Good day, ladies and gentlemen, and thank you for standing by. Welcome to the GEN Restaurant Group, Inc. Fourth Quarter 2023 Earnings Conference Call. At this time, all participants have been placed in a listen-only mode, and the lines will be open for your questions following the presentation. Please note that this conference is being recorded today, March 6, 2024. Now I would like to turn the conference over to Tom Croal, the company's Chief Financial Officer. Thank you, operator, and good afternoon. By now, everyone should have access to our fourth quarter 2023 earnings release. If not, it can be found at www.genkoreanbbq.com in the Investor Relations section. Before we begin our formal remarks, I need to remind everyone that our discussions today will include forward-looking statements within the meaning of federal securities laws, including but not limited to, statements regarding our growth plans and potential new store openings, as well as those types of statements identified in our Annual Report on Form 10-K for the year ended December 31, 2023, and our subsequent reports filed with the SEC. These forward-looking statements are not guarantees of future performance, and therefore you should not put undue reliance on them These statements represent our views only as of the date of this call and are also subject to numerous risks and uncertainties that could cause actual results to differ materially from what we currently expect. We refer you to our recent SEC filings, including our annual report on Form 10-K, for a more detailed discussion of the risks that can impact our future operating results and financial condition. Except as required by law, we undertake no obligation to update or revise these forward-looking statements in light of new information or future events. During today's call, we will discuss some non-GAAP financial measures, which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are available in our earnings press release and our SEC filings, which are available in the Investor Relations section of our website. Now, I'd like to turn it over to our Board Chair and Co-CEO, David Kim. Thank you, Tom, and good afternoon, everybody. During 2023, the company achieved record revenues of $181 million, representing growth of over 10% versus 2022. This was driven by the opening of 6 new restaurants, including 3 new restaurants in the fourth quarter. As we look ahead to 2024, we expect double-digit revenue growth, driven by eight new restaurant openings over the coming year. Before I get into the details of the quarter, let me remind you of what makes GEN Korean BBQ truly unique. We are a full-service, sit-down, not a buffet, casual dining restaurant concept, serving a variety of proteins, including steak, pork, chicken, seafood, and salad across both lunch and dinner, all at an affordable, all-inclusive price. Unlike other restaurant concepts, every GEN Korean BBQ experience provides our guests with an efficient cook-it-yourself-at-each-table model. This eliminates the need for cooks at our restaurants, enabling us to keep our prices low and allows us to provide the best value proposition to our guests. Moreover, our small, smaller kitchen footprint also provides us with additional space for tables, allowing more guests to enjoy our dining experience. With that background, let's talk about the restaurant development. During the fourth quarter, we opened three new restaurants, one in Houston, Texas, in October, one in Kapolei, Hawaii, in November, and one in Arlington, Texas, in December. This gives us a total of six new restaurants for year 2023. Looking ahead to 2024, we anticipate opening eight new restaurants. During February of 2024, we opened two new restaurants, both one in Dallas and one in Seattle. The six remaining restaurants will open throughout the year, with most expected in the fourth quarter. In addition to the eight new restaurants in 2024, we have 10 additional leases in various stages of negotiations that we would expect to be 2025 new restaurants. We are excited and committed to expanding our footprint and growing GEN Korean BBQ. We believe the growth opportunity ahead of us is substantial. We remain pleased with the performance of our four restaurants from 2022 and early 2023. As we stated on our last call, the stores continue to collectively generate annualized average unit volume of approximately $5 million and remain on track for an average payback period of approximately 2.2 years. Within our restaurants, we're currently in a testing phase of new menu items and drinks, options that we are in the works of a rollout. Operationally, during the quarter, we completed an integration of the two operating companies into one. We also completed a switch from US Foods to Sysco. While these operational initiatives involved additional costs above what we were expecting in the quarter and impacted our profitability, I'm pleased to say that both of these initiatives are completed. Importantly, we believe we have a solid foundation to create a great guest experience and drive further growth for GEN Korean BBQ as we add new restaurants throughout the country. In closing, we believe we have an exciting growth pipeline ahead of us. Not only do we expect to open eight new restaurants, but we are also funding these new restaurants primarily through the free cash flow, further demonstrating the strength of our business. Coupled with the attractive new unit economics that are among the best in the industry, we believe we have the necessary foundation to capture the opportunities ahead and enhance long-term value for our shareholders. With that, I would now like to turn the call over to our CFO, Tom Croal, to discuss our results. Thank you, David. For the year ended December 31, 2023, revenues increased 10.6% to $181 million, compared to $163.7 million in 2022, driven by new unit openings and a 0.6% increase in same-store sales. For the fourth quarter, revenue increased 10.4% to $45.1 million, compared to $40.8 million in the fourth quarter of 2022, driven primarily by new unit openings. Same-store sales decreased by 1.7% in the fourth quarter of 2023 as compared to the fourth quarter of 2022. Turning to expenses, cost of goods sold as a percentage of company restaurant sales decreased by 20 basis points to 32.6%, primarily due to more favorable commodity pricing and ongoing negotiations with our vendors. Payroll and benefits, as a percentage of company restaurant sales, increased by 90 basis points to 32.1%, due to increases in minimum wage rates in certain markets which we operate, primarily California, short-term high labor costs in newly opened restaurants as we train staff and management, and upgrading the quality of our restaurant managers. Importantly, we believe we have a solid foundation to continue to create great guest experiences going forward and drive further growth for GEN Korean BBQ. Occupancy expenses as a percentage of company restaurant sales increased by 89 basis points year-over-year to 8.4%, primarily due to 2022 and 2023 new restaurant openings, which include higher rent markets. Other operating expenses as a percentage of company restaurant sales increased 176 basis points year-over-year to 11.2%, due to costs totaling approximately 110 basis points to standardize restaurant operating supplies and services across all restaurants, and approximately 40 basis points related to increased utilities, which is primarily in California. In summary, adjusted restaurant-level EBITDA as a percentage of total revenues was 16%, compared to 19.3% in the fourth quarter of 2022. As I discussed, the major differences are: increased payroll and benefits of approximately 90 basis points, increased occupancy of approximately 89 basis points, increased operating expenses of approximately 176 basis points, partially offset by reduced costs of goods of approximately 20 basis points. Please refer to our earnings release for a reconciliation of non-GAAP measures. We currently anticipate our 2024 Restaurant-Level EBITDA margin will approach the 18% range as we improve labor rates and our operating expenses. G&A during the fourth quarter was approximately $4.4 million or approximately 9.7% of revenue, excluding stock-based compensation, in comparison to the guidance we provided last quarter of $3.1 million to $3.6 million. The increase from our guidance range is due primarily to the addition of new personnel necessary for our increased level of new restaurant development. In addition, we had non-cash stock-based compensation of approximately $760,000 during the quarter. Adjusted EBITDA was $1.6 million, including pre-opening costs. This compares to $5 million for the fourth quarter of 2022. The decrease versus the fourth quarter of last year was driven by higher pre-opening costs as we built additional units, incremental public company costs in the fourth quarter this year, which we did not have last year, and the items I mentioned previously. Without pre-opening costs, adjusted EBITDA would be approximately $2.9 million. Our net loss was $193,000, or $0.01 per diluted share, compared to net income of $175,000 in the fourth quarter of 2022. This was driven by the same factors I previously mentioned. Turning to liquidity, as of December 31, 2023, we had no long-term debt except for $5 million in government-funded EIDL loans, and we have $20 million available in our revolving line of credit. Importantly, we maintain a strong balance sheet with $31 million in cash and cash equivalents and have generated strong cash flow, allowing us to self-fund $17 million of capital expenditures in 2023. Turning to guidance, for 2024, we would like to provide the following guidance items: Total revenue between $200 million and $205 million, including 8 new restaurants, and general and administrative expense of $18 million to $19 million, excluding non-cash stock-based compensation expense. This concludes our prepared remarks. We'd like to thank you again for joining us on the call today, and we are now happy to answer any questions that you may have. Operator, please open the line for questions. Thank you. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of George Kelly with ROTH Capital Partners. Please proceed with your question. Hey, everybody. Thanks for taking my questions. Hi, George. Hey, Tom. So first question for you. I'm curious, you mentioned in your prepared remarks about testing new menu and drink items. I was just curious if you could give us a little more detail on what that is. So the new products that we're testing is. It's a, it's a +$20 incremental per guest, and then for that price, they're getting a much higher quality meats. So we're testing it right now. We've, because of the quality of these meats, our supply line are not able to meet the demand or our projected demand. So we just started this about three weeks ago, but they're rolling out slowly. We don't have enough data, but the initial data that are coming in are very positive. And just a follow-up on that, is it something that, just going back to your supply line point, is it feasible that if the data continues to come back positively, that it's something you could have that rolled out across the base by midyear, or will it take much longer than that? No. We think that by the end of March, or the third week or the fourth week of March, we should be at 100% rollout. Okay. Interesting. I take it you probably don't want to share with the data at this point. Maybe it's too early to share the data, or are you comfortable giving more detail on just what you've seen? It's all I can say is very positive, but it's not enough data pull. We need more restaurants. Okay, understood. And then a couple other questions for you. In your guidance for fiscal year 2024, you said four- wall should approach 18% margin. And I'm just curious, it was 16% in the fourth quarter, and I'm confused. That's a pretty big step up, and so I'm just curious what it is that you're doing to drive another 200 basis points, because it seems like comp growth should probably be flattish at best. I would think it's still negative in your guidance. So how are you getting to that four- wall margin improvement? The margin that we missed this quarter was a lot of one-time expense due to the integration of the two companies to one. So that, and we have invested a lot more in human capital to not only be ready for the stores we're opening this year, we have a lot on the pipeline, which we said that we can probably open approximately 10 next year. But a lot of that 10 next year is actually happening. We are starting processes in terms of drawings and city, you know, approvals, which a lot of them will probably start opening in 2025, first and second quarter. So we are putting up a lot of infrastructure costs getting ready for that. Okay, understood. And then last question, and then I'll hop back in the queue. Tom, you said $18 to $19 million of G&A ex SBC, and I'm just curious, can you quantify what your expectation for stock-based comp is in 2024? And that's all I had. Thanks. Yep. The stock-based comp should be around $3 million per year for 2024. Okay, thank you. I'll hop back in the queue. Thank you. Our next question comes from the line of Jeremy Hamblin with Craig-Hallum. Please proceed with your question. Thanks for taking the questions. So I wanted to just hone in a bit more on the current trends that you're seeing out there. You're, you know, kind of more than two-thirds of the way through the March quarter. I imagine you probably have had some negative impact from the heavy rains in your, you know, biggest geography. But, you know, wanted to see if you could give us an update on where same-store sales are trending. And then, you know, as a kind of a follow-up on that, I know it's a, you know, kind of a small test case, but, you know, whether or not in the markets where you have added the premium menu items, whether or not those stores in the recent weeks have seen, you know, comp trends turn positive. The California stores make up approximately 50% of our total sales. Yes, we have been impacted by the weather, but that is just every year we're gonna have Mother Nature in some capacity hit us. Yes, January didn't look very good. February was okay, and March we're starting to improve. And when you say improve- Go ahead. Sorry, continue the question. I was just gonna say, when you say improve, you know, again, I was just trying to hone in on whether or not, you know, the test locations, whether or not they're seeing, you know, they've seen same-store sales turn positive. Because I imagine it sounds like, you know, maybe same-store sales down mid-single digit or something like that, here, given the tough start in January. The Same-Store Sales is turning positive. So if it—let's say if it was a double-digit negative, it's now double-digit a single-digit negative. Any stores that were a single-digit negative is turning to positive. So it's going the right direction, yes. Okay, got it. And then, in terms of just, you know, I wanna come back and make sure I understood, you know, the cadence of your unit openings and the expectations around that. So you, you've opened up a couple of locations here in Q1. You're looking for 8 total for the year. And just wanted to capture, you know, it sounds like the vast majority of the remaining 6 are gonna be in Q4. Do you plan to open 1 or 2, you know, or 1 each in quarters two and three? But just wanted to see if you could share some color there. So this year, we've already opened 2. We're not sure if we can open at the end of March, maybe, to be safe, we'll be opening 1 in April. We probably have the rest of them, we just started construction in 2 of them. So if you put, like, a 4-5-month time frame, that should finish out on the third quarter, maybe 1 more, we're not sure about that. The rest are all in the city approval stages. So if we can get some more approved this quarter, maybe the second quarter, we might be able to put some more in the third quarter. But we're telling the street we will achieve them in the fourth quarter. Understood. You highlighted a little bit around the premium, you know, menu options, you know, the $20 increase option there. Also, I think you noted in your comments that you were looking at, you know, making some changes on your drink mix or in your alcohol mix. Was hoping that you might be able to share a little bit more color on that initiative. We've rolled out a new initiative. It's a mixed drink with a product called Soju, and that's doing very well. New restaurant openings, we have decided to roll all them, all of them out, except Boston, with liquor licenses, because the footprint of the Boston, of how small it is and not having a bar, and the cost to get a liquor license is around $300,000 to $500,000. We can't make those numbers pencil out, but the rest of them, going forward, as a company, we will have liquor licenses. We've rolled out some liquor licensed restaurants that don't have bars with new products, and we're seeing not a lot, but small incremental sales increase in the liquor side of the business. Okay, great. And then, just in terms of thinking about your, the mix of business. So, you know, I think you have menu, very limited menu pricing, at this point in time, maybe 1%. But wanted to just understand in terms of the composition of what you're seeing in your, your, kind of your check, you know, versus traffic, and whether or not there's consideration for the existing or the legacy locations to take any menu pricing here in 2024. We're still very concerned that if there is a downturn in the economic situation, we at GEN don't want to be priced out in terms of our guest experience and their perceived value proposition that we give to our guests. Going forward with new restaurants in new locations, they are substantially higher than the 50% of our restaurants that we have in California. So for example, in Seattle, we are opening that, we've opened that store with a dinner price at $34.95 compared to $29.95. So we have pricing strength in other markets, and we will continue that trend. As we are opening majority of our restaurants outside of California, the guest check average, by default, will go up because we're charging more in other states. Okay, got it. And then, just last one here for me. You know, on, on California, specifically, you know, there are some changes in terms of labor laws, you know, really regarding, you know, targeted, I think, more at chain restaurants. But just wanted to get an understanding, as you looked at, you know, labor performed, you know, better than we expected in Q4, that was nice. But in terms of what our expectations should be here as we get into, you know, kind of that April date, where there's, you know, going to be some change in, you know, in the California labor laws, what should we be expecting in terms of impact to your PNL here throughout the remainder of 2024? Because we're still very steadfast in not pricing ourselves out, because our competitors are very apart from our pricing, meaning they're probably anywhere from 10%-20% higher than our pricing structure. This April increase in the minimum wage doesn't legally impact us, but the market, the labor market, are saying, "If I'm getting $20 from a fast food restaurant, why would I compromise at getting paid the minimum wage of 17, 18+?" So there is pressure because of the surrounding labor, the labor dollars that are required by the fast food industry, it will impact us. We've thought about perhaps maybe raising prices in very regional store-by-store basis, because a lot of this are different regions. They're not all throughout the same areas. So we're looking at it, but- We still believe in continuously tightening our belts to find more efficient ways to bring our labor costs down. Yes, there's gonna be a breaking point at one point, but we still are looking, and we're finding small areas to continuously cut. Great. Thanks for taking my questions, and best wishes this year. Thank you. Thank you. Our next question comes from the line of Todd Brooks with The Benchmark Company. Please proceed with your question. Hey, thanks. Good evening, gentlemen, and congrats on first year under the belt here. Well done. Hi, Todd. Wanted to kick off on the real estate side, and it was good to hear that twenty-two and early twenty-three opening class, you're hitting those $5 million AUVs, and the payback period is kind of below that 2.5-year hurdle that you had set out, and that's even in some higher cost locations. I guess, David, can you talk to the mix of the openings in twenty-four, as far as totally new markets versus densifying markets where you're getting some scale, like the Texases of the world or backfilling in Florida or Hawaii? And then are you getting to enough scale in those markets where you have multiple units now that the economics and how fast those stores mature is likely to improve going forward? We are opening new stores in existing markets, especially the ones that are doing well. So let's just take an example like Texas, where we'll be growing a lot of restaurants there. Our margins are great. Our sales are great. So we will fill in all those markets, the markets that we're very comfortable, that we like the labor cost structure, we like the sales structure. So the areas are Arizona, Texas, Florida, New York, Hawaii. So we will be filling those in aggressively. And we have staffing that we've gotten ready to take those on comfortably. New areas, we have to be ahead of the curve here, so we are testing and going in, where we just signed North Carolina. We will go into Tennessee, we're in the works of that. Let me see. And, Seattle, we just opened. We are gonna start construction in Oregon. Most likely in 2025, opening, it will start, we'll start going into Colorado. Okay. So- Great. Yeah, we are filling in our good markets for sure, meaning we will open those markets, and we'll, we will start opening the other outskirts and see how that works. But with the improvement of personnel, the investment that we put in to bring in people in construction, in real estate selection, has dramatically improved so much that the issues that we faced right after COVID, of the hardships that we had in the site selection and the process to push the construction out quicker, has improved dramatically. That is why we're getting more comfortable right now in the expansion phase as of today. That's great to hear, and obviously, the talent and resources that you've brought in are a big part of that. But the environment itself, when you get to permitting and landlord works and things like that, are those getting better just because of the talent that you've brought on staff, or is that environment itself loosening up, too, and making you constructive on maybe shorter lead times to get units open as you get to 25, 26? It's—I think it's both, but I really attribute that to the people that work for GEN. The more you you know, there's a saying, the squeaky wheel gets oiled and gets more attention. Mm-hmm. We have great professional guys who are, they know what they're doing, so that process is getting easier and shorter. Okay, great. And then a final one on the real estate side. I know that, you've laid out the eight units for this year and the 10 leases that are under the, or the 10 sites that are in process for getting locked up for 2025. Thoughts about buffers. Are you still feeling the need to build buffers of potential locations, given how much more professional that development team's getting for you? And, if you're looking towards 2025 i s it the, are you, is the governor to 10 units more how fast you can grow the restaurant level talent, especially when you're going to newer markets? Perhaps if you can help me define what you mean by buffer. I don't quite understand. Can you- Sure. Yeah. Ask the question, please. Where you were targeting— Let's say you're targeting the eight units for this year, and when permitting, landlord lead time, supply chains were really tough. You almost had to have 11, 12 units in the works for a year to be able to deliver the eight, but it sounds like the environment and the team are much tighter. So do you feel like you need to still run kind of a couple of units in process at any given time if one washes out in a given year, you can run into a permanent snafu? Or just how much less friction are you seeing in the overall construction environment, where you may not need that anymore? We have a much bigger buffer because of our ability that we think we have, because of the upfront investment we're making on personnel. We're okay having a lot more buffer. Even if we were efficient in getting that 10 built, and we had more, we're able to take that on as of today. So we might, for example, this is just an example. Mm-hmm. Let's say we said that we can open 10 in 2025. Maybe we can end up at 15 because the buffers became a reality, right? So, so we're comfortable having more buffer because the more efficient we get, those buffers actually can now will turn into new store openings. Okay, great. That's helpful. Thanks, David. And then one more question. I know distributor switches are never easy on a team and the supply chain pros as you try to accomplish those. As we're thinking about that approaching 18% Restaurant-Level EBITDA margin, how should we be thinking about food costs with a full year under Sysco and ramping into that system? And also layering in, if you do have success from a sales mix standpoint with the premium pricing, premium product tier, how should we be thinking about food costs with both of those realities potentially playing out over the course of this year? The switching of a major distributor has to do with Sysco, the systems that they have, and we get adjusted, and they have to adjust. We are constantly meeting with Sysco, at least the senior level personnel, to improve on that, and it is improving. I actually sit on those meetings to make sure that the late deliveries or the missing product percentage drops. In terms of products, we don't—it's streamlined very well. We don't have that issue, and the food cost is actually stabilizing a lot. Again, I believe on the last quarter call, I said we are really not, we're really not concerned about the increase of food cost. It's very much stabilizing. We are at pre-COVID level of stabilization. Okay. And then the premium tier products and the premium pricing, is that beneficial to food cost, or is the $20 upcharge basically allowing you to hold food cost in kind of that 32% range? It's too soon to tell, but the initial numbers that are coming in is it's holding. Great. Okay, thanks for taking all my questions, and I'll jump back in queue. Appreciate it. Thank you. Thank you. Thank you. We have reached the end of the question and answer session. I'll now turn the call back over to management for closing remarks. We'd like to thank everybody for being on the call. We're excited to completing our first year and our first filing of our 10-K. Excited for 2024, and look forward to speaking with everybody soon. Thank you. Thank you very much. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.