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Investor PresentationMarch 2013
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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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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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