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Granite City Food & Brewery® Reports 33.3% Increase In Revenue In Fourth Quarter 2012

Fiscal Year 2012 Financial Results

Total revenue for the fiscal year of 2012 increased by 29.7% to $121.0 million compared to $93.2 million for the fiscal year of 2011. The acquired Cadillac Ranch restaurants accounted for approximately $21.0 million of the $27.8 million increase in sales. Total cost of sales before occupancy was $90.7 million in the fiscal year of 2012 or 75.0% of revenue compared to cost of sales before occupancy in the fiscal year of 2011 of $71.7 million or 76.9% of revenue.

General and administrative expenses were $9.7 million or 8.0% of revenue for the fiscal year of 2012 compared to $8.2 million or 8.8% of revenue for the fiscal year of 2011.

The net loss for the fiscal year of 2012 was $4.1 million compared to a net loss of $4.6 million in the fiscal year of 2011. Included in 2012 was approximately $1.8 million in pre-opening expense and costs related to the acquisition of Cadillac Ranch. Net loss per share available to common shareholders was $(0.77) and $(2.05) for the fiscal years 2012 and 2011, respectively. Net loss per share available to common shareholders in the fiscal years of 2012 and 2011 included $(0.13) and $(0.09) attributable to declared dividends on preferred stock, respectively. Additionally, net loss per share in fiscal year 2011 included $(1.14) attributable to the non-cash beneficial conversion feature of our Series A Preferred Stock. There was a weighted average of 6.4 million and 5.6 million shares of common stock outstanding in the fiscal year of 2012 and 2011, respectively.

Outlook

Guidance for fiscal year 2013 is as follows:

  • Net sales are anticipated to be between $130 million and $140 million.
  • Adjusted EBITDA is expected to be between $8.5 million and $9.5 million. As the reconciliation table below indicates, we derive EBITDA by adding back the following items to operating loss: net interest expense, non cash compensation, disposal and exit activities and any related gain or (loss), depreciation and amortization, pre-opening costs and any provision for income taxes. Since the company has many capital leases, we further reduce EBITDA for the difference between the fixed rent recorded and the actual amount paid for rent expense to generate Adjusted EBITDA.

Fourth Quarter 2012 Conference Call

The company will host a conference call to discuss its fourth quarter financial results on Tuesday, March 19 th at 10:00 a.m. Central Time. The call may be accessed by 1-800-354-6885 and referencing code 21652361. A replay of the call will be available for 30 days and may be accessed by calling 1-800-633-8625 and entering replay code 21652361.

About Granite City

Granite City Food & Brewery Ltd. develops and operates two casual dining concepts: Granite City Food & Brewery and Cadillac Ranch All American Bar & Grill. Granite City Food & Brewery is a polished casual American restaurant that features a great dining experience with affordable, high-quality menu items prepared from made-from-scratch recipes, served in generous portions. There is a brewery onsite, serving hand-crafted and micro brews. Granite City opened its first restaurant in 1999 and is expanding nationwide; there are currently 28 Granite City restaurants in 13 states. Cadillac Ranch restaurants feature freshly prepared, authentic, All-American cuisine in a fun, dynamic environment. Its patrons enjoy a warm, Rock N’ Roll inspired atmosphere, with plenty of room for friends, music and dancing. The Cadillac Ranch menu is diverse with offerings ranging from homemade meatloaf to pasta dishes, all freshly prepared using quality ingredients. The Company purchased its first Cadillac Ranch in November 2011 and has since purchased five additional Cadillac Ranch restaurants along with its intellectual property. The Company currently operates six Cadillac Ranch restaurants in five states. Additional information about Granite City Food & Brewery can be found at www.gcfb.com.

Forward-Looking Statements, Non-GAAP Financial Measurements and Adjusted Financial Measures

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 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 23, 2012.

Additionally, this press release contains certain non-GAAP financial measures, including references to restaurant-level IBO, company-wide EBITDA and adjusted EBITDA. As compared to the nearest GAAP measurement for our company, restaurant-level IBO represents revenue less cost of food, beverage, retail, labor and direct restaurant operating expenses. 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 income (loss) with the add-back of depreciation and amortization, net loss (gain) on disposal of assets and exit or disposal costs. 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. As compared to the nearest GAAP measurement for our company, adjusted EBITDA represents operating income (loss) with the add-back of net interest expense, pre-opening expenses, acquisition costs, depreciation and amortization, loss (gain) on disposal of assets, exit or disposal costs, non-cash share-based compensation, termination costs and any provision for income taxes, and further adjusts for the difference between the amount of fixed rent recorded on the statements of operations and the actual amount paid for rent expense. We use adjusted EBITDA as a way to measure our overall internal operational performance without restaurant openings and/or closings and as a means of evaluating our restaurants’ 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, company-wide EBITDA and adjusted EBITDA for the fourth quarter and fiscal years of 2012 and 2011 are provided herein.

Finally, in order to provide supplemental results of operations information, we have included certain adjusted financial measures. In particular, we have presented various financial metrics for comparable restaurants, which are those restaurants that we have operated for more than 18 months, and our new restaurants which are those restaurants that we have operated for 18 months or less. The contributions of these groups of restaurants to company-wide performance are set forth herein.

 
Granite City Food & Brewery Ltd.
 
Condensed Consolidated Statements of Operations
 
    Thirteen Weeks Ended     Fifty-two Weeks Ended
December 25,   December 27, December 25,   December 27,
2012   2011 2012   2011
 

Restaurant revenues

$ 30,858,733 $ 23,150,305 $ 120,931,643 $ 93,222,655
 
Cost of sales:
Food, beverage and retail 8,394,785 6,360,043 32,723,253 25,408,053
Labor 10,075,877 8,009,972 39,816,861 31,993,363
Direct restaurant operating 4,822,621 3,849,455 18,162,626 14,259,739
Occupancy   2,647,390     1,882,782     9,999,277     7,133,428  
Total cost of sales   25,940,673     20,102,252     100,702,017     78,794,583  
 
Pre-opening 127,787 105,887 1,043,199 112,494
General and administrative 2,507,012 2,450,104 9,714,095 8,186,699
Acquisition costs 28,591 868,293 713,336 868,293
Depreciation and amortization 1,911,986 1,471,692 7,405,705 5,997,940
Exit or disposal activities 15,578 17,274 64,839 (139,625 )
Loss on disposal of assets   114,245     183,866     482,508     149,246  
Operating income (loss)   212,861     (2,049,063 )   805,944     (746,975 )
 
Interest:
Income 1,725 1,756 1,757 5,953
Expense   (1,191,727 )   (1,034,449 )   (4,913,182 )   (3,858,509 )
Net interest expense   (1,190,002 )   (1,032,693 )   (4,911,425 )   (3,852,556 )
 
Net loss $ (977,141 ) $ (3,081,756 ) $ (4,105,481 ) $ (4,599,531 )
 
Loss per common share, basic $ (0.15 ) $ (0.70 ) $ (0.77 ) $ (2.05 )
 
Weighted average shares outstanding, basic   8,050,178     4,686,845     6,417,488     5,642,620  
 
 

Selected Balance Sheet Information

           
December 25, 2012 December 27, 2011
 
Cash $ 2,566,034 $ 2,128,299
Current assets, including cash $ 5,905,523 $ 4,626,534
Total assets $ 71,766,785 $ 60,932,417
Current liabilities $ 14,811,246 $ 13,903,942
Total liabilities $ 70,258,483 $ 61,769,369
Shareholders' equity (deficit) $ 1,508,302 $ (836,952 )
 
             

Non-GAAP Reconciliations Q4 2012 Results

 
Total for All
Comparable

% of

New

% of

Restaurants

% of

Restaurants

Sales

Restaurants

Sales

As Reported

Sales

 
Restaurant revenues $ 23,463,396 100 % $ 7,395,337 100 % $ 30,858,733 100 %
 
Cost of sales:
Food, beverage and retail 6,437,522 27.4 % 1,957,263 26.5 % 8,394,785 27.2 %
Labor 8,000,075 34.1 % 2,075,802 28.1 % 10,075,877 32.7 %
Direct restaurant operating expenses 3,540,427 15.1 % 1,282,194 17.3 % 4,822,621 15.6 %
           
Restaurant-level IBO* $ 5,485,372 23.4 % $ 2,080,078 28.1 % $ 7,565,450 24.5 %
 
Occupancy 2,647,390 8.6 %
Pre-opening 127,787
Acquisition costs 28,591
General and administrative   2,507,012   8.1 %
 
Company-wide EBITDA* 2,254,670 7.3 %
 
Depreciation and amortization 1,911,986
Exit or disposal activities, other   129,823  
 
Operating loss 212,861
 
Interest:
Income 1,725
Expense   (1,191,727 )
Net interest expense (1,190,002 )
 
Net loss $ (977,141 )
 
     

Non-GAAP Reconciliations Q4 2012 Adjusted EBITDA

 
Net loss $ (977,141 )
 
Net interest expense 1,190,002
Exit or disposal activities 15,578
Loss on disposal of assets 114,245
Depreciation and amortization 1,911,986
Pre-opening 127,787
Acquisition costs 28,591
Termination/contract negotiation costs 138,131
Share-based compensation 86,082
Lease adjustment   (1,058,349 )
Adjusted EBITDA* $ 1,576,912  
 

*See accompanying disclosure regarding use of non-GAAP financial measures.Certain percentages may not foot due to rounding.

             

Non-GAAP Reconciliations Q4 2011 Results

 
Total for All
Comparable

% of

New

% of

Restaurants

% of

Restaurants

Sales

Restaurants

Sales

As Reported

Sales

 
Restaurant revenues $ 22,454,713 100 % $ 695,592 N/A $ 23,150,305 100 %
 
Cost of sales:
Food, beverage and retail 6,149,873 27.4 % 210,170 N/A 6,360,043 27.5 %
Labor 7,808,772 34.8 % 201,200 N/A 8,009,972 34.6 %
Direct restaurant operating expenses 3,754,100 16.7 % 95,355 N/A 3,849,455 16.6 %
           
Restaurant-level IBO* $ 4,741,968 21.1 % $ 188,867 N/A $ 4,930,835 21.3 %
 
Occupancy 1,882,782 8.1 %
Pre-opening 105,887
Acquisition costs 868,293
General and administrative   2,450,104   10.6 %
 
Company-wide EBITDA* (376,231 ) -1.6 %
 
Depreciation and amortization 1,471,692
Exit or disposal activities, other   201,140  
 
Operating loss (2,049,063 )
 
Interest:
Income 1,756
Expense   (1,034,449 )
Net interest expense (1,032,693 )
 
Net loss $ (3,081,756 )
 
     

Non-GAAP Reconciliations Q4 2011 Adjusted EBITDA

 
Net loss $ (3,081,756 )
 
Net interest expense 1,032,693
Exit or disposal activities 17,274
Loss on disposal of assets 183,866
Depreciation and amortization 1,471,692
Pre-opening 105,887
Acquisition costs 868,293
Termination/contract negotiation costs 304,141
Share-based compensation 144,373
Lease adjustment   (1,013,027 )
Adjusted EBITDA* $ 33,436  
 

*See accompanying disclosure regarding use of non-GAAP financial measures.Certain percentages may not foot due to rounding.

           

Non-GAAP Reconciliations Fiscal Year 2012 Results

 
Total for All
Comparable

% of

New

% of

Restaurants As

% of

Restaurants

Sales

Restaurants

Sales

Reported

Sales

 
Restaurant revenues $ 94,893,591 100 % $ 26,038,052 100 % $ 120,931,643 100 %
 
Cost of sales:
Food, beverage and retail 25,742,364 27.1 % 6,980,889 26.8 % 32,723,253 27.1 %
Labor 32,497,067 34.2 % 7,319,794 28.1 % 39,816,861 32.9 %
Direct restaurant operating expenses 13,918,768 14.7 % 4,243,858 16.3 % 18,162,626 15.0 %
           
Restaurant-level IBO* $ 22,735,392 24.0 % $ 7,493,511 28.8 % $ 30,228,903 25.0 %
 
Occupancy 9,999,277 8.3 %
Pre-opening 1,043,199
Acquisition costs 713,336
General and administrative   9,714,095   8.0 %
 
Company-wide EBITDA* 8,758,996 7.2 %
 
Depreciation and amortization 7,405,705
Exit or disposal activities, other   547,347  
 
Operating loss 805,944
 
Interest:
Income 1,757
Expense   (4,913,182 )
Net interest expense (4,911,425 )
 
Net loss $ (4,105,481 )
 
     

Non-GAAP Reconciliations Fiscal Year 2012 Adjusted EBITDA

 
Net loss $ (4,105,481 )
 
Net interest expense 4,911,425
Exit or disposal activities 64,839
Loss on disposal of assets 482,508
Depreciation and amortization 7,405,705
Pre-opening 1,043,199
Acquisition costs 713,336
Termination/contract negotiation costs 223,341
Share-based compensation 309,829
Lease adjustment   (4,071,746 )
Adjusted EBITDA* $ 6,976,955  
 

*See accompanying disclosure regarding use of non-GAAP financial measures.Certain percentages may not foot due to rounding.

           

Non-GAAP Reconciliations Fiscal Year 2011 Results

 
Total for All
Comparable

% of

New

% of

Restaurants

% of

Restaurants

Sales

Restaurants

Sales

As Reported

Sales

 
Restaurant revenues $ 70,072,350 100 % $ 23,150,305 N/A $ 93,222,655 100 %
 
Cost of sales:
Food, beverage and retail 19,048,008 27.2 % 6,360,045 N/A 25,408,053 27.3 %
Labor 23,983,390 34.2 % 8,009,973 N/A 31,993,363 34.3 %
Direct restaurant operating expenses 10,410,269 14.9 % 3,849,470 N/A 14,259,739 15.3 %
           
Restaurant-level IBO* $ 16,630,683 23.7 % $ 4,930,817 N/A $ 21,561,500 23.1 %
 
Occupancy 7,133,428 7.7 %
Pre-opening 112,494
Acquisition costs 868,293
General and administrative   8,186,699   8.8 %
 
Company-wide EBITDA* 5,260,586 5.6 %
 
Depreciation and amortization 5,997,940
Exit or disposal activities, other   9,621  
 
Operating loss (746,975 )
 
Interest:
Income 5,953
Expense   (3,858,509 )
Net interest expense (3,852,556 )
 
Net loss $ (4,599,531 )
 
   

Non-GAAP Reconciliations Fiscal Year 2011 Adjusted EBITDA

 
Net loss $ (4,599,531 )
 
Net interest expense 3,852,556
Exit or disposal activities (139,625 )
Loss on disposal of assets 149,246
Depreciation and amortization 5,997,940
Pre-opening 112,494
Acquisition costs 868,293
Termination/contract negotiation costs 304,141
Share-based compensation 820,448
Lease adjustment   (4,355,841 )
Adjusted EBITDA* $ 3,010,121  
 

*See accompanying disclosure regarding use of non-GAAP financial measures.Certain percentages may not foot due to rounding.

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