Earnings call transcript: GEN Restaurant Group sees stock fall after Q1 2025 loss

GEN Restaurant Group Inc., known for its Jen Korean BBQ brand, reported a net loss in the first quarter of 2025, leading to a sharp decline in its stock price during aftermarket trading. The company saw revenues increase, but the shift from a net income in the previous year to a net loss this year has raised concerns among investors. According to InvestingPro data, two analysts have recently revised their earnings expectations downward, while the company’s gross profit margin stands at a concerning 17.4%.

Key Takeaways

• GEN Restaurant Group reported a net loss of $2.1 million for Q1 2025.
• The company’s stock fell 9.52% in aftermarket trading.
• Revenues increased by 13% year-over-year to $57.3 million.
• Same-store sales declined slightly, but new restaurant openings continue.

Company Performance

GEN Restaurant Group’s performance in Q1 2025 was marked by a net loss of $2.1 million, a significant shift from the $3.8 million net income reported in the same period last year. Despite this, the company achieved a 13% increase in total revenues, reaching $57.3 million. The company continues to expand its footprint, opening six new restaurants and planning further growth.

Financial Highlights

• Revenue: $57.3 million, up 13% year-over-year.
• Net loss: $2.1 million, compared to a net income of $3.8 million in Q1 2024.
• Adjusted net income: $1.4 million ($0.04 per share), down from $2.9 million ($0.09 per share) in Q1 2024.
• Cash and cash equivalents: $15.4 million.
• Long-term debt: $5 million.

Market Reaction

Following the earnings announcement, GEN Restaurant Group’s stock fell 9.52% in aftermarket trading, closing at $4.56. This decline reflects investor concerns over the company’s return to a net loss, despite revenue growth and expansion efforts. The stock has lost over 54% in the past year and is trading near its 52-week low of $3.98, indicating potential investor apprehension. InvestingPro analysis suggests the stock is fairly valued at current levels, with analysts setting price targets between $10-13, indicating potential upside despite near-term challenges. For deeper insights into GENK’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Outlook & Guidance

Looking forward, GEN Restaurant Group plans to open 12-13 new restaurants in 2025 and anticipates reaching a $300 million annual revenue run rate by the end of the year. The company is also targeting a restaurant-level adjusted EBITDA margin of 17-18%. However, it remains cautious about potential impacts from Chinese tariffs on equipment and construction costs. InvestingPro data reveals the company operates with a significant debt burden, with a debt-to-equity ratio of 12.81 and short-term obligations exceeding liquid assets, which could impact expansion plans. Subscribers can access 15+ additional ProTips and detailed financial metrics to better evaluate GENK’s growth strategy.

Executive Commentary

CEO David Kim stated, "We believe our value-priced all-inclusive dining model continues to resonate with guests and positions us for durable long-term growth." CFO Tom Kearl highlighted the impact of new restaurant development on profitability, noting, "If we stopped all new restaurant development, we estimate we could have generated a $2,500,000 profit in the first quarter."

Risks and Challenges

• Macroeconomic pressures are affecting consumer demand, contributing to a decline in customer traffic.
• Potential tariffs on Chinese goods could increase costs for equipment and construction.
• Same-store sales have declined slightly, which may affect future revenue growth.
• The company’s expansion plans may face challenges if economic conditions worsen.

Q&A

During the earnings call, analysts questioned the impact of macroeconomic conditions on sales performance and the cautious approach to new restaurant development due to potential tariffs. Positive early results from the dual-concept restaurant model and promising gift card redemption rates were also discussed.

Full transcript - GEN Restaurant Group Inc (GENK) Q1 2025:

Conference Operator: Please also note today’s event is being recorded. At this time, I would like to turn the floor over to Tom Kearl, the company’s Chief Financial Officer.

Sir, you may begin.

Tom Kearl, Chief Financial Officer, Jen Korean BBQ: Thank you, operator, and good afternoon. By now, everyone should have access to our first 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 securities 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 03/31/2025, 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 differ materially from what we currently expect. We refer you to our recent SEC filings, including our annual report on Form 10 ks, 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 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 Korean BBQ: Thank you, Tom, and good afternoon, everyone. In the first quarter of twenty twenty five, despite economic pressures and slow consumer demand, we generated a 13% year over year increase in total revenues to $57,300,000. This increase was driven by our growing footprint of restaurants and the continued success of our existing locations. We’re pleased with our execution in the first quarter and the continued progress we’re making across our strategic priorities. We believe our value priced all inclusive dining model continues to resonate with guests and positions us for durable long term growth.

We opened six restaurants in the first quarter, bringing Jen’s footprint to 49 stores. These new openings represent a balanced geographic mix, including both new and existing markets. With this latest round of openings, we remain on pace to meet our target of 12 to 13 total new stores by the February. We have six restaurants under construction in addition to the six we opened in the first quarter. We made significant improvements both year over year and sequentially in same store sales growth.

For the first quarter, same store sales were down a very small modest point 7% compared to being down 5.6% for all of 02/2024. This is a tremendous improvement. Restaurant level adjusted EBITDA margin for the quarter was slightly off our overall annual goal of 17 to 18%, coming in at around 15.6% due to higher cost from new restaurant openings. While our same store sales have dramatically improved year over year and are presently better than many of our competitors in the industry, it’s not the metrics that we believe captures our success. I can’t stress enough.

Our business model revolves around growing our footprint to capitalize on the strong EBITDA and resulting swift payback of our initial investment for new restaurants and the extraordinary ROI new stores generate. We have an impressive two point one year payback period run rate on our 2,024 new stores, which equates to 40% plus ROI. Our shorter payback period than most competitors allows us to provide a more consistent and efficient return for our investors. Said another way, at the time we went public in February, we had 33 stores. We have added 16 new stores since then, roughly increasing our store count by 50%.

But because of strong internal cash flow, we haven’t needed to take any debt or equity to do this. This proves the value of our high free cash flow model. Having said this, we still deeply focus on ways to drive growth at existing locations and have a number initiatives to share. First, we only took a 2.8% price increase at the February when most companies took four to 10% price increases. We’re happy to report that our increase has not influenced customers at all.

We remain a high quality value dining experience for our customers. Second, we’ve continued to enhance our training programs. We’re spending more time and effort on training in order to build the bench strength necessary to expand new restaurant development and openings around the country and into South Korea. And third, our incubator projects. Last year, we announced the launch of Gen gift cards at 78 Costco locations, all within a five mile radius of most of our restaurants across The US.

The gift card continuously sells exceptionally well. This quarter, we’re testing egift cards which will be sold through Costco’s website. We have also recently signed an agreement to sell gift cards at Sam’s Clubs, which we expect to begin by the end of the second quarter or the beginning of third quarter. Our success in expanding this initiative is a testament to Jen’s brand strength and position as a leader in Korean barbecue. We look forward to expanding this avenue with even more big box retail partners in the near future.

Also, I’m pleased to announce one of our incubator projects was the creation of our new dual concept store in Texas. That includes a restaurant we’re calling Con Sushi. Con is a contemporary medium to high end sushi restaurant at an average price point of $39, which compares to our Gen price point of $30. Con is an all you can eat concept, which, like Jen, is a value based restaurant concept. The two restaurants are attached but have separate entrances and completely different interiors.

Most importantly, they’ve been engineered to create an extremely efficient back of the house setup with one bar, one kitchen, one storage area, and one area for bathrooms for both restaurants. This model uses one labor force to run two restaurants, which results in a significant improvement in operating margin. Now instead of waiting in long lines, they can choose between two unique concepts that provide value based dining. The two restaurant together, Jen and Con, invite more crowds and create an epicenter for consumers. While still early days, we’re evaluating a number of additional opportunities to roll out this dual concept.

Finally, as a result of another incubator project, we have recently reached an agreement with Cisco for them to sell our proprietary gen Korean barbecue meat products to third parties, such as grocery and big store retailers. This is in the early stages and will provide more information on future calls. Turning back to new restaurant expansion. We’re also making tangible progress on our international expansion into South Korea, where we plan to open three new restaurants in 02/2025. The first one is on track to open at the end of second quarter, with the other two expected later in the year.

These units will be built at approximately one third the cost of our US stores, offering even more compelling potential returns, which are not subject to the volatility of the current tariffs. Additionally, by opening in Korea, we hope to see early culinary, cultural, and experimental trends that might translate well for us in our US locations. Given the strong momentum in our development pipeline, we remain on pace to open 12 to 13 new restaurants in 2,025. We expect to achieve restaurant level adjusted EBITDA margin between 1718% and revenue between 245 and $250,000,000 for full year of 02/2025. By the end of 02/2025, we anticipate being at an annual run rate approaching 300,000,000 of revenue when all new restaurants are opened.

Another topic I want to address is the potential impact of recent announced tariffs. There could be a material impact on equipment costs and construction materials sourced from China, but still at very early stage to quantify the extent. If tariffs begin to significantly affect our new restaurant development costs, which would reduce our ROI, we may decide to slow or pause the pace of new unit expansion until conditions improve or stabilize. Overall, our first quarter marks a strong start to the year and reinforces the strategic foundation we have built to build and support the long term growth. Backed by a healthy balance sheet, strong unit level returns, and rising brand momentum, we believe Jed is well positioned to deliver on our 02/2025 goals and continue expanding our presence across both domestic and international markets.

Thank you for your continued support. We remain excited about the opportunities ahead and confident in the road we’re on. Tom will now provide a detailed look at our first quarter financial performance.

Tom Kearl, Chief Financial Officer, Jen Korean BBQ: Thank you, David. David discussed revenue in his opening remarks, so I will start with expenses. Cost of goods sold as a percentage of company restaurant sales increased by 20 basis points to 33.6% in the first quarter of twenty twenty five compared to the first quarter last year. This minor increase is primarily attributable to inflationary pressure and a minor impact from our premium menu. Cost of goods sold decreased by 50 basis points compared to the fourth quarter of twenty twenty four, primarily due to improved margin from our premium menu.

Payroll and benefits as a percentage of company restaurant sales decreased by 10 basis points in the first quarter of twenty twenty five to 31.7% compared to the first quarter of last year. Occupancy expenses as a percentage of company restaurant sales increased by 40 basis points to 8.9% compared to the first quarter of last year due to new restaurant openings. Other operating expenses as a percentage of company restaurant sales increased 30 basis points to 10.3% compared to the first quarter of last year. G and A excluding stock based compensation during the first quarter was $5,600,000 or 9.8% of revenue compared to $3,900,000 or 7.7% of revenue in the year ago period. During the first quarter of twenty twenty five, we opened six new restaurants compared to only two new restaurants in the first quarter last year.

This tripling of new store openings is a main driver of higher G and A and includes hires across construction, regional operations and training. To a much lesser extent, the first quarter also reflected increased marketing expenses. In the first quarter, we had a net loss before income taxes of $2,100,000 which equated to a loss per share of $06 compared to net income before income taxes of $3,800,000 which equated to an EPS of $0.11 per share in the first quarter of twenty twenty four. However, 2024 included a one time gain related to the buyout of our partner in Hawaii of $3,400,000 In addition, the first quarter of twenty twenty five reflects higher costs associated with new restaurant development, including $2,600,000 in pre opening costs. If you look at adjusted net income, a non GAAP measure, we generated net income of $1,400,000 or an EPS of $04 per share in the first quarter of twenty twenty five compared to net income of $2,900,000 or an EPS of $09 per share in the first quarter last year.

Since going public in 2023, we have grown Gin from 33 restaurants to 49, a 50% increase, without incurring any long term debt. If we stopped all new restaurant development, we estimate we could have generated a $2,500,000 profit in the first quarter along with an additional $4,000,000 of EBITDA or cash flow. This figure strips out all pre opening costs and a reduction in G and A. Total adjusted EBITDA for the first quarter of twenty twenty five was $1,200,000 down from $6,400,000 in the first quarter of twenty twenty four. However, excluding the one time gain of $3,400,000 I just discussed, adjusted EBITDA for the first quarter of twenty twenty four was only 3,000,000 Additionally, after removing pre opening costs, adjusted EBITDA for the first quarter of twenty twenty five decreased only slightly to $3,300,000 compared to $3,600,000 in the fourth quarter of twenty twenty four.

Turning to our liquidity position, as of 03/31/2025, we had $15,400,000 in cash and cash equivalents, and only long term debt we carry is $5,000,000 We have fully available all of our $20,000,000 revolving line of credit. During the first quarter, we repurchased 33,400 shares of our Class A common stock at an average cost of $5.94 per share. As of 03/31/2025, we had 4,800,000.0 remaining under our repurchase authorization. Remember that we have 33,000,000 shares outstanding including our A and B shares. The founding group continues to own 85% of the company.

Because of the founder’s strong ownership position, their interests are consistently aligned with those of the public shareholders and they are fully vested in successfully growing GEM. Before concluding, I want to address investor questions we’ve received recently regarding long term lease obligations. To reiterate what we said on our last call, GAAP accounting under ASC eight forty two requires us to record our restaurant lease obligations as a liability with an offsetting operating lease asset. The $147,000,000 in lease liabilities are offset by $130,000,000 in operating lease assets on our balance sheet. This is a GAAP requirement.

These lease liabilities are not bank or institutional long term debt and should not be considered as such when evaluating our company. We have only $5,000,000 of long term debt. We 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 $126,000,000 This incorrect assumption artificially lowers our tangible asset return metrics. All of these points highlight the fact that Jen has no material long term debt and produces strong returns from restaurant development.

To reiterate what David said earlier, our financial outlook for the remainder of 2025 remains strong. We continue to anticipate opening between twelve and thirteen new restaurants, which includes our first three international units in South Korea. We’re targeting full year revenues of $245,000,000 to $250,000,000 and achieving restaurant level adjusted EBITDA margins in the 17% to 18% range. By the end of twenty twenty five, we anticipate being at an annual run rate approaching $300,000,000 in revenue when all the new restaurants are opened. This concludes our prepared remarks.

We’d like to thank you again for joining us on the call today. We are now happy to answer any questions that you may have. Operator, please open the line for questions.

Conference Operator: And two. If you are using a speakerphone, we do ask that you please pick up the handset prior to pressing the keys to ensure the best sound quality. Once again, that is star and then one to join the question queue. Our first question today comes from Todd Brooks from The Benchmark Company. Please go ahead with your question.

Todd Brooks, Analyst, The Benchmark Company: Hey, thanks for taking my questions. Good to speak with you both. I want to lead off, Tom, if you could talk to maybe the same store sales progression across the course of the first I know a lot of companies saw material dips in business in February. So I didn’t know if you were willing to give us any color there. And then maybe quarter to date commentary on what you’ve seen so far in fiscal Q2.

Tom Kearl, Chief Financial Officer, Jen Korean BBQ: Yeah. Hi, Todd. January and February were pretty strong months. I think we talked about those on our last call. March, things dipped.

I think through February, we were positive. And at the March, we ended up being slightly negative. And it has continued negative in April and the May.

Todd Brooks, Analyst, The Benchmark Company: Okay. And if you’re looking at kind of causality, does it just feel macro to you? Or or I guess speculation, but what do you what do you guys attributing the recent weakness over the last couple months? So

Tom Kearl, Chief Financial Officer, Jen Korean BBQ: Yeah. We it’s it’s macro. It it definitely is macro based on what’s going on, in the economy and in the world. The impact of, how our customers are feeling.

Todd Brooks, Analyst, The Benchmark Company: Okay. Fair enough. And then, David, for you, I was wondering if you could give us a framework. A lot of exciting initiatives within the incubator. When you guys are talking to a $300,000,000 revenue run rate exiting 2025, how how should we think about that as kind of new revenue opportunities driven by the incubator versus revenue that’s generated by the core Gen franchise?

David Kim, Chairman and CEO, Jen Korean BBQ: So the incubators are just new projects that we want to try and see if we can enhance our brand. But all that growth of incremental sales reaching the 300,000,000 is purely all coming from new store restaurants and existing restaurants.

Todd Brooks, Analyst, The Benchmark Company: Yeah. That’s great to hear. Thanks. And then just quickly, and I’ll hop back in queue. If if we think about Con Sushi and the dual branded restaurant, I know it’s early.

Think you spoke I’m just wondering operationally. I think you spoke about both menus being available, but does kan sushi actually have grills in the tables in them? Or how do you make the gen menu and the gen experience available to that customer? And then just how many of these con sushis do you foresee the market supporting? Thanks.

David Kim, Chairman and CEO, Jen Korean BBQ: In the past experience before gen, there’s a lot of, national concepts and smaller concepts that I was involved with where dual concepts did not work. And there’s a lot of studies done on why it doesn’t work. So with that experience, knowing what I know of what didn’t work for most concepts, it’s a very different model where when a guest comes in, it’s a very different restaurant. One cannot tell that one is a con all you can eat and one is a gin all you can eat. It’s very different.

There there are no grills on the con side con So there’s a little bit of, complexity in making sushi, but we’ve deployed a lot of technology to where we can cut down a lot of the labor side to execute our operations on the con side. But in terms of numbers coming in, they’re coming in much better than we thought. It’s a very short number, but we’re extremely optimistic on it. Why this was created is I wanna try to explain it in a simpler way.

It’s like the wingman for Jen. Many times we come across larger spaces that we have to let go and not do because the landlord wants us to take a bigger space. And to achieve this, if we were to have two concepts where one concept supports the, let’s say, the long line of Korean barbecue, instead of losing those customers to another competitor, they now we can capture those customers by coming into our concept that’s right next door. And we’ve this this is not all theory. These were all thought through, planned through, looked at a sample of some of our restaurants, especially our headquartered restaurant where another all you can eat sushi is, and our customers, we were losing to them.

So we said we said, let’s try this and see if it will work. So operationally wise, construction wise, it’s a little more expensive, not that expensive. And it’s basically we’re getting two for one in terms of labor cost. The food cost is almost the same in terms of percentage. It’s a little slightly higher on the sushi side.

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

Todd Brooks, Analyst, The Benchmark Company: Okay, perfect. Thanks, guys.

Tom Kearl, Chief Financial Officer, Jen Korean BBQ: Thank you, Todd.

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

George Kelly, Analyst, Roth Capital Partners: Hey, everybody. Thanks for taking my questions. Maybe to start one for Tom. Just curious, the four wall target that you gave 17% to 18% for fiscal year twenty twenty five. Just wondering what gives you confidence in that number.

1Q was below target and you just commented that comps were negative in April and May. Just curious what you’re seeing or planning that gives you confidence that it will go during

Tom Kearl, Chief Financial Officer, Jen Korean BBQ: the year? Yes, there’s a couple of things. One is, last year, our first quarter was our lowest quarter as well. And this year our first quarter is lower. So we know that we’ll make up for it as the year goes on.

We are managing labor costs very tightly and we believe that there’s room to improve in the margins there like we did last year and we’ll do the same thing this year.

George Kelly, Analyst, Roth Capital Partners: Okay. Okay. Understood. And then second question on the potential Chinese tariff impact on on new builds, David, that you were talking about. What is your expectation for per unit build costs in 2025?

And what kind of risk do you see around your target? Just curious, like, if you’re getting close to having a better sense of of how it’s gonna shake out and what that means for for unit growth, etcetera. So if you could just elaborate on that topic a bit, that would be helpful.

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

Some pricing were quoted 15%. It’s all over the map right now. So I think, with the news that are coming, starting last week and this week, I think the consensus is it’s gonna settle down. Once it settles down, we can start evaluating what next steps we can take.

George Kelly, Analyst, Roth Capital Partners: Okay. Okay. Understood. And then, one last one is just on the openings that, just happened in in one q, the six openings. How can you just broadly talk about how they’re performing?

David Kim, Chairman and CEO, Jen Korean BBQ: It’s too early to tell. It’s a mixture. Some are average, some are above, some are below.

George Kelly, Analyst, Roth Capital Partners: Alright. I’ll have it back

David Kim, Chairman and CEO, Jen Korean BBQ: to have only been open for a month. Thanks.

Conference Operator: Once again, if you would like to ask a question, please Our next question comes from Will Forsberg from Craig Hallum. Please go ahead with your question.

Will Forsberg, Analyst, Craig Hallum: Hey, guys. This is Will on for Jeremy. Thanks for taking my questions. Just like to jump back to the comp trends you guys have seen. Could you maybe break out what you saw in Q1 in terms of average check versus traffic?

And then I guess how that’s progressed into Q2 so far?

Tom Kearl, Chief Financial Officer, Jen Korean BBQ: Yes. I think overall, we did see as we talked about a 2.5% plus increase because of our price. We saw about a 10% to 11% reduction in our just overall customer base, but we saw 7% improvement from our premium menu. So all in all, we ended up less than 1% off.

Will Forsberg, Analyst, Craig Hallum: Got it. That’s great color. And then going back to unit growth, so a little ahead of schedule here. Start the year, I guess, how can we think of the cadence the remainder of the year? And then I guess in the South Korea market, what are you seeing there that led you to add another unit to expectations?

And I guess also, would there be anything to note on expected AUVs there?

David Kim, Chairman and CEO, Jen Korean BBQ: The the market that we found in South Korea, although it’s a very competitive market, there is no sizable size 5,000 square feet or larger that is offering Jen’s model of all you can eat beef. So we’ll be the first ones going in. We don’t we we we will open the first one in June 10, and we’ll see how those numbers move. But, there’s a good and a bad about markets like that. The good is, it is a it’s in a it’s on the bottom of their cycle of economic pressure with all the election issues and all that.

So we’re able to perhaps, get better deals in Korea in terms of occupancy. Although the sales might be lower than The US depending on how how our sales come in, the construction of opening a restaurant in South Korea for the same square footage is about 25 to 30%. So for every dollar that we spend in The US, it only costs us 25 to 30¢. So we are always looking at an internal rate of return. So so for example, if the sales number comes in lower and our margins are lowered in The US, if we do the mathematics and we can pull our money out in the same, projections we gave, the street of two and a half years, we’ll continue to look at that and see if that’s a better model.

But again, it is a very big market. People are very ignorant about some of these markets thinking that they’re small. They’re not a small market. That market, the way our data’s come in, is about a 100 to 200 store market. So, it’s just way too early to tell.

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

Will Forsberg, Analyst, Craig Hallum: Got it. And then just one last one for me on on the gift cards. I know redemption had been around 50%, I believe. Have you gotten to a point now where you’ve kind of seen a more normalized redemption rate that you could share? And then also, at this time, are you able to quantify the lift, in average check from gift users versus the the baseline customer base?

David Kim, Chairman and CEO, Jen Korean BBQ: K. The answer to the first question, it stabilized. We think it’s gonna stabilize around 65%. The industry is about 75%. So we’re we’re ahead of the industry.

It has stabilized a lot. In terms of whether we got incremental sales from that, we don’t have that data. But some of the discussions we have with the managers is that consumers that are using the gift card are actually spending more money when they are dining at our place. How do we know that is we see more sales in premium menus, and we see more sales in drinks for the ones who are using those cards. We don’t have raw datas on that.

We don’t track that, but that is what we’re hearing from the managers.

Will Forsberg, Analyst, Craig Hallum: Got it. Appreciate the color. Best of luck.

David Kim, Chairman and CEO, Jen Korean BBQ: Thanks, Will.

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

David Kim, Chairman and CEO, Jen Korean BBQ: Thank you very much for continuously believing in our company. We will continue to grow this brand. And, despite some macroeconomics of issues with, the tariffs, we think that will all get behind us, and we are not shifting our focus. We’re focused on what we’re doing every day. Thank you very much.

Thank you.

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

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