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 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.

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, 2025 and 2024. The terms “we”, “our”, and “us” as used herein refer to the Operating Company and its consolidated subsidiaries prior to the IPO and related transactions described in this Form 10-K and GEN Restaurant Group, Inc. and its consolidated subsidiaries, including the Operating Company, following the IPO and related 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 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.

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 opening of our first restaurant in September 2011 we have grown to 57 company-owned restaurants located in California, Arizona, Hawaii, Nevada, Texas, New York, Oregon, New Jersey, Washington, North Carolina, Florida and six stores in South Korea. Our restaurants have modern décor, lively Korean pop music playing in the background and embedded grills in the center of each table. We believe we offer our customers a unique dining experience in which guests cook the majority of the food themselves, reducing the need for chefs and servers and providing a similar customer experience across the restaurants.

Previous 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.

Current wording

We expect to continue to grow our number of restaurants in the future. 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 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

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 each of 2023 and 2024. During the year 2025, we opened 15 new restaurants, including six in South Korea. Subsequent to December 31, 2025, we opened two new restaurants in Tucson, AZ and Denton, TX. In addition to these opening, as of December 31, 2025 we have entered into leases for 18 new restaurant locations, with openings planned during 2026 and thereafter. The 15 restaurants opened during 2025 are located in Orlando, FL, Edison, NJ, San Antonio TX, Cary, NC, Waco, TX, El Paso, TX, La Jolla, CA and two in Austin, TX. In addition to the Tucson, AZ restaurant we opened in January 2026 and the Denton, TX restaurant we opened in March 2026 , we currently expect to open four to eight other locations during 2026. Additionally, we expanded internationally into South Korea with six Company-owned locations in 2025. Future sales and profitability levels of our restaurants and our ability to successfully implement our growth strategy in the near term, however, remain uncertain.

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, 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.

Current wording

On September 29, 2023, the Company entered into a $20 million line of credit with PCB bank. The line of credit matures on September 25, 2026 and bears interest at a variable rate per annum equal to 7.0% as of December 31, 2025. As of December 31, 2025 the balance was $1.0 million. On January 12, 2026, the Company paid the $1.0 million balance.

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, 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.

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 (Loss) Income Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted net (loss) income, Adjusted Net (Loss) Income attributable to Class A common stock per share - basic and diluted, Adjusted earnings (loss) per share, (“EPS”), Restaurant-Level Adjusted EBITDA, Restaurant-Level Adjusted EBITDA Margin, Average Unit Volumes, comparable restaurant sales growth, the number of restaurant openings and revenue per square foot.

Previous 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.”

Current wording

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

Previous wording

Adjusted Net Income and Adjusted net income per share represents net income before income taxes, adjusted for stock-based compensation, and the related tax impact of the stock-based compensation adjustment, and provision for income taxes. “Adjusted EPS” is Adjusted Net Income, converted to a per share amount. Adjusted Net Income and Adjusted EPS are non-GAAP measures intended as supplemental measures of our performance and are neither required by, nor presented in accordance with, GAAP. For a discussion of why we consider these measures to be useful and their material risk and limitations, see“Non-GAAP Financial Measures.”

Current wording

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

Previous wording

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

Current wording

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

Previous 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:

Current wording

“Revenue per square foot” means the restaurant sales for all restaurants opened a full 18 months before the end of the 18 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, 2025 and 2024:

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. Revenue also includes gift card revenue earned.

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, and revenue earned through retail or wholesale distribution.

Previous 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.

Current wording

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

Previous wording

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

Current wording

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

Previous 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.

Current wording

Equity in loss of equity method investee. Equity in 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

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

Current wording

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

Previous 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.

Current wording

Revenues. Revenues were $212.5 million for the year ended December 31, 2025, compared to $208.4 million for the year ended December 31, 2024, an increase of $4.2 million, or 2.0%. This primarily reflects having 57 restaurants open in the year ended December 31, 2025 compared to 43 restaurants open in the year ended December 31, 2024.

Previous 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%.

Current wording

Food costs. Food costs were $73.8 million for the year ended December 31, 2025, compared to $68.7 million for the year ended December 31, 2024, an increase of $5.1 million, or 7.4%. The increase in food costs primarily reflects more restaurants in operation and inflationary cost increases. As a percentage of revenue, food costs increased from 33.0% to 34.6%.

Previous 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%.

Current wording

Payroll and benefits. Payroll and benefits costs were $64.9 million for the year ended December 31, 2025, compared to $64.3 million for the year ended December 31, 2024, an increase of $0.6 million, or 1.0%. The increase in payroll and benefits costs is primarily due to new restaurants, partially offset by labor efficiencies implemented. As a percentage of revenue, payroll and benefits costs decreased from 30.9% to 30.4%.

Previous 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.

Current wording

Occupancy expenses. Occupancy expenses were $21.2 million for the year ended December 31, 2025 compared to $17.5 million for the year ended December 31, 2024, an increase of $3.7 million, or 21.0%. The increase in occupancy expenses reflects the addition of 15 new locations in 2025. As a percentage of revenue, occupancy expenses increased from 8.4% in 2024 compared to 10.0% in 2025.

Previous 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.

Current wording

Operating expenses. Operating expenses were $24.2 million for the year ended December 31, 2025 compared to $21.5 million for the year ended December 31, 2024, an increase of $2.6 million, or 12.2%, as expenses increased to support revenue growth and reflected inflationary cost increases. As a percentage of revenue, operating expenses were 11.4% in 2025 and 10.3% in 2024.

Previous 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.

Current wording

Depreciation and amortization expenses. Depreciation and amortization expenses were $9.0 million for the year ended December 31, 2025 and $6.7 million for the year ended December 31, 2024. As a percentage of revenue, depreciation and amortization expenses at the restaurant-level were 4.2% in 2025 and 3.2.% in 2024.

Previous 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.

Current wording

Pre-opening costs. Pre-opening costs were $8.3 million for the year ended December 31, 2025 compared to $7.6 million for the year ended December 31, 2024. This increase was due to more restaurants under development and opened in 2025 than in 2024.

Previous 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.

Current wording

General and administrative expenses. General and administrative expenses were $25.9 million for the year ended December 31, 2025 compared to $21.3 million for the year ended December 31, 2024, an increase of $4.6 million, or 21.6%. As a percentage of revenue, general and administrative expenses increased from 10.2% in 2024 to 12.2% in 2025 as marketing and personnel costs increased in connection with the expansion of restaurants in development.

Previous 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.

Current wording

Employee retention credits. During both the years ended December 31, 2025 and December 31, 2024 we received employee retention credits from the IRS in the amount of $0.3 million and $0.2 million, respectively.

Previous wording

Other income (loss). Other income (loss) consists of one-time legal accruals and other miscellaneous items.

Current wording

Other loss. Other loss consists of one-time legal accruals and other miscellaneous items. During the years ended December 31, 2025 and 2024, we incurred approximately $346 thousand, and $0 of these expenses, respectively.

Previous 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.

Current wording

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

Previous 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.

Current wording

Equity in loss of equity method investee. Equity in 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. Equity method investee was a loss of $17 thousand in 2024.

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. We believe that Adjusted EBITDA and Adjusted EBITDA Margin provide useful information to management and investors regarding certain financial and business trends relating to our financial condition and operating results, as these measure depict normal recurring cash operating expenses essential to supporting the operations of our company.

Current wording

Adjusted EBITDA represents net income excluding interest (income) expense, income taxes, depreciation and amortization, stock-based compensation, and also excludes non-recurring and certain other non-cash items such as employee retention credits, litigation accruals, non-cash lease expense, non-cash lease expense included in pre-opening costs and gain on remeasurement of previously held interest. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by revenue. We believe that Adjusted EBITDA and Adjusted EBITDA Margin provide useful information to management and investors regarding certain financial and business trends relating to our financial condition and operating results, as these measure depict normal recurring cash operating expenses essential to supporting the operations of our company.

Previous wording

The following table reconciles net income to Adjusted EBITDA for the year ended December 31, 2024 and December 31, 2023:

Current wording

The following table reconciles net (loss) income to Adjusted EBITDA for the years ended December 31, 2025 and December 31, 2024:

Previous wording

The following table reconciles Net income before taxes to Adjusted net income and Adjusted net income per share for the twelve months ending December 31, 2024 and 2023:

Current wording

The following table reconciles Net (loss) income before taxes to Adjusted net (loss) income and Adjusted net (loss) income per share attributable to Class A common stock per share-basic and diluted for the years ended December 31, 2025 and 2024:

Previous 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.

Current wording

Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted net (loss) income, Adjusted net (loss) income attributable to Class A common stock per share - basic and diluted, 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 (loss) income, Adjusted net (loss) income attributable to Class A common stock per share-basic and diluted, 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 these measures 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, 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.

Current wording

As of December 31, 2025 we had $2.8 million of cash and ($31.3) million of working capital deficit, which is calculated as current assets minus current liabilities, compared with $23.7 million of cash and ($7.2) million of working capital deficit as of December 31, 2024. 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

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.

Current wording

Net cash provided by operating activities during the year ended December 31, 2025 was $3.4 million, the result of net loss of $19.4 million, adjusted by non-cash charges of depreciation and amortization of $9.1 million, amortization of operating lease assets of $6.4 million, impairment expense of $5.5 million and stock-based compensation of $3.0 million, partially offset by the increase of $8.7 million from gift cards and a decrease in accounts receivable of $6.9 million. The net cash inflows from changes in operating assets and liabilities were $196 thousand.

Previous wording

Net cash used in investing activities during the year ended December 31, 2023 was $6.3 million, reflecting $10.9 million in the net recovery of proceeds from advances made to a related party, partially offset by $17.2 million for the purchase of property and equipment.

Current wording

Net cash used in investing activities during the year ended December 31, 2025 was $27.7 million, for the purchase of property and equipment.

Previous wording

Net cash provided by financing activities during the year ended December 31, 2024 was $18 thousand, primarily due to $3.0 million in proceeds from third party debt and proceeds of $3.0 million from line of credit, partially offset by payments of $3.8 million on third party loans, $0.9 million for member distribution, and payments to members for advances of $0.9 million.

Current wording

Net cash provided by financing activities during the year ended December 31, 2024 was $18 thousand, primarily due to $3.0 million in proceeds from third party debt and proceeds of $3.0 million from line of credit, partially offset by payments of $3.8 million on third party loans, $0.9 million for member distributions, and payments to members for advances of $0.9 million.

Previous wording

We assess potential impairments of our long-lived assets, which includes property and equipment and operating lease right-of-use assets, in accordance with the provisions of Financial Accounting Standards Board, (“FASB”), Accounting Standards Codification, (“ASC”) 360, “Property, Plant and Equipment.” An impairment test is performed on a quarterly basis or whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. In determining the recoverability of the asset value, an analysis is performed at the individual restaurant level. Assets are grouped at the individual restaurant-level for purposes of the impairment assessment because a restaurant represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Recoverability of an asset group is measured by a comparison of the carrying amount of an asset group to its estimated forecasted restaurant cash flows expected to be generated by the asset group. Factors considered by us in estimating future cash flows include, but are not limited to: significant underperformance relative to expected historical or projected future operating results; significant changes in the manner of use of the acquired assets; and significant negative industry or economic trends. If the carrying amount of the asset group exceeds its estimated undiscounted future cash flows, an impairment charge is recognized as the amount by which the carrying amount of the asset exceeds the fair value of the asset.

Current wording

An impairment test is performed on a quarterly basis or whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. In determining the recoverability of the asset value, an analysis is performed at the individual restaurant level. Assets are grouped at the individual restaurant-level for purposes of the impairment assessment because a restaurant represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Recoverability of an asset group is measured by a comparison of the carrying amount of an asset group to its estimated forecasted restaurant cash flows expected to be generated by the asset group. Factors considered by us in estimating future cash flows include, but are not limited to: significant underperformance relative to expected historical or projected future operating results; significant changes in the manner of use of the acquired assets; and significant negative industry or economic trends. If the carrying amount of the asset group exceeds its estimated undiscounted future cash flows, an impairment charge is recognized as the amount by which the carrying amount of the asset exceeds the fair value of the asset.

Previous wording

See Note 2 - Basis of Presentation and Summary of Significant Accounting Policies, for a discussion of recently adopted accounting standard.

Current wording

See “Note 2 - Basis of Presentation and Summary of Significant Accounting Policies” to the financial statements, for a discussion of recently adopted accounting standard.