Granite City Food & Brewery, which is backed by CIC Partners, has acquired the assets of five Cadillac Ranch All American Bar & Grill restaurants for an aggregate purchase price of about $6.2 million. The restaurants are located in Minnesota, Miami, Maryland and Indianapolis. Granite City also bought certain Cadillac Ranch intellectual property, including trademarks, for about $1.5 million. Granite City has agreed to buy the assets of a sixth Cadillac Ranch restaurant, in Pittsburgh, subject to issuance of the required liquor license.
PRESS RELEASE
Granite City Food & Brewery Ltd. (NASDAQ:GCFB) recently announced that it has completed the purchase of the assets of five Cadillac Ranch All American Bar & Grill restaurants, in Bloomington, Minnesota; Miami, Florida; Oxon Hill, Maryland; Annapolis, Maryland; and Indianapolis, Indiana, for an aggregate purchase price of approximately $6.2 million. The Company also acquired certain Cadillac Ranch intellectual property, including trademarks, from Restaurant Entertainment Group, LLC for approximately $1.5 million.
The parties also have entered into a separate asset purchase agreement for the Cadillac Ranch restaurant assets in Pittsburgh, Pennsylvania allowing Granite City to purchase the assets for $900,000 upon issuance of a liquor license to operate the restaurant. The Company expects to receive such liquor license sometime in the second quarter of 2012.
“We are pleased with the initial integration of the Cadillac Ranch stores into our existing restaurant company,” said Rob Doran, CEO. “The acquisitions to date represent a significant step for Granite City to grow into a broader and more dynamic restaurant company. We believe that the acquisitions of the Cadillac Ranch restaurant assets along with the recent Granite City restaurant enhancements and the anticipated 2012 Granite City restaurant openings will continue to grow our revenue and operating income.”
Jim Gilbertson, CFO, added “We are pleased to disclose that on a combined basis giving effect to the acquisitions completed to date, operating loss for the 9 month period ended September 30, 2011 was $168 thousand and adjusted EBITDA for the 9 month period ended September 30, 2011 was $5.45 million. Our primary financial focus has been and will remain growth in revenue and EBITDA and, in my view, the Cadillac Ranch acquisitions presented a great opportunity to significantly enhance this growth at a compelling value.”
Guidance for FY 2012
Including the results of the five Cadillac Ranch acquisitions closed to date, and excluding the potential Pittsburgh acquisition, management’s guidance for fiscal year 2012 is as follows:
We anticipate a continuation of the positive same store sales trend resulting in net sales of between $115 million and $125 million.
Adjusted EBITDA is expected to be between $7 million and $8 million. Due to the high number of capital leases, management tracks adjusted EBITDA in order to fully account for all store level lease expense. To arrive at adjusted EBITDA, management reduces EBITDA for the difference between the fixed rent recorded and the actual amount paid for rent expense whether pursuant to a capital or operating lease. Additional detail regarding these non-GAAP measures appears below.
The range of guidance above takes into account potential variance in both the timing and number of completed 2012 Granite City restaurant openings and additional restaurant enhancements as well as the time needed to fully integrate and enhance operations at the acquired Cadillac Ranch locations. Our guidance may also vary due to adjustments resulting from completion of our fiscal year 2011 audit.
Of note, the Kendall, Florida Cadillac Ranch restaurant was opened in July 2011. All other Cadillac Ranch restaurants were open for all of 2011. The guidance above includes management’s projections for a full year of operations for all acquired Cadillac Ranch locations, including Kendall.
About the Company
In May 2011, Granite City sold $9.0 million of convertible preferred stock to Concept Development Partners (CDP) in partnership with Dallas-based private equity firm, CIC Partners, and entered into a $10.0 million credit facility with Fifth Third Bank. Of the new capital, $7.05 million was used to purchase a majority of the shares of common stock of Granite City’s then majority shareholder, DHW Leasing, L.L.C. The transaction brought the Company capital, additional management and several new, experienced board members, including Mike Rawlings, former President of Pizza Hut, a Founding Partner of CIC Partners, and current Mayor of Dallas, Lou Mucci, former CFO of BJ’s Restaurants, Michael Staenberg, President of THF Realty, Fouad Bashour, a Founding Partner of CIC Partners, and Rob Doran, former Executive Vice President of McDonalds’s. Rob Doran now serves as the Company’s CEO. Since CDP’s investment, the Company has been developing growth plans for existing Granite City restaurants as well as the construction of new Granite City restaurants, such as the recently announced Troy, Michigan location set to open in early 2012.
In late 2011, the Company acquired the assets of five Cadillac Ranch restaurants and related intellectual property, and Fifth Third Bank increased the Company’s credit facility by $12.0 million. The Company has entered into an agreement to acquire the assets of a sixth Cadillac Ranch restaurant, namely the Pittsburgh, Pennsylvania location, subject to issuance of the required liquor license.
Granite City Food & Brewery is a modern American restaurant and brewery. Everything served at Granite City is made fresh on site using high quality ingredients, including Granite City’s award-winning signature line of craft beers. The extensive menu features moderately priced favorites served in generous portions. Our attractive price point, high service standards, and great food and beer combine for a memorable dining experience. Granite City Food & Brewery Ltd. opened its first restaurant in St. Cloud, Minnesota in 1999 and currently operates 26 Granite City restaurants and 5 Cadillac Ranch restaurants in 13 states. Additional information about Granite City Food & Brewery can be found at the Company’s website (www.gcfb.net).
Forward-Looking Statements
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, our ability to maintain our NASDAQ listing, and the risks and uncertainties described in our Current Report on Form 8-K filed with the Securities and Exchange Commission on May 17, 2011.
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