Kona Grill — Investor Presentation (January 2019)
27 slides from Kona Grill's investor presentation, Jan 14, 2019
Slide 1: Kona Grill Investor Presentation January 2019
Kona Grit Investor Presentation January 2019 i“ ’ 4 ¥
Slide 2: Important Cautions Regarding Forward-Looking Statements
Important Cautions Regarding Forward-Looking Statements This presentation contains forward-looking statements. These statements relate to future events or expectations regarding our future financial performance. These statements are only predictions and involve known and unknown risks, uncertainties
Slide 3: Scottsdale | 1998
Scottsdale | 1998
Slide 4: Founded on the idea that a bar is the energy of a restaurant
Founded on the idea that a bar is the energy of a restaurant, Kona Grill rose to go-to-destination fame by offering a fun and engaging atmosphere in strategically placed locations primed to drive high- volume sales. This, paired with a diverse menu offering and an unbeatable food and beverage based
Slide 5: Strong Unit Performance
Strong Unit Performance Sales per square foot $626 McCormick & Schmick's $674 BJ's Restaurant & Brewhouse $709 Kona Grill $770 P.F. Chang's $920 The Cheesecake Factory
Slide 6: Rapid Sales Growth driven by unit expansion
$80 Rapid Sales Growth oe driven by unit expansion 32% : CAGR : $20 H $0 $76 $70 $50 $37 $25 2004 2005 2006 2007 2008
Slide 7: Same-Store Sales Growth
Same-Store Sales Growth Strong consumer appeal with solid unit level growth Note: Includes only restaurants ‘opened for more than 18 months 8% 6% 4% 4% 8% 7.3% 4.2% 4.0% 2.7% 2004 2005 2006 2007 (7.2%) 2008
Slide 8: Attractive Restaurant Operating Profit Margin
Attractive Restaurant Operating Profit Margin Well developed model generates high unit level returns 20% 15% 10% 5% 18.3% 17.8% 17.0% 12.3% McCormick The Cheesecake P.F. Chang’s Kona Grill BJ's Restaurant & Schmick's Factory & Brewhouse
Slide 9: Strong G&A Leverage
15% StrongG&A ~ Leverage Provide opportunity for EBITDA growth 5% °% of Restaurant Sales Note: G&A excludes separation, 123R, and Rights plan expenses 12.5% 2005 11.3% 2006 9.6% 2007 9.6% 2008 8.1% 2009
Slide 10: Compelling Unit Level Economics
Compelling Unit Level Economics Quality site selection and effective execution leads to superior returns ($ in thousands) Restaurant Sales Net Cash Investment» Restaurant Cash Flow % Margin Cash Return on Cash Investment (1) Figures reflect averages for the 14 stores in the comparable base as of 12/
Slide 11: Erosion of Core Values
Slide 12: Moved away from coveted scratch menu offerings and eliminated fan favorites
Moved away from coveted scratch menu offerings and eliminated fan favorites Recent menu rollouts were not well received and adversely impacted sales Removal of the wildly-famous Happy Hour offerings drove loyal patrons to look elsewhere for alternative options The focus on rapid growth had a negativ
Slide 13: Tomorrow's Kona
Slide 14: Kona is in the early stages of a renewed focus
Kona is in the early stages of a renewed focus on the principles and practices that propelled its initial success: ¢ A devotion to once again offering an industry-leading food and beverage Happy Hour program that converts bar patrons to dinner guests. ¢ A menu that offers a strong value proposition
Slide 15: Bring Back the Margarita
Bring Back the Margarita Value-Driven Happy Hour Food and Drink Menu Kona's Famous Margarita Returns Expansion of Happy Hour Times to Drive Late Night and Weekend Sales Confidential | 15
Slide 16: Competitive menu pricing will once again offer a strong value proposition
* Competitive menu pricing will once again offer our guests a strong value proposition. - Improvements in purchasing, customer service, operational excellence and menu execution will ensure a consistent brand experience. « The continued focus on Happy Hour and value driven offerings will likely conv
Slide 17: Founders and key employees ownership
KG ssi! FDS Ownership \ ‘| - \ ‘3 ‘ 1 - , "Kona crit fou ders & pies key, employees Ferns ito Festore\the core\competencies de’ Kona Grill ccessful | os af ore own 40% of the company P vigil WH) bs These commonly aligned interests position Kona to overhaul operatiohs, improve the guest experience an
Slide 18: Co-Founder and CEO and leadership team
Co-Founder and CEO Founder and CEO of WHC, a company with a portfolio of 50+ restaurants | Entrepreneur who has built more than 25 successful businesses Co-founder of Kona Grill | President of WHC | 30+ years of restaurant experience Previous Kona Grill District Manager | VP of Operations of WHC | 3
Slide 19: Financial Overview
Slide 20: Revenue and number of units
$179.1 sis 169.5 $160 $156.9. $143.0 suo sumo $119.4 Revenue as $98.3 Year # of Units a0 2013 25 2014 30 560 2015 37 2016 45 “ee 2017 46 x20 2018 42 . a $0 2013 2014 2015 2016 2017 2018 (estimated) Confidential | 20
Slide 21: Same-Store Sales
Same-Store Sales 14% 10% 6% 2% 2% 6% “10% 14% 3.8% 2.0% | a (5.9%) (12.3%) 2013 2014 2015 2016 2017 2018 (estimated)
Slide 22: Restaurant Operating Profit Margin
20% 18.4% eb 16.2% 14.7% 15% Restaurant _ 5% . 10.7% Operating = - 10% Profit Margin + Significant opportunity to drive margin improvement via operational efficiencies See + Underperforming units have negatively impacted margins in 2016, 2017, and 2018 0% 2013 2014 2015 2016 2017 2018 (estimated)
Slide 23: G&A Expenses
G&A Expenses Primary headcount in place; expect to continue to cut G&A through improvements to operational efficiencies * Included additions to headcount to support growth initiatives °% of Revenue 10% 5% 8.0% 2013 9.0% 2014* 8.8% 2015* 7.8% 2016 7.5% 7.5% 2017 2018 (estimated)
Slide 24: EBITDA
EBITDA* * EBITDA excludes one-time items such as lease termination costs $10 $8 $6 $4 82 $9.0 $8.2 $5.9 _ $6.5 $5.9 _ $4.8 2013 2014 2015 2016 2017 2018 (estimated)
Slide 25: Capitalization
Capitalization Select Balance Sheet Items 12.31.17 ($ in millions) Cash & Cash Equivalents $3.5 $5.0 $2.0 Long-term Debt $26.8 $37.8 $33.2 (estimated)
Slide 26: Key Takeaways
Key Takeaways
Slide 27: Key Takeaways (continued)
and previous key employees hz d to restore the core competencies that made it successful on the principles and practices that propelled Kona Grill’s initial success Reintroduction of the that converts bar patrons to dinner guests Competitive menu pricing will once again offer our guests Improvements