GENK

Market Tailwinds and Strategic Positioning

• Korean food is experiencing accelerating mainstream adoption in the U.S., with Korean food exports to the U.S. growing 13.2% year-over-year, Korean sauce exports hitting a record $411 million, and ramyun sales reaching $1.5 billion, up nearly 22%. Asian packaged food retail sales are growing 4x faster than overall packaged food, with Korean food tracking 10% annual growth led by Gen Z and millennial shoppers.
• U.S. frozen food is an $87 billion market that has grown 45% since 2019, with 71% of frozen shoppers actively seeking new products. Takeout-style frozen food is a $14 billion category growing as consumers trade down from restaurant dining amid macroeconomic pressure, which has kept overall U.S. food service traffic near-flat.
• Gen Restaurant Group has an existing trusted brand from millions of restaurant customers, giving it an advantage over new CPG brands that need to build recognition from scratch.

CPG Business Model and Operational Updates

• The CPG division uses co-manufacturing partners rather than owned plants, allowing fast, capital-efficient scaling with no major capital projects required for growth. Incremental return on invested capital for CPG is meaningfully higher than new restaurant development, and the division is expected to reach high-teens EBITDA margins at scale.
• Gen CPG products are already placed in nearly 2,000 retail doors nationwide, exceeding the full-year 2026 target of 1,500-2,000 doors set in March 2026. The current 12-month revenue run rate is projected at $35-$40 million, with more than 1,000 additional doors in product testing and over 8,000 doors in active outreach.
• The CPG business is structured in three tiers: 1) core frozen non-cooked marinated meats (90% of current focus, addressing a $100 billion U.S. retail meat category), 2) future prepared replacement meals for the deli section (projected to be 2-3x the size of the frozen meat business long-term), 3) a Korean incubator for non-meat SKUs (beverages, snacks, jerky) manufactured in South Korea, which is already seeing double-digit growth.
• Existing restaurant meat procurement scale and supply chain infrastructure already support CPG demand, with additional manufacturing capacity secured across the U.S. and South Korea to support scaling.

Proposed Transaction

• The company received a non-binding letter of intent from a multi-concept U.S. restaurant operator to acquire only Gen's U.S. restaurant operations (including lease assignments) for approximately $100 million. Gen would retain 100% ownership of the CPG business. The board is reviewing the proposal per public company protocols, with no assurance a transaction will close.
• The proposed transaction would monetize the restaurant business, strengthen the balance sheet, eliminate long-term restaurant-related liabilities, and allow management to focus all capital and attention on the faster-growing CPG business.

• Full-year 2026 total revenue guidance is reaffirmed at $215 to $225 million.
• The company expects to complete the fifth and final restaurant transfer under its previously announced joint venture transaction in Q3 2026, and will keep new restaurant development spending near maintenance levels.
• The current $35 to $40 million 12-month CPG revenue run rate projection is conservative, and includes very little contribution from new prospective distribution deals or the upcoming prepared meal line.

Total company revenue for Q2 2026 was $55.7 million, a 1.2% year-over-year increase from $55.0 million in Q2 2025. Revenue gains from the CPG segment and new restaurants opened in 2025/2026 offset comparable restaurant sales declines and the loss of $2.3 million in annual revenue from restaurants transferred to a joint venture in the quarter. The core restaurant segment generated restaurant-level adjusted EBITDA of $6.3 million, representing 11.3% of total company revenue, down from $9.0 million (16.3% of revenue) in Q2 2025. Restaurant-level adjusted EBITDA margin improved sequentially to 11.3% from 7.4% in Q1 2026, the strongest margin in three quarters. The CPG segment delivered revenue that grew 341% sequentially from Q1 2026, hit $2 million in June 2026 alone, and is already profitable. CPG currently accounts for ~3.5% of the company's 12-month revenue run rate, with frozen non-cooked marinated meats making up ~90% of current CPG revenue.

• There is no assurance that the proposed sale of the restaurant operations will be consummated, as it is based on a non-binding letter of intent and remains under board review.
• CPG growth depends on maintaining strong product velocity to retain retail shelf space, and relies on successful new product development that meets consumer and retailer expectations.
• Imported SKUs from South Korea carry longer lead times that create inventory management challenges.
• Overall U.S. food service traffic remains near-flat amid ongoing macroeconomic pressure that strains consumer willingness to pay restaurant prices, pressuring restaurant segment profitability.

Q: How does Gen reach the $35 to $40 million 12-month CPG run rate, and what contribution comes from the upcoming prepared meal line? / A: The $35-$40 million run rate is based only on current locked-in sales of existing frozen meat products, with no contribution from prepared meals or new large distribution deals. It is a conservative projection; any new large distribution agreements will be disclosed separately if they push the run rate higher. Prepared meals are still in testing, with three of four products approved for launch, but are not factored into the current projection. Grocers are actively pressing for the new line, which industry data suggests could be twice the size of the frozen meat business long-term.

Q: Will non-core SKUs from the Korean incubator segment dilute focus on the core frozen meat business, and is there a plan to rationalize SKU count? / A: Additional non-meat SKUs were added at the request of retail partners, not as a deliberate strategic choice, due to strong demand driven by high core meat product velocity. While the company's primary focus remains frozen meats, these non-core SKUs are growing at double-digit (and in some cases triple-digit) rates with structurally higher margins than core meat products. Capacity for these SKUs is already secured through large South Korean manufacturing conglomerates, so the only challenge is limited inventory management, which the company is managing with dedicated incubator division personnel.

Q: What revenue scale does CPG need to reach to hit the high-teens EBITDA margin target? / A: Gen is already achieving EBITDA margins higher than the high-teens target it has disclosed publicly, and management is being intentionally conservative with its public margin guidance.

Q: If the restaurant sale proceeds, will separating restaurant operations hurt CPG profitability from lost shared infrastructure for in-store demonstrations? / A: Gen retains full ownership of the brand after the transaction, even if the restaurant assets are sold. Management has already discussed potential cooperative agreements with the buyer to leverage shared infrastructure where beneficial, so no material negative impact to profitability is expected.