project roadmap presentation
TRANSCRIPT
Confidential
Discussion materials June 12, 2009
Project Roadmap
Presented by: Sidney Oster and Bryce King
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1 Contents
Kona Grill overview 2
Granite City Brewery overview 8
Comps 14
Next steps 15
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2 Kona Grill has grown from its original sushi concept into a leading upscale casual dining concept.
Business description
Kona Grill , Inc. (“Kona”) began as a sushi concept in 1994 and,
responding to customer demands, expanded its menu offerings,
opening the first restaurant under the “Kona Grill” name in 1998
in Scottsdale, AZ
Kona offers freshly prepared food, featuring a diverse selection of
mainstream American dishes as well as a variety of appetizers
and entrees with an international influence, including an
extensive selection of award-winning sushi.
– Kona’s menu items also incorporate over 40 signature sauces
and dressings that it makes from scratch
– A full service bar offers a broad assortment of wines, specialty
drinks, and beers
– Kona’s restaurants incorporate modern design elements to
create an upscale ambiance.
TTM revenue over $77 million and EBITDA of $2.7 million
– Alcoholic beverages account for 32% of total revenue
There are 21 units in thirteen states
– All units are company owned
– All properties are leased (expirations range from 2013-2029)
Four new location planned for 2009. Management believes the
concept has the potential for over 100 locations nationwide
Recent events:
– May 15, 2009 : The CEO, Marcus Jundt, was forced to resign
– May 18, 2009 : Mill Road Capital offers $4.60/share for buyout
Key statistics
Source: Kona Grill, Inc.
As of 12/31/08
Average unit volume $4.3mm ($608/sq.ft.)
Restaurant operating profit 17.4%
Unit cash investment $2.5 million
Average check $24.00 ($16.50, excl. alcohol)
Footprint 6,800 sq.ft. (appr. 260 to 300 guests)
Site locations
High-activity areas such as retail centers,
shopping malls, and lifestyle centers that
are situated near commercial office space
and residential housing
Day part Lunch, dinner, and late night
CA 139
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Location details 3
As of March 31, 2009
Source: Kona Grill, Inc,
1) Number of seats includes dining room, patio seating, sushi bar, bar, and private dining room (where applicable).
Year Square Number of
State City Location Opened Footage Seats (1)
Arizona Scottsdale Scottsdale Fashion Square 1998 5,964 274
Arizona Chandler Chandler Fashion Center 2001 7,389 326
Missouri Kansas City Country Club Plaza 2002 7,455 222
Nevada Las Vegas Boca Park Fashion Village 2003 7,380 295
Colorado Denver Cherry Creek Mall 2004 5,920 243
Nebraska Omaha Village Pointe 2004 7,415 304
Indiana Carmel Clay Terrace 2004 7,433 295
Texas Sugar Land First Colony Mall 2005 7,127 285
Texas San Antonio The Shops at La Cantera 2005 7,200 256
Texas Dallas North Park Mall 2006 6,872 299
Illinois Lincolnshire Lincolnshire Commons 2006 7,020 305
Texas Houston Houston Galleria 2006 7,459 315
Illinois Oak Brook Oak Brook Promenade 2006 6,999 298
Texas Austin The Domain 2007 6,890 298
Michigan Troy Big Beaver Road 2007 7,000 280
Connecticut Stamford Stamford Town Center 2007 7,654 305
Louisiana Baton Rouge Perkins Rowe 2007 6,900 260
Arizona Gilbert San Tan Village 2008 6,770 259
Florida West Palm Beach CityPlace 2008 6,750 243
Arizona Phoenix CityNorth 2008 7,510 368
Virginia Richmond West Broad Village 2009 7,000 282
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Historical financial performance 4
$ in thousands
2008 2007 2006
Total units 20 18 14
Total revenues $75,815 $69,521 $50,322
Costs and expenses:
Cost of restaurant sales 20,730 19,600 14,320
Restaurant labor 25,396 21,554 15,555
Occupancy 5,157 4,465 3,363
Restaurant operating 11,314 9,479 6,875
General and administrative expenses 8,416 7,294 7,155
Pre-opening expenses 2,073 1,962 1,971
Total costs and expenses 73,086 64,354 49,239
EBITDA $2,729 $5,167 $1,083
Capital expenditures $17,146 $12,755 $20,775
Selected operating data:
% change in comparable store sales -7.2% 2.7% 4.0%
Average unit volume $4,279 $4,808 $4,768
Restaurant operating profit $13,218 $14,423 $10,209
For the fiscal years ended December 31,
Source: Kona Grill, Inc.
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Ownership and trading analysis 5
Key trading statistics Major shareholders
Breakdown of shares held
Source: CapitalIQ
Number %
Insiders 1,212,035 18.59%
Institutional 3,189,980 48.93%
Retail/other shareholders 2,117,985 32.48%
Total shares outstanding 6,520,000 100.00%
Tradeable float 3,951,120 60.6%
Basic Shares Held
Stock Price (6/11/2009) $3.65
Fully diluted shares outstanding 6,520,000
Market cap $23,798,000
Net debt 4,400,000
Enterprise value $28,198,000
EV / LTM EBITDA 10.60x
52-week high / low $8.70 / $1.10
3-month average closing price $2.58
Float % 60.6%
Average daily volume 43,562
Historical stock price performance
$0.77
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% of
Basic Basic Shares
Top holders Shares Outstanding
William Blair Inv Mgmt 846,912 12.99%
Mill Road Capital 640,062 9.82%
Jundt, Marcus E. 611,531 9.38%
BBS Capital 514,486 7.89%
Straus Capital Mgmt 320,000 4.91%
Total top holders 2,932,991 44.98%
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Analysis at various prices 6
Implied multiple at various prices ($ millions, except per share data)
Source: Capital IQ, Kona Grill, Inc., and proprietary analysis
52-week
Kona's Current high
Offer share price Metrics $3.65 $4.13 $4.60 $4.85 $5.10 $5.35 $8.70
Premium (discount) to market price per share
Current $3.65 0.0% 13.0% 26.0% 32.9% 39.7% 46.6% 138.4%
1-month average $3.56 2.5% 15.9% 29.2% 36.2% 43.3% 50.3% 144.4%
3-month average $2.58 41.5% 59.9% 78.3% 88.0% 97.7% 107.4% 237.2%
Implied equity value $23.8 $26.9 $30.0 $31.6 $33.3 $34.9 $56.7
Net debt 4.4 4.4 4.4 4.4 4.4 4.4 4.4
Implied enterprise value $28.2 $31.3 $34.4 $36.0 $37.7 $39.3 $61.1
TEV / LTM Revenue $77.2 0.37x 0.41x 0.45x 0.47x 0.49x 0.51x 0.79x
TEV / 2009E Revenue $84.8 0.33x 0.37x 0.41x 0.42x 0.44x 0.46x 0.72x
TEV / 2010E Revenue $98.8 0.29x 0.32x 0.35x 0.36x 0.38x 0.40x 0.62x
TEV / LTM EBITDA $2.7 10.60x 11.77x 12.93x 13.54x 14.15x 14.77x 22.98x
TEV / 2009E EBITDA $4.8 5.87x 6.52x 7.17x 7.50x 7.84x 8.18x 12.73x
TEV / 2010E EBITDA $8.6 3.28x 3.64x 4.00x 4.19x 4.38x 4.57x 7.11x
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7 Contents
Granite City Brewery overview 8
Comps 14
Next steps 15
Kona Grill overview 2
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8 Granite City Brewery – sophisticated yet unpretentious modern American upscale casual dining chain
Business description
Key statistics
Source: Granite City Brewery, Inc.
As of 12/31/08
Average unit volume $3.9million
Restaurant operating profit 11.8%
Unit cash investment $1.0 million - $1.3 million
Average check $13.14 - $15.56 (depending on market)
Footprint 8,800 sq.ft.
Site locations
Located just off one or more interstate
highways and is centrally located within
the respective area's retail, lodging and
transportation activity
Day part Lunch, dinner, and late night
CA 139
Granite City Food & Brewery Ltd (“Granite”) first opened in St.
Cloud, MN in 1999. The concept targets a broad guest base by
incorporating two popular national dining preferences: high
quality, made-from-scratch, casual, value-priced food, and fresh,
handcrafted, quality beers
Granite has a broad 85-item menu that is focused on full-flavored
ingredients and is based on the made-from-scratch preparation of
distinctive items not generally featured at other restaurant chains
– Flagship brews consist of four styles available every day. In
addition, Granite also produces specialty or seasonal beers
which are designed to attract beer enthusiasts
– Granite’s restaurants have open atmospheres as well as floor-
to-ceiling window systems. Granite and other rock materials
are used along with natural woods and glass to create a
balanced, clean, natural interior feel
TTM revenue over $93.7 million and EBITDA of $1.0 million
There are 26 units in eleven Midwestern states
– All units are company owned
– All real estate is leased (the building for one location is owned)
Recent events:
– February 2009 : Landlords agree to lower rents at all of
Granite’s 26 locations by $4 million over the next two years
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Location details 9
As of March 31, 2009
Source: Granite City Food & Brewery Ltd
Year Square
State City Opened Footage
Minnesota St. Cloud June-99 10,000
South Dakota Sioux Falls December-00 10,600
North Dakota Fargo November-01 9,276
Iowa Des Moines September-03 9,449
Iowa Cedar Rapids November-03 9,449
Iowa Davenport January-04 9,449
Nebraska Lincoln May-04 9,449
Minnesota Maple Grove June-04 9,449
Kansas East Wichita July-05 9,449
Minnesota Eagan September-05 7,600
Missouri Kansas City November-05 9,449
Kansas Kansas City January-06 9,449
Kansas Olathe March-06 9,449
Kansas West Wichita July-06 9,412
Minnesota St. Louis Park September-06 7,250
Nebraska Omaha October-06 9,000
Minnesota Roseville November-06 9,531
Wisonsin Madison December-06 9,000
Illinois Rockford July-07 9,000
Illinois East Peoria October-07 9,000
Illinois Orland Park December-07 9,000
Missouri St. Louis January-08 11,360
Indiana Ft. Wayne February-08 8,550
Ohio Toledo February-08 8,550
Indiana South Bend July-08 8,729
Indiana Indianapolis February-09 8,550
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Historical financial performance 10
$ in thousands
Source: Granite City Food & Brewery Ltd
2008 2007 2006
Total units 25 21 18
Total revenues $96,294 $75,912 $58,328
Costs and expenses:
Cost of restaurant sales 29,036 22,897 17,320
Restaurant labor 35,429 27,429 20,832
Occupancy 6,200 4,738 3,435
Restaurant operating 14,260 10,555 7,120
General and administrative expenses 10,880 8,619 6,461
Pre-opening expenses 1,664 2,708 2,382
Total costs and expenses 97,469 76,946 57,550
EBITDA ($1,175) ($1,034) $778
Capital expenditures $3,436 $10,326 $7,679
Selected operating data:
% change in comparable store sales 0.2% NA 5.5%
Average unit volume $3,852 $3,615 $3,240
Restaurant operating profit $11,369 $10,293 $9,621
For the fiscal years ended December 31,
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Ownership and trading analysis 11
Key trading statistics Major shareholders
Breakdown of shares held
Source: CapitalIQ
Historical stock price performance
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Number %
Insiders 1,185,379 7.32%
Institutional 4,612,159 28.47%
Retail/other shareholders 10,400,311 64.21%
Total shares outstanding 16,197,849 100.00%
Tradeable float 13,930,150 86.0%
Basic Shares Held
% of
Basic Basic Shares
Top holders Shares Outstanding
William Blair Inv Mgmt 1,089,927 6.73%
Brewing Ventures Llc 1,071,875 6.62%
Solstice Capital Mgmt 903,651 5.58%
McGowan, Eugene E. 593,382 3.66%
William Harris Investors 560,000 3.46%
Total top holders 4,218,835 26.05%
Stock Price (6/11/2009) $0.36
Fully diluted shares outstanding 16,197,849
Market cap $5,831,226
Net debt 70,200,000
Enterprise value $76,031,226
EV / LTM EBITDA 76.03x
52-week high / low $2.16 / $0.14
3-month average closing price $0.32
Float % 86.0%
Average daily volume 86,595
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Analysis at various prices 12
Implied multiple at various prices ($ millions, except per share data)
Source: Capital IQ, Granite City Food & Brewery., and proprietary analysis
52-week
Granite's Current high
Offer share price Metrics $0.36 $0.46 $0.56 $0.66 $0.76 $0.86 $2.16
Premium (discount) to market price per share
Current $0.36 0.0% 27.8% 55.6% 83.3% 111.1% 138.9% 500.0%
1-month average $0.43 -16.0% 7.3% 30.6% 53.9% 77.2% 100.6% 403.7%
3-month average $0.32 12.6% 43.9% 75.2% 106.5% 137.8% 169.1% 575.8%
Implied equity value $5.8 $7.5 $9.1 $10.7 $12.3 $13.9 $35.0
Net debt 70.2 70.2 70.2 70.2 70.2 70.2 70.2
Implied enterprise value $76.0 $77.7 $79.3 $80.9 $82.5 $84.1 $105.2
TEV / LTM Revenue $93.7 0.81x 0.83x 0.85x 0.86x 0.88x 0.90x 1.12x
TEV / 2009E Revenue $90.1 0.84x 0.86x 0.88x 0.90x 0.92x 0.93x 1.17x
TEV / 2010E Revenue $88.9 0.86x 0.87x 0.89x 0.91x 0.93x 0.95x 1.18x
TEV / LTM EBITDA $1.0 76.03x 77.65x 79.27x 80.89x 82.51x 84.13x 105.19x
TEV / 2009E EBITDA $4.4 17.28x 17.65x 18.02x 18.38x 18.75x 19.12x 23.91x
TEV / 2010E EBITDA $5.4 14.08x 14.38x 14.68x 14.98x 15.28x 15.58x 19.48x
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13 Contents
Granite City Brewery overview 8
Comps 14
Next steps 15
Kona Grill overview 2
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Restaurant trading comparables 14
Trading analysis ($ millions, except per share data)
Source: Capital IQ
Stock
price
% of 52-
week
high
Market
cap
Total
enterprise
value
LTM
Revenue
LTM
EBITDA
FV/LTM
Revenue
FV/LTM
EBITDA
LTM
EBITDA
margin
Benihana Inc. $6.40 61.8% $98 $139 $302 $32 0.46 x 4.31 x 10.6%
BJ's Restaurants Inc. 16.42 76.8% $439 $374 $390 $36 0.96 10.30 9.3%
Brinker International Inc. 17.37 75.1% $1,774 $2,407 $3,865 $507 0.62 4.74 13.1%
Buffalo Wild Wings Inc. 34.85 75.0% $627 $563 $457 $66 1.23 8.52 14.5%
California Pizza Kitchen Inc. 14.10 71.1% $339 $346 $673 $66 0.51 5.28 9.7%
Cracker Barrel Old Country Store, Inc. 30.10 81.9% $674 $1,415 $2,373 $200 0.60 7.08 8.4%
Darden Restaurants Inc. 33.85 80.2% $4,642 $6,438 $7,068 $878 0.91 7.33 12.4%
Landry's Restaurants Inc. 10.47 47.4% $169 $1,018 $1,108 $196 0.92 5.20 17.7%
O'Charley's Inc. 9.49 64.8% $204 $310 $925 $64 0.34 4.87 6.9%
PF Chang's China Bistro Inc. 33.08 82.1% $784 $708 $1,202 $128 0.59 5.53 10.7%
Red Robin Gourmet Burgers Inc. 19.33 49.9% $300 $489 $869 $99 0.56 4.95 11.4%
Ruby Tuesday, Inc. 6.77 69.1% $357 $839 $1,273 $136 0.66 6.18 10.7%
Texas Roadhouse Inc. 11.45 89.1% $800 $884 $915 $106 0.97 8.33 11.6%
The Cheesecake Factory Incorporated 16.67 74.0% $1,002 $1,129 $1,605 $158 0.70 7.14 9.9%
Median 74.5% 0.64 x 5.86 x 10.7%
Kona Grill 3.65 42.0% $24 $28 $77 $3 0.37 10.60 3.4%
Granite City Food & Brewery 0.36 16.7% $6 $76 $94 $1 0.81 76.03 1.1%
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Next steps 15
To be discussed