Granite City Food & Brewery Receives NASDAQ Delisting Notice

Granite City Food & Brewery Ltd. (NASDAQ: GCFB) announced today that it has received a letter from the Listing Qualifications Staff of The NASDAQ Stock Market notifying the Company that its common stock is subject to delisting from The NASDAQ Capital Market at the opening of business on February 1, 2012, unless the Company requests an appeal of this determination.

The notice stated that the delisting is attributable to the Company’s failure to comply with the minimum shareholders’ equity requirement for continued listing set forth in NASDAQ Listing Rule 5550(b)(1). NASDAQ staff did not accept the Company’s plan for compliance submitted on January 4, 2012.

"We believe our plan for regaining and sustaining compliance merits continued listing of our common stock and we have therefore decided to appeal the staff’s determination to a listing qualifications panel,” said Chief Financial Officer James G. Gilbertson. "We believe that many of the actions we have taken since the CDP transaction have added significant value to the Company and that we are only beginning to see the results of such actions, as reflected in our recently filed Form 8-K/A containing pro forma financials that show the impact of the Cadillac Ranch asset acquisitions.”

The Company anticipates that the listing qualifications panel hearing will be scheduled within the next four weeks.

If the Company’s common stock does not continue to be listed on The NASDAQ Capital Market, the shares would become subject to certain rules of the SEC relating to "penny stocks.” Such rules require broker-dealers to make a suitability determination for purchasers and to receive the purchaser’s prior written consent for a purchase transaction, thus restricting the ability to purchase or sell the shares in the open market. In addition, trading, if any, would be conducted in the over-the-counter market in the so-called "pink sheets” or on the OTC Bulletin Board, which was established for securities that do not meet NASDAQ listing requirements. Consequently, selling the shares would be more difficult because smaller quantities could be bought and sold, transactions could be delayed, and security analyst and news media coverage of the Company may be reduced. These factors could result in lower prices and larger spreads in the bid and ask prices for the shares. There can be no assurance that the Company’s common stock will continue to be listed on The NASDAQ Capital Market.

About the Company

In May 2011, the Company sold $9.0 million of convertible preferred stock to Concept Development Partners (CDP) in partnership with Dallas-based private equity firm, CIC Partners, and entered into a $10.0 million credit facility with Fifth Third Bank. The transaction brought the Company capital, additional management and several new, experienced board members, including Mike Rawlings, former President of Pizza Hut, a Founding Partner of CIC Partners, and current Mayor of Dallas, Lou Mucci, former CFO of BJ’s Restaurants, Michael Staenberg, President of THF Realty, Fouad Bashour, a Founding Partner of CIC Partners, and Rob Doran, former Executive Vice President of McDonalds’s. Rob Doran now serves as the Company’s CEO. Since CDP’s investment, the Company has been developing growth plans for existing Granite City restaurants as well as the construction of new Granite City restaurants, such as the Troy, Michigan location set to open in early 2012.

In late 2011, the Company acquired the assets of five Cadillac Ranch restaurants and related intellectual property, and Fifth Third Bank increased the Company’s credit facility by $12.0 million. The Company has entered into an agreement to acquire the assets of a sixth Cadillac Ranch restaurant, namely, the Pittsburgh, Pennsylvania location, subject to issuance of the required liquor license.

Granite City Food & Brewery is a modern American restaurant and brewery. Everything served at Granite City is made fresh on site using high quality ingredients, including Granite City’s award-winning signature line of craft beers. The extensive menu features moderately priced favorites served in generous portions. Granite City’s attractive price point, high service standards, and great food and beer combine for a memorable dining experience. The Company opened its first Granite City restaurant in St. Cloud, Minnesota in 1999 and currently operates 26 Granite City restaurants in 11 states and 5 Cadillac Ranch restaurants in 4 states. Additional information can be found at the Company’s website (www.gcfb.net).

Forward-Looking Statements

Certain statements made in this press release of a non-historical nature constitute "forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated. Such factors include, but are not limited to, changes in economic conditions, changes in consumer preferences or discretionary consumer spending, a significant change in the performance of any existing restaurants, our ability to continue funding our operations and meet our debt service obligations, our ability to maintain our NASDAQ listing, and the risks and uncertainties described in our Current Report on Form 8-K filed with the Securities and Exchange Commission on May 17, 2011.