Granite City Food & Brewery Ltd. (NASDAQ:GCFB) recently announced that it has completed the purchase of the assets of five Cadillac Ranch All American Bar & Grill restaurants, in Bloomington, Minnesota; Miami, Florida; Oxon Hill, Maryland; Annapolis, Maryland; and Indianapolis, Indiana, for an aggregate purchase price of approximately $6.2 million. The Company also acquired certain Cadillac Ranch intellectual property, including trademarks, from Restaurant Entertainment Group, LLC for approximately $1.5 million.
The parties also have entered into a separate asset purchase agreement for the Cadillac Ranch restaurant assets in Pittsburgh, Pennsylvania allowing Granite City to purchase the assets for $900,000 upon issuance of a liquor license to operate the restaurant. The Company expects to receive such liquor license sometime in the second quarter of 2012.
“We are pleased with the initial integration of the Cadillac Ranch stores into our existing restaurant company,” said Rob Doran, CEO. “The acquisitions to date represent a significant step for Granite City to grow into a broader and more dynamic restaurant company. We believe that the acquisitions of the Cadillac Ranch restaurant assets along with the recent Granite City restaurant enhancements and the anticipated 2012 Granite City restaurant openings will continue to grow our revenue and operating income.”
Jim Gilbertson, CFO, added “We are pleased to disclose that on a combined basis giving effect to the acquisitions completed to date, operating loss for the 9 month period ended September 30, 2011 was $168 thousand and adjusted EBITDA for the 9 month period ended September 30, 2011 was $5.45 million. Our primary financial focus has been and will remain growth in revenue and EBITDA and, in my view, the Cadillac Ranch acquisitions presented a great opportunity to significantly enhance this growth at a compelling value.”Guidance for FY 2012 Including the results of the five Cadillac Ranch acquisitions closed to date, and excluding the potential Pittsburgh acquisition, management’s guidance for fiscal year 2012 is as follows:
- We anticipate a continuation of the positive same store sales trend resulting in net sales of between $115 million and $125 million.
- Adjusted EBITDA is expected to be between $7 million and $8 million. Due to the high number of capital leases, management tracks adjusted EBITDA in order to fully account for all store level lease expense. To arrive at adjusted EBITDA, management reduces EBITDA for the difference between the fixed rent recorded and the actual amount paid for rent expense whether pursuant to a capital or operating lease. Additional detail regarding these non-GAAP measures appears below.
- The range of guidance above takes into account potential variance in both the timing and number of completed 2012 Granite City restaurant openings and additional restaurant enhancements as well as the time needed to fully integrate and enhance operations at the acquired Cadillac Ranch locations. Our guidance may also vary due to adjustments resulting from completion of our fiscal year 2011 audit.
- Of note, the Kendall, Florida Cadillac Ranch restaurant was opened in July 2011. All other Cadillac Ranch restaurants were open for all of 2011. The guidance above includes management’s projections for a full year of operations for all acquired Cadillac Ranch locations, including Kendall.