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United States securities and exchange commission logo
January 21, 2022
Tom Croal
Chief Financial Officer
GEN Restaurant Group, Inc.
11472 South Street
Cerritos, CA 90703
Re: GEN Restaurant
Group, Inc.
Amendment No. 1 to
Draft Registration Statement on Form S-1
Filed December 27,
2021
File No. 377-05692
Dear Mr. Croal:
We have reviewed your amended draft registration statement and
have the following
comments. In some of our comments, we may ask you to provide us with
information so we
may better understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Form S-1 Draft Registration Statement Amendment No. 1 filed December 27,
2021
Prospectus Summary, page 1
1. Please balance your
disclosure in this section by discussing your receipt of loans and
grants under the
Payroll Protection Program and the Restaurant Revitalization Fund,
including the amounts
received and forgiven. Please provide context for the discussion of
your performance by
providing quantitative and qualitative disclosure indicating how the
receipt and forgiveness
of such loans has impacted your results of operations.
2. Please update the
financial metrics, starting with AUVs, presented on pages 3 and 4 for
the most recent fiscal
period reported in the registration statement, as this information is
presented only for
2019. Please make similar revisions elsewhere that you discuss these
financial metrics.
Tom Croal
GEN Restaurant Group, Inc.
January 21, 2022
Page 2
Organizational Structure, page 7
3. Please revise your discussion of the tax receivable agreement here,
and elsewhere that you
discuss the TRA, to describe how the TRA confers economic benefits to
the pre-IPO
investors, will redirect cash flows to the TRA participants, and may
materially affect your
liquidity. Please also quantify the estimated maximum payment you
would be required to
make under your TRA assuming all continuing members of GEN LLC redeem
following
this offering. Please similarly discuss the situation in which
payments may be accelerated,
such as under GEN Inc.'s right to early termination, and quantify the
amount of the early
termination payment.
4. Your disclosure references a diagram of your structure and ownership
immediately after
the Reorganization and the offering, however it does not appear that
the diagram is
included. Please revise to include the diagram.
Use of Proceeds, page 60
5. To the extent that any of the proceeds of the offering will be used to
repay indebtedness,
please disclose the information required by Instruction 4 to Item 504
of Regulation S-K.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Key Performance Indicators and Non-GAAP Financial Measures, page 73
6. We note your presentation of Non-GAAP measures here precedes the
presentation
and discussion of the results of operations beginning on page 76.
Please move your Non-
GAAP presentation so it does not have greater prominence than the
presentation and
discussion of your GAAP results of operations. Refer to Question
102.10 of the staff's
Compliance & Disclosure Interpretations on "Non-GAAP Financial
Measures."
7. We note your reconciliation of Adjusted EBITDA includes an adjustment
for pre-
opening expenses which represent normal, recurring, cash operating
expenses necessary to
operate your business. Please tell us your consideration of the
guidance in Question
100.01 of the Non-GAAP Compliance and Disclosure Interpretations.
8. We note the reconciliation of restaurant-level operating income to
restaurant-level
EBITDA which appears on page 74. However, this information appears to
differ from
the financial snapshot on slide 22 of the test-the-waters materials.
Please advise.
Comparable Restaurant Sales Growth, page 74
9. You state that comparable restaurant sales growth in 2019 decreased due
to new Asian
concept restaurant openings near certain of your locations. Please
revise to specify if such
FirstName LastNameTom Croal
impact is limited to 2019 results, or if you expect such openings to
continue to impact
Comapany NameGEN
comparable Restaurant
restaurant salesGroup,
growthInc.
in future periods. Please also
add risk factor
Januarydisclosure, to the2 extent applicable.
21, 2022 Page
FirstName LastName
Tom Croal
FirstName LastNameTom Croal
GEN Restaurant Group, Inc.
Comapany
January 21,NameGEN
2022 Restaurant Group, Inc.
January
Page 3 21, 2022 Page 3
FirstName LastName
Restaurant-Level EBITDA and Restaurant-Level EBITDA Margin, page 74
10. We read your response to our prior comment 4 and note your revised
disclosure. We also
note that you continue to present Restaurant-Level Operating Income on
the face of the
Statement of Operations and in other areas of the document that
present that measure,
such as Selected Historical Financial Information. The Statement of
Operations is a
combined financial statement for the entire entity and should not be
presented at a
restaurant level. Please revise your Statement of Operations and
related disclosure to
present operating income for the entire entity.
11. We note that you adjust for more than interest, taxes, depreciation
and amortization
in calculating the non-GAAP measure you call Restaurant-Level EBITDA.
Please refer to
Question 103.01 of the Compliance & Disclosure Interpretations on
Non-GAAP Financial
Measures and revise your future filings to not characterize the
non-GAAP measure as
EBITDA and to use a title that clearly distinguishes the measure from
"EBITDA," such as
"Adjusted EBITDA."
Liquidity and Capital Resources, page 86
12. We note that you made an aggregate of $22.4 million in distributions
to LLC members in
the nine months ended September 30, 2021. Please disclose the reason
for these
distributions, including why they were made at this time and how the
amount of the
distributions was determined, and whether they were obligated pursuant
to agreements
with such members. Please include similar disclosure in your
prospectus summary,
including a discussion of how it has impacted your cash amount.
Certain Relationships and Related Party Transactions, page 115
13. Please file the instruments governing the notes discussed in this
section, and in particular
the Ignite notes receivable and notes payable. See Item 601(b)(4) of
Regulation S-K. We
also note that notes are secured by an interest in the assets of each
of the GEN entities.
Please add risk factor disclosure highlighting risks to the company if
you were to default
on the notes.
14. Please revise this section to identify the names of the related person
involved in the related
person transactions disclosed in this section (as opposed to the name
of the entity), the
approximate dollar value of the amount of the related persons'
interests in the transactions,
and the amount of principal paid during the period for which
disclosure is provided.
Please also explain the business or operations of Ignite. See Item 404
of Regulation S-K.
15. Please file a copy of the consulting agreement with Ignite and revise
your disclosure to
explain the services performed by Ignite under the consulting
agreement. Please also file
your agreement(s) with Fast Fabrications, Wise Universal, Inc. and
Pacific Global. See
Item 601(b)(10) of Regulation S-K.
Tom Croal
FirstName LastNameTom Croal
GEN Restaurant Group, Inc.
Comapany
January 21,NameGEN
2022 Restaurant Group, Inc.
January
Page 4 21, 2022 Page 4
FirstName LastName
Exhibits
16. Please file any material lease agreement as an exhibit to the
registration statement. See
Item 601(b)(10)(ii)(D) of Regulation S-K.
You may contact Tatanisha Meadows at 202-551-3322 or Angela Lumley at
202-551-
3398 if you have questions regarding comments on the financial statements and
related
matters. Please contact Jennie Beysolow at 202-551-8108 or Erin Jaskot at
202-551-3442 with
any other questions.
Sincerely,
Division of
Corporation Finance
Office of Trade
& Services
cc: Peter Wardle, Esq.