A California-based Korean barbecue company is planning a deal worth up to $100 million that would transfer operations at 47 U.S. restaurants to a new owner. GEN Restaurant Group’s proposed restaurant-portfolio shakeup would leave it focused primarily on selling Korean food for customers to prepare at home.
GEN announced on October 14 that it had signed a binding letter of intent with Chubby Group. Its board approved the agreement unanimously, but the transaction still has conditions to clear before closing.
The restaurants would change hands in stages
The companies’ announcements outline a four-phase takeover of the 47 restaurants over 12 months. Chubby would pay for conversions and buildouts using its own capital, while GEN would keep operating profits until each restaurant’s handoff.
In an October 15 announcement from Chubby, the buyer said it aims to take over the first 12 locations on November 1. It plans to relaunch restaurants as GEN X, with wagyu-focused Korean barbecue, or as other Chubby concepts. The proposed acquisition also includes four development sites.
The parties are targeting a closing within 30 days of the announcement. That remains a goal: definitive agreements, regulatory approvals and the transfer of licenses and leases are among the steps still required.
GEN would keep its name and a few restaurants
GEN plans to remain publicly traded and retain ownership of its brand. It would also keep approximately three restaurants for training, staffing and research tied to its packaged-food business.
The company, based in Cerritos, says its corporate structure would be reorganized around that business after the transaction. Senior management would focus on growing products sold for at-home meals, rather than running the larger restaurant portfolio.
That is a substantial change for a business founded in Southern California in 2011. Its restaurants built their identity around Korean barbecue meals that guests cook on grills at their tables.
The company’s newer packaged-food business includes ready-to-cook marinated meats. GEN says its products are sold through retailers including Costco and Albertsons, giving the brand a route to customers who may never visit one of its dining rooms.
A deal designed to reduce debt and lease obligations
GEN says the transaction would substantially reduce its approximately $160 million in lease liabilities. It also expects the deal to help eliminate outstanding debt.
The proposed payment structure includes a term note receivable, representing payments due to GEN. Chubby would receive a perpetual license to use the GEN brand, while GEN would retain ownership of the name.
For diners, the immediate change is a proposed new operator and a phased transition. The longer-term change is at GEN itself: a restaurant company is preparing to put packaged Korean food at the center of its business.
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