GEN Restaurant Group Inc

Previous wording

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 Restaurant Group, Inc., included in Part II, Item 8 of this Annual Report on Form 10-K, and with the audited consolidated financial statements and related notes of GEN Restaurant Companies, LLC (the “Operating Company”) for the years ended December 31, 2023 and 2022.. The terms “we”, “our”, and “us” as used herein refer to the Operating Company and its consolidated subsidiaries prior to the Transactions (as defined in Note 1 to such consolidated financial statements) and to GEN Restaurant Group, Inc. and its consolidated subsidiaries, including the Operating Company, following the Transactions.

Current wording

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, 2024 and 2023. The terms “we”, “our”, and “us” as used herein refer to the Operating Company and its consolidated subsidiaries prior to the Transactions (as defined in Note 1 to such consolidated financial statements) and to GEN Inc. and its consolidated subsidiaries, including the Operating Company, following the Transactions.

Previous wording

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 37 company-owned restaurants located in California, Arizona, Hawaii, Nevada, Texas, New York and Florida. 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.

Current wording

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 46 company-owned restaurants located in California, Arizona, Hawaii, Nevada, Texas, New York, Oregon, New Jersey, and Florida. 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.

Previous wording

We expect to continue growing our number of restaurants in the future. Our new restaurants opened prior to 2022 have generated average Payback Periods of approximately 1.7. Restaurants range in size from 4.7 thousand to 12 thousand square feet, and are typically located in high-activity commercial areas.

Current wording

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.

Previous wording

Although we temporarily paused our new restaurant opening plans during the 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 during 2023 we opened six new restaurants. As of December 31, 2023 we have entered into leases for additional eleven new restaurant locations for openings during 2024 and thereafter. These locations are in Maui, Hawaii, Orlando, Florida, Austin, Texas, Dallas Texas, Seattle, Washington, Portland, Oregon, Jacksonville, Florida, New York (Sixth Street), NY, San Antonio, Texas, Bayside (Queens), New York, and Austin, Texas. The six restaurants opened during 2023 were Kapolei, Hawaii, Westheimer Road in Houston, Texas Arlington, Texas, Cerritos, California, Chandler, Arizona and Fort Lauderdale, Florida. We currently expect to open seven to eight other locations during 2024. Future sales and profitability levels of our restaurants and our ability to successfully implement our growth strategy in the near term, however, remain uncertain, as the full impact and duration of the pandemic continues to evolve.

Current wording

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 both of 2023 and 2024. Subsequent to December 31, 2024, we opened three new restaurants in San Antonio, TX, Edison, NJ, and Orlando, FL. In addition to these three, as of December 31, 2024 we entered into leases for 18 new restaurant locations, with openings planned during 2025 and thereafter. These locations are in Austin, TX, New York (Sixth Street), NY, Bayside (Queens), NY, El Paso, TX, San Diego, 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, MA and Sterling Heights, MI. The six restaurants opened during 2024 are our Dallas, Texas, Seattle, Washington, Jacksonville, Florida, Maui, Hawaii, Pflugerville, Texas, and Tigard, Oregon locations. In addition to the three restaurants we opened in January 2025, we currently expect to open 10 to 13 other locations during 2025. Additionally, we are introducing international expansion into

Previous wording

On September 29, 2023, the Company entered into a $20 million line of credit with a bank. The line of credit matures on September 25, 2024 and bears interest at a variable rate per annum equal to 8.750% as of December 31, 2023. No amounts have been borrowed under the line of credit as of December 31, 2023.

Current wording

On September 29, 2023, the Company entered into a $20 million line of credit with a bank. The line of credit matures on September 25, 2025 and bears interest at a variable rate per annum equal to 7.75% as of December 31, 2024. As of December 31, 2024 the balance was $3.0 million, which was subsequently paid in full on January 2, 2025.

Previous wording

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 Income Margin, Adjusted EBITDA, Adjusted EBITDA Margin, 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.

Current wording

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 Income Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted net income, Adjusted net income 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.

Previous wording

Net Income Margin is net income measured under GAAP divided by revenue.

Current wording

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

Previous wording

Adjusted EBITDA represents net income excluding interest expense, income taxes, depreciation and amortization, stock-based compensation, and consulting fees paid to a related party, and we also exclude non-recurring 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 and non-cash lease expense included in pre-opening costs. 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.”

Current wording

Adjusted EBITDA represents net income excluding interest 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 and non-cash lease expense included in pre-opening costs. 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.”

Previous wording

“Average Unit Volume” or “AUV” means the average annual restaurant sales for all restaurants open for a full 12 months before the end of the period measured. AUV is calculated by dividing annual revenue for the year presented for all such restaurants by the total number of restaurants in that base. This measurement allows management to assess changes in consumer spending patterns at our restaurants and the overall performance of our restaurant base.

Current wording

“Average Unit Volume” (“AUV”) means the average annual restaurant sales for all restaurants open for a full 18 months before the end of the period measured. AUV is calculated by dividing annual revenue for the year presented for all such restaurants by the total number of restaurants in that base. This measurement allows management to assess changes in consumer spending patterns at our restaurants and the overall performance of our restaurant base.

Previous wording

The following table shows the AUV for the year ended December 31, 2023 and December 31, 2022 :

Current wording

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

Previous wording

Comparable restaurant sales change refers to the change in year-over-year sales for the comparable restaurant base. We include restaurants in the comparable restaurant base that have been in operation for at least 12 full months prior to the accounting period presented. Once a restaurant has been open 12 full months, it must have had continuous operations during both the current period and the prior year period being measured to remain a comparable restaurant. If operations were to be substantially impacted by unusual events that closed the location or significantly changed its capacity, that location is excluded from the comparable sales calculation until it has been operating continuously under normal conditions for both the current period and the prior year comparison period.

Current wording

Comparable restaurant sales change refers to the change in year-over-year sales for the comparable restaurant base. We include restaurants in the comparable restaurant base that have been in operation for at least 18 full months prior to the accounting period presented. Once a restaurant has been open 18 full months, it must have had continuous operations during both the current period and the prior year period being measured to remain a comparable restaurant. If operations were to be substantially impacted by unusual events that closed the location or significantly changed its capacity, that location is excluded from the comparable sales calculation until it has been operating continuously under normal conditions for both the current period and the prior year comparison period.

Previous wording

The number of restaurant openings reflects the number of restaurants opened 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 has had, and is expected to continue to have, an impact on our results of operations. We temporarily stopped opening new restaurants in 2020 and 2021 due to the COVID-19 pandemic, but began openings again in 2022. The following table shows the change in our restaurant base for the year ended December 31, 2023 and 2022:

Current wording

The number of restaurant openings reflects the number of restaurants opened 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 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 years ended December 31, 2024 and 2023:

Previous wording

“Revenue per square foot” means the restaurant sales for all restaurants opened a full 12 months before the end of the twelve 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, 2023 and 2022:

Current wording

“Revenue per square foot” means the restaurant sales for all restaurants opened a full 18 months before the end of the eighteen 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, 2024 and 2023:

Previous wording

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.

Current wording

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.

Previous wording

Consulting fees — related party. Consulting fees include expenses paid to a related party entity, which provides for annual fees of up to 25% of gross revenue in exchange for various consulting services. The related party is 100% owned by an executive officer, the services were for 21 of the restaurants, and such consulting fees were only paid to the extent we had adequate resources. Following our IPO, these consulting fees were eliminated as services transitioned to us, although corporate general and administrative expenses have increased correspondingly.

Current wording

Consulting fees — related party. Consulting fees include expenses paid to a related party entity, which provided for annual fees of up to 25% of gross revenue in exchange for various consulting services. The related party is 100% owned by an executive officer, the services were for 21 of the restaurants, and such consulting fees were only paid to the extent we had adequate resources. Following our IPO, these consulting fees were eliminated as services transitioned to us, although corporate general and administrative expenses have increased correspondingly.

Previous wording

Management fees. Management fees include expenses paid to a third-party entity, which provides fixed fees for 12 restaurants and a percentage of gross revenue for one restaurant in exchange for management services. Following the IPO, management fees were phased out, although corporate general and administrative expenses are expected to increase correspondingly.

Current wording

Management fees. Management fees included expenses paid to a third-party entity, which provides fixed fees for 12 restaurants and a percentage of gross revenue for one restaurant in exchange for management services. Following the IPO, management fees were phased out, although corporate general and administrative expenses are expected to increase correspondingly.

Previous wording

Employee retention credits. Employee retention credits include refundable credits recognized under the provisions of the CARES Act and extension thereof. During the three months ended December 31, 2023 and December 31, 2022, $0 and $949 thousand, respectively, of these credits were received and recorded, and during the year ended December 31, 2023, and December 31, 2022, $2.5 million and $3.5 million, respectively, of these credits were received and recorded.

Current wording

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

Previous wording

Equity in income of equity method investee. Equity in income of equity method investee reflects our 50% ownership in a restaurant located in Hawaii that is accounted for using the equity method.

Current wording

Equity in income 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.

Previous wording

Revenues. Revenues were $181.0 million for the year ended December 31, 2023, compared to $163.7 million for the year ended December 31, 2022, an increase of $17.3 million, or 10.6%. This reflects revenue increases due largely to price increases in lunch and dinner menus in late 2022, as well as having 37 restaurants open in the year ended December 31, 2023 compared to 31 restaurants open in the year ended December 31, 2022.

Current wording

Revenues. Revenues were $208.4 million for the year ended December 31, 2024, compared to $181.0 million for the year ended December 31, 2023, an increase of $27.4 million, or 15.1%. This primarily reflects having 43 restaurants open in the year ended December 31, 2024 compared to 37 restaurants open in the year ended December 31, 2023.

Previous wording

Food costs. Food costs were $58.3 million for the year ended December 31, 2023, compared to $54.4 million for the year ended December 31, 2022, an increase of $3.9 million, or 7.3%. The increase in food costs reflects more restaurants in operation and inflationary cost increases. As a percentage of revenue, food costs decreased from 33.2% to 32.2%.

Current wording

Food costs. Food costs were $68.7 million for the year ended December 31, 2024, compared to $58.3 million for the year ended December 31, 2023, an increase of $10.4 million, or 17.8%. The increase in food costs primarily reflects more restaurants in operation and inflationary cost increases. As a percentage of revenue, food costs increased from 32.2% to 33.0%.

Previous wording

Payroll and benefits. Payroll and benefits costs were $56.9 million for the year ended December 31, 2023, compared to $48.9 million for the year ended December 31, 2022, an increase of $8.0 million, or 16.4%. The increase in payroll and benefits costs reflects the staffing needed to support the higher customer volumes from new and existing restaurants as well as inflationary payroll increases. As a percentage of revenue, payroll and benefits costs increased from 29.8% to 31.4%, reflecting inflationary payroll rate increases.

Current wording

Payroll and benefits. Payroll and benefits costs were $64.3 million for the year ended December 31, 2024, compared to $56.9 million for the year ended December 31, 2023, an increase of $7.4 million, or 13.1%. The increase in payroll and benefits costs is primarily due to new restaurants. As a percentage of revenue, payroll and benefits costs decreased from 31.4% to 30.9%.

Previous wording

Occupancy expenses. Occupancy expenses were $14.7 million for the year ended December 31, 2023 compared to $12.1 million for the year ended December 31, 2022, an increase of $2.5 million, or 21.0%. The increase in occupancy expenses reflects the addition of six new locations in 2023. As a percentage of revenue, occupancy expenses were 8.1% in 2023 compared to 7.4% in 2022.

Current wording

Occupancy expenses. Occupancy expenses were $17.5 million for the year ended December 31, 2024 compared to $14.7 million for the year ended December 31, 2023, an increase of $2.9 million, or 19.6%. The increase in occupancy expenses reflects the addition of six new locations in 2024. As a percentage of revenue, occupancy expenses were 8.4% in 2024 compared to 8.1% in 2023.

Previous wording

Operating expenses. Operating expenses were $18.0 million for the year ended December 31, 2023 compared to $15.0 million for the year ended December 31, 2022, an increase of $3.0 million, or 20.1%, as expenses increased to support the revenue growth and reflected inflationary cost increases. As a percentage of revenue, operating expenses were 10.0% in 2023 and 9.2% in 2022.

Current wording

Operating expenses. Operating expenses were $21.5 million for the year ended December 31, 2024 compared to $18.0 million for the year ended December 31, 2023, an increase of $3.5 million, or 19.4%, as expenses increased to support the revenue growth and reflected inflationary cost increases. As a percentage of revenue, operating expenses were 10.3% in 2024 and 10.0% in 2023.

Previous wording

Depreciation and amortization expenses. Depreciation and amortization expenses were $4.8 million for the year ended December 31, 2023 and $4.3 million for the year ended December 31, 2022. As a percentage of revenue, depreciation and amortization expenses at the restaurant-level were 2.7% in 2023 and 2.6% in 2022.

Current wording

Depreciation and amortization expenses. Depreciation and amortization expenses were $6.7 million for the year ended December 31, 2024 and $4.8 million for the year ended December 31, 2023. As a percentage of revenue, depreciation and amortization expenses at the restaurant-level were 3.2% in 2024 and 2.7% in 2023.

Previous wording

Pre-opening costs. Pre-opening costs were $3.6 million for the year ended December 31, 2023 compared to $1.5 million for the year ended December 31, 2022. This increase was due to more restaurants under development in 2023 than in 2022.

Current wording

Pre-opening costs. Pre-opening costs were $7.6 million for the year ended December 31, 2024 compared to $3.7 million for the year ended December 31, 2023. This increase was due to more restaurants under development in 2024 than in 2023.

Previous wording

General and administrative expenses. General and administrative expenses were $12.9 million for the year ended December 31, 2023 compared to $8.0 million for the year ended December 31, 2022, an increase of $4.9 million, or 62.0%. As a percentage of revenue, general and administrative expenses increased from 4.9% in 2022 to 7.1% in 2023 as costs shifted post-IPO from consulting and management fees previously paid to related parties.

Current wording

General and administrative expenses. General and administrative expenses were $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, an increase of $7.2 million, or 51.1%. As a percentage of revenue, general and administrative expenses increased from 7.8% (including management fees) in 2023 to 10.2% in 2024 as costs shifted post-IPO from consulting and management fees previously paid to related parties.

Previous wording

Consulting fees - related party. Consulting fees were $2.3 million for the year ended December 31, 2023 compared to $4.9 million for the year ended December 31, 2022, a decrease of $2.6 million or 52.5%. These fees were eliminated following the IPO in June 2023.

Current wording

Consulting fees - related party. Consulting fees were $2.3 million for the year ended December 31, 2023. These fees were eliminated following the IPO in June 2023.

Previous wording

Management Fees. Management fees were $1.2 million for the year ended December 31, 2023 and $2.3 million for the year ended December 31, 2022. These were paid to a third-party entity and consist of fixed fees for twelve restaurants and a percentage of gross revenue for one restaurant in exchange for management services. These fees were eliminated following the IPO in June 2023.

Current wording

Management Fees. Management fees were $1.2 million for the year ended December 31, 2023. These were paid to a third-party entity and consist of fixed fees for twelve restaurants and a percentage of gross revenue for one restaurant in exchange for management services. These fees were eliminated following the IPO in June 2023.

Previous wording

Employee retention credits. During both the twelve month periods ended December 31, 2023 and December 31, 2022 we received employee retention credits from the IRS in the amount of $2.5 million and $3.5 million, respectively.

Current wording

Employee retention credits. During both the years ended December 31, 2024 and December 31, 2023 we received employee retention credits from the IRS in the amount of $199 thousand and $2.5 million, respectively.

Previous wording

Other income (loss). During the year ended December 31, 2023 these expenses were $0. In the year ended December 31, 2022 the loss was $0.8 million consisting of legal accruals.

Current wording

Other income (loss). During the years ended December 31, 2024, and 2023 these expenses were $0.

Previous wording

Interest expense, net. During 2023, interest expense, net, was $0.3 million in income compared to $0.6 million in expense in 2022. The increase in net interest income was primarily due to the interest income earned on the proceeds from the IPO.

Current wording

Interest income, net. During 2024, interest income, net was $0.8 million compared to $0.3 million in 2023. The increase in net interest income was primarily due to the interest income earned on the proceeds from the IPO.

Previous wording

Equity in income of equity method investee. Equity in income of equity method investee was a gain of $0.5 million in 2023 compared to $1.0 million in 2022.

Current wording

Equity in income 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.

Previous wording

Stock-based compensation expense: During the year ended December 31, 2023, we incurred expenses related to the granting of Restricted Stock Units (“RSUs”) to employees. This was recorded in General and administrative expense.

Current wording

Stock-based compensation expense: During the years ended December 31, 2024 and 2023,we incurred expenses related to the granting of restricted stock units (“RSUs”) to employees. This was recorded in General and administrative expense.

Previous wording

Consulting fees—related party: These costs ended following the completion of the IPO in June 2023.

Current wording

Consulting fees—related party: These costs ended following the completion of the IPO.

Previous wording

Adjusted EBITDA, Adjusted EBITDA Margin, Restaurant-Level Adjusted EBITDA, and Restaurant-Level 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. Our presentation of these measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Our computation of Adjusted EBITDA, Adjusted EBITDA Margin, Restaurant-Level Adjusted EBITDA and Restaurant-Level Adjusted EBITDA Margin may not be comparable to other similarly titled measures presented by other companies, because all companies may not calculate Adjusted EBITDA, Adjusted EBITDA Margin, Restaurant-Level Adjusted EBITDA, and Restaurant-Level Adjusted EBITDA Margin in the same fashion. These non-GAAP financial measures have limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP.

Current wording

Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted net income, Adjusted net income attributable to Class A common stock per share, Restaurant-Level Adjusted EBITDA, and Restaurant-Level 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. Our presentation of these measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Our computation of Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted net income, Restaurant-Level Adjusted EBITDA and Restaurant-Level Adjusted EBITDA Margin may not be comparable to other similarly titled measures presented by other companies, because all companies may not calculate Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted net income, Adjusted net income attributable to Class A common stock per share, Restaurant-Level Adjusted EBITDA, and Restaurant-Level Adjusted EBITDA Margin in the same fashion. These non-GAAP financial measures have limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP.

Previous wording

As of December 31, 2023 we had $32.6 million of cash and $5.5 million of working capital, which is calculated as current assets minus current liabilities, compared with $11.2 million of cash and ($22.5) million of working capital as of December 31, 2022. On June 30, 2023, we completed the IPO of 4,140,000 shares of Class A common stock. The public offering price of the shares sold in the IPO was $12.00 per share, resulting in aggregate net proceeds to us of approximately $46.2 million after deducting the underwriting discounts and commission and offering expenses payable by us.

Current wording

As of December 31, 2024 we had $23.7 million of cash and ($7.2) million of working capital deficit, which is calculated as current assets minus current liabilities, compared with $32.6 million of cash and $5.5 million of working capital as of December 31, 2023. On June 30, 2023, we completed the IPO of 4,140,000 shares of Class A common stock. The public offering price of the shares sold in the IPO was $12.00 per share, resulting in aggregate net proceeds to us of approximately $46.2 million after deducting the underwriting discounts and commission and offering expenses payable by us.

Previous wording

Prior to the IPO certain companies within GEN Restaurant Group made distributions to their members, which impacted our cash position upon completion of the IPO. The operating agreements of most of the companies within GEN Restaurant Group, as separate private entities prior to the Reorganization, mandated annual or quarterly distributions of available cash and/or tax distributions in an amount sufficient to allow members to pay taxes on income allocated to them. We determined the amount of these distributions based on the operating cash flow of each such entity. During the year ended December 31, 2022, an aggregate of $29.5 million of distributions were made, and during the year ended December 31, 2023, an aggregate of $26.5 million of distributions were made.

Current wording

Prior to the IPO certain companies within GEN Restaurant Group made distributions to their members, which impacted our cash position upon completion of the IPO. The operating agreements of most of the companies within GEN Restaurant Group, as separate private entities prior to the Reorganization, mandated annual or quarterly distributions of available cash and/or tax distributions in an amount sufficient to allow members to pay taxes on income allocated to them. We determined the amount of these distributions based on the operating cash flow of each such entity. During the year ended December 31, 2023, an aggregate of $26.5 million of distributions were made, and during the year ended December 31, 2024, an aggregate of approximately $0.9 million of distributions were made related to income taxes.

Previous wording

We believe that cash provided by operating activities and cash on hand will be sufficient to fund our lease obligations, capital expenditures and working capital needs for at least the next 12 months. Upon the IPO transaction, GEN Inc. became a holding company with no operations of its own. Accordingly, GEN Inc. will be dependent on distributions from GEN LLC to pay its taxes, its obligations under the Tax Receivable Agreement and other expenses.

Current wording

We believe that cash provided by operating activities and cash on hand will be sufficient to fund our lease obligations, capital expenditures and working capital needs for at least the next 12 months. Upon the IPO transaction, GEN Inc. became a holding company with no operations of its own. Accordingly, GEN Inc. is dependent on distributions from GEN LLC to pay its taxes, its obligations under the Tax Receivable Agreement and other expenses.

Previous wording

Net cash provided by operating activities during the year ended December 31, 2022 was $23.4 million, the result of net income of $11.7 million, adjusted by non-cash adjustments of $4.0 million due to aborted deferred IPO costs written off, $4.4 million for depreciation and amortization, $2.6 million in amortization of operating lease assets, and net cash inflows of approximately $1.7 million from changes in operating assets and liabilities. The net cash inflows from changes in operating assets and liabilities were primarily the result of an increase of $2.0 million in accounts payable, and an increase of $1.7 million in other current liabilities, offset partially by a $1.4 million decrease in inventories and $1.4 million decrease in operating lease liabilities.

Current wording

Net cash provided by operating activities during the year ended December 31, 2024 was $17.8 million, the result of net income of $4.5 million, adjusted by non-cash charges of depreciation and amortization of $6.9 million, amortization of operating lease assets of $6.8 million and stock-based compensation of $3.0 million, partially offset by the gain of $3.4 million. The net cash outflows from changes in operating assets and liabilities were primarily flat.

Previous wording

Net cash provided by operating activities during the year ended December 31, 2023 was $22.2 million, the result of net income of $11.4 million, adjusted by non-cash charges of depreciation and amortization of $4.9 million, amortization of operating lease assets of $4.6 million and stock-based compensation of $1.5 million, offset by net cash outflows of approximately $0.3 million from changes in operating assets and liabilities. The net cash outflows from changes in operating assets and liabilities were primarily the result of an increase in prepaid expenses of $2.6 million and a decrease in operating lease liabilities of $3.1 million, partially offset by an increase in accounts payable of $3.0 million and a decrease in inventory of $2.1 million.

Current wording

Net cash provided by operating activities during the year ended December 31, 2023 was $22.2 million, the result of net income of $11.4 million, adjusted by non-cash charges of depreciation and amortization of $4.9 million, amortization of operating lease assets of $4.6 million and stock-based compensation of $1.5 million, partially offset by net cash outflows of approximately $0.3 million from changes in operating assets and liabilities. The net cash outflows from changes in operating assets and liabilities were primarily the result of an increase in prepaid expenses of $2.6 million and a decrease in operating lease liabilities of $3.1 million, partially offset by an increase in accounts payable of $3.0 million and a decrease in inventory of $2.1 million.