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

MINNEAPOLIS--(BUSINESS WIRE)--

Granite City Food & Brewery Ltd. GCFB, a casual dining restaurant group, today reported results for the fourth quarter and fiscal year ended December 25, 2012.

Highlights were as follows:

• Total restaurant sales increased 33.3% to $30.9 million for the fourth quarter of 2012 from $23.2 million in the fourth quarter of 2011
• Total restaurant sales increased 29.7% to $120.9 million for fiscal year 2012 from $93.2 million in fiscal year 2011
• Same store sales (SSS) increased 4.5% and 2.6% in the fourth quarter and fiscal year 2012 over the comparable periods of 2011, respectively
• Restaurant-level Income Before Occupancy (“IBO”) increased $2.6 million and $8.7 million in the fourth quarter and fiscal year 2012 over the comparable periods of 2011, respectively
• Company recorded approximately $1.6 million and $7.0 million in Adjusted EBITDA in fourth quarter and fiscal year 2012, respectively, compared to $0.03 million and $3.0 million in the comparable periods of 2011

“2012 was an incredible year for the Company and we accomplished a lot in a very short time period,” commented Rob Doran, CEO. “This past year we focused on setting the stage for growth and then executing on the steps we put in place to grow both organically and externally. Organically, we were able to increase our store level revenue and our store level operating margin pushing more store level income to the bottom line. Additionally, we began our rebranding process through signage, menus and most importantly, our new prototype Granite City restaurant in Troy, MI – which has been a huge success and surpassed all our internal pre-opening goals. Externally, we finalized the purchase of four additional Cadillac Ranch restaurants, stabilized the operations and absorbed the growth within our home office team. The completion of a $6.5 million equity placement with CDP mid-year helped fund 2012 growth and set the stage for three additional Granite City restaurants in 2013 – including our recent opening in Franklin, TN. We are very happy with our results of this past year and look forward to continued success in 2013.”

Fourth Quarter 2012 Financial Results

Total revenue for fourth quarter 2012 increased by 33.3% to $30.9 million compared to $23.2 million for the fourth quarter of 2011. The five Cadillac Ranch restaurants acquired in November and December of 2011 and the one Cadillac Ranch restaurant acquired in May 2012 accounted for approximately $5.1 million of the $7.7 million increase in sales. Total cost of sales before occupancy was $23.3 million in the fourth quarter of 2012 or 75.5% of revenue compared to prior year fourth quarter cost of sales before occupancy of $18.2 million or 78.7% of revenue.

General and administrative expenses were $2.5 million or 8.1% of revenue for the fourth quarter of 2012 compared to $2.5 million or 10.6% of revenue for the fourth quarter of 2011. This decrease in general and administrative expense as a percent of revenue was primarily attributable to the larger sales base associated with our Cadillac Ranch acquisitions. We believe that the benefit of restaurant, menu and food upgrades, and future restaurant unit growth will help to further reduce general and administrative expenses as a percentage of revenue.

The net loss for the fourth quarter of 2012 was $1.0 million compared to a net loss of $3.1 million in the fourth quarter of 2011. In the fourth quarter of 2011, there were additional one-time expenses related to the Cadillac Ranch asset acquisitions and personnel costs which caused a higher net loss. Net loss per share available to common shareholders was $(0.15) and $(0.70) for the fourth quarters of 2012 and 2011, respectively. Net loss per share available to common shareholders in the fourth quarters of 2012 and 2011 included $(0.03) and $(0.04) attributable to a declared dividend on preferred stock, respectively. Weighted average shares outstanding in the fourth quarters of 2012 and 2011 were 8.1 million and 4.7 million, respectively.

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.