Granite City Food & Brewery Ltd. Improves Restaurant-Level EBITDA Margin to 16.4% for Second Quarter 2009

Granite City Food & Brewery Ltd. (Nasdaq:GCFB), a Modern American upscale casual restaurant chain, today reported results for the second quarter ended June 30, 2009.

Highlights for the second quarter of 2009 were as follows:

• Restaurant-level EBITDA improves to 16.4% from 12.1% in prior year second quarter

• Restaurant-level EBITDA for comp stores increases to 18.5% from 14.5% in prior year second quarter

• Prime cost (food, beverage, labor) decreases 5.1 percentage points from 67.3% in prior year quarter to 62.2% in second quarter 2009

• Same-store-sales down 13.2% from prior year second quarter

• Adjusted company-wide EBITDA improves $1.5 million from $0.3 million in second quarter 2008 to $1.8 million in second quarter 2009. Corporate charges decrease $0.4 million in second quarter 2009 compared to second quarter 2008

Second Quarter 2009 Financial Results

For all the restaurants, the restaurant-level EBITDA margin was 16.4% for the second quarter of 2009 compared to 12.1% in the second quarter of 2008. This represents an increase of 4.3 percentage points in restaurant-level EBITDA.

'I am very pleased with our operating performance in what has been a challenging environment,' commented Granite City's CEO, Steve Wagenheim. 'We are hopeful that some recent increases in traffic continue and are a reflection of our lower price point during the past several months. Our consistency of operations has never been better. I am extremely proud of our dedicated employees for improving our adjusted EBITDA on a year over year basis during the quarter when revenues were down. While we are pleased with the operating performance, we still have the challenge of restructuring our balance sheet. We continue to work with our lessors in an effort to restructure our debt and leases. We believe a successful restructure will help us avoid curtailing or reducing the scale of our operations. Our cash balance of $1.9 million at the end of the second quarter was generated by making fewer lease payments during negotiations. Although this is a short-term strategy, we are hopeful that we will negotiate acceptable terms with our lessors, thereby strengthening our balance sheet and improving our monthly cashflow.'

Total revenue for the second quarter 2009 decreased by 11.9% to $22.1 million compared to $25.1 million for the second quarter of 2008.

Total cost of sales was $18.5 million in the second quarter or 83.6% of sales compared to prior year second quarter cost of sales of $22.1 million or 87.9% of sales. The improvement in the second quarter compared to the prior year quarter was due to several factors including our renegotiated food and food distribution costs, sizing and scheduling our staff to standardized sales-per-labor-hour levels, and a continued strong focus in managing strategy.

General and administrative expenses were $2.4 million or 11.0% of sales for the second quarter of 2009 compared to $2.8 million or 11.1% of sales for the second quarter of 2008. The company incurred approximately $479,000 in restructuring costs and legal costs related to restructuring during the second quarter of 2009. Excluding these costs, general and administrative costs would have been $2.0 million or 8.8% of revenue.

The net loss for the second quarter of 2009 was $2.5 million or $(0.16) per share compared to a net loss of $3.3 million or $(0.20) per share in the second quarter of 2008.

Year-to-Date Financial Results

Total revenue for the first half of 2009 decreased by 11.4% to $43.5 million compared to $49.1 million for the first half of 2008.

For all the restaurants, the restaurant-level EBITDA margin was 15.9% for the first half of 2009 compared to 10.3% in first half of 2008. This represents an increase of 5.6 percentage points in restaurant-level EBITDA.

Total cost of sales was $36.6 million in the first half or 84.1% of sales compared to prior year first half cost of sales of $44.0 million or 89.7% of sales.

General and administrative expenses were $4.5 million or 10.3% of sales for the first half of 2009 compared to $5.5 million or 11.1% of sales for the first half of 2008. The company incurred $501,000 in restructuring costs and legal costs related to restructuring during first half of 2009. Excluding these costs, general and administrative costs would have been $4.0 million or 9.2% of revenue.

The net loss for the first half of 2009 was $5.3 million or $(0.32) per share compared to a net loss of $7.6 million or $(0.47) per share in the first half of 2008.

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