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Granite City Reports Increase In Revenue In Third Quarter 2011

Concept Development Partners Transaction

In May 2011, Granite City received a $9 million infusion of equity capital from Concept Development Partners (CDP) in partnership with Dallas-based private equity firm, CIC Partners, along with $10 million in debt financing from Fifth Third Bank. The transaction brought the Company capital, additional management and several new, experienced board members including, Mike Rawlings, former President of Pizza Hut and a Founding Partner of CIC Partners, Lou Mucci, the former CFO of BJ’s Restaurants, Michael Staenberg, President of THF Realty, Fouad Bashour, a Founding Partner of CIC Partners, and Rob Doran, former Executive Vice President of McDonald’s. Rob Doran now serves as CEO of Granite City. Since CDP’s investment, Granite City has been developing plans to enhance existing stores as well as construct new stores such as the recently announced Troy, Michigan store set to open in early 2012.

Third Quarter 2011 Conference Call

The company will host a conference call to discuss its third quarter 2011 financial results on Wednesday, November 9, 2011 at 10:00 a.m. Central Time. The call may be accessed by calling 1-888-240-9345 and referencing code 8705504. A replay of the call will be available for 30 days and may be accessed by calling 1-888-203-1112 and entering replay code 8705504.

About Granite City

Granite City Food & Brewery is a modern American restaurant and brewery. Everything served at Granite City is made fresh on site using high quality ingredients, including Granite City's award-winning signature line of craft beers. The extensive menu features moderately priced favorites served in generous portions. Our attractive price point, high service standards, and great food and beer combine for a memorable dining experience. Granite City Food & Brewery Ltd. opened its first restaurant in St. Cloud, Minnesota in 1999 and currently operates 26 Granite City restaurants in 11 states as well as a Cadillac Ranch All American Bar & Grill restaurant at the Mall of America. Additional information about Granite City Food & Brewery can be found at the company’s website ( www.gcfb.net).

Forward-Looking Statements, Non-GAAP Financial Measurements, and Comparable Restaurant Data

Certain statements made in this press release of a non-historical nature constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated. Such factors include, but are not limited to, changes in economic conditions, changes in consumer preferences or discretionary consumer spending, a significant change in the performance of any existing restaurants, our ability to continue funding our operations and meet our debt service obligations, and the risks and uncertainties described in our Current Report on Form 8-K filed with the Securities and Exchange Commission on May 17, 2011.

Additionally, this press release contains certain non-GAAP financial measures, including references to restaurant-level IBO and company-wide EBITDA. As compared to the nearest GAAP measurement for our company, restaurant-level IBO represents revenue less cost of food, beverage, labor and restaurant operating costs. We use restaurant-level IBO and restaurant-level IBO as a percentage of revenue as internal measurements of restaurant-level operating performance. Restaurant-level IBO as we define it may not be comparable to similar measurements used by other companies and is not a measure of performance or liquidity presented in accordance with GAAP. We believe that restaurant-level IBO is an important component of our financial results because it is a widely used measurement within the restaurant industry to evaluate restaurant-level productivity, efficiency, and performance. We use restaurant-level IBO as a means of evaluating our restaurants’ financial performance compared with our competitors. As compared to the nearest GAAP measurement for our company, company-wide EBITDA represents operating loss with the add-back of depreciation and amortization, net loss on disposal of assets and exit or disposal costs (Rogers & Troy). We use company-wide EBITDA as a way to measure our overall internal operational performance without restaurant closings and as a means of evaluating our financial performance compared with our competitors. These non-GAAP measurements should not be used as substitutes for net loss, net cash provided by or used in operations or other financial data prepared in accordance with GAAP. Schedules of reconciliations of restaurant-level IBO and company-wide EBITDA for the third quarter and first three quarters of 2011 and 2010 are provided herein.

Granite City Food & Brewery Ltd.

       

Condensed Consolidated Statements of Operations

 
Thirteen Weeks Ended Thirty-nine Weeks Ended
September 27,   September 28, September 27,   September 28,
2011   2010 2011   2010
 
Restaurant revenue $ 22,945,303 $ 22,271,547 $ 70,072,350 $ 67,729,980
 
Cost of sales:
Food, beverage and retail 6,252,503 6,163,390 19,048,008 18,694,615
Labor 7,803,658 7,639,081 23,983,390 23,203,003
Direct restaurant operating 3,583,686 3,504,658 10,410,292 9,931,699
Occupancy   1,858,212     1,997,789     5,250,643     6,399,753  
Total cost of sales   19,498,059     19,304,918     58,692,333     58,229,070  
 
Pre-opening 6,608 - 6,608 -
General and administrative 1,985,543 1,588,399 5,736,591 4,803,441
Depreciation and amortization 1,458,486 1,512,449 4,526,246 4,469,527
Exit or disposal activities 17,660 374,485 (156,900 ) 634,876

(Gain) loss on disposal of assets

  36,340     17,969     (34,619 )   (58,186 )
Operating income (loss)   (57,393 )   (526,673 )   1,302,091     (348,748 )
 
Interest:
Income 20 5,968 4,197 10,151
Expense   (948,013 )   (936,985 )   (2,824,059 )   (2,590,658 )
Net interest expense   (947,993 )   (931,017 )   (2,819,862 )   (2,580,507 )
 
Net loss $ (1,005,386 ) $ (1,457,690 ) $ (1,517,771 ) $ (2,929,255 )
 
Loss per common share, basic $ (0.26 ) $ (0.20 ) $ (1.39 ) $ (0.40 )
 
Weighted average shares outstanding, basic   4,653,852     7,367,895     5,961,102     7,366,807  
 

Selected Balance Sheet Information

   
September 27, 2011 December 28, 2010
 
Cash $ 1,435,333 $ 3,104,320
Current assets, including cash $ 3,420,193 $ 4,817,027
Total assets $ 54,161,726 $ 56,463,061
Current liabilities $ 9,901,321 $ 14,014,137
Total liabilities $ 51,929,317 $ 53,005,994
Shareholders' equity $ 2,232,409 $ 3,457,067
 

Non-GAAP Reconciliations Q3 2011 and Q3 2010 Results

           
Q3 2011

% of Sales

Q3 2010

% of Sales

 
Restaurant revenues $ 22,945,303 100 % $ 22,271,547 100 %
 
Cost of sales:
Food, beverage and retail 6,252,503 27.2 % 6,163,390 27.7 %
Labor 7,803,658 34.0 % 7,639,081 34.3 %
Direct restaurant operating expenses 3,583,686 15.6 % 3,504,658 15.7 %
   
Restaurant-level IBO* $ 5,305,456 23.1 % $ 4,964,418 22.3 %
 
Occupancy 1,858,212 8.1 % 1,997,789 9.0 %
Pre-opening 6,608 - - -
General and administrative   1,985,543   8.7 %   1,588,399   7.1 %
 
Company-wide EBITDA* 1,455,093 6.3 % 1,378,230 6.2 %
 
Depreciation and amortization 1,458,486 1,512,449
Exit or disposal activities, other   54,000     392,454  
 
Operating loss (57,393 ) (526,673 )
 
Interest:
Income 20 5,968
Expense   (948,013 )   (936,985 )
Net interest expense (947,993 ) (931,017 )
   
Net loss $ (1,005,386 ) $ (1,457,690 )
 

*See accompanying disclosure regarding use of non-GAAP financial measures.

Certain percentages may not foot due to rounding.

 

Non-GAAP Reconciliations Q3 2011

         
Q3 YTD 2011

% of Sales

Q3 YTD 2010

% of Sales

 
Restaurant revenues $ 70,072,350 100 % $ 67,729,980 100 %
 
Cost of sales:
Food, beverage and retail 19,048,008 27.2 % 18,694,615 27.6 %
Labor 23,983,390 34.2 % 23,203,003 34.3 %
Direct restaurant operating expenses 10,410,292 14.9 % 9,931,699 14.7 %
   
Restaurant-level IBO* $ 16,630,660 23.7 % $ 15,900,663 23.5 %
 
Occupancy 5,250,643 7.5 % 6,399,753 9.4 %
Pre-opening 6,608 - - -
General and administrative   5,736,591   8.2 %   4,803,441   7.1 %
 
Company-wide EBITDA* 5,636,818 8.0 % 4,697,469 6.9 %
 
Depreciation and amortization 4,526,246 4,469,527
Exit or disposal activities, other   (191,519 )   576,690  
 
Operating loss 1,302,091 (348,748 )
 
Interest:
Income 4,197 10,151
Expense   (2,824,059 )   (2,590,658 )
Net interest expense (2,819,862 ) (2,580,507 )
   
Net loss $ (1,517,771 ) $ (2,929,255 )
 

*See accompanying disclosure regarding use of non-GAAP financial measures.

Certain percentages may not foot due to rounding.





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