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Korean BBQ Chain Gen Restaurant to Go Public

An all-you-can-eat Korean barbecue chain with Orange County roots is cooking up plans to go public.

Gen Restaurant Group Inc., also known as Gen Korean BBQ, last month filed plans for an initial public offering, with proceeds earmarked for its operations and a national expansion.

The 12-year-old company, which got its start in Tustin and now counts headquarters about a mile over the county line in Cerritos, will don the ticker symbol “GENK” on the Nasdaq when the IPO is completed.

Gen Restaurant is aiming to raise $25 million with its IPO, according to investment advising company Renaissance Capital, though the restaurant chain has yet to disclose its desired funding or likely stock price in regulatory filings.

The company’s IPO paperwork indicates that since 2020, it has nearly tripled its annual revenue, with $164 million reported last year.

Gen Restaurant currently has 32 locations across California, Arizona, Nevada, Hawaii, Texas and New York. Its OC locations include its initial spot in Tustin, plus sites in Fullerton and Huntington Beach.

Locations average about $6 million in sales annually.

The company’s ties to OC go beyond its Tustin origins. Gen Restaurant is currently represented by law firms Gibson, Dunn & Crutcher in Irvine and Newport Beach-based Stradling Yocca Carlson & Rauth. Its IPO is being underwritten by Roth Capital Partners in Newport Beach.

Sushi, Ramen Chains

Gen Restaurant would add to a growing roster of locally based Asian restaurant chains that have tapped the public markets in recent years, with varied results.

Irvine-based Kura Sushi USA (Nasdaq: KRUS) went public in 2019 at $14 a share; stock for the revolving sushi chain, with some 45 locations, now trades around $82, giving it a market cap over $900 million as of last week.

Kura is OC’s 16th-largest restaurant chain by sales, with $141.1 million for the 12 months ended August 2022.

Buena Park-based ramen chain Yoshiharu Global Co. (Nasdaq: YOSH) raised $12 million in a smaller-sized IPO last year. Yoshiharu reported $8.3 million in 2022 revenue, up 27% from the year prior.

The nine-location ramen chain, now valued at $9 million, has seen its shares fall 87% since going public at around $5 apiece last September.

Declining IPO Market

Gen Restaurant is among the first reported local companies with plans to go public this year through a traditional IPO. Many OC companies hoping to join the public markets are doing so via a reverse merger with a special purpose acquisition company, or SPAC, which is considered a faster route to public trading than a traditional IPO.

Should Gen successfully go public this year, the restaurant chain will do so in a declining IPO market.

The U.S. stock market this year has seen a total of 68 IPOs as of the end of last month.

That’s 41% less than the same time last year, according to investment analytics firm Stock Analysis.

The domestic and global decline of IPOs can be attributed to market volatility, the “dismal performance” of IPOs listed in 2021 and higher inflation and interest rates, which have caused investors to avoid new public companies, according to data from a report last year by EY.

The number of U.S. IPOs continues to fall from the year prior, when the stock market saw a total of 181, down 83% from the record 1,035 in 2021.

Regulatory filings indicate that Gen Restaurant has been plotting an IPO since late 2021.
Restaurateur-Led

Gen Restaurant’s co-founders David Kim and Jae Chang both immigrated from Korea and founded the company over a decade ago in Tustin. The chain is one of many restaurant ventures led by the duo.

Kim previously ran Baja Fresh Mexican Grill, which was owned at the time by his investment group, Cypress-based Fresh Enterprises Inc. Baja Fresh in 2009 moved from Thousand Oaks to Fresh Enterprise’s home city as part of a consolidation effort led by Kim.

While serving as CEO of Baja Fresh, Kim also ran La Salsa Inc., another locally based fast-casual Mexican restaurant chain. The Baja Fresh and La Salsa chains in 2016 were sold to an out-of-town ownership group for a reported $27 million.

Like Kim, Chang has also owned and managed several restaurant brands, including H2O Sushi and Izakaya, Korean rice bowl chain California Gogi Grill and all-you-can-eat hot pot joint Shabuya.

Pandemic Rebound

Gen Korean BBQ locations emphasize family-style meals, which “requires guests to share and coordinate their cooking responsibilities,” the company’s IPO paperwork notes.

That type of dining experience took a steep hit during the pandemic. Gen’s revenue in 2020 fell 45% from the year prior to $63 million.

The company that year temporarily closed its restaurants then offered takeout only at select locations. As restrictions were lifted, Gen eventually opened up to allow limited indoor dining and outdoor dining at some of its sites.

The following year, the company bounced back. Gen more than doubled its revenue to $141 million in 2021. The company then continued its growth streak in 2022, topping revenue 16% at $164 million.

Gen appears on track to surpass its revenue last year, as first-quarter sales jumped 15% year-over-year to $44 million.

Growth Plans

Funding from Gen’s planned IPO will help the chain ramp up to grow its footprint and enter new markets.

The company has already opened a new restaurant in Cerritos this year. It plans to open six to seven more locations by the end of 2023.

Following this year, Gen aims to open eight to 10 restaurants annually in new markets such as Oregon, Georgia, Virginia, Utah and Washington, D.C., filings indicate.

Gen officials believe that, in the long-term, the restaurant chain can grow to a total of 250 locations in the U.S.

“Our unique culinary experience appeals to a vast segment of the population, particularly millennials and Gen Z,” the company said in filings.

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