Granite City Food & Brewery Ltd. (NASDAQ: GCFB), a Modern American upscale casual restaurant chain, today reported results for the fourth quarter and fiscal year ended December 27, 2011.
Highlights were as follows:
- Total restaurant sales increased 7.2% to $23.2 million for the fourth quarter of 2011 from $21.6 million in the fourth quarter of 2010
- Total restaurant sales increased 4.4% to $93.2 million for fiscal year 2011 from $89.3 million in fiscal year 2010
- Granite City restaurant guest counts increased 4.9% quarter over quarter
- Restaurant-level Income Before Occupancy (“IBO”) of $5.0 million for the fourth quarter of 2011 increased $303,000 over the fourth quarter of 2010
- Restaurant-level IBO at $21.6 million in fiscal year 2011 increased $947,000 over fiscal year 2010
“We have had a very exciting year at Granite City and we are pleased with the progress we have made on a number of company and operational initiatives,” said Robert Doran, Chief Executive Officer of Granite City. “In the short time since the CDP transaction in May 2011, we have remodeled 4 stores, begun the construction of our new Troy, Michigan location, signed the lease for a new Granite City restaurant in Franklin, Tennessee for a mid 2012 opening, purchased 5 Cadillac Ranch restaurants with a sixth one pending, and recapitalized our balance sheet through increased debt capacity with Fifth Third Bank. Operationally, we introduced a new Granite City logo, initiated the launch of improved technology into our stores with new kitchen management systems and table management systems to ensure our goal of providing food hotter and fresher food to our customers, and rolled out a new dinner and lunch menu. With all this activity we never lost focus of our customers and were able to increase our guest counts and our same store sales above industry averages. We are excited about 2012 and look forward to seeing the results of all this hard work in your Company’s future.”
Fourth Quarter 2011 Financial Results
Total revenue for fourth quarter 2011 increased by 7.2% to $23.2 million compared to $21.6 million for the fourth quarter of 2010. The two Cadillac Ranch restaurants acquired in the fourth quarter of 2011 accounted for approximately $696,000 of the $1.6 million increase in sales. Total cost of sales before occupancy was $18.1 million in the fourth quarter of 2011 or 78.3% of sales compared to prior year fourth quarter cost of sales before occupancy of $16.9 million or 78.2% of sales.
General and administrative expenses were $2.4 million or 10.5% of revenue for the fourth quarter of 2011 compared to $1.8 million or 8.2% of revenue for the fourth quarter of 2010. General and administrative costs included non-cash stock compensation of $94,000 in the fourth quarter of 2011 compared to $98,000 in the fourth quarter of 2010. With the addition of several key members of management in connection with our May 2011 transaction, we expect general and administrative expenses to run at this higher rate in future months. We believe that the benefit of restaurant, menu and food upgrades and future restaurant unit growth will help to offset these expenses in the long term. We will monitor these expenses closely and will make adjustments as needed.
The net loss for the fourth quarter of 2011 was $3.0 million compared to a net loss of $1.6 million in the fourth quarter of 2010. This net loss is inclusive of approximately $1.3 million of pre-opening costs and one-time costs related to the Cadillac Ranch acquisition and the CDP transaction. Net loss per share available to common shareholders was $(0.68) and $(0.22) respectively. Net loss per share available to common shareholders in the fourth quarter of 2011 included $(0.04) attributable to dividend declared. There was a weighted average of 4.7 million and 7.4 million shares of common stock outstanding in the fourth quarters 2011 and 2010, respectively.
Fiscal Year 2011 Financial Results
Total revenue for fiscal year 2011 increased by 4.4% to $93.2 million compared to $89.3 million for fiscal year 2010. Total cost of sales before occupancy was $71.6 million in 2011 or 76.9% of sales compared to prior year cost of sales before occupancy of $68.7 million or 76.9% of sales.
General and administrative expenses were $8.2 million or 8.8% of revenue for fiscal year 2011 compared to $6.6 million or 7.4% of revenue for fiscal year 2010. General and administrative costs included non-cash stock compensation of $569,000 in 2011 compared to $374,000 in 2010.
The net loss for fiscal year 2011 was $4.6 million compared to a net loss of $4.5 million in fiscal year 2010. This net loss is inclusive of approximately $1.3 million of pre-opening costs and one-time costs related to the Cadillac Ranch acquisition and the CDP transaction. Net loss per share available to common shareholders was $(2.05) and $(0.61), respectively. Net loss per share available to common shareholders in 2011 included $(0.09) attributable to dividends declared and $(1.14) attributable to the non-cash beneficial conversion feature. There was a weighted average of 5.6 million and 7.4 million shares of common stock outstanding in 2011 and 2010, respectively.
At December 27, 2011, the company’s cash balance was $2.1 million. As of March 13, 2012, the unused balance of its $12 million line of credit at Fifth Third Bank was approximately $5.2 million.
Outlook
In light of the completion of the five Cadillac Ranch acquisitions, and excluding the potential sixth Cadillac Ranch acquisition, guidance for fiscal year 2012 is as follows:
- Net sales are anticipated to be between $115 million and $125 million.
- Adjusted EBITDA is expected to be between $7 million and $8 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. Due to the company having 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.
- The range of guidance above is due to variance that could occur in the timing of completion of the anticipated 2012 Granite City restaurant openings and additional restaurant enhancements.
- The Kendall, Florida Cadillac Ranch restaurant we acquired in December 2011 was opened in July, 2011. All other Cadillac Ranch restaurants were open for all of 2011. The guidance above assumes a full year of operations for all Cadillac Ranch restaurants, including Kendall.
Fourth Quarter and Fiscal Year 2011 Conference Call
The company will host a conference call to discuss its fourth quarter and fiscal year 2011 financial results on Wednesday, March 14, 2012 at 10:00 a.m. Central Time. The call may be accessed by calling 1-888-244-2435 and referencing code 4504015. 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 4504015.
About Granite City
Granite City Food & Brewery is a Modern American upscale casual restaurant chain. The Granite City menu features affordable yet high quality family favorite menu items prepared from made-from-scratch recipes and served in generous portions. The sophisticated yet unpretentious restaurants, proprietary food and beverage products, attractive price points and high service standards combine for a great dining experience. Granite City opened its first restaurant in St. Cloud, Minnesota in 1999 and currently operates 26 Granite City restaurants and five Cadillac Ranch restaurants in 13 states. Additional information can be found at the Company’s website (www.gcfb.net).
