Yahoo Finance
As of Dec. 2024, it employs around 2700 employees. Around 60 per restaurant.
June. 04, 2025
Q1 2025 Data
Price: $4.25, Shares: 33m, Cap: $140m.
Summary
*A restaurant chain whose stock price had dropped over 70% from its IPO price of $12 in 2023. It was caused by comparable sales drop and higher expenses, as a result its profit went downward.
* The UP-C based A&B dual share structure and the financial leasing accounting also caused confusion for retail investors, and the limited public float (less than 5m) make it unsuitable for institutional investors.
* If the business stabilizes, it is expected to generate at least $250m in revenue, $15m to $20m in real EBITDA and $10m to $15m in real profit. The current $140m market cap has been more than discounted for the downward risk.
Business
(1) History
(1) History
The company was founded by David Kim and Jae Chang, both Korean immigrants, in 2011. They captured the getting popular Korean cuisine by opening the all-you-can-eat KBBQ restaurants. By 2019, it had opened 28 restaurants and generated $113m in annual revenue. Then the Covid hit, it came out ok with 6 new restaurants been opened in 2022. It IPOed in the middle of 2023, raised around $46m at $12/share. Ended with over $180m in revenue for that year.
Since the time of IPO, it continued its expansion plan by opened 6 restaurants in 2023, 6 in 2024 and 6 more in Q1 2025. The current revenue run rate is expected to be around $250m.
However, since 2024, its comparable sales started sliding. It contracted by 5% in 2024 and 0.7% in Q1 2025. Also, its restaurant EBITDA margin has decreased while its SG&A expense is up. Its real EBITDA drop from $4m - $6m per quarter to around $3m - $4m per quarter.
Currently, as of Q1 2025, it operates 49 Ken BBQ restaurants. It targets to open around 10 new restaurants per year for year 2025 and 2026.
(2) Product & Services
GEN BBQ: For each store usually generates around $5m in AUC. Both food and labour cost around 30%, rental around 10%, added other expenses, usually a restaurant generates 15% to 20% in EBITDA. Since the IPO, the number has slide toward the lower end.
The restaurant is AYCE style which charges the customer a flat fee of around $20 for lunch and $30-$35 for dinner. There is a premium menu which will charge $20 more.
Kan Sushi: It is currently testing a dual store model, which put a GEN BBQ and a sushi store together. There is currently only one location using this format.
The cost of opening a new restaurant is around $2m to $3m. Usually, it can be paid back around just 2 years. However, lately this is getting longer. It plans to open 2 restaurants in South Korea this year. The cost of opening a new restaurant and labour cost are significantly lower in Korea.
(3) Industry
The casual dinning industry is very sensitive to economic conditions. Thus, by nature it is very cyclical. Whenever there is a high inflation, a recession or merely an uncertainty, the consumer would tend to cut down dining outside.
In 2021 and 2022, the sector enjoyed a very high growth post-pandemic. However, since 2023, caused by high inflation, people are more towards takeout and drive-through than dining out. For the first quarter of 2025, as the tariff war starts, consumer started to be cautions on spending again.
In 2024, red lobster filed for bankruptcy.
On the other side, the casual dining industry paints a much different picture. It has been enjoying much better growth post-pandemic. It seems to be a shift from fine-dining towards to fast casual dining.
Major competitors:
KPOT: A franchise chain features both Korean hotpot and BBQ together, which grew very fast to over 100 restaurants already. It is also AYCE and charged similar price to GEN BBQ.
(4) Seasonality
It seems the second and third quarter are better than the first quarter and fourth quarter.
(5)Employees
2. Management
(1) Management
David Kim: CEO. He was an immigrant from South Korea at a young age. Entered restaurant businesses at his early age. In 2006, with his brother and some other investor, they bought the troubled Baja Fresh fast food chain and try to turn it around. He became the CEO of Baja Fresh and was featured in one of the episodes of the under-covered boss TV show. In 2011, he stepped down from CEO of Baja Fresh and started the GEN BBQ restaurant chain.
(2) Ownership and Compensation
David Family: 170k A shares + 10.7m B shares, 33%
Jae Chang: Co-founder, holds 8.3m B shares. 25%.
All major shareholders and insiders together own around 40% of A shares + 100% of B shares.
David was paid around $300k in 2023 and 2024 which is very modest.
3. Financial data
Notes: debt
5m government debt.
Notes: Share Data
5m A shares + 28m B shares. The B share has 10 votes for each share.
Options: Very few options are outstanding.
4. Valuation and comments
(1) The company is currently valued at less than 60% of its annual revenue. Around 8x of its 2024 real EBITDA, and around just 10x of it actual income or FCF. It is quite cheap even if it stops growing and just maintains the current profit. Obviously, the market is thinking the business will go downward going forward.
(1) The company is currently valued at less than 60% of its annual revenue. Around 8x of its 2024 real EBITDA, and around just 10x of it actual income or FCF. It is quite cheap even if it stops growing and just maintains the current profit. Obviously, the market is thinking the business will go downward going forward.
(2) I think the comparable sales decline is caused by both the industry headwind and the managements focus on opening new restaurants. It is somewhat concerning, but I feel it will be stabilized eventually.
(3) The management has a long history of running the fast food restaurant industry. Especially, they used to buy troubled restaurants and turn their business around. Those experience should add some confidence that they could face future operation challenges.
(4) Assuming it generates $250m in revenue and 15% in restaurant EBITDA. It could generate around $37.5m profit before SG&A. It can easily generate around $15m-$20m EBT if it just cut down its corporate expenses.
5. Risk
(1) The casual dinning industry is currently experiencing a headwind. It might last a very long time, or it might never recover.
(2) The KBBQ space has no barrier to enter. The entering of other players or the current competitions both could significantly shrink its profitability or even force it to close restaurants.
(3) If not managed well, its restaurants could easily become unprofitable.
(4) Consumer's love for Korean cuisine might change and shift to other new dining options.
6. Conclusion
This company has been growing very well in the past and currently is experiencing sone headwinds. The current valuation is very attractive. However, a casual dining restaurant chain could change very fast. Should watch it very closely.
7. Links
