KONA Presentation (March 2013)

7/30/2019 KONA Presentation (March 2013)

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NASDAQ: KONA

Investor PresentationMarch 2013


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NASDAQ:KONA

This presentation contains forward-looking statements. These statements relate to future events orexpectations regarding our future financial performance. These statements are only predictions andinvolve known and unknown risks, uncertainties, and other factors. The fo llowing factors, among others,could c ause our ac tual results and performance to differ materially from the results and performanc eprojected in, or implied by, the forward-looking statements: the adverse impact if restaurant salesdecrease, a decline in visitors to ac tivity centers surrounding our restaurants, the limited history foreva luating our company; the effec t of growth on our infrastructure, resources, and existing restaurants;

our ability to expand our operations in both new and existing markets; the impact of supply shortagesand food costs in general; our ability to protect trademarks and other proprietary information; theimpact of litiga tion; our ability to raise capital; negative publicity surrounding our restaurants or theconsumption of our food products in general; the impact of federal, state, or local governmentregulations; labor shortages or increa ses in labor costs; ec onomic and political conditions generally; andthe effec t of competition in the restaurant industry.

We assume no obligation to publicly update or revise these forward-looking statements for any reason,or to update the reasons actual results could differ materially from those anticipated in, or implied by,these forward-looking statements, even if new information becomes available in the future.

Important Cautions RegardingForward-Looking Statements

2012-2013 Kona Grill, Inc. All Rights Reserved


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NASDAQ:KONA

Emerging national restaurantconcept positioned as differentiatedupscale, polished casual

Flavorful new American cuisine,

award-winning sushi, significant barbusiness

Moderately priced $25 avg. check with high unit volumes

TTM sales: $96 million

Who We Are


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Successful Execution in 4 DaypartsLunchHappy HourDinnerReverse Happy Hour

3 Distinct BusinessesSushiBarAmerican Grill

What Sets Us Apart?


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23 restaurants across 16 states

Average unit volume: $4.2 million

Na tionw id e o p p or tun ity o f 100+ loc a tions

Where We Are

ScottsdaleChandler

Kansas City

Las Vegas

Denver

Omaha

Carmel

San Antonio

Oak BrookLincolnshire

Dallas

Stamford

Austin

Troy

Gilbert

Baton Rouge

Houston

Phoenix

Richmond

Eden Prairie

Woodbridge

Baltimore

Tampa

Boise

Existing restaurant

Executed lease for new restaurant; severalsites in LOI/lease negotiation


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Build premier polished casual concept

Capitalize on 4 daypart model with 3 distinct businesses

Take brand to the next phase of growth

23 profitable restaurants in 16 states Top quartile restaurant operating margins

Strong same-store sales momentum on a trailing 2 year basis

Disciplined return-on-investment focus

Strategy


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Achieved best year in the companys history

Improved income from continuing operations by 127% to $5.3M

Same-store sales of 2.7%; successfully lapped 8.8% in 2011

Improved operating margins by 100 bps to 18.8%Reduced G&A spend by $1.4M to $7.0M or 7.3% of sales

Increased cash to $8M, including $5.5M for stock buyback

Strongest ba lance sheet in the companys history

Stock price increased 42%; 11 th best performance in industry

2012 Highlights


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Differentiated Menu Options

Macadamia Nut Chicken Carrot Cake

Kona CalamariSushi & Sashimi Combo Avocado Egg Roll

Picasso Roll


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Target:

High traffic , upscale retail centers andshopping malls

Lifestyle/entertainment centers

Urban power dining locations

Significant commercial, residential andda ytime population

Empirical site selection model

Rigorous ROI review

Prototype: 6,500 sq. ft. & 280 seats

Strict Site Selection Strategy


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Adults 25 - 55

HH Income $70K+

High education (grad school)

Health conscious

High frequency

Target Market


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New Design Prototype

Prototype for new restaurants and remodels

Features modern design elements that appeal to guests

Host Stand and Entry Way Outdoor Patio


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New Design Prototype

Creates inviting a tmosphere for guests to enjoy duringvarious dining occasions

Dining Room and Sushi Bar Lounge


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Scratch kitchen delivers exceptional flavors

40+ signature sauces & dressings

Awarded best sushi in multiple markets(24% of total sales)

Voted best happy hour in several c ities

Bar business (30%+ of total sales)

Multiple choices for health conscious guests

Exhibition-style kitchen & sushi barIndoor/outdoor design drives energy

Exceptional Dining Experience


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Emphasis on training &supervision

Formal performance reviews

Low staff to table ratio

Higher than peer guest

satisfaction scores

Exceptional Service


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Guest Usage *KONAGRILL

Casual DiningIndustry Range

Heavy 17% 10-15%

Medium 37% 16-30%

Light 46% 55-60%

* Visits in last 90 days:Heavy 9+

Medium 4-8

Light 1-3

Loyal User Base


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Crea ting buzz

Social marketing (Yelp, Fac ebook, Twitter)SEO/SEM & other interac tive advertising

Print advertising

Local restaurant marketing

Public relations

Targeted direc t mailing

Konavore local events

Charity event sponsorship

Concierge

Brand Positioning & Awareness


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200,000+ Konavore members

Drive traffic by keeping Kona Grill top of mind

Deliver increased frequency through unique offerings

Loyalty Program


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Experienced Senior Leadership Team

Name and Position Biography

Berke BakayPresident & Chief Exec utive Officer

Largest shareholder (15% of compa ny)

Board member since 2009

10+ years of investment management

Christi HingChief Financ ial Officer

17 years of financ e a nd a ccounting experience

7+ years with Kona

Marci RudeVP of Development

21+ years of commercial rea l estate experienceInstrumental in PF Changs bistro growth phase

J enny ElkinsVP of Operations

10+ years with Kona

Previous roles include senior direc tor of training,district manager and general manager

Chris MoranVP of Food and Beverage

26+ yea rs of restaurant industry experienc e

Roles of inc reasing responsibilities, inc ludingcorporate executive chef - Redstone American Grill


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FINANCIAL OVERVIEW


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$10.53$16.62 $18.73 $17.80 $17.50

$23.35

$22.59

Affordable Dining Experience

Av e ra g e c h e c k c o m p a re s fa v o ra b ly to c o m p e titio n

$13.50

$19.10$21.50

$25.00

$28.13

With vs. without a lco hol .Source : 2011 10-K, mo st r ece n t 10-Q & est im a te s fo r food c om po nen t o f ave rag e c hec k .


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$50.3

$66.8$72.7

$76.0$82.7

$93.7 $96.0

2006 2007 2008 2009 2010 2011 2012

Stable Sales Growth

Res taurant Sales($ millions)


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Strong Trailing 2+ Year SSS

Note : Inc ludes only resta urants op ene d for more tha n 18 m onths.

* Q1 2012 SSS ref lec ts est im ate d 470 bp s favo rab le im pa c t f rom we at her, extra d a y (Feb . 29) an d c alend ar shift

6.0%7.6%

9.1% 10.6%

7.8%8.7%*

2.3% 0.2%

0.1%

0.0%

5.0%

10.0%

15.0%

Q1 Q2 Q3 Q4

2010 SSS 2011 SSS 2012 SSS

Impressive 10%+ Trend

hl bl d l


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Highly Leverageable Operating Model

18.3%

15.9%

10.3%

14.7%

17.8%18.8%

10.0%

15.0%

20.0%

2008 2009 Q4 09* 2010 2011 2012

Strong Margin Improvement under Current Management Team

* Lowest margin in companys history; development pipeline placed on hold

G&ALeverageProvidesOpportunity


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G&A Leverage Provides Opportunityfor EBITDA Growth

Note : Ad justed G& A exc ludes sep a rat ion, 123R, ac t ivist sha reho lder a c t ivit ies, & Rights p lan e xpen ses.

10.3%

8.8%8.1%

7.8%7.0%

2008 2009 2010 2011 2012

Adjusted G&A as % of Sales

h


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Strong EBITDA Growth

$4.0 $3.9$5.0

$8.8

$11.4

2008 2009 2010 2011 2012

Annual EBITDA($ in millions)

Note: EBITDA excludes non-cash stock based compensation


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C lli U i L lE i


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($ in th o usa nd s) Comp Units

Restaurant sales $4,200

Net cash investment 2 $2,500

Restaurant cash flow

% Margin $79018.8%

Cash return on cash investment 32%

Compelling Unit Level Economics

Q ua l ity si te se le c t ion & e ffe c t ive e xe c ut ion c a n lea d to sup er io r re turns

Figures reflect averages for the 23 restaurants in the c omparable base as of 12/31/12.2Net of landlord tenant improvement allowance & excluding pre-opening expenses.

K T k A


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Unique c oncept: differentiated upscale polished casual

50%+ of sales from sushi and bar

Successful execution in 4 daypa rts & 3 distinc t businesses

National portability, flexible real estate options

Industry leading unit economics

Strong cash-on-cash returns

Significant profitability growth in 2012

2012 EPS-Continuing Operations $0.59 vs. $0.24 in 2011

Key Ta k e - A w a y s

$4.0 $3.9

$5.0

$8.8

$

08 09 10 11 12

EBITDA($ in millions)


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KONA Presentation (March 2013)

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