MINNEAPOLIS Granite City Food & Brewery on Thursday reported a first quarter net loss that more than doubled over the year-ago period as costs related to new store openings and higher commodities prices ate into a 32-percent jump in revenue. The company also said that it has signed a long-term development agreement with real estate developer United Properties that is expected to lower the casual-dining chain’s cost of capital and reduce building costs.
For the first quarter ended March 25, Granite City posted a net loss of $4.3 million, or 27 cents per share, compared with a net loss of $1.4 million, or 10 cents per share, in the year-earlier period. First quarter revenue rose to $24 million, from $18.2 million a year ago.
Granite City reported that operating costs jumped nearly 41 percent to $22 million, or 91.6 percent of sales, from $15.6 million, or 85.9 percent of sales, in the year-ago period. The company blamed the increase on several factors, including a temporary increase in overall food and labor costs for new store openings and a sharp increase in commodity costs. Granite City opened three restaurants early in the first quarter, which followed three new store openings in the company's 2007 fourth quarter.
“Having come off a series of six openings in a very short period of time was very trying for the company, but I believe we have weathered the storm and are now heading into a much more stable time period for those restaurants and the company as a whole,” chief executive Steve Wagenheim said in a statement.
According to Granite City's agreement with United Properties, United will develop 22 restaurants between 2009 to 2012 and be responsible for all costs related to the land and building. In addition, Granite City will have the right of first offer to purchase stores owned by United. The restaurant company said it expects the deal will reduce its current lease rate by 100 basis points.
Granite City, based here, operates 25 restaurants in 12 states.
