Chubby Cattle Group — the Los Angeles-based restaurant group known for its meat-centric Asian concepts — will grow its portfolio by almost three-quarters after it completes the acquisition of Gen Korean BBQ in phases over the next twelve months.
More details have come out about the $100 million acquisition, which was announced earlier this month. The 70-unit Chubby Cattle Group has signed a binding letter of intent to purchase all Gen Korean BBQ restaurants and will be rebranding the top-performing locations to Gen X BBQ and converting the rest to other Chubby Cattle concepts.
Before completing the acquisition, Chubby Cattle also closed a $50 million first round of Series A funding. Prysym Capital is a venture capital firm that has mostly invested in tech startups, including restaurant technology platform Chowbus, AI software, and financial technology companies.
Chubby will take over the first 12 Gen Korean BBQ locations on Nov. 1, and the rest will follow in waves over the next year. The new funding will go toward completing the Gen restaurant conversions, creating a bigger supply chain and restaurant openings of new concepts. Overall, Chubby is acquiring, rebranding, and converting 47 Gen Korean BBQ locations, with an additional four restaurants under construction.
Before signing the letter of intent to purchase Gen Korean, Chubby Cattle had already worked with the company before and converted some failing locations in California. Chubby Cattle co-founder David Zhou told Nation’s Restaurant News that before they took over, the Gen Korean location was pulling in about $2 million in revenue, but now makes about six times that.
“The ownership of Gen’s saw declines in their stores, and there was no way for them to adjust,” Zhou said. “If a restaurant group focuses on one brand, one price point, one customer demographic, [then that’s going to happen]. We have almost 30 brands and we can move up and down pricepoints and change up concepts based on what customers are looking for. We’re constantly adjusting.”
Once under the Chubby Cattle umbrella, Gen Korean restaurants will join the Chubby Cattle ecosystem, so-named because unlike traditional restaurant groups, each Chubby Cattle brand has access to the company’s meat supply chain and modular restaurant design buildouts. Brands can “shop” from Chubby Cattle’s pre-fab modular designs and purchase beef directly from the parent company, including the A5 wagyu that Chubby Cattle concepts are known for.
“We work directly with the ranches, buy the whole carcass of the cattle, and store them at our warehouse when we import them from Australia and Japan,” Zhou said. “We control the quality of the beef. For every other restaurant, they can’t control the quality at that scale. Most steakhouses just rely on Sysco.”
Zhou described what they do as similar to Netflix (which produces its own series without the need for a TV or movie studio), Coscto (which has the buying power and vendors get discounts), and eventually like Amazon (which has its own network of warehouses).
“This is why we vertically integrate, and why we say we’re not just a restaurant group,” Zhou said. “We’re building all the b2b infrastructure to support restaurants, and then we actually get to onboard cool culinary concepts, provide them financing, construction, and the supply chain. We get to see how far these brands will go.”
When Gen Korean restaurants are converted to Gen X as part of this ecosystem, Zhou said they will upgrade the menus, the quality of the proteins, and the interiors of the restaurants. They will also add buffet stations with vegetables and other sides, similar to how some of their other concepts like Wagyu Factory work.
Moving forward, Chubby Cattle Group hopes to surpass 200 locations over the next two years. The company is also in discussions with other restaurant groups to bring them into the fold.
“If there is a concept that can use our supply chain, can use our expansion assistance, our backup support, and our hospitality team, we’re going to put them on,” Zhou said.
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