The chain's stock price rose as high as $19.99 per share on Wednesday, which valued the chain at $622 million.
Gen Korean BBQ's journey to the stock market is exceeding expectations.
The casual-dining chain sold 3.6 million shares at $12 per share, meaning it raised $43.2 million in its IPO. That's above its projection of 3 million shares at a range of $10 to $12 per share. When the company began trading Wednesday, stock prices rose as high as $19.99 per share. At that level, Gen Korean reached a valuation of roughly $622 million.
The 34-unit chain operates in California, Arizona, Nevada, Hawaii, Texas, Florida, and New York, serving traditional Korean food as well as Korean-American fusion. It uses a self-service model in which food is displayed family-style and guests use an embedded grill at the center of the table to cook. Because of this, Gen Korean doesn't use chefs and has limited personnel in the back of house. Customers can order unlimited quantities for a fixed price, ranging from $17.95 to $20.99 for lunch and $25.95 to $29.95 for dinner as of March 31.
After same-store sales dropped as much as 74.2 percent in Q2 2020, the brand has experienced positive comps for seven out of the past eight quarters. The lone negative period was Q3 2022, which was a 0.3 percent drop year-over year.
Here's a clear look at how same-store sales have trended since 2020:
Q1 2020: –18.4 percent
Q2 2020: –74.2 percent
Q3 2020: –63.2 percent
Q4 2020: –42.9 percent
Q1 2021: –12.6 percent
Q2 2021: 386.7 percent, 26.8 percent against 2019
Q3 2021: 239.6 percent, 35.6 percent against 2019
Q4 2021: 122.7 percent, 31.3 percent against 2019
Q1 2022: 71.8 percent, 25 percent against 2019
Q2 2022: 3.7 percent, 32.6 percent against 2019
Q3 2022: –0.3 percent, 34.8 percent against 2019
Q4 2022: 0.4 percent, 32.1 percent against 2019
Q1 2023: 3.9 percent, 31.3 percent against 2019
The brand debuted three stores last year in Texas, Las Vegas, and New York. Around six or seven should open in 2023; one came online in April and two more followed in June. Eight to 10 locations are expected to open in the years ahead. Some new markets include Oregon, Georgia, Virginia, Utah, and Washington, D.C. The chain said it has room for 250 restaurants domestically. Approximately 62 percent of restaurants are located in California, with 44 percent in Southern California specifically.
The units run from 4,700 to 12,000 square feet and are based in high-activity commercial areas. The three openings in 2022 had an average net build-out cost of about $1.9 million. The last of those three cost around $2.6 million. Going forward, the chain is targeting build-out costs of less than $3 million. Stores have historically generated average payback periods of about 1.4 years.
Gen Korean earned $163.7 million in 2022 revenue, up from $140.6 million in 2021 and $62.7 million in 2020. In the first quarter of this year, the concept earned $43.9 million in revenue, up from $38.3 million last year. In the 12 months ending March 31, Gen Korean BBQ had a $6 million AUV.
In 2022, the company achieved a net income margin of 6.3 percent, a restaurant-level adjusted EBITDA margin of 20.5 percent, and an adjusted EBITDA margin of 13.1 percent. In Q1, it posted a net income margin of 9.4 percent, a restaurant-level adjusted EBITDA margin of 19.2 percent, and an adjusted EBITDA margin of 11.9 percent.
The restaurant IPO market has been up and down since COVID began. In 2021, a slew of concepts went public— Krispy Kreme, Dutch Bros Coffee, Portillo's, First Watch, and Sweetgreen. After a quiet 2022, matters have picked up recently with CAVA raising $318 million in its IPO, well above expectations. Eatertainment concept Pinstripes also announced its plans to merge with a special purpose acquisition company to go public. Other chains that have unveiled intentions to hit the stock market, but haven't yet, include Fogo de Chão, MOD Pizza, Twin Peaks, and Panera Brands (Panera, Caribou Coffee, and Einstein Bros. Bagels)