Gen Korean BBQ Considers $100M Sale of Restaurant Business
Gen Korean BBQ explores $100M sale while scaling retail presence beyond 2,000 locations.
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Gen Korean BBQ received a non-binding letter of intent for a sale of its U.S. restaurant business valued at over $100 million. The offer covers more than 59 U.S. locations and follows a decline in comparable restaurant sales, while its consumer packaged goods division shows accelerating growth, aiming to reach nearly 2,000 retail locations.
Why It Matters
This acquisition discussion may compress available territories for franchisees as a focus on consumer packaged goods suggests strategic shifts away from traditional restaurant operations, impacting unit economics.
Gen Korean BBQ is exploring a potential sale of its U.S. restaurant business, following a non-binding letter of intent from a nationwide multi-concept restaurant operator valued at over $100 million. This transaction would encompass more than 59 U.S. locations, while retaining full ownership of its consumer packaged goods (CPG) division. The deal is contingent upon further due diligence and requires approval from both the board and shareholders. Additionally, the board may consider other proposals during this review process.
The announcement coincided with the company’s second-quarter earnings report, revealing a 1.2 percent increase in total revenue to $55.7 million, primarily driven by the success of its CPG division and new restaurant openings. However, restaurant sales are facing challenges, with comparable sales declining 9.3 percent in the quarter and a reported net loss of $4.6 million, a significant drop from a $1.7 million loss the previous year.
Chairman and CEO David Kim stated, “Receiving this proposal is a testament to the GEN brand and the value we have already built.” He emphasized that the board, along with financial and legal advisors, will evaluate the offer to determine the best path for the company and its shareholders. Kim indicated that focusing entirely on the CPG business could be a strategic move, as it is experiencing rapid growth.
As of March, Gen Korean BBQ projected its CPG products to be available in 1,500 to 2,000 retail locations by the end of 2026, with expected annual revenue exceeding $20 million. Impressively, the company has already achieved placements in nearly 2,000 retail doors, revising its annual revenue run rate projection to between $35 million to $40 million. The CPG division also saw a substantial 341 percent increase in revenue sequentially from the first quarter, with June marking over $2 million in sales. The expansion includes notable partnerships with retailers such as Albertsons, Stater Bros., and multiple Costco regions.
The changing landscape suggests a significant shift in focus from restaurant operations to consumer packaged goods, highlighting the contrasting economics between the two sectors. The implications for franchisees in the system may involve considerations about continuity, potential changes in support, and royalty structures pending the outcome of the proposed deal. Moving forward, the efficacy of this transition may depend on the execution of their CPG growth plans and the company's ability to adapt to market demands.
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