving line of credit with Pacific City Bank. As of December 31, 2024,2025, the aggregate principal amount of our debt outstanding under this line of credit was $3.0$1.0 million, although we have the ability to increase borrowings under this line of credit, subject to satisfaction of the conditions contained in the loan agreement. On January 12, 2026, the Company paid the $1.0 million balance on the line of credit.

Our management developed and implemented remediation plans, including operation improvements designed to limit journal entries as well as implementation of an accounting system with a closed architecture. The material weaknesses was considered remediated when, after design and implementation, management has concluded, through testing, that these controls are effective. Our management will monitor the effectiveness of its remediation plans and will maintain the changes management put into place, and any new ones as determined to be appropriate. If remediation is not maintain, material weaknesses could result in further material misstatements to our annual or interim financial statements that might not be prevented or detected on a timely basis, or in delayed filing of required periodic reports. In the future, if we are unable to assert that our internal control over financial reporting is effective, or if our Independent Registered Public Accounting Firm is unable to express an unqualified opinion as to the effectiveness of the Company’s internal control over financial reporting, when required in the future, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of the Class A common stock could be adversely affected and we could become subject to litigation or investigations by the Exchange, the SEC,Securities and Exchange Commission, (the “SEC”), or other regulatory authorities, which could require additional financial and management resources.

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups (“JOBS”) Act, and a “smaller reporting company,” as defined under the Exchange Act. As an emerging growth company and a smaller reporting company, we are permitted to follow reduced disclosure requirements compared to those of public companies that are not emerging growth companies or smaller reporting companies do. We will remain an emerging growth company until the earlier of (a) the last day of the fiscal year in which we have total annual gross revenue of $1.235 billion or more; (b) the last day of the fiscal year following the fifth anniversary of the date of the completion of our initial public offering; (c) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (d) the date on which we are deemed to be a large accelerated filer under the rules of the Securities and Exchange Commission, (the “SEC”),SEC, which means the market value of our voting and non-voting common stock that is held by non-affiliates exceeds $700 million as of the prior June 30th (and we have been a public company for at least 12 months and have filed at least one annual report on Form 10-K). For so long as we remain an emerging growth company, we are permitted and intend to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include:

We are not currently required to comply with the SEC rules that implement Section 404 of the Sarbanes- Oxley Act, and are therefore not required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. We will bewere required to provide an annual management report on the effectiveness of our internal control over financial reporting commencingbeginning with our second annual report on Form 10-K (December 31, 2024). Our independent registered public accounting firm is not required to audit the effectiveness of our internal control over financial reporting until after we are no longer an “emerging growth company,” as defined in the JOBS Act. At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our internal control over financial reporting is documented, designed or operating.

Our success is substantially dependent on the continued service of certain members of our senior management team. These executives have been responsible for determining the strategic direction of our business and for executing our growth strategy. They are integral to our brand, culture and the reputation we enjoy with suppliers, customers and consumers. We also rely on our leadership team for operating our business, identifying, recruiting and training key personnel, identifying expansion opportunities, arranging necessary financing, and for general and administrative functions. The loss of the services of any of these executives or other key employees could have a material adverse effect on our business and prospects, as we may not be able to timely find suitable individuals to replace, if at all. In addition, any such departure could be viewed in a negative light by investors and analysts, which may cause the price of our common stock to decline. We also currently have co-CEOs, and this management structure could be cumbersome and lead to disagreements at the management level. Furthermore, certain agreements between us and our co-CEOs could give rise to claims by us against our co-CEOs in certain circumstances. We carry key-person life insurance for our senior executives. To continue to execute our growth strategy, we also must identify, hire and retain highly skilled personnel. We might not be successful in continuing to attract and retain qualified personnel. Failure to identify, hire and retain necessary key personnel could have a material adverse effect on our business, financial condition or results of operations.

California also enacted legislation affording consumers expanded privacy protections: the California Consumer Privacy Act of 2018, or CCPA, went into effect as of January 1, 2020 and was subject to enforcement starting July 1, 2020. Additionally, the California Attorney General issued CCPA regulations that add additional requirements on businesses. The potential effects of this legislation and the related CCPA regulations may require us to incur substantial costs and expenses in an effort to comply. For example, the CCPA gives California residents (including employees) expanded rights to transparency, access and require deletion of their personal information, opt out of certain personal information sharing and receive detailed information about how their personal information is collected and used. The CCPA also provides for civil penalties for violations, as well as a private right of action for data breaches that may increase data breach litigation. Additionally, a new privacy law, the California Privacy Rights Act, or CPRA, was approved by California voters in the November 3, 2020 election.election and went into effect on January 1, 2023, with enforcement beginning on March 29, 2023. The CPRA significantly modifiesmodified the CCPA, potentially resulting in further uncertainty and requiring us to incur additional costs and expenses in efforts to comply. The enactment of the CCPA and CPRA is prompting similar legislative developments in other states in the United States, which could create the potential for a patchwork of overlapping but different state laws, and is inspiring federal legislation.

The following management’s discussion and analysis of our financial condition and results of operations should be read in conjunction with the audited consolidated financial statements and related notes of GEN Inc., included in Part II, Item 8 of this Annual Report on Form 10-K, which includes GEN Restaurant Companies, LLC (the “Operating Company”) for the year ended December 31, 20242025 and 2023.2024. The terms “we”, “our”, and “us” as used herein refer to the Operating Company and its consolidated subsidiaries prior to the TransactionsIPO (asand definedrelated transactions described in Notethis 1Form to such consolidated financial statements)10-K and toGEN GENRestaurant Group, Inc. and its consolidated subsidiaries, including the Operating Company, following the Transactions.IPO and related transactions.

GEN Restaurant Group is an Asian casual dining restaurant concept that offers an extensive menu of traditional Korean and Korean-American food, including high-quality meats, poultry, and seafood, all at a superior value. Founded in 2011 by two Korean immigrants, since the opening of our first restaurant in September 2011 we have grown to 4657 company-owned restaurants located in California, Arizona, Hawaii, Nevada, Texas, New York, Oregon, New Jersey, Washington, North Carolina, Florida and Florida.six stores in South Korea. Our restaurants have modern décor, lively Korean pop music playing in the background and embedded grills in the center of each table. We believe we offer our customers a unique dining experience in which guests cook the majority of the food themselves, reducing the need for chefs and servers and providing a similar customer experience across the restaurants.

We expect to continue to grow our number of restaurants in the future. In 2022, our new restaurants have generated average Payback Periods of approximately 1.9 years, which equates to an average ROI of over 50%. For the restaurants opened in 2023 and 2024, the average Payback Periods of 2.2 years, which equates to an average ROI of approximately 45%. Going forward, we are targeting for our new restaurant units a Payback Period of less than 3 year, which equates to an ROI of 33% to 40%. Restaurants range in size from 4.7 thousand to 12 thousand square feet, and are typically located in high-activity commercial areas.

Although we temporarily paused our new restaurant opening plans during the COVID-19 pandemic, our long-term growth strategy is to continue to open new restaurants in locations that we believe will achieve profitability levels consistent with our pre-pandemic experience. During 2022, we opened three new restaurants, and we opened six new restaurants during botheach of 2023 and 2024. During the year 2025, we opened 15 new restaurants, including six in South Korea. Subsequent to December 31, 2024,2025, we opened threetwo new restaurants in SanTucson, Antonio, TX, Edison, NJ,AZ and Orlando,Denton, FL.TX. In addition to these three,opening, as of December 31, 20242025 we have entered into leases for 18 new restaurant locations, with openings planned during 20252026 and thereafter. TheseThe locations15 restaurants opened during 2025 are located in Austin,Orlando, FL, Edison, NJ, San Antonio TX, NewCary, YorkNC, (SixthWaco, Street), NY, Bayside (Queens), NY,TX, El Paso, TX, SanLa Diego,Jolla, CA, Waco, TX, Kona, HI, Nashville, TN, Boston, MA, Tucson, AZ, Cary, NC, Austin (Southpark) TX, Naperville, IL, Clearwater, FL, McAllen, TX, San Antonio, TX, Cambridge, MACA and Sterlingtwo Heights,in MI.Austin, The six restaurants opened during 2024 are our Dallas, Texas, Seattle, Washington, Jacksonville, Florida, Maui, Hawaii, Pflugerville, Texas, and Tigard, Oregon locations.TX. In addition to the threeTucson, restaurantsAZ restaurant we opened in January 2025,2026 and the Denton, TX restaurant we opened in March 2026 , we currently expect to open 10four to 13eight other locations during 2025.2026. Additionally, we areexpanded introducing international expansioninternationally into South Korea with at least twosix Company-owned locations slated to open in 2025. Future sales and profitability levels of our restaurants and our ability to successfully implement our growth strategy in the near term, however, remain uncertain.

On September 29, 2023, the Company entered into a $20 million line of credit with aPCB bank. The line of credit matures on September 25, 20252026 and bears interest at a variable rate per annum equal to 7.75%7.0% as of December 31, 2024.2025. As of December 31, 20242025 the balance was $3.0$1.0 million,million. whichOn wasJanuary subsequently12, 2026, the Company paid inthe full$1.0 onmillion January 2, 2025.balance.

In assessing the performance of our business, we consider a variety of financial and performance measures. The key measures for determining how our business is performing include Net (Loss) Income Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted net (loss) income, Adjusted netNet income(Loss) EPS,Income attributable to Class A common stock per share - basic and diluted, Adjusted earnings (loss) per share, (“EPS”), Restaurant-Level Adjusted EBITDA, Restaurant-Level Adjusted EBITDA Margin, Average Unit Volumes, comparable restaurant sales growth, the number of restaurant openings and revenue per square foot.

Net (Loss) Income Margin

Adjusted EBITDA represents net income excluding interest expense,income (expense), net, income taxes, depreciation and amortization, stock-based compensation, consulting fees paid to a related party, gain on extinguishment of debt, RRF grants, employee retention credits, litigation accruals, non-cash lease expense andexpense, non-cash lease expense included in pre-opening costs.costs and gain on remeasurement of previously held interest. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by revenue. Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP measures intended as supplemental measures of our performance and are neither required by, nor presented in accordance with, GAAP. For a discussion of why we consider these measures to be useful and their material risks and limitations, see “Non-GAAP Financial Measures.”

Adjusted Net (Loss) Income and Adjusted EPS

Adjusted Net (Loss) Income and Adjusted netEPS income per share representsrepresent net income before(loss) income taxes, adjusted for stock-basedpre-opening costs, gain on remeasurement of previously held interest, stock based compensation, legal settlements, and the related tax impact of the stock-basedadjustments. compensationAdjusted adjustment,Net (Loss) Income attributable to Class A common stock per share-basic and provisiondiluted, foris incomeAdjusted taxes.Net (Loss) Income less Adjusted Net (Loss) Income attributable to non-controlling interest. “Adjusted EPS” is Adjusted Net Income,(Loss) Income attributable to Class A common stock per share-basic and diluted, converted to a per share amount. Adjusted Net (Loss) Income, Adjusted Net (Loss) Income attributable to Class A common stock per share-basic and diluted, and Adjusted EPS are non-GAAP measures intended as supplemental measures of our performance and are neither required by, nor presented in accordance with, GAAP. For a discussion of why we consider these measures to be useful and their material risk and limitations, see “Non-GAAP Financial Measures.”

Restaurant-Level Adjusted EBITDA is Income(loss) income from operations plus adjustments to add-back the following expenses: depreciation and amortization, pre-opening costs, general and administrative expenses, related party consulting fees, management fees and non-cash lease expense. Non-cash items such as charges for asset impairments and asset disposals are not included in Restaurant-Level Adjusted EBITDA. Restaurant-Level Adjusted EBITDA Margin is the calculation of Restaurant-Level Adjusted EBITDA divided by revenue. For a discussion of why we consider these measures to be useful and their material risks and limitations, see “Non-GAAP Financial Measures.”

The following table shows the AUV for the years ended December 31, 20242025 and December 31, 2023 2024:

During the month of January 2025,2026, we opened threetwo new restaurants.restaurants: in Tucson, Arizona and Denton, Texas.

“Revenue per square foot” means the restaurant sales for all restaurants opened a full 18 months before the end of the eighteen18 month period measured divided by the average square footage of such restaurants. This measurement allows management to assess the effectiveness of our approach to real estate selection and the overall performance of our restaurant base. The following table shows the revenue per square foot for the year ended December 31, 20242025 and 20232024:

Revenues. Revenues represent sales of food and beverages in restaurants and, to a minor extent, through our online portal. Restaurant revenues in a given period are directly impacted by the number of restaurants we operate, menu pricing, the number of customers visiting and comparable restaurant sales change. Revenue also includes gift card revenue earned.earned, and revenue earned through retail or wholesale distribution.

Employee retention credits. Employee retention credits include refundable credits recognized under the provisions of the CARES Act and extension thereof. During the yearsyear ended December 31, 2024,2025, and December 31, 2023,2024, $0.2$0.3 million and $2.5$0.2 million, respectively, of these credits were received and recorded.

Interest expense,income (expense), net. Interest expense includes cash and non-cash charges related to our debt outstanding and finance lease obligations. Interest income reflects income earned on notescash receivable.balances.

Equity in incomeloss of equity method investee. Equity in income (loss) of equity method investee reflected our 50% ownership in GKBH that was accounted for using the equity method until the date of acquisition on February 18, 2024.

Provision(Benefit) provision for income taxes. Represents federal, state, and local current and deferred income tax expense (benefit).

OccupancyRevenues. expenses. Occupancy expensesRevenues were $17.5$212.5 million for the year ended December 31, 20242025, compared to $14.7$208.4 million for the year ended December 31, 2023,2024, an increase of $2.9$4.2 million, or 19.6%.2.0%. TheThis increaseprimarily reflects having 57 restaurants open in occupancy expenses reflects the additionyear ofended sixDecember new31, locations in 2024. As a percentage of revenue, occupancy expenses were 8.4% in 20242025 compared to 8.1%43 restaurants open in 2023.the year ended December 31, 2024.

Pre-openingFood costs. Pre-openingFood costs were $7.6$73.8 million for the year ended December 31, 20242025, compared to $3.7$68.7 million for the year ended December 31, 2023.2024, Thisan increase wasof due$5.1 tomillion, or 7.4%. The increase in food costs primarily reflects more restaurants under development in 2024operation thanand ininflationary 2023.cost increases. As a percentage of revenue, food costs increased from 33.0% to 34.6%.

General and administrative expenses. General and administrative expenses were $25.9 million for the year ended December 31, 2025 compared to $21.3 million for the year ended December 31, 2024 compared to $14.1 million (including management fees) for the year ended December 31, 2023,2024, an increase of $7.2$4.6 million, or 51.1%.21.6%. As a percentage of revenue, general and administrative expenses increased from 7.8% (including management fees) in 2023 to 10.2% in 2024 to 12.2% in 2025 as marketing and personnel costs shiftedincreased post-IPOin fromconnection consultingwith andthe managementexpansion feesof previouslyrestaurants paidin to related parties.development.

Employee retention credits. During both the years ended December 31, 20242025 and December 31, 20232024 we received employee retention credits from the IRS in the amount of $199$0.3 thousandmillion and $2.5$0.2 million, respectively.

Interest income,income (expense), net. During 2024,2025, interest income, netexpense was ($0.2) million due to lower cash on hand during 2025, compared to interest income of $0.8 million compared to $0.3 million in 2023. The increase in net interest income was2024 primarily due to the interest income earned on the proceeds from the IPO.IPO transaction and the reduction of proceeds using for development of new restaurants.

Equity in incomeloss of equity method investee. Equity in (loss) income of equity method investee reflected our 50% ownership in GKBH that was accounted for using the equity method until the date of acquisition on February 18, 2024. Equity method investee was a loss of $17 thousand in 2024 compared to a $535 thousand gain in 2023.2024.

Adjusted EBITDA represents net income excluding interest (income) expense, income taxes, depreciation and amortization, stock-based compensationcompensation, and consultingalso feesexcludes paid to a related partynon-recurring and wecertain alsoother exclude non-recurringnon-cash items such as gain on extinguishment of debt, RRF grants, employee retention credits, litigation accruals, aborted deferred IPO costs written off, non-cash lease expense andexpense, non-cash lease expense included in pre-opening costs.costs and gain on remeasurement of previously held interest. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by revenue. We believe that Adjusted EBITDA and Adjusted EBITDA Margin provide useful information to management and investors regarding certain financial and business trends relating to our financial condition and operating results, as these measure depict normal recurring cash operating expenses essential to supporting the operations of our company.

The following table reconciles net (loss) income to Adjusted EBITDA for the yearyears ended December 31, 20242025 and December 31, 20232024:

GEN Restaurant Group is an Asian casual dining restaurant concept that offers an extensive menu of traditional Korean and Korean-American food, including high-quality meats, poultry, and seafood, all at a superior value. Founded in 2011 by two Korean immigrants, since the opening of our first restaurant in September 2011 we have grown to 5954 company-owned restaurants located in California, Arizona, Hawaii, Nevada, Texas, New York, Oregon, New Jersey, Washington, North Carolina, Florida and sixfour storesrestaurants in South Korea. Our restaurants have modern décor, lively Korean pop music playing in the background and embedded grills in the center of each table. We believe we offer our customers a unique dining experience in which guests cook the majority of the food themselves, reducing the need for chefs and servers and providing a similar customer experience across our restaurants. We have also extended the GEN brand beyond our restaurants into consumer-packaged goods (“CPG”), bringing our signature flavors to grocery retailers across the country.

On September 29,25, 2023, the Company entered into a loan agreement for a $20.0 million line of credit with PCB Bank. The line of credit matures on September 25, 2026, and bears interest at a variable rate per annum equal to 7.00% as of MarchJune 31,30, 2026. The balance outstanding under the line of credit is $4.5$12.0 million as of MarchJune 31,30, 2026.

On April 25, 2025, the Company entered into a loan agreement for a $2.0 million loan with PCB Bank. The loan matures on April 25, 2027, and bears interest at a variable interest rate per annum equal to 7.00% as of MarchJune 31,30, 2026. The balance as of MarchJune 31,30, 2026 was $1.1$978 million.thousand.

On July 29, 2025, the Company entered into a loan agreement for $4.0 million with PCB Bank. The loan matures on July 29, 2027, and bears interest at a variable rate per annum equal to 0.25% over the Wall Street Journal Index rate (prime rate), which equals 7.00% as of MarchJune 31,30, 2026. The balance as of MarchJune 31,30, 2026 was $2.8$2.6 million.

On October 27, 2025, the Company entered into a loan agreement for $4.0 million with PCB Bank. The loan matures on October 27, 2027, and bears interest at a variable rate per annum equal to 0.25% over the Wall Street Journal Prime Rate, which equaled 7.00% at MarchJune 31,30, 2026. The balance as of MarchJune 31,30, 2026 was $4.0 million.

Net (Loss) Income Margin is net (loss) income measured under accounting principles generally accepted in the United States of America (“GAAP”) divided by revenue.

Adjusted EBITDA represents net (loss) income excluding interest expense,expense (income), net, income taxes, depreciation and amortization, stock-based compensation, employee retention credits, litigation accruals,accrual for a discrete claim, non-cash lease expense, non-cash lease expense relatedincluded toin pre-opening costscosts, loss on lease termination, and gain on remeasurementdeconsolidation of previously held interest.restaurants. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by revenue. Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP measures intended as supplemental measures of our performance and are neither required by, nor presented in accordance with, GAAP. For a discussion of why we consider these measures to be useful and their material risks and limitations, see “Non-GAAP Financial Measures.”

Restaurant-Level Adjusted EBITDA is (Loss) Income from operations plus adjustmentsadjusted to add-backexclude the following expensesitems: depreciation and amortization, pre-opening costs, loss on lease termination, gain on deconsolidation of restaurants, general and administrative expenses, and non-cash lease expense. Non-cash items such as charges for asset impairments and asset disposals are not included in Restaurant-Level Adjusted EBITDA. Restaurant-level Adjusted EBITDA Margin is the calculation of Restaurant-Level Adjusted EBITDA divided by revenue. For a discussion of why we consider these measures to be useful and their material risks and limitations, see “Non-GAAP Financial Measures.”

Adjusted Net (Loss) Income represents net (loss) income, adjusted for pre-opening costs, stock-based compensation, the costs of a discrete legal settlement, loss on lease termination, gain on remeasurementdeconsolidation of previously held interest and stock-based compensation,restaurants, and the related tax impact of the adjustments. Adjusted net (loss) income per share is defined as adjusted net income divided by the weighted-average number of shares of Class A common stock outstanding for the applicable period.

The following table shows the AUV for the twelve months ended MarchJune 31,30, 2026 and 2025:

Change in Number of Restaurant OpeningsRestaurants

The change in number of restaurant openingsrestaurants reflects the number of restaurants opened or closed during a particular reporting period. Before we open new restaurants, we incur pre-opening costs. New restaurants may not be profitable, and their sales performance may not follow historical patterns. The number and timing of restaurant openings and closings has had, and is expected to continue to have, an impact on our results of operations. The following table shows the change in our restaurant base for the three and six months ended MarchJune 31,30, 2026 and 2025:

Revenue per square foot means the restaurant sales for all restaurants opened a full 18 months before the end of the 18 month18-month period measured divided by the average square footage of such restaurants. This measurement allows management to assess the effectiveness of our approach to real estate selection and the overall performance of our restaurant base. The following table shows the revenue per square foot for the twelve months ended MarchJune 31,30, 2026 and 2025:

Revenues. Revenues representconsist primarily of sales of food and beverages in restaurantsour and,restaurants, toincluding aorders minor extent,placed through our online portal.portal, and, increasingly, sales of our consumer packaged goods ("CPG") products through grocery retailers and other retail, wholesale and direct-to-consumer channels. Restaurant revenuesrevenue in a given period areis directly impacted by the number of restaurants we operate, menu pricing, thecustomer number of customers visitingtraffic and comparable restaurant sales change. Revenue also includes gift card revenue earned, and revenue earned through retail or wholesale distribution.earned.

Food costs. Food costs are variable in nature, change with sales volume and are influenced by menu mix and subject to increases or decreases based upon fluctuations in commodity costs. Another important factor causing fluctuations in food costs includes restaurant management of food waste. Food costs are a substantial expense and are expected to growchange proportionally as our sales grow.levels change.

Payroll and benefits. Payroll and benefits include all restaurant-level management and hourly labor costs, including wages, employee benefits and payroll taxes. Similar to the food costs that we incur, labor and related expenses at our restaurants are expected to growchange proportionally as our sales grow.levels change. Factors that influence fluctuations in our labor and related expenses include the volume of sales at our restaurants, minimum wage and payroll tax legislation, payroll rate increases due to labor shortages or inflationary pressures, the frequency and severity of workers’ compensation claims, and healthcare costs.

Results of Operations for the Three Months Ended MarchJune 31,30, 2026 and 2025

The following table presents selected comparative results of operations for the three months ended MarchJune 31,30, 2026 and 2025. Our financial results for these periods are not necessarily indicative of the financial results that we will achieve in future periods.

Revenues. Revenues were $53.9$55.7 million for the three months ended MarchJune 31,30, 2026, compared to $57.3$55.0 million for the three months ended MarchJune 31,30, 2025, aan decreaseincrease of $3.4$688 million,thousand, or 6.0%.1.2%. This reflects decreases in revenueGrowth in our comparableCPG storedivision base,and revenue from restaurants opened in 2025 and 2026 were partially offset by a 9.3% decline in comparable restaurant sales and the increaseloss inof revenue from havingthe 59six restaurants openwe exited during the quarter, which contributed $2.3 million of revenue in the three months ended MarchJune 31,30, 20262025. comparedThe second quarter represented a return to 49year-over-year restaurantsrevenue opengrowth, following a 6.0% year-over-year decline in the threefirst monthsquarter endedof March2026, 31,driven 2025.primarily by the continued growth of our CPG division.

Food costs. Food costs were $20.5$21.8 million for the three months ended MarchJune 31,30, 2026, compared to $19.3$18.6 million for the three months ended MarchJune 31,30, 2025, an increase of $1.2$3.2 million, or 6.4%.16.9%. The CPG accounted for $2.5 million, or 81%, of the increase. The increase in food costs reflects inflationary cost increases and more restaurants in operation. As a percentage of revenue, food costs increased to 38.0%39.1% from 33.6%.33.8%.

Payroll and benefits. Payroll and benefits costs were $17.3$15.6 million for the three months ended MarchJune 31,30, 2026, compared to $18.2$16.6 million for the three months ended MarchJune 31,30, 2025, a decrease of $0.9 million, or 5.0%,5.7%, as the Company implemented labor efficiencies. As a percentage of revenue, payroll and benefits costs increased slightlydecreased from 31.7%30.1% to 32.1%.28.0%.

Occupancy expenses. Occupancy expenses were $5.8$5.3 million for the three months ended MarchJune 31,30, 2026 compared to $5.1 million for the three months ended MarchJune 31,30, 2025, an increase of $0.7$0.2 million, or 13.5%.4.2%. reflecting locations opened in 2025 and 2026. The increaserestaurants transferred during the second quarter of 2026 operated through their respective transfer dates, so these transactions did not significantly reduce occupancy expenses in the period; we expect the reduction in occupancy expenses reflectsfrom these exits to be reflected beginning in the additionthird quarter of 10 new locations.2026. As a percentage of revenue, occupancy expenses were 10.7%9.6% in the three months ended MarchJune 31,30, 2026 compared to 8.9%9.3% in the three months ended MarchJune 31,30, 2025.

Operating expenses. Operating expenses were $6.5$6.8 million for the three months ended MarchJune 31,30, 2026 compared to $5.9 million for the three months ended MarchJune 31,30, 2025, an increase of $0.6$0.9 million, or 13.5%,14.5%, as expenses increased to support revenue growth from the new stores and reflected inflationary cost increases. As a percentage of revenue, operating expenses were 12.0%12.1% in the three months ended MarchJune 31,30, 2026 and 10.3%10.7% in the three months ended MarchJune 31,30, 2025.

Depreciation and amortization expenses. Depreciation and amortization expenses were $2.3$2.4 million for the three months ended MarchJune 31,30, 2026 and $2.0$2.2 million for the three months ended MarchJune 31,30, 2025. As a percentage of revenue, depreciation and amortization expenses at the restaurant-level wereremained 4.3%flat at 4.2% during the three months ended MarchJune 31,30, 2026 and 3.5%4.0% during the three months ended MarchJune 31,30, 2025, with the increase related to more restaurants in operation.2025.

Pre-opening costs. Pre-opening costs were $1.8$1.3 million for the three months ended MarchJune 31,30, 2026 compared to $2.7$2.1 million for the three months ended MarchJune 31,30, 2025.This2025. representsThis lessreflects fewer restaurants in development during the three months ended MarchJune 31,30, 20262026, as compared to the three months ended MarchJune 31,30, 2025.

General and administrative expenses. General and administrative expenses were $6.9$7.1 million for the three months ended MarchJune 31,30, 2026 compared to $6.4 million for the three months ended MarchJune 31,30, 2025, an increase of $0.5$0.7 million, or 8.3%.11.1%. The increase iswas primarily due to additionalinvestment in our CPG go-to-market efforts, including marketing costs.and in-store demonstrations; excluding our CPG division, corporate and restaurant general and administrative expenses declined year over year. As a percentage of revenue, general and administrative expenses increased from 11.1%11.6% for the three months ended MarchJune 31,30, 2025 to 12.8% for the three months ended MarchJune 31,30, 2026.

Interest (expense) income, net. During the three months ended MarchJune 31,30, 2026, interest expense, net was $226$314 thousand compared to $60$67 thousand of interest income, net during the three months ended MarchJune 31,30, 2025. The increasechange infrom interest expenseincome, net to interest expense, net is related to higher debt levels,levels partially offset byand lower net interest income was primarily due to thelower interestaverage incomecash earnedbalances onduring the proceedsthree frommonths theended IPOJune transaction30, and the reduction of proceeds used for development of new restaurants.2026.

Adjusted EBITDA represents net (loss) income excluding interest expense (income), expense,net, income taxes, depreciation and amortization, and also excludes non-recurringunusual and certain other non-cash items, such as stock-based compensation expense, employee retention credits, litigation accruals,accrual for a discrete claim, non-cash lease expense, non-cash lease expense included in pre-opening costscosts, loss on lease termination and gain on remeasurementdeconsolidation of previouslyrestaurants held interest.. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by revenue. We believe that Adjusted EBITDA and Adjusted EBITDA Margin provide useful information to management and investors regarding certain financial and business trends relating to our financial condition and operating results, as these measures reflect normal recurring cash operating expenses essential to supporting the operations of our company. We expect Adjusted EBITDA to increase with the number of new restaurants we open and with comparable restaurant sales growth.