GEN Restaurant Group Reports 13% Revenue Growth but Faces $1.96 Million Net Loss in Q1 2025

GEN Restaurant Group, Inc. reported its financial results for the first quarter of 2025, revealing a revenue increase of 13% to $57.3 million, up from $50.8 million in the same period last year. This growth is attributed to the expansion of its restaurant base, with 49 locations operational compared to 39 a year earlier. However, the company experienced a net loss of $1.96 million, a significant decline from a net income of $3.7 million in the prior year, primarily due to increased operating expenses and a lack of one-time gains that had previously bolstered earnings.

The company's total restaurant operating expenses rose to $53.1 million, a 15.6% increase from $45.9 million in the previous year. Key contributors to this rise included food costs, which increased by 13.5% to $19.3 million, and payroll and benefits, which grew by 12.6% to $18.2 million. The increase in these costs reflects both inflationary pressures and the need to support a larger workforce across its expanding restaurant network. General and administrative expenses also saw a notable increase of 36.3%, reaching $6.4 million, driven by higher marketing and personnel costs associated with the company's growth strategy.

In terms of operational developments, GEN Restaurant Group opened six new restaurants during the first quarter of 2025, including locations in Florida, New Jersey, Texas, and North Carolina. The company has plans to open a total of 12 to 13 new locations throughout the fiscal year. As of March 31, 2025, the company had a total of 49 restaurants in operation, reflecting a commitment to geographic expansion and market penetration.

The company’s cash position decreased to $15.4 million from $23.7 million at the end of 2024, with working capital also declining to $(13.0) million. This change is attributed to increased capital expenditures related to new restaurant openings and operational costs. Despite these challenges, GEN Restaurant Group maintains a line of credit of $20 million, which remains untapped as of the end of the quarter, providing a potential source of liquidity for future investments.

Looking ahead, GEN Restaurant Group aims to continue its expansion strategy while managing rising costs. The company anticipates that its new restaurant openings will contribute positively to revenue growth, with a target payback period of less than three years for new locations. However, the management acknowledges the ongoing challenges posed by inflation and competitive market conditions, which may impact pricing strategies and overall profitability.