EMac Yep you are correct.
We highly recommend to start eating the second generation to ensure that you know what you are eating.
We would suggest the following steps.
1. Harvest normally
2. Put pupae on the beetle tower
3. Put beetle in the beetle inlay
4. Put the worms that you just harvested into the tray with the biggest worms so these can turn into beetles
5. From the above actions, you should be able to maintain a peak capacity of beetles. The survivability of pupae and beetles are low in the beginning due to new environment and farmer.
*Interesting note, once the worms/beetles reaches the overcrowding capacity or due to lack of food source, they will produce less eggs and/or less likely to evolve to the next stage.