GEN Restaurant Group (NASDAQ:GENK) reported second-quarter revenue growth as its consumer packaged goods business expanded rapidly, while restaurant-level profitability remained below the prior-year period amid commodity inflation, softer comparable sales and investments in retail distribution.
Total revenue increased 1.2% to $55.7 million for the quarter ended June 30, compared with $55 million a year earlier. Chief Financial Officer Luke Hewko said growth in CPG revenue and contributions from restaurants opened during 2025 and 2026 more than offset a decline in comparable restaurant sales and the impact of restaurants transferred to a joint venture.
CPG Revenue Accelerates as Retail Footprint Expands
Chairman and Chief Executive Officer David Kim said the CPG division generated its strongest quarter to date. CPG revenue rose 341% sequentially from the first quarter, led by frozen raw, uncooked marinated meat products. June revenue exceeded $2 million, and GEN products were placed in nearly 2,000 retail locations nationwide, according to Kim.
The company previously projected CPG distribution in 1,500 to 2,000 U.S. locations by the end of 2026, with a revenue run rate exceeding $20 million. Kim said GEN now estimates a 12-month revenue run rate of between $35 million and $40 million based largely on current sales activity.
During the question-and-answer session, Kim said that run-rate estimate assumes “very little” contribution from new customers and does not include potential revenue from planned prepared-meal products. He said the June figure included sales associated with new placements, and retailers generally reorder products on schedules that can range from two to four weeks.
GEN’s current retail customers include Albertsons banners, Stater Bros., Smart & Final, Save Mart, BevMo! and multiple Costco regions, Kim said. The company has presented products to more than 1,000 additional potential retail doors, including BJ’s Wholesale Club, Walmart, cruise lines and wholesalers, while pursuing more than 8,000 additional locations.
The CPG business is focused primarily on six frozen marinated beef, pork and chicken products. Kim said roughly 90% of the division’s attention remains directed toward its meat products, though GEN is also testing Korean beverages, snacks, jerky and other products manufactured in South Korea.
Kim said GEN has approved three of four products for a planned line of prepared replacement meals and is presenting the products to grocers while packaging is still being completed. The prepared-meal category was not included in the company’s $35 million to $40 million CPG run-rate projection, he said.
Margins Reflect CPG Investment and Restaurant Pressures
Cost of goods sold rose to 39.1% of revenue from 33.8% a year earlier. Hewko said 81% of the $3.2 million increase in food-cost dollars came from the CPG business, which has retail cost of goods sold that was not present in the prior-year period. The remainder reflected commodity cost inflation.
Payroll and benefits improved to 28% of revenue from 30.1%, reflecting labor efficiencies. Occupancy costs increased to 9.6% of revenue from 9.3%, although Hewko said occupancy benefits from restaurants exited during the quarter are expected to begin in the third quarter.
Other operating costs rose to 12.1% of revenue from 10.7%. General and administrative expense increased to $7.1 million, or 12.8% of revenue, from $6.4 million, or 11.6% of revenue. Hewko attributed the increase entirely to CPG go-to-market spending, including marketing and in-store demonstrations. Excluding CPG, he said corporate and restaurant G&A declined year over year.
Loss from operations was $5.2 million, or 9.2% of revenue, compared with a $1.9 million loss, or 3.4% of revenue, in the prior-year quarter. The latest result included a $600,000 loss on a lease termination.
Net loss widened to $4.6 million from $1.7 million a year earlier. Net loss attributable to GEN Restaurant Group was $0.14 per basic and diluted Class A share, compared with a loss of $0.05 per share in the 2025 quarter.
Restaurant-level adjusted EBITDA was $6.3 million, or 11.3% of revenue, down from $9 million, or 16.3% of revenue, a year ago. Still, Hewko characterized the quarter as a sequential improvement, with restaurant-level margin rising from 7.4% in the first quarter and 7.9% in the fourth quarter of 2025.
Balance Sheet, Restaurant Transaction and Outlook
Cash and cash equivalents totaled $5.9 million as of June 30, up from $2.8 million at the end of 2025. Total debt was $24 million, compared with $14.6 million at year-end, primarily reflecting an $11 million net draw on the company’s line of credit to support working capital and CPG inventory.
First-half capital expenditures fell to $5.3 million from $16.5 million a year earlier as GEN slowed restaurant development.
The company expects to complete the fifth and final restaurant transfer under its previously announced joint-venture transaction during the third quarter. It reiterated full-year revenue guidance of $215 million to $225 million and said its priorities are improving restaurant margins, scaling CPG distribution and maintaining capital discipline.
Regarding the proposed restaurant-operations sale, Kim said the board, along with financial and legal advisers, is reviewing the non-binding proposal and may evaluate a broader process. He cautioned that there is no assurance definitive agreements will be reached or that a transaction will be completed.
About GEN Restaurant Group (NASDAQ:GENK)
GEN Restaurant Group, Inc, operating as Gen Korean BBQ House, is a restaurant operator specializing in an all-you-can-eat Korean barbecue dining concept. The company offers patrons a hands-on grilling experience with a selection of premium meats, seafood, and vegetables cooked tableside, alongside traditional Korean side dishes and beverages. Gen Korean BBQ House locations feature modern décor and a fast-casual service style designed to appeal to a broad demographic of consumers seeking experiential dining.
The company’s restaurants serve a core menu of marinated and non-marinated proteins, including beef, pork, chicken and plant-based alternatives, complemented by signature banchan (side dishes), sauces and dessert offerings.
