GEN Restaurant Group Inc., which owns the 34-unit GEN Korean BBQ House concept, began trading Wednesday in its initial public offering, joining a small list of brands seeking funds in the public markets this year.
The Cerritos, Calif.-based casual-dining company offered 3.6 million shares at $12 each, the high end of its $10-$12 range, and they began trading Wednesday at $18 a share and closed at $15.34. The company’s upsized offering was expected to raise about $43.2 million.
The GEN Restaurant Group IPO was a further test of the public-market appetite for restaurant stocks after Washington, D.C.-based Cava Group Inc., parent to the 263-unit fast-casual Mediterranean brand, made its successful public market debut in mid-June. Cava’s shares closed at $43.30 on its first day of trading, nearly double the announced pricing of $22 a share. Other brands such as Fogo de Chao, Panera Bread and Fat Brand’s Twin Peaks have expressed plans to make public offerings.
In the 12 months ended March 31, GEN Restaurant Group said it had revenues of $169 million and average unit volumes of $6 million. As of June 14, it had restaurants in seven states, including its home state of California as well as Arizona, Florida, Hawaii, Nevada, New York and Texas.
GEN Korean BBQ was founded in 2011 in Tustin, Calif., by Jae Chang and David Kim. Kim was the owner of Baja Fresh Mexican Grill and La Salsa Fresh Mexican Grill. In 2016, Kim sold both brands to the MTY Food Group Inc., a Montreal-based restaurant operator, in a $27 million deal.
Because GEN Restaurant Group had less than $1.07 billion in revenue during its last fiscal year, it qualified as an emerging growth company, or EGC, and had limited disclosure requirements, the company noted.
SEC documents said that in 2022, GEN Restaurant Group achieved a net income margin of 6.3% and a restaurant-level adjusted earnings before interest, taxes, depreciation and amortization margin of 20.5%.
The GEN Korean BBQ House concept allows customers to cook their own food. “Because our guests serve as their own chefs,” the company said in its Securities and Exchange Commission filings, “we believe our kitchens require a smaller percentage of our footprint than other casual-dining restaurant concepts, enabling more space for guest seating.”
“We offer an extensive menu of traditional Korean and Korean-American food, including high-quality meats, poultry, seafood and mixed vegetables, all at a superior value,” the company said in its SEC filings. “Our restaurants have modern décor, lively Korean pop music playing in the background and embedded grills in the center of each table.”
The food is served family-style, “which fosters more meaningful interaction than traditional casual dining,” GEN said in its filings. “We believe our unique culinary experience appeals to a vast segment of the population, particularly Millennials and Gen Z.”
Menu prices generally range from $17.95 to $20.99 for lunch and $25.95 to $29.95 for dinner, the company said, except $35.95 for dinner at the Miracle Mile Las Vegas, Nev., location and $26.95 for lunch, $32.95 for regular dinner and $36.95 for late dinner at the Manhattan location.
GEN Restaurant Group said it expects “to open six or seven additional locations during the rest of 2023.” It cited possible new markets that include such states such as Colorado, Georgia, New Jersey, Oregon, Utah and Virginia and also the District of Columbia.
“Going forward, we are targeting average net build-out costs of $3 million with AUVs of approximately $5 million for our new restaurant units,” the company said.
The company listed on the Nasdaq Stock Exchange under the symbol "GENK."
The sole book-running manager on the public offering was Roth Capital Partners with the Craig-Hallum Capital Group and The Benchmark Co. as co-managers.
Update June 28, 2023: This story was edited to include Wednesday's stock-market closing price.
Contact Ron Ruggless at [email protected]
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