Earnings call transcript: GEN Restaurant Group Inc Q3 2025 sees revenue growth amid challenges

GEN Restaurant Group Inc reported its third-quarter earnings for 2025, highlighting a 2.7% increase in total revenue to $50.4 million. Despite this growth, the company faced a net loss of $3.9 million, or $0.11 per diluted share. The stock showed a 4.73% rise in aftermarket trading, reflecting positive sentiment towards recent operational expansions and product innovations. However, same-store sales saw a significant decline of 9.9% during the quarter.

Key Takeaways

• Revenue growth driven by new restaurant openings.
• Same-store sales declined by 9.9% in Q3 2025.
• Net loss of $3.9 million, or $0.11 per diluted share.
• Stock rose 4.73% in aftermarket trading.
• Continued product innovation in grocery stores.

Company Performance

GEN Restaurant Group Inc demonstrated resilience in the face of economic pressures, achieving a 2.7% year-over-year revenue increase primarily due to new restaurant openings. However, the restaurant industry faced challenges, including a downturn in customer traffic following global tariff announcements, particularly affecting the Hispanic customer base in California and Texas.

Financial Highlights

• Total revenue: $50.4 million, up 2.7% year-over-year.
• Net loss: $3.9 million, or $0.11 per diluted share.
• Restaurant level adjusted EBITDA: 15% of total revenue.
• Average Unit Volume (AUV): $5.2 million per restaurant.

Market Reaction

Following the earnings announcement, GEN Restaurant's stock experienced a 4.73% increase in aftermarket trading, reaching $2.88. This positive movement suggests investor confidence in the company's strategic initiatives, despite the challenges faced in the current quarter.

Outlook & Guidance

The company is targeting full-year revenue of $220-$225 million with restaurant-level adjusted EBITDA margins of 15-15.5%. GEN Restaurant Group is also exploring a grocery store initiative, which could potentially generate $100 million in revenue over the next 4-5 years. However, if economic conditions do not improve, there may be a pause in new restaurant openings.

Executive Commentary

David Kim, CEO, emphasized, "Consistent with our previous messaging, same store sales are not the metrics that define our success." CFO Tom Crowell noted, "We have not taken any price increases since 2024 and meat prices are at an all-time high," highlighting the cost pressures faced by the company.

Risks and Challenges

• Economic pressures affecting consumer spending.
• Rising cost of goods sold, particularly meat prices.
• Potential impact of global tariffs on customer traffic.
• Competition in the sit-down restaurant sector.
• Dependence on expansion for revenue growth.

GEN Restaurant Group's strategic focus on innovation and expansion positions it to navigate current challenges, but economic uncertainties and competitive pressures remain significant hurdles.

Full transcript - GEN Restaurant Group Inc (GENK) Q3 2025:

Conference Operator: Good afternoon, ladies and gentlemen, and welcome to JEN Restaurant Group Inc. 3Q twenty twenty five Earnings Call. At this time, all lines are in listen only mode. Following the presentation, we will conduct a question and answer session. And now I would like to turn the conference over to Mr.

Tom Crowell, the company's Chief Financial Officer.

Tom Crowell, Chief Financial Officer, JEN Restaurant Group Inc.: Thank you, operator, and good afternoon. By now, everyone should have access to our third quarter twenty twenty five earnings release. If not, it can be found at www.jenkoreanbbq.com in the Investor Relations section. 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 security laws, including, but not limited to, statements regarding growth plans and potential new store openings as well as those types of statements identified in our quarterly report on Form 10 Q for the period ended 09/30/2025, 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.

These statements represent our views only as of the date of this call and are also subject to numerous risks and uncertainties that could cause actual results to materially differ from what we currently expect. We refer you to our recent SEC filings, including our annual report on Form 10 ks and our quarterly reports on Form 10 Q for a more detailed discussion of the risks that could impact our future operating results and financial condition. 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. During today's call, we will discuss some non GAAP financial measures, which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP.

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. Now I'd like to turn it over to our Chairman and CEO, David Kim.

David Kim, Chairman and CEO, JEN Restaurant Group Inc.: Thank you, Tom, and good afternoon, everyone. The third quarter continued to be a very challenging environment for the restaurant business. In spite of this, we continue to implement our business plan, opening new stores, continuing to deliver exceptional service, and build our brand recognition. Although macro pressures continue to persist, we strongly believe our value focused experimental dining model resonates with guests and positions us for durable long term growth and profitability. We opened 15 restaurants in the first nine months of 2025, eight of which opened in the third quarter.

This includes six new restaurants in South Korea for a total of 57 restaurants in operation. The Korean restaurants use an operational model consistent to our restaurants in The US at a fraction of the construction and operational cost. These 2,025 openings represent a balanced geographic mix, including new, existing, and international markets. And we are scheduled to open an additional two stores by the 2025. We have exceeded our initial estimate of 12 to 13 stores for a total of 17 stores in 2025.

Recently, we announced the launch of ready to cook Korean branded beets for sale at Albertsons, Vaughan's, and Pavilion Grocery Stores in California and Hawaii. These products feature the exact same meats and recipes used in our restaurants, bringing the true restaurant experience without compromising quality. Most other restaurant companies that sell food in their frozen section of grocery stores cannot repeat the same pace and quality of food like Jen can. These are not TV dinners, but are the same crafted meals and quality ingredients we serve in our restaurants, bringing our genuine quality restaurant food to your dining room table. With four product choices of ready to cook meats, we recently announced partnerships to sell at over 600 grocery locations.

We took this challenge because we anticipate annual revenues from grocery store could exceed a $100,000,000 over the next four to five years. This allows for expansion of our brand awareness as Jen is building a powerful ecosystem that extends beyond restaurants into a community of authentic Korean products, experiences, and digital innovation. During the third quarter, we generated a 2.7% year over year increase in total revenue to $50,400,000 for the 2025 due to our new restaurant openings over the last year. As we reported last quarter, during the month of April, after global tariffs were announced, we have continued to see a downturn in our restaurant customer traffic, which resulted in same store sales dropping by 9.9% for the third quarter. And some of our peers are experiencing the same downturn.

In spite of the inflationary driven increase in cost, our restaurant level adjusted EBITDA margin was 15% in the 2025 and fifteen point six percent year to date. Consistent with our previous messaging, same store sales are not the metrics that defines our success. I can't stress that enough. Our AUV revenue is 5,200,000.0 per restaurant in the casual dining space. This is a very elite level.

Our AUV revenue levels drive our margins and strong cash flow. Our business model revolves around growing our footprint to capitalize on the short duration to recoup our initial investment in new restaurants. Since our IPO two years ago, we have added 24 new stores with total cost of approximately 2,500,000.0 each, roughly increasing our store count by 73%. We believe this proves the value of our high free cash flow model. Although the restaurant industry is facing a softer environment, we remain confident in our strategy, our team, and our ability to drive long term growth.

Having said this, we still deeply focus on ways to drive growth at existing location and and have a number of initiatives to share as we continue expansion of the Gen brand of products and services. Last year, we announced the launch of Gen gift cards at 95 Costco locations, all within five mile radius of all of our current restaurant across The US. The gift cards continue to sell exceptionally well. Recently, we began selling gift cards at 92 Sam's Club locations. Our success in expanding this initiative is a testament to Jen's brand strength and position as a leader in Korean barbecue.

We're also expanding our reach beyond our restaurants through several exciting initiatives. These include bulk sales of Korean b b q meats, ecommerce business growth, sales of Korean beef jerky, sales of Korean sojuice developed in Korea and imported to The US, and sales of our proprietary Korean and other Korean related gen products under development. All of these products will be sold at our restaurants and or through our distribution channels. Ultimately, we anticipate that most of these items will also soon be available in grocery stores. Each of these initiatives are created to build off of Jen's powerful brand recognition and enhance our margins through new revenue streams.

With a solid operating model, meaningful expansion across both core and new concepts, and continued investment in our development pipeline, we're executing with focus and discipline. Now I'd like to hand the call over to Tom for a detailed look at our third quarter financial performance.

Tom Crowell, Chief Financial Officer, JEN Restaurant Group Inc.: Thank you, David. David discussed revenue in his remarks, so I will start with expenses. Cost of goods sold as a percentage of company restaurant sales increased by three thirty four basis points to 34.8% in the 2025 compared to the third quarter last year. Cost of goods sold as a percentage of restaurant sales increased by 95 basis points compared to the 2025. The increase reflects inflationary cost increases, more new restaurants in operation and a minor impact from our premium menu.

We have not taken any price increases since the 2024 and meat prices are at an all time high. We have elected not to pass on these increases to our customers and will not raise our prices in the near term to show loyalty to our customers during these uncertain economic times. Payroll and benefits as a percentage of company restaurant sales decreased by 196 basis points in the 2025 to 28.5% compared to the third quarter of last year. Payroll and benefits as a percentage of sales decreased by 155 basis points from the 2025. This decrease is due to recently rolled out labor efficiencies.

Occupancy expenses as a percentage of company restaurant sales increased by two thirty eight basis points to 10.8% compared to the third quarter of last year due to 16 additional restaurant openings. This is primarily due to higher rents at our new locations along with the startup of several restaurants. Other operating expenses as a percentage of company restaurant sales increased 58 basis points to 12.2% compared to the third quarter of last year. G and A excluding stock based compensation during the third quarter was $5,700,000 or 11.4% of revenue compared to $4,500,000 or 9.1% of revenue in the year ago period. This increase is primarily due to increased personnel required for new restaurant development and additional advertising, marketing and legal expenditures.

G and A expenses in the third quarter remained flat compared to G and A expenses in the 2025. In the third quarter, we had a net loss before income taxes of $3,900,000 which equated to $0.11 per diluted share of Class A common stock compared to net income before income taxes of 300,000 which equated to $01 per diluted share of Class A common stock in the 2024. The 2025 reflects higher costs associated with new restaurant development, including 2,300,000.0 in pre opening costs. If you look at adjusted net income, a non GAAP measure, we had a net loss of $700,000 or $02 per diluted share of Class A common stock in the 2025 compared to adjusted net income of 2,600,000.0 or $07 per share in the third quarter of last year. As David said, since going public in June 2023, we have grown GYN from 33 stores to 57, a 73% increase.

If we stopped all new restaurant development, we estimate that our net income or loss could have been profitable for the third quarter. This figure strips out all preopening costs and includes a reduction in G and A. Restaurant level adjusted EBITDA for the 2025 was $7,600,000 or 15% of total revenue compared to $9,000,000 or 18.2% in the 2024. Total adjusted EBITDA for the 2025 was $200,000 as compared to $3,400,000 in the 2024. After removing preopening costs from both periods, adjusted EBITDA for the third quarter of twenty twenty five was $1,800,000 compared to $4,500,000 in the 2024.

Turning to our liquidity position. As of 09/30/2025, we had approximately $5,000,000 in cash and cash equivalents. Additionally, we have full availability of our $20,000,000 revolving credit facility. We anticipate using a portion of our revolving credit facility as we continue to open new restaurants in the future. If the current economic climate does not turn around in the near term, we will consider slowing our growth plans for 2026 and focus our efforts on improving operations and margins at our existing restaurants and growth through our grocery store initiatives.

Before concluding, I want to reiterate what we said on our last call. Our balance sheet reflects $165,000,000 in lease liabilities as required under GAAP through the new ASC eight forty two lease accounting standard. These are not financial obligations in the form of long term debt, but rather the accounting recognition of our future lease commitments. Importantly, they are offset by $140,000,000 in operating lease assets. We've also received questions about our return on tangible asset metrics.

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 140,000,000. This incorrect assumption can artificially lower our return metrics. To wrap up, we anticipate opening two stores by the end of the year for a total of 17 new restaurants for all of 2025, which includes our six international units in South Korea. We're targeting full year revenue of $220,000,000 to $225,000,000 and achieving restaurant level adjusted EBITDA margins in the 15% to 15.5% range. By the 2025, we anticipate being at an annual run rate of approximately $250,000,000 of revenue when all our new restaurants are open.

This does not include our new initiatives. This concludes our prepared remarks. We'd like to thank you again for joining us on our call today, and we are now happy to answer any questions that you may have. Operator, please open the line for questions.

Conference Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Your Your first question comes from Jeremy Hamblin of Craig Hallum. Please proceed.

Jeremy Hamblin, Analyst, Craig Hallum: Thanks for taking the questions. I thought I might start by getting an understanding of the Korean units. And and first, wanted to clarify, you know, in terms of I think some of those locations are, you know, Kansushi and some are gen Korean. I don't know if some of them are, kind of joint locations. And, you know, just want to understand what the the economics look like.

You know, what do you what do you anticipate the AUVs to be with those stores in year one? And, you know, what what's the cost to to build those locations?

David Kim, Chairman and CEO, JEN Restaurant Group Inc.: So we have, right now, four gens and two cons. The cons are way outpacing the sales of gens at this point. We anticipate the cons to do around, I would say, 3 to 4,000,000, maybe more in the 4,000,000. The gen side is it still needs more time. So we're we're probably gonna do about two to three million of the gents.

What was the second question, Jeremy? I apologize.

Jeremy Hamblin, Analyst, Craig Hallum: Just the cost. Yeah. The cost of bills.

David Kim, Chairman and CEO, JEN Restaurant Group Inc.: Yeah. The cost of billed is coming out to be about less than a million a store. That's about 800,000. So it's substantially lowered in The US.

Jeremy Hamblin, Analyst, Craig Hallum: Got it. And then, in terms of the, you know, the the softer, trends on existing locations, can we assume that that's kind of continued here in q four? I mean, you know, are you kind of expecting down, you know, 10, or something like that in q four?

David Kim, Chairman and CEO, JEN Restaurant Group Inc.: Correct. Yes. Right now, we're seeing softness. It started from the tariff days to the ice crackdown, especially in areas where we have our customer, are lot Hispanic, and they have been impacted for sure in the California region. And we're starting to see some in the Texas, but mostly California.

And it's just an assumption that and, of course, we're we're not just comparing to other sit downs. There are actually sit down restaurants that are doing well, but a lot of them are struggling with the comp sales. We have not seen as of last week, a substantial improvement on the, traffic.

Jeremy Hamblin, Analyst, Craig Hallum: Got it. And then I I wanted to switch gears just to ask about the, you know, the grocery store, initiative. You know, 600 locations, that's kind of an impressive ramp. What is the current run rate on on, you know, kind of annualized revenue of that portion of the business? I mean, getting to a 100,000,000, in four to five years would be, you know, quite impressive.

But, you know, wanted to get an understanding of of the velocity there. And then also in terms of, you know, the the the cost, to run that business. Right? You know, I don't know if you're having to pay slotting fees or, you know, kind of what is the, you know, the the start up cost of of that, initiative.

David Kim, Chairman and CEO, JEN Restaurant Group Inc.: K. We did a test with 31 locations by the, by the name of pavilions. They're they're in our data show that they're much less traffic than the other brands they own. Why, we were able to get the first orders and get bin spaces and etcetera is the response that they've gotten in the 31 test locations was anywhere from 50% or more of the consumers that were buying the products already new gen or gen customers. So it really helped, solidify our strength of our brand.

The buying department have mandates in grocery stores now that they wanna take more directions of merchandising Asian foods and Hispanic foods, and we happen to fall in in that category. And because of the strong brand presence and the strong customer acceptance of our brand, The 31 store store data came in high in terms of new products going into their shelves without any discounting. And how we were able to go into the 570 stores, is the other brands that they own, which is a higher traffic brand like Albertsons and Safeway, is where we think that the, that the sales of those stores will be much higher than the Pavilions brand. The Velocity, we just got into the the, Pavilions for less than a month and a half, and the 570 stores will go into the month of November. They normally don't slot products during these times because they're focused on the holiday season.

But for some reason, they saw such a popularity of our brand. They made concessions and did a last minute, last minute adjustments, but but most retailers don't do that. They're locked in till, I think, February, and that's when they do their schematics again. So we don't have the velocity, but what they're telling us on the 30 locations is as a brand new brand, they're very happy with how we are selling down our products. The cost to manage this, it's substantially substantially less than the cost of running, the restaurant division.

There is gonna, the margin erosions will happen once they start approaching us, which they have had discussions with us on shelf space and discounts and etcetera. They did say that in the history of their corporation, it was the first time they allowed their brand to come in without committing to a slotting fee on Southern California. Northern California and Hawaii, we have negotiated a very small slotting fees, but that's just being worked out, but the products are all made and already in their warehouses. There is another 300 store in the Midwest from Texas on with the same company. I think that is gonna it's it's between 3 to 400.

They'll probably put us in there, but they're telling us certain areas in the Midwest margins are not that better than the West Coast. We are now we have appointments to discuss, with the big boxes, in about two weeks because, we have had, very high successes with our gift card program, and they want to now see what kind of products that they can enhance, with the gift card and cross work so that customers who buy our gift cards can be introduced to our other branded meat products and etcetera.

Jeremy Hamblin, Analyst, Craig Hallum: Awesome. Thanks for the color. Last one for me. I I was very interested to hear a bit more about the, you know, the idea of of slowing or halting, unit growth going forward. That seems, you know, certainly from a cash perspective, like, a great idea.

And and I wanted to see if if you and Tom had had really, you know, kind of gone through, you know, what the cash flow might look like. I mean, you you have about, you know, 9 or $10,000,000 in preopening costs this year, you know, in in CapEx, I think, tracking in the range of, close to $30,000,000 So wanted to just get a sense of how much you've explored that, might given kind of some ambitious growth here that you've had in in, you know, the existing stores' performance, it seems like that might be a, you know, an interesting path here, you know, from a perspective of of generating, you know, a lot more, cash flow?

David Kim, Chairman and CEO, JEN Restaurant Group Inc.: Yes. We definitely have ran that number. We have still seven under construction. Two or three will come on board this year by the end of this year, and we cannot stop those. The other ones can pause.

We have another 11 because these these, locations, you have to be at least a year ahead of signing leases. So we will see how the year end, sales progresses, and we'll watch it very carefully. If we can maintain the year's numbers, we will continue. If we think that the slowdown of the consumers on the restaurant sector, gets a little behind and continues to slow, yes, we will, for sure consider pausing the the opening of new restaurants. And we all we have, looked at all the financial numbers and the projections.

Tom Crowell, Chief Financial Officer, JEN Restaurant Group Inc.: Yep. In detail. Right.

Jeremy Hamblin, Analyst, Craig Hallum: Great. Thanks. Thanks for taking the question.

David Kim, Chairman and CEO, JEN Restaurant Group Inc.: Thank you, Jeremy. Thank you.

Conference Operator: The next question comes from Todd Brooks of Benchmark. Please proceed.

Todd Brooks, Analyst, Benchmark: Hey, good afternoon, guys. How are you doing? Hi, Todd. Good. Couple of follow ups to Jeremy's questions, and I've got a few others.

I just wanted to clarify, you talked the industry has seen kind of a continuing deceleration here going into the fourth quarter. But I think, David, if I heard your comment right, quarter to date trends have stabilized with down 10% that you saw in the third quarter or have your trends also slowed a little bit from that trend that you put up for the full third quarter?

David Kim, Chairman and CEO, JEN Restaurant Group Inc.: Some weeks are better. Some weeks are worse. So I it it we're we're just into it now. I need a little more data. The the the true number actually for us starts in the November because now we're going to the very high season for Thanksgiving and Christmas.

Those are critical months for us, so I don't have that number for you right now.

Todd Brooks, Analyst, Benchmark: Okay. Fair enough. Following up on the packaged food products, when you frame up a $100,000,000 opportunity per year as you get four or five years into the effort, what assumptions do you put behind a $100,000,000 in revenues? Four four SKUs expands to a multiple of that number of SKUs. 600 doors expands to what number of doors?

What what does it take from an operation and offering in a number of doors to generate a $100,000,000 in annual revenue?

David Kim, Chairman and CEO, JEN Restaurant Group Inc.: There is a competitor that moves Korean barbecue frozen products through the Trader Joe network, and we have certain numbers that they have. And and those Trader Joe's do more volume per store, but they have much less stores. And, we looked at the initial one month pavilions, and we are gonna be putting in more products. We are already talking to the supermarkets to bring in gen branded products other than just the meats. It's all being worked on now.

As they come on, we will announce it. So there will be more SKUs other than just the four SKU. And as those grow because we are getting information from our buyers of what they want because what they have now is costing them more money. It's less quality, and they have their internal numbers of products that they currently sell. So when you start putting those numbers together with more SKUs, we can kind of formulate that number.

So as the years go is at least the first cycle of year with new SKUs coming on board and knowing some numbers with companies like what was the other term?

Todd Brooks, Analyst, Benchmark: The big I'm

David Kim, Chairman and CEO, JEN Restaurant Group Inc.: sorry. I I I just blanked out. Trader Joe's, I we we kind of am able to formulate a number that we can achieve.

Todd Brooks, Analyst, Benchmark: That's exciting. Good to hear it. A few more from me if we have the time. The labor efficiency was very impressive in the quarter, especially given how much the traffic trends fell off and where sales came in relative to probably what was an original expectation. How are you generating 200 basis points of efficiency year over year?

David Kim, Chairman and CEO, JEN Restaurant Group Inc.: I think we can generate more. I don't want to use loose words by saying AI technology and things like that, but we are actually deploying those right now. But there's gonna be a certain point where I cannot run a store with no humans. Right? So we're we're constantly deploying more technologies so that we can be more efficient.

But there will be a certain line because, well, we are gonna drop off in service if we go too thin. I think there's a little more basis points to play with, but this this is probably the extent of it, sort of us bringing Octop Optimus from Tesla to serve customers. Okay?

Conference Operator: Mhmm.

Todd Brooks, Analyst, Benchmark: Okay. Fair enough. And then the six stores in South Korea across the two brands, is that your near term footprint for South Korea? Thoughts on further growth there, what it takes to know if that warrants more capital, especially looking at kind of the the the multiple uses for, the capital that you do have, from an availability standpoint?

David Kim, Chairman and CEO, JEN Restaurant Group Inc.: We are gonna study the Korean market, but we are very optimistic on the con side of the business. So, therefore, if we do have a a restructure of the capital, then it would be more on the con expansion, South Korea is very faster and less expensive to build in that, in that country. But as of now, we're just going to, keep tweaking the operations to, come up with a better EBITDA.

Todd Brooks, Analyst, Benchmark: Okay. Great. And a final one for me, and I'll jump back in queue. David, on prior calls, you've spoken to the competitive environment, and some of these maybe ankle biters that have followed very successful gen locations with their own kind of either mom and pop or maybe branded Korean offering. What are you seeing from activity from these competitors?

How are they dealing with a slowing environment? And is their pace of opening new stores? Is there any evidence of that slowing yet so you'll see maybe less competitive intensity as you look out to '26? Thanks.

David Kim, Chairman and CEO, JEN Restaurant Group Inc.: Yes. We hear information from our bankers. These are local community banks, minority local community banks. And, yes, they say because they're borrowers of, the SBA program, who are our competitors. Yes.

They say their, sales are substantially down, but it still has not stopped the entrepreneurs wanting to have the same American dream of gen three and barbecue. So we are continuously having to deal with competitors for sure.

Todd Brooks, Analyst, Benchmark: Okay. Great. Thank you both.

Tom Crowell, Chief Financial Officer, JEN Restaurant Group Inc.: Thank you, John. Thank you. For

Conference Operator: your last question, we will hear from George Galley of Roth Capital. Please proceed.

George Galley, Analyst, Roth Capital: Hey, everyone. Thanks for taking my questions. Just a few more for you. Hi, David. Hey, Tom.

Tom Crowell, Chief Financial Officer, JEN Restaurant Group Inc.: Hi.

George Galley, Analyst, Roth Capital: First on your South Korean units, can you give a margin, a four wall margin by brand?

David Kim, Chairman and CEO, JEN Restaurant Group Inc.: I don't have that. We've probably been open two, two and a half months. We had some changeover in senior management in a very short period of time. So we had to go in, send some peep some one executive in. Our margins are not good right now because we need to stabilize it.

I don't have that data today, but on the next quarter call, I will have that data.

George Galley, Analyst, Roth Capital: Okay. Okay. And then I just wanted to to follow-up on one of the earlier questions about your expectations for openings next year. So I just wanna make sure I I had it right. There's seven under construction.

Two two to three of those are expected to open this year. That leaves four to five. Are those the the for sure openings next year? And then you mentioned an 11 number. I just I didn't know kinda what's the status.

Is it just those 11 that that you might pause, or or does it also include the four to five that are are beyond this year?

David Kim, Chairman and CEO, JEN Restaurant Group Inc.: No. There's four to five beyond this year. So the six is locked. They're under construction, so I cannot stop that. But the next 11 are not under construction.

Maybe one or two might come on board, but the rest, we can we can put a pause if we wanted to.

George Galley, Analyst, Roth Capital: Okay. Okay. And then the premium menu, I I forget if it was in the queue or in in the press release. Sounds like there was a a margin negative margin impact from that menu. Can can you quantify that?

Did I read that right? Like, what have you seen from the premium menu? And and also, what is the current penetration of that that offering?

David Kim, Chairman and CEO, JEN Restaurant Group Inc.: The current penetration of the offering is about four to 5% because of the how expensive the products that we serve on that, I think it eroded about a percent in food cost. Yep.

George Galley, Analyst, Roth Capital: So you're saying the impacts from that 45% was a 1% impact on four wall consolidated four wall margin?

David Kim, Chairman and CEO, JEN Restaurant Group Inc.: On the food cost side. On the on the

Tom Crowell, Chief Financial Officer, JEN Restaurant Group Inc.: food cost, less less than 1%, but, yeah, approaching 1%. Right?

George Galley, Analyst, Roth Capital: And and do you plan to retain I mean, do you plan to to continue does the math work? Or I mean, are you comfortable?

Tom Crowell, Chief Financial Officer, JEN Restaurant Group Inc.: No. We're not comfortable.

David Kim, Chairman and CEO, JEN Restaurant Group Inc.: We are working on another. We think that our menu presentation is needs a a uplift and an update. We are working through it now. We have to be very careful when we roll it out because if we roll it out during this busy season and we don't execute well, it might backfire. So once the new menu comes out and we reorganize the presentation of it with different products, we'll probably test it first before we roll it out throughout the country.

George Galley, Analyst, Roth Capital: And and the new menu might or might not exclude the premium menu. Is that

David Kim, Chairman and CEO, JEN Restaurant Group Inc.: what you're It will include the premium menu in a different way. We have, competitors right now that are offering a much better quality Wagyu meats. And, we are right now thinking, if there's some thoughts and some discussions about it, If there's, if there's, progress, we will test the higher meets. But we're definitely, almost set to go forward with it.

George Galley, Analyst, Roth Capital: Okay. Okay. And then last question for me is just on your twenty twenty five cohort of US openings. How would you characterize them? Are they opening, you know, just given the macro challenges, like opening quite a bit slower than than prior cohorts or any kind of geographic items you've noticed certain places are outperforming or underperforming?

Just any kinda background on on maybe those openings.

David Kim, Chairman and CEO, JEN Restaurant Group Inc.: The new markets brand new markets that we have one stores are not performing as we are expected we we wanted to, but the markets that we're already in, we're doing well.

George Galley, Analyst, Roth Capital: Okay. Okay. Appreciate the time. Thanks.

Tom Crowell, Chief Financial Officer, JEN Restaurant Group Inc.: Thank you. Thank you.

Conference Operator: At this time, this concludes our question and answer session. I would now like to turn the call back over to Mr. Kim for closing remarks.

David Kim, Chairman and CEO, JEN Restaurant Group Inc.: Thank you very much for your time today.

Tom Crowell, Chief Financial Officer, JEN Restaurant Group Inc.: Thank you all. Appreciate it.

Conference Operator: Ladies and gentlemen, this concludes today's conference. You may now disconnect your lines at this time. Thank you for your participation.

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