GEN Restaurant Group, Inc. reported its financial results for the three and nine months ended September 30, 2024, showing notable changes in revenue, profitability, and strategic developments compared to the previous fiscal period.

For the three months ended September 30, 2024, the company generated revenue of $49.1 million, a 7.8% increase from $45.6 million in the same period of 2023. However, net income significantly decreased to $169,000 from $2.6 million, reflecting a 93.6% decline. The income from operations also fell sharply to $88,000 from $2.5 million, indicating challenges in maintaining profitability despite revenue growth. For the nine-month period, revenue rose to $153.7 million, up 13.1% from $135.9 million, but net income dropped to $5.9 million from $11.6 million, a 49.0% decrease.

Total restaurant operating expenses for the three months increased by 11.4% to $43.8 million, while total costs and expenses rose by 13.7% to $49.0 million. The increase in expenses was attributed to higher food costs, payroll, and general administrative expenses, which surged by 25.0% and 37.3%, respectively, compared to the same quarter in 2023. The company also reported a significant rise in pre-opening costs, totaling $1.8 million for the quarter, compared to $0.7 million in the prior year.

Strategically, GEN Restaurant Group expanded its operations, increasing the number of restaurants from 37 at the end of 2023 to 41 by September 30, 2024. The company also completed the acquisition of the remaining 50% interest in GKBH Restaurant, LLC, gaining full control, and signed leases for three new locations in Clearwater, FL, Naperville, IL, and South Austin, TX.

Financially, the company faced challenges with cash flow, reporting cash and cash equivalents of $22.1 million as of September 30, 2024, down from $32.6 million at the end of 2023. The net cash used in investing activities was notably high at $22.7 million, primarily due to property and equipment purchases and the GKBH acquisition.

The company’s balance sheet showed total assets of $225.7 million, up from $183.9 million at the end of 2023, while total liabilities increased to $177.7 million from $146.4 million. The increase in liabilities was driven by higher operational costs and investments in growth.

Overall, while GEN Restaurant Group experienced revenue growth, it faced significant challenges in profitability and cash flow management during the reported periods.