Press Release:

(Minneapolis, MN) – Granite City Food & Brewery Ltd., a casual dining restaurant group, today reported results for the second quarter ended July 2, 2013.

Highlights were as follows:

Total restaurant sales increased 11.8% to $34.0 million for the second quarter of 2013 from $30.4 million in the second quarter of 2012

Total restaurant sales increased 16.9% to $68.9 million for the first half of 2013 from $59.0 million in the first half of 2012

Same store sales increased 2.1% in the second quarter of 2013 over the second quarter of 2012

Same store sales increased 2.5% in the first half of 2013 over the first half of 2012

Company recorded approximately $2.3 million in Adjusted EBITDA in the second quarter of 2013 compared to $1.9 million in the second quarter of 2012

Company recorded approximately $4.5 million in Adjusted EBITDA in the first half of 2013 compared to $3.5 million in the first half of 2012

“We incorporated a variety changes to our menu during the second quarter which caused some increases in our labor and food costs as the staff adjusted to the enhanced menu,” commented Rob Doran, CEO. That said, we performed strongly as a company, our Troy and Franklin prototypes continued to perform very well, and we increased our EBITDA on a quarter over quarter basis. During the quarter we also completed the construction of our downtown Indianapolis restaurant that recently opened in July 2013. We feel the team is well positioned and we look forward to future restaurant openings including the upcoming new restaurant in Lyndhurst, Ohio later this fall.”

Second Quarter 2013 Financial Results

Total revenue for second quarter 2013 increased by 11.8% to $34.0 million compared to $30.4 million for the second quarter of 2012. This increase was the result of three additional locations in operation in the second quarter of 2013 compared to that of 2012. Comparable restaurant revenue, which includes restaurants which we have operated for over 18 months, increased 2.1%. Total cost of sales before occupancy was $25.5 million in the second quarter of 2013 or 75.1% of revenue compared to prior year second quarter cost of sales before occupancy of $22.7 million or 74.8% of revenue.

General and administrative expenses were $2.4 million or 6.9% of revenue for the second quarter of 2013 compared to $2.4 million or 7.8% of revenue for the second quarter of 2012. This decrease in general and administrative expense as a percent of revenue was primarily attributable to the larger sales base associated with our additional restaurants in the second quarter of 2013. 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 second quarter of 2013 was $0.5 million compared to a net loss of $1.0 million in the second quarter of 2012. Net loss per share available to common shareholders was $(0.09) and $(0.25) for the second quarters of 2013 and 2012, respectively. Net loss per share available to common shareholders in the second quarters of 2013 and 2012 included $(0.02) and $(0.04) attributable to a declared dividend on preferred stock, respectively. Weighted average shares outstanding in the second quarters of 2013 and 2012 were 8.2 million and 4.9 million, respectively.

Year-to-Date 2013 Financial Results

Total revenue for first half 2013 increased by 16.9% to $68.9 million compared to $59.0 million for the first half of 2012. This increase was the result of an additional fiscal week in the first quarter of 2013 and three additional locations in operation in the first half of 2013 compared to that of 2012. Comparable restaurant revenue, which includes restaurants which we have operated for over 18 months, increased 2.5%. Total cost of sales before occupancy was $51.8 million in the first half of 2013 or 75.2% of revenue compared to prior year first half cost of sales before occupancy of $44.0 million or 74.6% of revenue.

General and administrative expenses were $5.1 million or 7.4% of revenue for the first half of 2013 compared to $4.9 million or 8.3% of revenue for the first half of 2012. This decrease in general and administrative expense as a percent of revenue was primarily attributable to the larger sales base associated with the additional fiscal week in the first quarter and additional restaurants in the first half of 2013.

The net loss for the first half of 2013 was $1.0 million compared to a net loss of $2.2 million in the first half of 2012. Net loss per share available to common shareholders was $(0.17) and $(0.55) for the first half of 2013 and 2012, respectively. Net loss per share available to common shareholders in the first half of 2013 and 2012 included $(0.05) and $(0.08) attributable to a declared dividend on preferred stock, respectively. Weighted average shares outstanding in the first half of 2013 and 2012 were 8.1 million and 4.8 million, 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 tables below indicate, we derive EBITDA by adding back the following items to operating loss: net interest expense, disposal and exit activities and any related gain or (loss), depreciation and amortization, acquisition cost, pre-opening costs, termination costs, property write-off costs, non cash compensation 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.