Gen Restaurant Group Co-CEO on $43M IPO: 'We're a very profitable company'

Gen Restaurant Group (GENK) raised $43.2 million in its public debut on June 26, nearly double the expectations for the Korean BBQ restaurant chain.

"We, as a company, when we went public, we actually make a profit. We see a lot of companies that go public and try... to go towards a profit stage; we're a very profitable company," David Kim, Gen Restaurant Group co-founder and co-CEO, told Yahoo Finance.

However, the company is taking a cautious approach to growth after setting expectations high.

"You got to be very careful how you grow this because you need your staff, your human capital to support it. You can't just grow and open a lot of restaurants and they fail, so we're being very careful in how we approach this growth," Kim said.

The company currently has 34 locations located in seven states including California, Florida, Arizona, Nevada, Hawaii, Texas, and New York. The company originally shared in its S-1 filing plans to open roughly 250 locations in the US long term, but now it plans to open more.

"We tested some smaller markets, and they're actually doing extremely well for us, so the numbers are going to change to a much larger number in terms of our growth plan, but we're still gathering more information, understanding how our restaurants behave in a smaller market," he said.

In the 12 months ending March 31, 2023, the chain brought in $169 million in revenue and average unit volumes (AUV) of $6.0 million.

Building new restaurants, of course, comes at a high cost. The company is targeting an average net build cost of $3 million with higher AUVs of nearly $5 million, which means it will take two-and-a-half years to get back that build cost.

One key way the company is saving is by designing and fabricating its ventilation systems itself.

"We do have an internal building system — the hood system, we do it in-house ... It helps us to bring our costs down when we're building our restaurants and also is a faster means," co-Founder and co-CEO Jae Chang said.

These ventilation systems play a crucial role in its cook-it-yourself business model, where customers actually cook their own food, though accidents happen.

"If you burn it, I'm sorry, but we'll give you more. We'll give you a lot more," Chang said.

While the restaurant and bar industry is seeing the cost of food move higher, up 0.4%, according to the Bureau of Labor Statistics' (BLS) June Consumer Price Index (CPI), Gen Restaurant Group said it was able to work around food inflation.

"We've been very blessed where we've been able to control our food costs. We have 30-plus different cuts of meat — it's a combination of chicken, beef, seafood."

The all-inclusive price allows customers to add unlimited quantities of food for a fixed price, ranging from $17.95 to $20.99 for lunch and $25.95 to $29.95 for dinner, as prices fluctuate slightly by market.

Who does this style appeal to the most? Gen Z and millennials.

"It's one of those interactive concepts [which] the younger generation just loves it. It's a family style."

But Chang emphasized the concept of Korean BBQ itself is nothing new and that the company is simply scaling it.

"The concept has been there for a very, very long time — 40 years plus. We just mainstreamed it. We just wanted to make sure everybody has a chance to understand what Korean barbecue is."

For both Kim and Chang, this moment and opportunity is everything.

Both are Korean immigrants who worked their way up the ranks, starting out as restaurant dishwashers to where they are today. To all entrepreneurs looking to pursue a similar journey, Kim had one, simple message: The "American dream is still alive."

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Brooke DiPalma is a reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.

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