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Ignite Restaurant Group, Inc. · S-1 · On 7/8/13

Filed On 7/8/13, 4:10pm ET   ·   Accession Number 1047469-13-7417   ·   SEC File 333-189840

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  As Of                Filer                Filing    For/On/As Docs:Size              Issuer               Agent

 7/08/13  Ignite Restaurant Group, Inc.     S-1                    4:2.3M                                   Merrill Corp/New/FA

Registration Statement (General Form)   —   Form S-1
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: S-1         Registration Statement (General Form)               HTML   1.77M 
 2: EX-21.1     Subsidiaries of the Registrant                      HTML     11K 
 3: EX-23.1     Consent of Experts or Counsel                       HTML      7K 
 4: EX-23.2     Consent of Experts or Counsel                       HTML      7K 


S-1   —   Registration Statement (General Form)
Document Table of Contents

Page (sequential) | (alphabetic) Top
 
11st Page   -   Filing Submission
"Table of Contents
"Prospectus Summary
"Risk Factors
"Forward-Looking Statements
"Use of Proceeds
"Dividend Policy
"Market Price of Common Stock
"Capitalization
"Selected Historical Consolidated Financial and Operating Data
"Unaudited Pro Forma Condensed Combined Financial Statements
"Management's Discussion and Analysis of Financial Condition and Results of Operations
"Business
"Management
"106
"Principal and Selling Stockholders
"115
"Certain Relationships and Related Party Transactions
"118
"Description of Capital Stock
"119
"Shares Eligible for Future Sale
"124
"U.S. Federal Tax Considerations for Non-United States Holders
"126
"Underwriting
"130
"Legal Matters
"134
"Experts
"Incorporation by Reference
"Where You Can Find More Information
"135
"Index to Consolidated Financial Statements
"F-1
"Report of Independent Registered Public Accounting Firm
"F-2
"Consolidated Balance Sheets of Ignite Restaurant Group, Inc. as of January 2, 2012 and December 31, 2012
"F-3
"Consolidated Statements of Operations of Ignite Restaurant Group, Inc. for the years ended January 3, 2011, January 2, 2012 and December 31, 2012
"F-4
"Consolidated Statements of Comprehensive Income of Ignite Restaurant Group, Inc. for the years ended January 3, 2011, January 2, 2012 and December 31, 2012
"F-5
"Consolidated Statements of Changes in Stockholders' Equity of Ignite Restaurant Group, Inc. for the years ended January 3, 2011, January 2, 2012 and December 31, 2012
"F-6
"Consolidated Statements of Cash Flows of Ignite Restaurant Group, Inc. for the years ended January 3, 2011, January 2, 2012 and December 31, 2012
"F-7
"Notes to Consolidated Financial Statements
"F-8
"Condensed Consolidated Balance Sheets of Ignite Restaurant Group, Inc. as of December 31, 2012 and April 1, 2013 (unaudited)
"F-27
"Condensed Consolidated Statements of Operations of Ignite Restaurant Group, Inc. for the twelve weeks ended March 26, 2012 (unaudited) and the thirteen weeks ended April 1, 2013 (unaudited)
"F-28
"Condensed Consolidated Statements of Cash Flows of Ignite Restaurant Group, Inc. for the twelve weeks ended March 26, 2012 (unaudited) and the thirteen weeks ended April 1, 2013 (unaudited)
"F-29
"Notes to Condensed Consolidated Financial Statements (unaudited)
"F-30
"Report of Independent Auditors
"F-35
"Consolidated Balance Sheets of Romano's Macaroni Grill as of June 29, 2011 and June 27, 2012
"F-36
"Consolidated Statements of Operations of Romano's Macaroni Grill for the years ended June 30, 2010, June 29, 2011 and June 27, 2012
"F-37
"Consolidated Statements of Changes in Net Assets (Liabilities) of Romano's Macaroni Grill for the years ended June 30, 2010, June 29, 2011 and June 27, 2012
"F-38
"Consolidated Statements of Cash Flows of Romano's Macaroni Grill for the years ended June 30, 2010, June 29, 2011 and June 27, 2012
"F-39
"Notes to Consolidated Financial Statements of Romano's Macaroni Grill
"F-40

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TABLE OF CONTENTS
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Table of Contents

As filed with the Securities and Exchange Commission on July 8, 2013

Registration No. 333-                

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933



IGNITE RESTAURANT GROUP, INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)
  5812
(Primary Standard Industrial
Classification Code Number)
  94-3421359
(I.R.S. Employer Identification No.)

9900 Westpark Drive, Suite 300
Houston, Texas 77063
(713) 366-7500
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)



Raymond A. Blanchette, III
Chief Executive Officer
Ignite Restaurant Group, Inc.
9900 Westpark Drive, Suite 300
Houston, Texas 77063
(713) 366-7500
(Name, address, including zip code, and telephone number, including area code, of agent for service)



With copies to:

Keith M. Townsend
King & Spalding LLP
1180 Peachtree Street, N.E.
Atlanta, Georgia 30309
(404) 572-4600

 

Johnny G. Skumpija
Cravath, Swaine & Moore LLP
825 Eighth Avenue
New York, New York 10019
(212) 474-1000

          Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.



          If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: o

          If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

          If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities act registration statement number of the earlier effective registration statement for the same offering. o

          If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

          Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o   Accelerated filer o   Non-accelerated filer ý
(Do not check if a
smaller reporting company)
  Smaller reporting company o

CALCULATION OF REGISTRATION FEE

       
 
Title of Each Class of Securities to be Registered
  Proposed Maximum
Aggregate Offering
Price(1)(2)

  Amount of
Registration Fee

 

Common Stock, $0.01 par value per share

  $80,000,000   $10,912

 

(1)
Estimated solely for the purpose of calculating the amount of the registration fee in accordance with Rule 457(o) under the Securities Act of 1933, as amended.

(2)
Includes the aggregate offering price of any additional shares of common stock that the underwriters have the option to purchase to cover over-allotments, if any.

          The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

   


Table of Contents

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED JULY 8, 2013

PROSPECTUS

             Shares

GRAPHIC

Ignite Restaurant Group, Inc.

Common Stock



        This is a public offering of shares of common stock of Ignite Restaurant Group, Inc. The selling stockholders identified in this prospectus, which include certain of our officers, are offering all                           of the shares offered hereby. We will not receive any of the proceeds from the sale of the shares by the selling stockholders.

        Our common stock is listed on The NASDAQ Global Select Market under the symbol "IRG." On July 5, 2013, the last reported sale price of our common stock on The NASDAQ Global Select Market was $19.12 per share.

        The underwriters have an option to purchase a maximum of                           additional shares from the selling stockholders. The underwriters can exercise this option at any time within 30 days from the date of this prospectus.

        We are an "emerging growth company" under applicable Securities and Exchange Commission rules and are subject to reduced public company reporting requirements.

        Investing in our common stock involves risks. See "Risk Factors" beginning on page 18.

 
  Price to
Public
  Underwriting
Discounts and
Commissions
  Proceeds,
before expenses
to us
  Proceeds,
before expenses
to the selling
stockholders
 
Per share   $     $     $     $    
Total   $     $     $     $    

        Delivery of the shares of common stock will be made on or about                           , 2013.

        Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

Credit Suisse

   

The date of this prospectus is                           , 2013.


Table of Contents

[ARTWORK]


Table of Contents


TABLE OF CONTENTS

 
  Page  

PROSPECTUS SUMMARY

    1  

RISK FACTORS

    18  

FORWARD-LOOKING STATEMENTS

    39  

USE OF PROCEEDS

    41  

DIVIDEND POLICY

    42  

MARKET PRICE OF COMMON STOCK

    43  

CAPITALIZATION

    44  

SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OPERATING DATA

    45  

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

    50  

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

    57  

BUSINESS

    86  

MANAGEMENT

    106  

PRINCIPAL AND SELLING STOCKHOLDERS

    115  

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

    118  

DESCRIPTION OF CAPITAL STOCK

    119  

SHARES ELIGIBLE FOR FUTURE SALE

    124  

U.S. FEDERAL TAX CONSIDERATIONS FOR NON-UNITED STATES HOLDERS

    126  

UNDERWRITING

    130  

LEGAL MATTERS

    134  

EXPERTS

    134  

INCORPORATION BY REFERENCE

    134  

WHERE YOU CAN FIND MORE INFORMATION

    135  

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

    F-1  



        You should rely only on the information contained in this prospectus or in any free-writing prospectus we may specifically authorize to be delivered or made available to you. We have not, the selling stockholders have not and the underwriters have not authorized anyone to provide you with additional or different information. The selling stockholders are offering to sell, and seeking offers to buy, shares of our common stock only in jurisdictions where such offers and sales are permitted. The information in this prospectus or any free-writing prospectus is accurate only as of its date, regardless of its time of delivery or the time of any sale of shares of our common stock. Our business, financial condition, results of operations and prospects may have changed since that date.

        Until                  , 2013 (25 days after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This delivery requirement is in addition to the dealers' obligation to deliver a prospectus when acting as an underwriter and with respect to their unsold allotments or subscriptions.

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MARKET DATA AND FORECASTS

        Unless otherwise indicated, information in this prospectus concerning economic conditions, our industry, our markets and our competitive position is based on a variety of sources, including information from independent industry analysts and publications such as KNAPP-TRACK™, as well as our own estimates and research. KNAPP-TRACK™ is a monthly sales and guest count tracking service for the chain dinner house/theme restaurant market in the United States. Each monthly KNAPP-TRACK™ report aggregates the change in comparable restaurant sales and guest counts compared to the same month in the preceding year from the competitive set of participants in the chain dinner house/theme restaurant market and provides an average to which we can compare our results. The competitive set of participants for each KNAPP-TRACK™ report is comprised of approximately 55 casual dining restaurant brands and typically includes restaurants such as T.G.I. Friday's, Outback Steakhouse, Red Lobster and Olive Garden. We and other restaurants benchmark our performance against the data included in the monthly KNAPP-TRACK™ report. The term "designated market area", or "DMA", refers to a geographic area as defined by Nielsen Media Research Company as a group of counties that make up a particular media market.

        Our estimates are derived from publicly available information released by third-party sources, as well as data from our internal research, and are based on such data and our knowledge of our industry, which we believe to be reasonable. None of the independent industry publications used in this prospectus were prepared on our behalf, and none of the sources cited in this prospectus have consented to the inclusion of any data from its reports, nor have we sought consent from any of them.


TRADEMARKS AND TRADENAMES

        This prospectus includes our trademarks, such as Joe's Crab Shack® and the design, our stylized logos set forth on the cover and back pages of this prospectus, Brick House Tavern + Tap® and the design and Romano's Macaroni Grill® and the design, which are protected under applicable intellectual property laws and are the property of Ignite Restaurant Group, Inc. or its subsidiaries. Solely for convenience, trademarks, service marks and tradenames referred to in this prospectus may appear without the ®, TM or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks, service marks and tradenames. This prospectus may also contain trademarks, service marks, tradenames and copyrights of other companies, which are the property of their respective owners.


ABOUT THIS PROSPECTUS

        Except where the context otherwise requires or where otherwise indicated, the terms "Ignite," "we," "us," "our," "our company" and "our business" refer to Ignite Restaurant Group, Inc. and its consolidated subsidiaries. The term "Joe's" refers to Joe's Crab Shack, "Brick House" refers to Brick House Tavern + Tap and "Macaroni Grill" refers to Romano's Macaroni Grill. The term "crab house" refers to a restaurant at which the featured entrees are predominantly crab. The term "Queen Crab" refers to Opilio crab that meets our size specification for designation as Queen Crab.

        The term "selling stockholders" refers to J.H. Whitney VI, L.P. ("J.H. Whitney VI"), an affiliate of us, together with the other selling stockholders identified in this prospectus.

        Throughout this prospectus, we provide a number of key performance indicators used by management and typically used by our competitors in the restaurant industry. These key performance indicators are discussed in more detail in the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations—Key Performance Indicators." In this prospectus, we also reference Adjusted EBITDA and restaurant-level profit margin, which are both non-GAAP financial measures. See "Prospectus Summary—Summary Historical Consolidated Financial and

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Operating Data" for a discussion of Adjusted EBITDA and restaurant-level profit margin, as well as a reconciliation of those measures to the most directly comparable financial measure required by, or presented in accordance with, generally accepted accounting principles in the United States, or U.S. GAAP.

        Our fiscal year ends on the Monday closest to December 31 of each year. Our most recent fiscal year ended on December 31, 2012. Fiscal years 2012 and 2011 were 52-week years, while fiscal year 2010 was a 53-week year. Prior to fiscal year 2013, the first three quarters of our fiscal year consisted of 12 weeks and our fourth quarter consisted of 16 weeks for 52-week fiscal years and 17 weeks for 53-week fiscal years. Commencing in fiscal year 2013, we changed our quarterly accounting periods to be comprised of 13 weeks, except for 53-week fiscal years for which the fourth quarter will be comprised of 14 weeks.

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PROSPECTUS SUMMARY

        This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider in making your investment decision. You should read the following summary together with the entire prospectus, including the more detailed information regarding our company, the common stock being sold in this offering and our consolidated financial statements and the related notes appearing elsewhere in this prospectus. You should also carefully consider, among other things, the matters discussed in the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this prospectus, as well as the documents we incorporate by reference, before deciding to invest in our common stock. Some of the statements in this prospectus constitute forward-looking statements. For more information, see "Forward-Looking Statements." Due to the timing of our recent acquisition of Romano's Macaroni Grill, the results of operations of Romano's Macaroni Grill are not yet included in our historical financial and operating data contained in this prospectus, including this "Prospectus Summary."

Our Company

        Ignite Restaurant Group, Inc. is a diversified restaurant company that operates a portfolio of three restaurant brands, Joe's Crab Shack, Brick House Tavern + Tap and Romano's Macaroni Grill. Each of our restaurant brands offers a variety of high-quality food and beverages in a distinctive, casual, high-energy atmosphere, and operates in a diverse set of markets across the United States. As of June 30, 2013, we owned and operated 134 Joe's Crab Shacks, 16 Brick House Tavern + Taps and 186 Romano's Macaroni Grills.

        Since the beginning of their tenures (starting in 2007), our management team has been developing and implementing many of the initiatives and strategies that serve as the foundation for what our company is today. The impact of these strategies began to take effect in fiscal year 2008. From the fiscal year ended December 29, 2008 through the fiscal year ended December 31, 2012, total revenues and Adjusted EBITDA (a non-GAAP financial measure) have improved at compounded annual growth rates of 14.2% and 27.8%, respectively. Over the same period, our total revenues increased from $273.4 million to $465.1 million, net income increased from a net loss of $5.0 million to net income of $8.7 million and Adjusted EBITDA increased from $19.5 million to $52.0 million. In addition, we have grown our comparable restaurant sales by 27.9% on a cumulative basis over the last five years, which has outperformed the KNAPP-TRACK growth rate of (6.7%) by more than 3,400 basis points on a cumulative basis over the same period of time. During fiscal year 2012, 2011 and 2010, our comparable restaurant sales increased by 2.2%, 6.9% and 4.9%, respectively, over the comparable period in our prior fiscal year.

        On April 9, 2013, we completed the acquisition of Romano's Macaroni Grill, which owns, operates and franchises Romano's Macaroni Grill restaurants, for an aggregate purchase price of approximately $60.8 million in cash, consisting of $54.1 million paid directly to the sellers and $6.7 million paid to other third parties related to outstanding indebtedness and transaction-related expenses of the sellers, subject to a working capital adjustment. Through the acquisition, we acquired 186 company-owned and twelve franchised restaurants across 36 states and Puerto Rico as well as twelve additional franchised units throughout nine foreign countries. For the twelve months ended December 31, 2012, Romano's Macaroni Grill generated $388.0 million in revenues and had average unit volumes of $2.1 million.

Joe's Crab Shack

        Joe's Crab Shack, founded in 1991, is an established, national chain of casual seafood restaurants serving a variety of high-quality seafood items, with an emphasis on crab. Joe's is a high-energy, family-friendly restaurant that encourages guests to "roll up your sleeves and crack into some crab." Our

 

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Southern seaside provenance, distinctive menu, hospitality and flavors are our most important differentiators.

        Joe's Crab Shack is America's only national crab house. Crab is deliberately placed center stage as a defining item to the Joe's experience. Joe's Steampot and Crab in a Bucket offerings allow guests to choose among four varieties of crabs (Queen, Snow, Dungeness and King) and lobster. Steampots, our best-selling item, are overflowing with generous portions of crab, other seafood, red potatoes, a fresh ear of corn and sausage and seasoned to our guests' tastes. Our Crab in a Bucket entrées allow guests to pair their favorite crab selection with several distinctive preparations ranging from Spicy Citrus to Chesapeake Style or Garlic Herb. Joe's Crab Shack also leverages its crab-forward menu with other craveable crab items, including made-from-scratch Crab Cakes, Crab Nachos and Crazy-Good Crab Dip. In addition to our core crab-focused menu, Joe's also offers a broad range of entrées featuring a variety of seafood, including the Redfish Orleans, Surf 'N Turf Burger and The Maine Grill, as well as a wide range of traditional seafood entrées like the Fisherman's Platter. Joe's also offers several "out of water" options such as Cheesy Chicken and Whiskey Smoked Ribs.

        We continuously seek to innovate our menu offerings. For example, we have dramatically shifted the menu mix at Joe's to focus on entrées featuring crab over the last five fiscal years. As a result of this strategy, the percentage of entrées at Joe's featuring crab increased from approximately 20% to over 50% of total food revenues over the last five fiscal years. We believe this mix shift has contributed to increases in guest satisfaction, comparable restaurant sales and restaurant-level profit. For the fiscal year ended December 31, 2012, our average check was $23.80, lunch and dinner represented 27% and 73% of revenue, respectively, and our revenues were comprised of 86% food, 13% alcohol and 1% retail merchandise.

        Many Joe's Crab Shack restaurants are located on waterfront property, and most locations offer outdoor patio seating and a children's playground. Joe's Crab Shack restaurants perform well in targeted markets with high population density and a propensity for seafood, as well as "destination" markets with national and regional tourist attractions, both of which are key characteristics of our site selection strategy.

Brick House Tavern + Tap

        Brick House Tavern + Tap, founded in 2008, is a casual restaurant brand that provides guests a differentiated, chef-inspired tavern experience by offering a distinctive blend of menu items in a polished setting. As a next generation bar and grill, Brick House appeals to a broad customer base providing guests with an elevated experience. Brick House was recently named by Nation's Restaurant News as one of the 50 Breakout Brands of 2013.

        Brick House offers guests a broad selection of high-quality, chef-inspired, contemporary tavern food. Menu items include handcrafted appetizers such as Deviled Eggs, Meat and Cheese Board, and Fried Stuffed Olives. In addition, Brick House's Brick Burgers, including the Gun Show Burger and the Greek Lamb Burger, offer guests a distinct take on the traditional burger. Brick House further enhances its burger offerings through its most popular burger, The Kobe, which is hand-formed from high-quality American Wagyu beef. Guests can also choose from a broad selection of homemade entrées such as Prosciutto Wrapped Meatloaf, Drunken Chops, BBQ Baby Backs and Chicken & Waffles, which are among our most popular items. A seasonal Daily Special menu features classic tavern food with a twist including, Chicken Pot Pie, Shrimp & Grits and Prosciutto Crusted Halibut. A Brick Pizza section offers our take on traditional pizzas, as well as the more unique Kobe Brick Pizza and Wild Mushroom Pizza. We also recently introduced meatballs to our menu, including Greek, buffalo chicken and drunken pork varieties. In addition, we consider Brick House to be a "Temple to Beer," with a diverse beverage selection highlighted by over 80 varieties of beer, including local microbrews and distinctive imports, a tap-at-your-table Beer Bong and a hand-pulled Cask Beer

 

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Engine. All Brick House restaurants have a full bar that supports a variety of liquor drinks, wine and beer cocktails like the Grizzly and Bee Sting, as well as specialty cocktails like the Blood Orange Whiskey Sour, Basil Gimlet and the Bloody Good Mary.

        The interior design of Brick House Tavern + Tap consists of diverse seating and gathering areas where guests can select multiple ways to enjoy their experience. In addition to a traditional dining room and bar area, Brick House also offers large communal tables and a section of leather recliners positioned in front of large HD TVs, where guests receive their own TV tray for dining. Each restaurant has a state-of-the-art entertainment package and provides guests with a clear line of sight to at least two HD TVs from every seat, making Brick House Tavern + Tap restaurants an ideal gathering place for sports enthusiasts. Outdoor seating is also available on the patio or around an open fire pit at nearly all locations. For fiscal year ended December 31, 2012, the daypart mix at Brick House Tavern + Tap was 19% lunch, 25% afternoon, 39% dinner and 17% late night and our revenues were comprised of 54% food and 46% alcohol. Our entrées range in price from $6.50 to $20.00.

Romano's Macaroni Grill

        Romano's Macaroni Grill, founded in 1988, is an established chain of casual Italian restaurants. A pioneer in the polished casual dining segment, Macaroni Grill offers guests a blend of authentic Italian food with innovative Italian preparation. Macaroni Grill aims to be a place where family and friends can come together to celebrate a big night or any night featuring wine, an abundant meal and a premium, comfortable and never intimidating experience.

        Since our acquisition of Macaroni Grill, we have begun transforming the service, menu, atmosphere and operations with what we believe to be the right people, the right culture and the right initiatives to create a distinctive experience for our guests. We are in the process of bringing many of the original brand elements that historically made a visit to Macaroni Grill a memorable experience back to our Macaroni Grill restaurants. For example, we have begun to restore wine as the key focus of a Macaroni Grill visit by, among other things, reviving our house honor system wine as a feature at every table, which we believe was a key element of Macaroni Grill's early success. We have also reintroduced the consistent presence of opera singers to our Macaroni Grill restaurants system-wide to provide entertainment that elevates our guests' dining experience to an authentic Italian experience.

        Macaroni Grill currently offers guests an expansive food and beverage menu that features fresh, classic pastas and wine. We also offer a wide variety of pizzas, meats, seafood, salads and desserts utilizing fresh, seasonal ingredients. In addition, we plan to launch revitalized pasta and classic Italian dishes as well as introduce a new line of entrées served in braiser pans. We intend to build on this strong menu foundation by refocusing on wine as a central aspect of the Macaroni Grill experience. We believe the honor wine system was an original cornerstone of the brand that guests fondly associate with Macaroni Grill and that a full restoration of the honor wine system coupled with a broader effort to refocus on wine as a central menu component are important elements in our transformation plans for Macaroni Grill. Therefore, in addition to restoring our honor system wine at every table, we intend to introduce a combination of Italian and American wines that match well with our new menu offerings. Our objective is to improve on the quality of existing menu items while offering premium options for guests that are looking for a big night out and want to have an Italian steakhouse experience. We expect to introduce our revamped wine program and food menu in August of 2013.

        Macaroni Grill restaurants feature open kitchens, brick ovens, festive string lights and fresh-cut flowers. Our staff is encouraged to greet guests with a traditional Italian greeting, leverage the open kitchen design and provide polished and professional service to provide a dinner filled with energy for Macaroni Grill guests. For the twelve months ended December 31, 2012, Macaroni Grill's lunch and dinner day parts represented approximately 22% and 78% of revenue, respectively, and revenue

 

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distribution was approximately 87% food and 13% alcohol. Our entrées range in price from $7.00 to $23.00.

Our Business Strengths

        We are focused on developing brands that have category leading and defendable positions within the casual dining segment. As a result, our core business strengths with respect to the restaurant brands we have historically operated, Joe's Crab Shack and Brick House Tavern + Tap, include the following:

 

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        In addition to the above strengths, we intend to transform our newly acquired Romano's Macaroni Grill into a leading restaurant brand using the following business strengths:

Our Strategy

        Our strategies include the following:

        Disciplined New Restaurant Growth.    We believe there are meaningful opportunities to grow the number of restaurants of both Joe's Crab Shack and Brick House Tavern + Tap. We seek to maximize free cash flow for reinvestment into new restaurants at attractive returns. For both our Joe's Crab Shack and Brick House Tavern + Tap brands, we target new restaurant cash-on-cash returns, which we define as restaurant-level profit per store divided by total build-out cost (excluding capitalized interest) and cash pre-opening costs, in excess of 25%.

 

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        For fiscal year 2013, we target opening as many as 12 new Company-owned restaurants, the vast majority of which will be new Joe's Crab Shack restaurants, and may convert as many as four existing restaurants to either a Joe's Crab Shack or a Brick House Tavern + Tap. Historically, our new restaurant growth had been substantially weighted towards new Joe's Crab Shack restaurants. However, given the compelling new unit volumes and returns recently achieved at our Brick House Tavern + Tap restaurants and the addition of the Macaroni Grill brand, we are in the process of evaluating our future growth strategy. We do not currently anticipate opening any new Company-owned Macaroni Grill's while we are in the process of transforming the brand.

        Focus on Comparable Restaurant Sales Growth.    We believe the following strategies have contributed to our successful growth and will allow us to generate comparable restaurant sales growth in the future:

 

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        Leverage our Scale to Enhance our Profitability.    We believe we have a scalable infrastructure and can continue to expand our margins as we execute our strategy. While each of our three brands have independent field operations, we use our shared services platform to handle many of the administrative functions for all brands. In connection with our acquisition of Macaroni Grill, we expect to realize further savings due to administrative synergies, as well as extra benefits of economies of scale, which we plan to utilize as we continue to integrate the brand. Such benefits include, but are not limited to, our ability to cost efficiently employ the most sought after advertising and marketing agencies for all of our brands and efficiencies associated with being able to utilize a single distribution model for all of our restaurants. Our leverageable structure should further our ability to enhance our profitability as we grow.

Principal and Selling Stockholder

        One of the selling stockholders, J.H. Whitney VI, L.P., or "J.H. Whitney VI," an affiliate of J.H. Whitney Capital Partners, LLC, or "J.H. Whitney," currently owns approximately 68% of our common stock. Following completion of this offering, J.H. Whitney VI will own approximately        % of our outstanding common stock, or approximately        % if the underwriters' option to purchase additional shares is fully exercised. As a result, J.H. Whitney VI will continue to be able to exert significant voting influence over fundamental and significant corporate matters and transactions. See "Risk Factors—Risks Related to This Offering and Ownership of Our Common Stock." However, to the extent the ownership of J.H. Whitney VI is less than 50% following the completion of this offering, the Company will no longer be a "controlled company" under The NASDAQ Stock Market corporate governance standards. See "Management—Corporate Governance—Controlled Company."

 

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        J.H. Whitney is a Connecticut-based private equity firm whose affiliated investment funds have current investments and remaining committed capital totaling $1.3 billion. J.H. Whitney focuses on investing in small and middle market companies with strong growth prospects in a number of industries.

Company History and Information

        The first Joe's Crab Shack was opened in Houston, Texas in 1991. Landry's Restaurants, Inc., or "Landry's," acquired Joe's Crab Shack in 1994. On October 13, 2006, in connection with the purchase by JCS Holdings, LLC, an entity controlled by J.H. Whitney VI, of 120 Joe's Crab Shack restaurants from Landry's, which we refer to as the "Landry Acquisition," we changed our name to Joe's Crab Shack Holdings, Inc. In 2008, we developed our second brand, Brick House Tavern + Tap. With the addition of the Brick House brand, on July 7, 2009, we changed our name to Ignite Restaurant Group, Inc.

        In May 2012, we completed an initial public offering, or the "IPO," of 6,438,087 shares of common stock sold by us (inclusive of 865,384 shares of common stock from the full exercise of the overallotment option granted to the underwriters) and 196,528 shares of common stock sold by our previous parent, JCS Holdings, LLC, or "JCS Holdings." The price of the shares sold in the IPO was $14.00 per share. We did not receive any proceeds from the sale of shares by JCS Holdings. The total proceeds to us, net of underwriters' discounts and commissions and other fees and expenses, were approximately $81.1 million. We used the proceeds from the IPO, together with cash on hand, to prepay a portion of our then outstanding senior secured credit facility, to pay a J.H. Whitney a fee in connection with the termination of a management agreement and for other general corporate purposes. In connection with the IPO we effected a 19,178.226-for-1 stock split. Immediately after completion of the IPO, JCS Holdings, distributed substantially all of the shares of our common stock then held by it and/or the cash proceeds received in the IPO to the holders of its Series A preferred units and its common units in accordance with the provisions then in effect of the Third Amended and Restated Limited Liability Company Agreement of JCS Holdings, LLC, as amended. JCS Holdings continues to hold shares equal to less than one percent of our outstanding common stock for the benefit of certain of our officers and directors who continue to hold unvested common units in JCS Holdings.

        On April 9, 2013, we completed our acquisition, referred to herein as the "acquisition," of Romano's Macaroni Grill from private equity firm Golden Gate Capital, management and other investors. The final purchase price remains subject to additional working capital and post-closing adjustments. In connection with and to finance the acquisition, on April 9, 2013, we entered into an amendment to our revolving credit facility and added a $50.0 million term loan facility. See "Unaudited Pro Forma Condensed Combined Financial Data."

        Our principal executive office is located at 9900 Westpark Drive, Suite 300, Houston, Texas 77063. Our telephone number is (713) 366-7500, and our website addresses are www.igniterestaurants.com, www.joescrabshack.com, www.brickhousetavernandtap.com and www.macaronigrill.com. The information contained on our websites are not deemed to be, and you should not consider such information to be, part of this prospectus.

Risk Factors

        Investing in shares of our common stock involves a high degree of risk. You should consider the information under the caption "Risk Factors" beginning on page 18 of this prospectus in deciding whether to purchase the common stock in this offering. Risks relating to our business include, among others:

 

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THE OFFERING

Common stock offered by the selling stockholders

                shares

Option to purchase additional shares from the selling stockholders

 

The underwriter has an option to purchase a maximum of          additional shares of our common stock from the selling stockholders to cover overallotments. The underwriter may exercise this option at any time within 30 days from the date of this prospectus.

Common stock outstanding immediately after this offering

 

25,640,602 shares

Use of proceeds

 

We will not receive any of the proceeds from the sale of shares of common stock by the selling stockholders. For additional information, see "Use of Proceeds."

Principal stockholder

 

Upon completion of this offering, J.H. Whitney VI will continue to own a controlling interest in us. Accordingly, we currently intend to continue to avail ourselves of the "controlled company" exemption under the corporate governance rules of The NASDAQ Stock Market.

Dividend policy

 

We currently intend to retain all available funds and any future earnings to fund the development and growth of our business and to repay indebtedness; therefore, we do not anticipate paying any cash dividends in the foreseeable future. Our ability to pay dividends on our common stock is limited by the terms of the agreements governing our indebtedness and may be further restricted by the terms of any future agreements governing our indebtedness. For additional information, see "Dividend Policy."

Symbol for trading on The NASDAQ Global Select Market

 

"IRG"

Risk factors

 

Investing in our common stock involves a high degree of risk. Please read carefully all of the information set forth in this prospectus, including the section entitled "Risk Factors" beginning on page 18 for a discussion of some of the factors you should carefully consider before deciding to invest in our common stock.

As of June 1, 2013, 25,640,602 shares of our common stock are outstanding. Unless otherwise indicated, all information in this prospectus relating to the number of shares of common stock to be outstanding immediately after this offering:

 

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SUMMARY HISTORICAL CONSOLIDATED FINANCIAL AND OPERATING DATA

        The following table provides a summary of our historical and unaudited pro forma consolidated financial and operating data for the periods and as of the dates indicated. The summary historical consolidated financial and operating data presented below for the fiscal years ended January 3, 2011, January 2, 2012 and December 31, 2012 and selected balance sheet data presented below as of December 31, 2012 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The historical consolidated financial data for the twelve weeks ended March 26, 2012 and the thirteen weeks ended April 1, 2013 and the selected balance sheet data as of April 1, 2013 have been derived from our unaudited condensed consolidated financial statements included elsewhere in this prospectus. The unaudited condensed consolidated financial statements have been prepared on the same basis as our audited consolidated financial statements and, in the opinion of our management, reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of these data. The results for any interim period are not necessarily indicative of the results that may be expected for a full fiscal year. The unaudited pro forma combined financial data for the year ended December 31, 2012 and for the twenty-six weeks ended July 1, 2013 have been derived from the historical financial statements of us and Romano's Macaroni Grill for such periods, which are included elsewhere in this prospectus, after giving effect to our IPO in May 2012, our debt refinancing transactions in October 2012 and the acquisition and related financing transactions specified under "Unaudited Pro Forma Condensed Combined Financial Statements."

        Our fiscal year ends on the Monday nearest to December 31 of each year. Fiscal years 2011 and 2012 were 52-week years ended on January 2, 2012 and December 31, 2012, respectively, while fiscal year 2010 was a 53-week year ended on January 3, 2011. Prior to fiscal year 2013, the first three quarters of our fiscal year consisted of 12 weeks and our fourth quarter consisted of 16 weeks for 52-week fiscal years and 17 weeks for 53-week fiscal years. Commencing in fiscal year 2013, we changed our quarterly accounting periods to be comprised of 13 weeks, except in the case of a 53-week fiscal year for which the fourth quarter will be comprised of 14 weeks. As such, the twelve weeks ended March 26, 2012 and the thirteen weeks ended April 1, 2013 are not comparable.

        The historical results presented below are not necessarily indicative of the results to be expected for any future period. This information should be read in conjunction with "Risk Factors," "Selected Historical Consolidated Financial and Operating Data," "Unaudited Pro Forma Condensed Combined Financial Statements," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and our and Romano's Macaroni Grill's audited consolidated financial statements and our and Romano's Macaroni Grill's unaudited condensed consolidated financial statements and each of their related notes included elsewhere in this prospectus.

 

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  Fiscal Year   Twelve
Weeks Ended
March 26,
2012(1)
  Thirteen
Weeks Ended
April 1,
2013(1)
 
 
  2010   2011   2012  
 
  (in thousands, except per share data)
 

Revenues

  $ 351,327   $ 405,243   $ 465,056   $ 103,430   $ 118,240  

Costs and expenses

                               

Restaurant operating costs and expenses

                               

Cost of sales

    103,981     127,607     145,451     32,915     36,321  

Labor expenses

    98,162     111,721     127,331     28,047     31,907  

Occupancy expenses

    27,715     30,708     33,846     7,532     8,554  

Other operating expenses

    64,382     72,296     81,219     18,568     21,804  

General and administrative

    20,719     23,556     31,725     6,223     10,291  

Depreciation and amortization          

    13,190     16,011     18,572     3,949     4,813  

Pre-opening costs

    4,627     4,855     3,871     1,528     1,091  

Restaurant impairments and closures

    909     333     115     49     17  

Loss on disposal of property and equipment

    3,242     1,295     2,296     89     195  
                       

Total costs and expenses

    336,927     388,382     444,426     98,900     114,993  
                       

Income from operations

    14,400     16,861     20,630     4,530     3,247  

Interest expense, net

    (3,831 )   (9,215 )   (9,366 )   (1,997 )   (395 )

Gain (loss) on insurance settlements

    589     1,126     (799 )       300  
                       

Income before income taxes

    11,158     8,772     10,465     2,533     3,152  

Income tax expense (benefit)

    1,456     (3,291 )   1,751     648     967  
                       

Net income

  $ 9,702   $ 12,063   $ 8,714   $ 1,885   $ 2,185  
                       

Per Share Data(2):

                               

Net income (loss) per share:

                               

Basic and diluted

  $ 0.51   $ 0.63   $ 0.37   $ 0.10   $ 0.09  

Weighted average shares outstanding:

                               

Basic

    19,178     19,178     23,328     19,178     25,624  

Diluted

    19,178     19,178     23,329     19,178     25,630  

 

 
  Fiscal Year Ended    
   
 
 
  Twelve
Weeks Ended
March 26,
2012
  Thirteen
Weeks Ended
April 1,
2013
 
 
  January 3,
2011
  January 2,
2012
  December 31,
2012
 
 
  (dollars in thousands, except per share data)
 

Selected Other Data:

                               

Restaurants open at end of period

    126     135     144     138     146  

Change in comparable restaurant sales(3)

    4.9 %   6.9 %   2.2 %   5.3 %   (1.4 )%

Average weekly sales

  $ 54   $ 59   $ 63   $ 63   $ 63  

Average unit volumes

  $ 2,810   $ 2,970   $ 3,050   $ 714   $ 767  

Restaurant-level profit margin(4)

    16.6 %   15.8 %   16.9 %   16.2 %   16.9 %

EBITDA(5)

  $ 28,179   $ 33,998   $ 38,403   $ 8,479   $ 8,360  

Adjusted EBITDA(5)

  $ 39,352   $ 43,270   $ 51,991   $ 10,927   $ 11,233  

Adjusted EBITDA margin(6)

    11.2 %   10.7 %   11.2 %   10.6 %   9.5 %

Capital expenditures

  $ 32,420   $ 39,442   $ 44,226   $ 6,648   $ 8,947  

 

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  Fiscal
Year Ended
December 31,
2012
  Twenty-Six
Weeks Ended
July 1,
2013*
 
 
  (in thousands)
 

Pro Forma Statement of Operations Data(7):

             

Pro forma revenues

  $ 853,060   $    

Pro forma total costs and expenses

  $ 850,528   $    

Pro forma net income (loss)

  $ 2,292   $    

Pro forma net income (loss) per share:

             

Basic

  $ 0.09   $    

Diluted

  $ 0.09   $    

 

 
  Thirteen
Weeks Ended
April 1,
2013
 

Selected Balance Sheet Data**:

       

Cash and cash equivalents

  $ 6,929  

Working capital (deficit)

    (12,856 )

Total assets

    201,438  

Total debt

    45,000  

Total stockholders' equity(2)

  $ 106,217  

*
To be updated in Amendment No. 1 to this Registration Statement.

**
Does not include Romano's Macaroni Grill. Amendment No. 1 to this Registration Statement will include the balance sheet for the Company as of July 1, 2013, which will give effect to the acquisition and related financing transaction.

(1)
Commencing in fiscal year 2013, we changed our quarterly accounting periods to be comprised of 13 weeks as opposed to three 12 week quarters and one 16 or 17 week quarter. We did not believe it was practicable to recast the prior year quarter to 13 weeks. However we were able to recast revenues on a 13-week basis for the first quarter of fiscal year 2012. On a thirteen week comparable quarter for 2012, revenues would have been $113.1 million. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Change in Quarterly Accounting Periods."

(2)
Immediately prior to the completion of our IPO, we effected a 19,178.226-to-1 stock split. We also reduced the par value of our common stock from $1.00 per share to $0.01 per share. The share and per share information for 2008 to 2011 included in these consolidated financial statements were retroactively adjusted to reflect the stock split. We issued 6.4 million shares in relation to our IPO in May 2012 and received net proceeds of $81.1 million.

(3)
Our comparable restaurant base includes restaurants open for at least 104 weeks, or approximately 24 months. Change in comparable restaurant sales represents the change in period-over-period sales for the comparable restaurant base. On a thirteen week comparable quarter for 2012, change in comparable restaurant sales would have been 5.3%.

(4)
Restaurant-level profit margin represents revenues (x) less (i) licensing revenue not attributable to core restaurant operations, (ii) cost of sales, (iii) labor expenses, (iv) occupancy expenses, and (v) other restaurant operating expenses (y) plus deferred rent expense (as described in footnote 5(a) below). Restaurant-level profit is a supplemental measure of operating performance of our restaurants that does not represent and should not be considered as an alternative to net income or revenues as determined by U.S. generally accepted accounting principles, or U.S. GAAP,

 

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  Fiscal Year Ended    
   
 
 
  Twelve
Weeks Ended
March 26,
2012
  Thirteen
Weeks Ended
April 1,
2013
 
 
  January 3,
2011
  January 2,
2012
  December 31,
2012
 
 
  (dollars in thousands)
 

Revenues

  $ 351,327   $ 405,243   $ 465,056   $ 103,430   $ 118,240  

Less: Licensing and other revenues

    (373 )   (584 )   (340 )   (65 )   (65 )
                       

Restaurant sales(A)

  $ 350,954   $ 404,659   $ 464,716   $ 103,365   $ 118,175  
                       

Restaurant operating costs and expenses

                               

Cost of sales

    103,981     127,607     145,451     32,915     36,321  

Labor expenses

    98,162     111,721     127,331     28,047     31,907  

Occupancy expenses

    27,715     30,708     33,846     7,532     8,554  

Other operating expenses

    64,382     72,296     81,219     18,568     21,804  

Deferred rent expense

    (1,597 )   (1,806 )   (1,536 )   (447 )   (398 )
                       

Restaurant-level profit(B)

  $ 58,311   $ 64,133   $ 78,405   $ 16,750   $ 19,987  
                       

Restaurant-level profit margin(B÷A)

    16.6 %   15.8 %   16.9 %   16.2 %   16.9 %
(5)
EBITDA represents earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA further adjusts EBITDA to reflect the additions and eliminations described in the table below. EBITDA and Adjusted EBITDA are supplemental measures of operating performance that do not represent and should not be considered as alternatives to net income or cash flow from operations, as determined by U.S. GAAP, and our calculation thereof may not be comparable to that reported by other companies. EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation, or as a substitute for analysis of our results as reported under U.S. GAAP. Some of the limitations are:

EBITDA and Adjusted EBITDA do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments;

EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs;

EBITDA and Adjusted EBITDA do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments on our debt;

EBITDA and Adjusted EBITDA do not reflect our tax expense or the cash requirements to pay our taxes;

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements; and

 

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In addition, this measurement is used by investors as a supplemental measure to evaluate the overall operating performance of companies in our industry. Management believes that investors' understanding of our performance is enhanced by including this non-GAAP financial measure as a reasonable basis for comparing our ongoing results of operations. Many investors are interested in understanding the performance of our business by comparing our results from ongoing operations from one period to the next and would ordinarily add back events that are not part of normal day-to-day operations of our business. By providing this non-GAAP financial measure, together with reconciliations, we believe we are enhancing investors' understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing strategic initiatives.

We also present Adjusted EBITDA because it is a measure which is used in calculating financial ratios in material debt covenants in our senior secured credit facility. Some of the adjustments included in Adjusted EBITDA are subject to certain limitations under our credit facility for purposes of calculating our debt covenants. For the fiscal quarter ending July 1, 2013, we are required to maintain a fixed charge coverage ratio (ratio of free cash flow to fixed charges) of

 

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  Fiscal Year Ended    
   
 
 
  Twelve
Weeks Ended
March 26,
2012
  Thirteen
Weeks Ended
April 1,
2013
 
 
  January 3,
2011
  January 2,
2012
  December 31,
2012
 
 
  (in thousands)
 

Net income

  $ 9,702   $ 12,063   $ 8,714   $ 1,885   $ 2,185  

Income tax expense

    1,456     (3,291 )   1,751     648     967  

Interest expense, net

    3,831     9,215     9,366     1,997     395  

Depreciation and amortization

    13,190     16,011     18,572     3,949     4,813  
                       

EBITDA

  $ 28,179   $ 33,998   $ 38,403   $ 8,479   $ 8,360  

Adjustments:

                               

Deferred rent expense(a)

    1,675     1,813     1,544     457     386  

Restaurant impairments and closures(b)

    909     333     115     49     17  

Non-cash loss on disposal of property and equipment(c)

    3,110     1,269     2,245     89     168  

Sponsor management fees(d)

    1,025     1,060     388     244      

Loss (gain) on insurance settlements(e)

    (589 )   (1,126 )   799         (300 )

Restatement expenses(f)

            1,873          

Pre-opening costs(g)

    4,627     4,855     3,871     1,528     1,091  

Transaction costs(h)

        579     1,714     40     1,018  

Stock-based compensation(i)

    44     36     628     9     215  

Other expenses(j)

    372     453     411     32     278  
                       

Adjusted EBITDA

  $ 39,352   $ 43,270   $ 51,991   $ 10,927   $ 11,233  
                       

(a)
Deferred rent expense represents the non-cash rent expense calculated as U.S. GAAP rent expense in any year less amounts payable in cash under the leases during the year. In measuring our operational performance, we focus on our cash rent payments. See Note 2 to our audited consolidated financial statements for additional details.

(b)
Impairment charges were recorded in connection with the determination that the carrying value of certain of our restaurants exceeded their estimated fair value. Also consists of expenses incurred following the closure of restaurants. See Note 2 to our audited consolidated financial statements for additional details.

(c)
Loss (gain) on disposal of property and equipment represents the net book value of property and equipment less proceeds received, if applicable, on assets abandoned or sold.

 

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(d)
Sponsor management fees consist of fees and expenses paid to J.H. Whitney under the management services agreement. We terminated this agreement in connection with the completion of the IPO during fiscal year 2012.

(e)
Gain on insurance settlements consists of proceeds in excess of the net book value of assets lost and related costs from property insurance claims at restaurants temporarily closed due to hurricane damage, flooding and/or foundational issues and other insurance recoveries.

(f)
Restatement expenses consists of non-recurring expenses related to our restatement that was completed in October 2012.

(g)
Pre-opening costs include expenses directly associated with the opening of new restaurants and are incurred prior to the opening of a new restaurant. See Note 2 to our audited consolidated financial statements for additional details.

(h)
Transaction costs consist of fees and expenses related to corporate transactions such as debt or equity issuances, including the IPO, amendments to debt agreements or acquisitions.

(i)
Stock-based compensation consists of expense for stock-based compensation awards, which is equal to the fair value of the awards at grant date, incurred ratably over the requisite service period.

(j)
Other expenses consist of costs related to abandoned new restaurant developments, fees payable to the agent under historic credit facilities, and compensation and expenses paid to certain members of our board of directors and, prior to the IPO, the management committee of our former parent company, JCS Holdings.
(6)
Adjusted EBITDA margin is defined as the ratio of Adjusted EBITDA to total revenues. We present Adjusted EBITDA margin because it is used by management as a performance measurement of Adjusted EBITDA generated from total revenues. See footnote 5 above for a discussion of Adjusted EBITDA as a non-GAAP measure and a reconciliation of net income to EBITDA and Adjusted EBITDA.

(7)
Derived from our unaudited pro forma condensed combined statements of operations for the fiscal year ended December 31, 2012 and the twenty-six weeks ended July 1, 2013, which are included elsewhere in this prospectus. See "Unaudited Pro Forma Condensed Combined Financial Statements."

 

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RISK FACTORS

        Investing in our common stock involves a high degree of risk. Before you purchase our common stock, you should carefully consider the risks described below and the other information contained in this prospectus, including our consolidated financial statements and accompanying notes. If any of the following risks actually occur, our business, financial condition, results of operation or cash flows could be materially adversely affected. In any such case, the trading price of our common stock could decline, and you could lose all or part of your investment.

Risks Related to Our Business

You should not rely on past increases in our comparable restaurant sales or our average unit volumes as an indication of our future results of operations because they may fluctuate significantly.

        A number of factors have historically affected, and will continue to affect, our comparable restaurant sales and average unit volumes, including, among other factors:

        Our comparable restaurant sales and average unit volumes may not increase at rates achieved over the past several fiscal years. In addition, our comparable restaurant sales and average unit volumes will likely be impacted by the addition of Macaroni Grill restaurants, and we may not be able to successfully transform and integrate the new brand. Changes in our comparable restaurant sales and average unit volumes could cause the price of our common stock to fluctuate substantially.

If we fail to execute our growth strategy, which partially depends on our ability to open new restaurants that are profitable, our business could suffer.

        One of the key means of achieving our growth strategies will be through opening new restaurants and operating those restaurants on a profitable basis. We expect this to be the case for the foreseeable future. For fiscal year 2013, we target opening as many as 12 new Joe's Crab Shack and/or Brick House restaurants. Because of the economic downturn, there are fewer new developments, such as shopping centers, being constructed, which reduces the supply of new restaurant locations. As a result, competition for prime locations is intense and the prices commanded for such locations have remained high. There is no guarantee that a sufficient number of locations will be available in desirable areas or on terms that are acceptable to us in order to achieve our growth plan. Delays or failures in opening new restaurants, or achieving lower than expected sales in new restaurants, could materially adversely affect our growth strategy. Once we have identified suitable restaurant sites, our ability to open new restaurants successfully and on the development schedule we anticipate will also depend on numerous other factors, some of which are beyond our control, including, among other items, the following:

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        Although we target specified new restaurant average unit volumes, cash on cash returns and capital investment for our brands, new restaurants may not meet these targets. Any restaurant we open may not be profitable or achieve operating results similar to those of our existing restaurants. We may not be able to respond on a timely basis to all of the changing demands that our planned expansion will impose on management and on our existing infrastructure, or be able to hire or retain the necessary management and operating personnel. Our existing restaurant management systems, financial and management controls and information systems may not be adequate to support our planned expansion. Our ability to manage our growth effectively will require us to continue to enhance these systems, procedures and controls and to locate, hire, train and retain management and operating personnel.

        There is also the potential that some of our new restaurants will be located near areas where we have existing restaurants, thereby reducing the revenues of such existing restaurants.

Macroeconomic conditions could adversely affect our ability to increase the sales and profits of existing restaurants or to open new restaurants.

        Although the global economy showed signs of recovery in 2012, the United States may continue to suffer from depressed economic activity. Recessionary economic cycles, higher fuel and other energy costs, lower housing values, low consumer confidence, inflation, increases in commodity prices, higher interest rates, higher levels of unemployment, higher consumer debt levels, higher tax rates and other changes in tax laws or other economic factors that may affect discretionary consumer spending could adversely affect our revenues and profit margins and make opening new restaurants more difficult. Our guests may have lower disposable income and reduce the frequency with which they dine out. This could result in reduced guest traffic, reduced average checks or limitations on the prices we can charge for our menu items, any of which could reduce our sales and profit margins. In addition, many of our Joe's Crab Shack restaurants are located in areas that we consider tourist or vacation destinations. Therefore, in those locations, we depend in large part on vacation travelers to frequent our Joe's Crab Shack restaurants, and such destinations typically experience a reduction in visitors during economic downturns, thereby reducing the potential guests that could visit our restaurants. Also, businesses in the shopping vicinity in which some of our restaurants are located may experience difficulty as a result of macroeconomic trends or cease to operate, which could, in turn, further negatively affect guest traffic at our restaurants. All of these factors could have a material adverse impact on our results of operations and growth strategy.

Our success depends on our ability to compete with many other restaurants.

        The restaurant industry is intensely competitive, and we compete with many well-established restaurant companies on the basis of food taste, price of products offered, guest service, atmosphere, location and overall guest experience. Our competitors include restaurant chains and individual restaurants that range from independent local operators to well-capitalized national and regional restaurant companies. Our Joe's Crab Shack restaurants compete against other casual seafood restaurants, including national and regional chains and local seafood restaurants, as well as against casual dining restaurants that provide a different type of food. Our Brick House Tavern + Tap restaurants compete against casual restaurants in the bar and grill segment and restaurants in the casual dining segment. Our Macaroni Grill restaurants compete against local, regional and national

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Italian restaurants, as well as restaurants in the casual dining segment that serve food other than Italian.

        Some of our competitors have substantially greater financial and other resources than we do, which may allow them to react to changes in the restaurant industry better than we can. Other competitors are local restaurants that in some cases have a loyal guest base and strong brand recognition within a particular market. As our competitors expand their operations or as new competitors enter the industry, we expect competition to intensify. Should our competitors increase their spending on advertising and promotions, we could experience a loss of guest traffic to our competitors. Also, if our advertising and promotions become less effective than those of our competitors, we could experience a material adverse effect on our results of operations. We also compete with other restaurant chains and other retail businesses for quality site locations, management and hourly employees.

Our failure to establish and maintain effective disclosure controls and procedures and internal controls over financial reporting contributed to the restatement of our previously issued financial statements. If we fail to remediate material weaknesses in our internal controls over financial reporting or otherwise establish and maintain effective internal controls over financial reporting and disclosure controls and procedures, we may have additional material misstatements in our financial statements and we may not be able to report our financial results in a timely manner.

        Our CEO and CFO performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures and concluded that they were not effective as of April 1, 2013 as a result of the material weaknesses in our internal controls over financial reporting described below. A "material weakness" is a deficiency, or combination of deficiencies, in internal controls such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected in a timely basis. The following material weaknesses were identified in connection with the restatement of our previously issued financial statements:

        Management previously concluded that there was a material misstatement that occurred and determined it appropriate to restate its previously issued financial statements as of January 3, 2011 and January 2, 2012 and for the years ended December 28, 2009, January 3, 2011 and January 2, 2012 and as of March 26, 2012 and for the twelve week periods ended March 28, 2011 and March 26, 2012. These material weaknesses in our internal controls over financial reporting contributed to the restatement of our previously issued financial statements. We have taken and continue to take steps to remediate the identified material weaknesses, and we will continue to review our internal controls over financial reporting in the areas identified above and other areas and update our accounting policies and procedures accordingly. However, there is no guarantee that additional material weaknesses will not be identified in the future or that any of these measures will ensure that we implement and maintain adequate controls over our financial processes and reporting in the future. Any failure to implement new or improved controls or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations. In particular, if the material weaknesses described above are not remediated, they could result in a misstatement of our accounts and disclosures that could result in a material misstatement to our annual or interim consolidated financial statements in future periods that would not be prevented or detected. If our financial statements are not timely or accurate, then, in addition to the risks described above, investors may lose confidence in our reported information and our ability to prevent fraud, we could be delisted from NASDAQ and we could lose our ability to

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access capital markets. For further discussion of our disclosure controls and procedures and internal controls over financial reporting, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Controls and Procedures."

        We have not completed the formal evaluation of our internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 because we are not currently required to do so. Our first Section 404 report will be prepared in connection with our Annual Report on Form 10-K for the fiscal year ending December 30, 2013. We cannot assure you that we will not uncover additional material weaknesses as of December 30, 2013 following this review. Also, until fully remediated, the control deficiencies outlined above could result in a material misstatement to our future annual or interim financial statements that would not be prevented or detected. In addition, our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal controls over financial reporting pursuant to Section 404 until the date we are no longer an "emerging growth company" as defined in the JOBS Act, if we continue to take advantage of the exemptions contained in the JOBS Act. We expect that we will remain an "emerging growth company" until the earliest of (i) the last day of our fiscal year following the fifth anniversary of our IPO; (ii) the last day of our fiscal year in which we have annual gross revenue of $1.0 billion or more; (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; and (iv) the date on which we are deemed to be a "large accelerated filer," which will occur at such time as we have (1) an aggregate worldwide market value of common equity securities held by non-affiliates of $700 million or more as of the last business day of our most recently completed second fiscal quarter, (2) been required to file annual, quarterly and current reports under the Exchange Act of 1934, as amended, or the Exchange Act, for a period of at least 12 calendar months, and (3) filed at least one annual report pursuant to the Exchange Act. As a result, we may qualify as an "emerging growth company" until as late as May 10, 2017. At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed or operating.

Legal proceedings or regulatory actions commenced in connection with the restatement could require us to incur significant costs and have an adverse impact on our business, financial condition and results of operations.

        On July 18, 2012, we announced our intention to restate our financial statements for the years ended December 28, 2009, January 3, 2011 and January 2, 2012 and the related interim periods. As a result of the restatement, on July 20, 2012, a putative class action complaint was filed in the U.S. District Court for the Southern District of Texas against us, certain of our current directors and officers and the underwriters in the IPO. The plaintiffs allege that all the defendants violated Section 11 of the Securities Act of 1933 (the "Securities Act"), and certain of our directors and officers have control person liability under Section 15 of the Securities Act, based on allegations that in light of the July 18, 2012 restatement announcement, our IPO registration statement and prospectus contained untrue statements of material facts, omitted to state other facts necessary to make the statements made not misleading, and omitted to state material facts required to be stated therein. The plaintiffs seek unspecified compensatory damages and attorneys' fees and costs. We have filed a motion to dismiss the case and will continue to vigorously defend the lawsuit. However, we are unable to predict the outcome of this case and any future related cases. In addition to the IPO litigation, we may become subject to additional scrutiny from, or formal investigations by, regulatory authorities such as the SEC or additional civil litigation, all of which could require us to incur significant legal expenses, pay fines or other penalties or damages and divert time, money and other valuable resources away from our operations and, thereby, harm our business.

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Changes in food and supply costs, including the cost of crab, could adversely affect our results of operations.

        Our profitability depends in part on our ability to anticipate and react to changes in food and supply costs. Operating margins for our restaurants are subject to changes in the price and availability of food commodities, including crab, shrimp, lobster and other seafood. In fiscal year 2012, Queen Crab, Snow Crab, Dungeness Crab, King Crab, lobster and shrimp accounted for approximately 49% of our total food purchases. Any increase in food prices, particularly for these food items, could adversely affect our operating results. In light of our acquisition of Romano's Macaroni Grill, we expect our total food purchases to become more heavily weighted towards items such as beef, chicken, flour and other items that have historically comprised a smaller portion of our food costs, and such items may subject us to additional volatility in price and availability. In addition, we are susceptible to increases in food costs as a result of factors beyond our control, such as weather conditions (including hurricanes), oil spills, fisherman strikes, food safety concerns, costs of distribution, product recalls and government regulations. Furthermore, the introduction of or changes to tariffs on seafood, such as imported crab and shrimp or other food products, could increase our costs and possibly impact the supply of those products. We cannot predict whether we will be able to anticipate and react to changing food costs by adjusting our purchasing practices and menu items and prices, and a failure to do so could adversely affect our operating results. In addition, because our menu items are moderately priced, we may not seek to or be able to pass along price increases to our guests. If we adjust pricing there is no assurance that we will realize the full benefit of any adjustment due to changes in our guests' menu item selections and guest traffic.

We may be unsuccessful integrating the Macaroni Grill business with our existing businesses and such process may be costly and time consuming, and we may not realize anticipated synergies and cost savings.

        On April 9, 2013, we closed the acquisition of Romano's Macaroni Grill. The acquisition and integration of Macaroni Grill involves a number of risks. The core risks relate to the valuation of the Macaroni Grill business and managing the complex process of integrating Macaroni Grill's restaurants, people, brand, technology and other assets so as to realize our projected value of Macaroni Grill and the synergies and cost savings anticipated by us to be realized in connection with the acquisition. The integration process may be costly and time consuming. The process of integrating the operations of Macaroni Grill could cause an interruption of, or loss of momentum in, the activities of our other restaurant brands and the possible loss of key personnel. Other risks include the potential inaccurate assessment of disclosed liabilities, potential inconsistencies in standards, controls, procedures and policies, including internal control and regulatory requirements under the Sarbanes-Oxley Act of 2002, and personnel turnover.

        In addition, the diversion of management's attention and any delays or difficulties encountered in connection with the acquisition and the integration of Macaroni Grill's operations with ours could have an adverse effect on our financial position and results of operations.

        Due to the timing of the acquisition, the results of operations of Macaroni Grill are not yet included in our historical financial and operating data contained in this prospectus, and the unaudited pro forma combined condensed financial statements contained in this prospectus are presented for informational purposes only and do not purport to represent our actual financial condition or results of operations if the acquisition had been completed as of the dates or for the periods indicated or that may be achieved as of any future date or for any future period. We may not be able to maintain the levels of revenue, earnings or operating efficiency that we and Macaroni Grill have achieved or might have achieved separately.

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Macaroni Grill has experienced significant declines in total revenues in the last several years and we may not be able to reverse these trends or realize the anticipated benefits of the acquisition for the Company.

        Macaroni Grill's revenues have steadily declined in the last several years, including a decline of approximately 26% over its last three fiscal years, from $524.4 million in fiscal 2010, to $437.7 million in fiscal 2011 and to $395.4 million in fiscal 2012. While we are implementing a number of measures to transform the Macaroni Grill brand, there can be no assurance that these measures will be successful. One of these measures, for example, is that we expect to introduce a revamped menu in our Macaroni Grill restaurants in August 2013 and are currently reintroducing many of the original brand elements of Macaroni Grill. These measures or any other changes we implement may not increase guest traffic at or improve the performance of our Macaroni Grill restaurants. Accordingly, it is possible that the trend of declining revenues experienced in prior years will continue. In addition, this transformation may also result in unexpected expenses and losses or divert significant financial resources that would otherwise be available for ongoing development of existing brands.

        Furthermore, at the time of the acquisition, we made certain assumptions as to how we would increase the revenues generated by Macaroni Grill restaurants and as a result, the cash flows of the Company. Our actual results could differ materially from those derived from such assumptions. If we are unable to improve the performance of our Macaroni Grill restaurants, the financial position and operating results of the Company may be adversely impacted and we will not realize the anticipated benefits of the acquisition. Even if our transformation efforts are successful, it may take a significant period of time for these efforts to result in increased revenues or comparable store sales growth for Macaroni Grill or for us to realize the anticipated benefits of the acquisition.

Brick House is a newer and still evolving brand and our plans to expand Brick House may not be successful.

        While Joe's, Brick House and Macaroni Grill are subject to the risks and uncertainties described herein, there is an enhanced level of risk and uncertainty related to the expansion of Brick House, our most newly developed brand. While Brick House has grown to 15 locations since its founding in 2008, it is still evolving and has not yet proven its long-term growth potential.

        Initially, we opened Brick House restaurants across a broad range of geographies with the intent of optimizing the brand prior to a continued build out. While we continue to incorporate key insights into our new restaurant rollout plans, we believe the brand is now positioned for expansion. However, there can be no assurance that the enhancements we intend to implement as part of the brand optimization process will be successful or that additional new restaurant growth will occur. Brick House will be subject to the risks and uncertainties that accompany any emerging restaurant brand. If Brick House fails to expand and/or continue generating profits, our operating results could suffer.

Food safety and food-borne illness concerns may have an adverse effect on our business.

        Food safety is a top priority, and we dedicate substantial resources to ensure that our guests enjoy safe, quality food products. However, food-borne illnesses, such as salmonella, E. coli, hepatitis A, trichinosis or "mad cow disease," and food safety issues have occurred in the food industry in the past, and could occur in the future. In addition, publicity regarding certain illnesses and contaminations related to seafood, including high levels of mercury or other carcinogens, oil contaminations, vibrio vulnificus and the Norwalk virus could affect consumer preferences and the consumption of seafood. Any report or publicity linking us to instances of food-borne illness or other food safety issues, including food tampering or contamination, could adversely affect our brands and reputation as well as our revenues and profits. Even instances of food-borne illness, food tampering or food contamination occurring solely at restaurants of our competitors could result in negative publicity about the food service industry or seafood restaurants generally and adversely impact our sales.

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        In addition, our reliance on third-party food suppliers and distributors increases the risk that food-borne illness incidents could be caused by factors outside of our control and that multiple locations would be affected rather than a single restaurant. Although we inspect food products when they are delivered to us, we cannot assure that all food items are properly maintained during transport throughout the supply chain and that our employees will identify all products that may be spoiled and should not be used in our restaurants. New illnesses resistant to any precautions may develop in the future, or diseases with long incubation periods could arise, such as "mad cow disease," which could give rise to claims or allegations on a retroactive basis. In addition, our industry has long been subject to the threat of food tampering by suppliers, employees or guests, such as the addition of foreign objects in the food that we sell. Reports, whether or not true, of injuries caused by food tampering have in the past severely injured the reputations and brands of restaurant chains in the quick service restaurant segment and could affect us in the future as well. If our guests become ill from food-borne illnesses, we could also be forced to temporarily close some restaurants. Furthermore, any instances of food contamination, whether or not at our restaurants, could subject us or our suppliers to a food recall pursuant to the Food and Drug Administration Food Safety Modernization Act.

Changes in consumer preferences could harm our performance.

        Consumer preferences often change rapidly and without warning, moving from one trend to another among many product or retail concepts. We also depend on trends regarding away-from-home dining. Consumer preferences towards away-from-home dining or certain food products might shift as a result of, among other things, health concerns or dietary trends related to cholesterol, carbohydrate, fat and salt content of certain food items, including crab or other seafood items, in favor of foods that are perceived as more healthy. Our menu is currently comprised of crab and other menu items and a change in consumer preferences away from these offerings would have a material adverse effect on our business. Negative publicity over the health aspects of such food items may adversely affect demand for our menu items and could result in lower guest traffic, sales and results of operations.

If we fail to continue to develop and maintain our restaurant brands, our business could suffer.

        We believe that maintaining and developing our restaurant brands are critical to our success and our growth strategy, and that the importance of brand recognition is significant as a result of competitors offering products similar to our products. We have made significant marketing expenditures to create and maintain brand loyalty as well as to increase awareness of our brands. In addition, we intend to make additional marketing expenditures to revamp the newly acquired Macaroni Grill brand. If our brand-building strategy is unsuccessful, these expenses may never be recovered, and we may be unable to increase our future sales or implement our business strategy.

        Any incident that erodes consumer affinity for our brands could significantly reduce their respective values and damage our business. If guests perceive or experience a reduction in food quality, service or ambiance, or in any way believe we failed to deliver a consistently positive experience, our brand value could suffer and our business may be adversely affected.

The impact of new restaurant openings could result in fluctuations in our financial performance.

        As discussed above, for fiscal year 2013, we target opening as many as 12 new restaurants and may convert as many as four additional restaurants. New restaurants typically experience an adjustment period before sales levels and operating margins normalize. When our new restaurants open, they typically encounter startup costs, but also significant guest traffic and, therefore, high sales in their initial months. However, over time, these new restaurants may experience a decrease in guest traffic and sales compared to their opening months. Accordingly, sales achieved by new or converted restaurants may not be indicative of future operating results. Also, due to the foregoing factors, results

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for any one fiscal quarter are not necessarily indicative of results to be expected for any other fiscal quarter or for a full fiscal year.

We rely heavily on certain vendors, suppliers and distributors, which could adversely affect our business.

        Our ability to maintain consistent price and quality throughout our restaurants depends in part upon our ability to acquire specified food products and supplies in sufficient quantities, especially with respect to shellfish such as crab. While our seafood offerings are generally caught from government regulated fisheries, crab and other fish are caught in the wild, which could cause volatility in supply. In some cases, we may have only one supplier or a limited number of suppliers for a particular food product. For example, Macaroni Grill currently relies on a single supplier for a portion of its food inventory. While we are in the process of obtaining second and sometimes third supply sources for each item, as well as domestic source suppliers for items that are produced internationally, we may be unsuccessful in obtaining such additional sources. We cannot make assurances regarding the continued supply of our food items since we do not have control over the businesses of our suppliers. Furthermore, such food items are perishable, and we cannot assure that such items will be delivered by such third parties in appropriate condition for sale in our restaurants. In addition, we rely on one primary distributor to deliver products to our Joe's Crab Shack and Brick House Tavern + Tap restaurants, and expect to consolidate our Macaroni Grill restaurants with such distributor by the end of August 2013. If any of these vendors, our other suppliers or our distributor is unable to fulfill their obligations, or if we are unable to find replacement providers in the event of a supply or service disruption, we could encounter supply shortages and incur higher costs to secure adequate supplies, which would materially harm our business.

        In addition, we use various third-party vendors to provide, support and maintain most of our management information systems. We also outsource certain accounting, payroll and human resources functions to business process service providers. Such third-party vendors may not be able to handle the volume of activity or perform the quality of service necessary for our operations. The failure of such vendors to fulfill their support and maintenance obligations or service obligations could disrupt our operations. Furthermore, the outsourcing of certain of our business processes could negatively impact our internal control processes.

Approximately 41% of our restaurants are located in California, Florida and Texas and, as a result, we are sensitive to economic and other trends and developments in those states.

        As of June 30, 2013, 139 of our 336 restaurants were spread across California (43), Florida (40) and Texas (56). As a result, we are particularly susceptible to adverse trends and economic conditions in those states, including their labor markets. In addition, given our geographic concentration in these states, negative publicity regarding any of our restaurants in such states could have a material adverse effect on our business and operations, as could other occurrences in these regions such as local competitive changes, changes in consumer preferences, local strikes, new or revised laws or regulations, energy shortages or increases in energy prices, droughts, hurricanes, fires, floods or other natural disasters.

        In addition, many of our restaurants in California and Florida are located in areas that we consider tourist or vacation destinations. Therefore, we depend in large part on vacation travelers to frequent our restaurants in these locations. Any change in consumer preferences away from California and Florida as their choice of destination could have a material adverse effect on our business and results of operation.

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Allergy concerns relating to crab and other shellfish items could affect consumer preferences and could negatively impact our results of operations.

        Many of our food items contain crab or other shellfish items. In recent years, there has been negative publicity concerning, shellfish and other food allergies. This negative publicity, as well as any other negative publicity concerning food products we serve, may adversely impact demand for our food and could result in a decrease in guest traffic to our restaurants. Owing to the severe nature of certain shellfish allergies, shellfish have recently been identified by the U.S. Food and Drug Administration as a significant allergen. The introduction of seafood and shellfish labeling regulations to the restaurant industry could cause us to modify the operations or atmosphere of our restaurants, which could adversely affect our business and brand differentiation.

Health concerns arising from outbreaks of viruses may have a material adverse effect on our business.

        The United States and other countries have experienced, and may experience in the future, outbreaks of viruses, such as H1N1, avian influenza, SARS and various other forms of influenza. To the extent that a virus is transmitted by human-to-human contact, our employees or guests could become infected, or could choose to, or be advised to avoid gathering in public places and avoid eating in restaurant establishments, which could adversely affect our business.

Information technology system failures or breaches of our network security could interrupt our operations and adversely affect our business.

        We rely on our computer systems and network infrastructure across our operations, including point-of-sale processing at our restaurants. Our operations depend upon our ability to protect our computer equipment and systems against damage from physical theft, fire, power loss, telecommunications failure or other catastrophic events, as well as from internal and external security breaches, viruses, worms and other disruptive problems. Any damage or failure of our computer systems or network infrastructure that causes an interruption in our operations could have a material adverse effect on our business and subject us to litigation or actions by regulatory authorities. While we utilize our personnel, as well as a variety of hardware and software, to monitor our systems, controls, firewalls and encryption and intend to maintain and upgrade our security technology and operational procedures to prevent damage, breaches or other disruptive problems, there can be no assurance that these security measures will be successful.

We may incur costs resulting from breaches of security of confidential guest information related to our electronic processing of credit and debit card transactions.

        The majority of our restaurant sales are by credit or debit cards. Other retailers have experienced security breaches in which credit and debit card information has been stolen. Although we use secure private networks to transmit confidential information, third parties may have the technology or know-how to breach the security of the guest information transmitted in connection with credit and debit card sales, and our security measures and those of technology vendors may not effectively prohibit others from obtaining improper access to this information. If a person is able to circumvent these security measures, he or she could destroy or steal valuable information or disrupt our operations. We may in the future become subject to claims for purportedly fraudulent transactions arising out of the actual or alleged theft of credit or debit card information, and we may also be subject to lawsuits or other proceedings relating to these types of incidents. Any such claim or proceeding could cause us to incur significant unplanned expenses, which could have an adverse impact on our financial condition, results of operations and cash flows. Further, adverse publicity resulting from these allegations could significantly harm our reputation and may have a material adverse effect on us and our restaurants.

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We depend upon our executive officers and may not be able to retain or replace these individuals or recruit additional personnel, which could harm our business.

        We believe that we have benefited substantially from the leadership and experience of our executive officers, including our Chief Executive Officer, Raymond A. Blanchette, III, and President and Chief Financial Officer, Michael J. Dixon. The loss of the services of any of our executive officers could have a material adverse effect on our business and prospects, as we may not be able to find suitable individuals to replace such personnel on a timely basis. In addition, any such departure could be viewed in a negative light by investors and analysts, which could cause our common stock price to decline. As our business expands, our future success will depend greatly on our continued ability to attract and retain highly skilled and qualified executive-level personnel. Our inability to attract and retain qualified executive officers in the future could impair our growth and harm our business.

We are dependent on attracting and retaining qualified employees while also controlling labor costs.

        We are dependent upon the availability of qualified restaurant personnel. Our future performance will depend on our ability to attract, motivate and retain our brand presidents, regional vice presidents, directors of operations and restaurant-level managers. Competition for these employees is intense. The loss of the services of members of our restaurant management team or the inability to attract additional qualified personnel as needed could materially harm our business.

        In addition, availability of staff varies widely from restaurant to restaurant. In fiscal year 2012, our restaurant manager turnover rate was 27% and our hourly restaurant employee turnover at our comparable restaurants was 100%. If restaurant management and staff turnover trends increase, we could suffer higher direct costs associated with recruiting, training and retaining replacement personnel. Moreover, we could suffer from significant indirect costs, including restaurant disruptions due to management changeover and potential delays in new restaurant openings or adverse guest reactions to inadequate guest service levels due to staff shortages. Competition for qualified employees may exert upward pressure on wages paid to attract such personnel, resulting in higher labor costs, together with greater recruitment and training expense.

        We must comply with the Fair Labor Standards Act and various federal and state laws governing employment matters, such as minimum wage, tip credit allowance, overtime pay practices, child labor laws and other working conditions and citizenship requirements. Federal, state and municipal laws may also require us to provide new or increased levels of employee benefits to our employees, many of whom are not currently eligible for such benefits. Many of our employees are hourly workers whose wages are likely to be affected by an increase in the federal or state minimum wage or changes to the tip credit allowance. Proposals have been made, and continue to be made, at federal and state levels to increase minimum wage levels, including changes to the tip credit allowance. An increase in the minimum wage or a change in the tip credit allowance may require an increase or create pressure to increase the pay scale for our employees. In addition, while we take certain measures to operate our restaurants in strict compliance with federal immigration regulations and the requirements of certain states, some of our employees, especially given the location of many of our restaurants, may fail to meet federal work authorization or residency requirements, which could result in disruptions in our work force, sanctions against us and adverse publicity. A shortage in the labor pool or other general inflationary pressures or changes could also increase our labor costs. A shortage in the labor pool could also cause our restaurants to be required to operate with reduced staff, which could negatively impact our ability to provide adequate service levels to our guests.

        Among the federal laws with which we must comply is the National Labor Relations Act that applies to the election by employees to be represented by a labor organization for purposes of collective bargaining over wages, hours, working conditions and terms and conditions of employment. Currently, none of our employees are represented by labor organizations for these purposes. However, potential union representation and collective bargaining agreements may result in increased labor costs that can have an impact on competitiveness. Labor disputes, as well, may precipitate strikes and picketing that may have an impact on business, including guest patronage and supplier deliveries.

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Our existing senior secured credit facility contains financial covenants, negative covenants and other restrictions and failure to comply with these requirements could cause the related indebtedness to become due and payable and limit our ability to incur additional debt.

        The lenders' obligation to extend credit under our existing senior secured revolving credit facility depends upon our maintaining certain financial covenants. In particular, our senior secured credit facility requires us to maintain a leverage ratio of rent adjusted debt to EBITDAR (earnings before interest, taxes, depreciation and amortization expense and rent expense, plus certain additional addbacks more particularly specified in the credit agreement), and a minimum fixed charge coverage ratio. These ratios are computed at the end of each fiscal quarter for the most recent 12-month period. The facility, as amended on April 9, 2013, allows for (a) a maximum leverage ratio of (i) 5.50x through December 29, 2013, (ii) 5.25x from December 30, 2013 through June 29, 2014, (iii) 5.0x from June 30, 2014 through December 28, 2014 and (iv) 4.75x thereafter and (b) a minimum fixed charge ratio of 1.35x through December 29, 2013 and 1.50x thereafter. Failure to maintain these ratios could result in an acceleration of outstanding amounts under the facility and restrict us from borrowing amounts under the revolving credit facility to fund our future liquidity requirements. In addition, our credit facility contains certain negative covenants, which, among other things, limit our ability to:

        Our ability to make scheduled payments and comply with financial covenants will depend on our operating and financial performance, which in turn, is subject to prevailing economic conditions and to other financial, business and other factors beyond our control described herein. Our obligations and the guarantees under the senior secured credit facility are secured by substantially all of our and such subsidiaries' present and future assets and a perfected first priority lien on the capital stock or other equity interests of our direct and indirect subsidiaries.

We may need additional capital in the future, and it may not be available on acceptable terms.

        The development of our business may require significant additional capital in the future to fund our operations and growth, among other activities. We have historically relied upon cash generated by our operations and our senior secured credit facility to fund our expansion. In the future, we intend to rely on funds from operations and, if necessary, our senior secured credit facility. We may also need to access the debt and equity capital markets. There can be no assurance, however, that these sources of financing will be available on acceptable terms, or at all. Our ability to obtain additional financing will be subject to a number of factors, including market conditions, our operating performance, investor sentiment and our ability to incur additional debt in compliance with agreements governing our then-outstanding debt. These factors may make the timing, amount, terms or conditions of additional financings unattractive to us. If we are unable to generate sufficient funds from operations or raise additional capital, our growth could be impeded.

        As of April 1, 2013, we had approximately $45.0 million of total indebtedness outstanding and available borrowing capacity of $52.2 million under our then current credit agreement. On April 9,

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2013, we entered into an amended and restated credit agreement which amends and restates in its entirety the credit agreement. The new credit agreement provides for a $100 million five-year senior secured revolving credit facility, which includes a letter of credit sub-facility of $15 million (increased from $10 million under the old credit agreement) and a swing line sub-facility of up to $15 million. The new credit agreement also provides for a five-year senior secured term loan facility in an aggregate principal amount of $50 million. We used the proceeds from the term loan facility and $10 million of the revolving credit facility to finance the acquisition. We may not be able to refinance our indebtedness prior to or at its maturity on acceptable terms or at all.

Legal complaints or litigation may hurt us.

        Occasionally, restaurant guests and/or employees file complaints or lawsuits against us alleging that we are responsible for some illness or injury they suffered at or after a visit to our restaurants, or that we have problems with food quality or operations. We are also subject to a variety of other claims arising in the ordinary course of our business, including personal injury claims, contract claims and claims alleging violations of federal and state law regarding workplace and employment matters, discrimination and similar matters. We could also become subject to class action lawsuits related to these matters in the future. In recent years, a number of restaurant companies have been subject to lawsuits, including class action lawsuits, alleging violations of federal and state law regarding workplace conditions, employment and similar matters. A number of these industry lawsuits have resulted in the payment of substantial damages by defendants. The restaurant industry has also been subject to a growing number of claims that the menus and actions of restaurant chains have led to the obesity of certain of their guests.

        Regardless, however, of whether any claim brought against us in the future is valid or whether we are liable, such a claim would be expensive to defend and may divert time, money and other valuable resources away from our operations and, thereby, hurt our business.

        We are subject to state and local "dram shop" statutes, which may subject us to uninsured liabilities. These statutes generally allow a person injured by an intoxicated person to recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated person. In the past, after allegedly consuming alcoholic beverages at our restaurants, there have been isolated instances where certain individuals have been killed or injured or have killed or injured third parties. Because a plaintiff may seek punitive damages, which may not be fully covered by insurance, this type of action could have an adverse impact on our financial condition and results of operations. A judgment in such an action significantly in excess of our insurance coverage could adversely affect our financial condition, results of operations or cash flows. Further, adverse publicity resulting from any such allegations may adversely affect us and our restaurants taken as a whole.

Failure to obtain and maintain required licenses and permits or to comply with alcoholic beverage or food control regulations could lead to the loss of our liquor and food service licenses and, thereby, harm our business.

        The restaurant industry is subject to various federal, state and local government regulations, including those relating to the sale of food and alcoholic beverages. Such regulations are subject to change from time to time. The failure to obtain and maintain these licenses, permits and approvals could adversely affect our operating results. Typically, licenses must be renewed annually and may be revoked, suspended or denied renewal for cause at any time if governmental authorities determine that our conduct violates applicable regulations. Difficulties or failure to maintain or obtain the required licenses and approvals could adversely affect our existing restaurants and delay or result in our decision to cancel the opening of new restaurants, which would adversely affect our business.

        In fiscal year 2012, approximately 13% of Joe's Crab Shack revenues and 46% of Brick House Tavern + Tap revenues were attributable to the sale of alcoholic beverages, and we expect Macaroni

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Grill's revenues attributable to the sale of alcoholic beverages will be significant. Our alcoholic beverage sales may increase in the future. Alcoholic beverage control regulations require each of our restaurants to apply to a state authority and, in certain locations, county or municipal authorities for a license or permit to sell alcoholic beverages on-premises and to provide service for extended hours and on Sundays. Alcoholic beverage control regulations relate to numerous aspects of daily operations of our restaurants, including minimum age of patrons and employees, hours of operation, advertising, trade practices, wholesale purchasing, other relationships with alcohol manufacturers, wholesalers and distributors, inventory control and handling, storage and dispensing of alcoholic beverages. In the past, we have been subject to fines for violations of alcoholic beverage control regulations. Any future failure to comply with these regulations and obtain or retain liquor licenses could adversely affect our results of operations and overall financial condition.

We are subject to many federal, state and local laws with which compliance is both costly and complex.

        The restaurant industry is subject to extensive federal, state and local laws and regulations, including the recently enacted comprehensive health care reform legislation and those relating to building and zoning requirements and the preparation and sale of food. The development and operation of restaurants depend to a significant extent on the selection and acquisition of suitable sites, which are subject to zoning, land use, environmental, traffic and other regulations and requirements. We are also subject to licensing and regulation by state and local authorities relating to health, sanitation, safety and fire standards and liquor licenses, federal and state laws governing our relationships with employees (including the Fair Labor Standards Act of 1938, the Immigration Reform and Control Act of 1986 and applicable requirements concerning the minimum wage, overtime, family leave, tip credits, working conditions, safety standards, immigration status, unemployment tax rates, workers' compensation rates and state and local payroll taxes), federal and state laws which prohibit discrimination and other laws regulating the design and operation of facilities, such as the Americans With Disabilities Act of 1990, or the ADA.

        In March 2010, the United States federal government enacted comprehensive health care reform legislation which, among other things, includes guaranteed coverage requirements, eliminates pre-existing condition exclusions and annual and lifetime maximum limits, restricts the extent to which policies can be rescinded and imposes new and significant taxes on health insurers and health care benefits. The legislation imposes implementation effective dates that extend through 2020, and many of the changes require additional guidance from government agencies or federal regulations. Due to the breadth and complexity of federal health care legislation and the staggered implementation of its provisions and corresponding regulations, it is difficult to predict the overall impact of the health care legislation on our business over the coming years. To date, we have not experienced material costs related to such legislation. However, due to the phased-in nature of the implementation and the lack of interpretive guidance, it is difficult to determine at this time what impact the health care reform legislation will have on our financial results. Possible adverse effects could include increased costs, exposure to expanded liability and requirements for us to revise the ways in which we provide healthcare and other benefits to our employees. Providing more extensive health insurance benefits to employees than the health insurance benefits we currently provide and to a potentially larger proportion of our employees, or the payment of penalties if the specified level of coverage is not provided at an affordable cost to employees, could have a material adverse effect on our results of operations and financial position. In addition, these laws require employers to comply with a significant number of new reporting and notice requirements from the Departments of Treasury, Labor and Health and Human Services, and we will have to develop systems and processes to track the requisite information and to comply with the reporting and notice requirements. Our suppliers also may be affected by higher minimum wage and benefit standards, which could result in higher costs for goods and services supplied to us.

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        The impact of current laws and regulations, the effect of future changes in laws or regulations that impose additional requirements and the consequences of litigation relating to current or future laws and regulations, or our inability to respond effectively to significant regulatory or public policy issues, could increase our compliance and other costs of doing business and therefore have an adverse effect on our results of operations. Failure to comply with the laws and regulatory requirements of federal, state and local authorities could result in, among other things, revocation of required licenses, administrative enforcement actions, fines and civil and criminal liability. In addition, certain laws, including the ADA, could require us to expend significant funds to make modifications to our restaurants if we failed to comply with applicable standards. Compliance with all of these laws and regulations can be costly and can increase our exposure to litigation or governmental investigations or proceedings.

New information or attitudes regarding diet and health could result in additional menu labeling laws and changes in regulations and consumer eating habits that could adversely affect our results of operations.

        Regulations and consumer eating habits may continue to change as a result of new information and attitudes regarding diet and health. These changes may include regulations that impact the ingredients and nutritional content of our menu items. The federal government as well as a number of states (including California), counties and cities have enacted menu labeling laws requiring multi-unit restaurant operators to make certain nutritional information available to guests (including caloric, sugar, sodium and fat content) or have enacted legislation prohibiting the sales of certain types of ingredients in restaurants. The success of our restaurant operations depends, in part, upon our ability to effectively respond to changes in consumer health and disclosure regulations and to adapt our menu offerings to fit the dietary needs and eating habits of our guests without sacrificing flavor. If consumer health regulations or consumer eating habits change significantly, we may be required to modify or discontinue certain menu items. To the extent we are unable to respond with appropriate changes to our menu offerings, it could materially affect guest traffic and our results of operations. Furthermore, a change in our menu could result in a decrease in guest traffic.

We may be subject to increased scrutiny as the result of growing public concern over seafood mislabeling.

        Although we source our seafood from third-party food suppliers and distributors that we believe accurately identify and label the seafood items that they sell and inspect food products when they are delivered to us, we do not conduct DNA sampling on the products we purchase. Therefore, we cannot assure that the seafood items we purchase from third parties have been accurately labeled, which could cause us to inadvertently mislabel such items in our restaurants. Recent studies have shown a number of instances of fish products being inaccurately labeled as other species in retail outlets, including grocery stores and restaurants. Although none of our restaurant brands was included in these studies, negative publicity regarding seafood mislabeling, even when not related to our restaurants, could affect consumer preferences and the consumption of seafood and consequently impact our sales. In addition, if any incident of seafood mislabeling were to occur at one of our restaurants, it could erode consumer affinity for our brands and significantly reduce their respective values and damage our business. Furthermore, public concern over seafood mislabeling could result in new regulations relating to the sourcing and labeling of seafood products. For instance, a bill was introduced to the U.S. Congress in July 2012 that was intended to address seafood fraud by requiring fish suppliers and restaurants to provide more information to their customers about the seafood they sell. Although such bill was not enacted, future bills may be proposed and enacted and compliance with any such regulations could cause us to incur additional costs.

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We occupy most of our restaurants under long-term non-cancelable leases which may obligate us to perform even after a restaurant closes, and we may be unable to renew leases at the end of their terms.

        All of our restaurant locations are leased under individual lease agreements. Leases are noncancelable and in general, have 10 to 15 year terms, with three to five-year extensions. If we were to close or fail to open a restaurant at a location we lease, we would generally remain committed to perform our obligations under the applicable lease, which could include, among other things, payment of the base rent for the balance of the lease term. Our obligation to continue making rental payments and fulfilling other lease obligations in respect of leases for closed or unopened restaurants could have a material adverse effect on our business and results of operations. Alternatively, at the end of the lease term and any renewal period for a restaurant, we may be unable to renew the lease without substantial additional cost, if at all. If we cannot renew such a lease we may be forced to close or relocate a restaurant, which could subject us to construction and other costs and risks. If we are required to make payments in respect of leases for closed or unopened restaurants or if we are unable to renew our restaurant leases, our business and results of operations could be adversely affected.

The impact of negative economic factors, including the availability of credit, on our landlords, developers and surrounding tenants could negatively affect our financial results.

        Negative effects on our existing and potential landlords due to the inaccessibility of credit and other unfavorable economic factors may, in turn, adversely affect our business and results of operations. If our landlords are unable to obtain financing or remain in good standing under their existing financing arrangements, they may be unable to provide construction contributions or satisfy other lease obligations owed to us. In addition, if our landlords are unable to obtain sufficient credit to continue to properly manage their retail sites, we may experience a drop in the level of quality of such retail centers. Our development of new restaurants may also be adversely affected by the negative economic factors affecting developers and potential landlords. Developers and/or landlords may try to delay or cancel recent development projects (as well as renovations of existing projects) due to the instability in the credit markets and recent declines in consumer spending, which could reduce the number of appropriate locations available that we would consider for our new restaurants. If any of the foregoing affect any of our landlords, developers and/or surrounding tenants, our business and results of operations may be adversely affected. To the extent our restaurants are part of a larger retail project or tourist destination, our guest traffic could be negatively impacted by economic factors affecting our surrounding tenants.

We have recorded impairment charges in past periods and may record additional impairment charges in future periods.

        We periodically evaluate possible impairment at the individual restaurant-level, and record an impairment loss whenever we determine impairment factors are present. We also periodically evaluate the criteria we use as an indication of restaurant impairment. We consider a history of restaurant operating losses to be a primary indicator of potential impairment for individual restaurant locations. A lack of improvement at restaurants we are monitoring, or deteriorating results at other restaurants, could result in additional impairment charges.

Our current insurance may not provide adequate levels of coverage against claims.

        We currently maintain insurance customary for businesses of our size and type. However, there are types of losses we may incur that cannot be insured against or that we believe are not economically reasonable to insure. Such losses could have a material adverse effect on our business and results of operations. In addition, we self-insure a significant portion of expected losses under our workers' compensation, general liability and property insurance programs. Unanticipated changes in the actuarial assumptions and management estimates underlying our reserves for these losses could result in

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materially different amounts of expense under these programs, which could have a material adverse effect on our financial condition, results of operations and liquidity.

Our failure or inability to enforce our trademarks or other proprietary rights could adversely affect our competitive position or the value of our brand.

        Our registered trademarks and service marks include Joe's Crab Shack and the design, our stylized logos set forth on the cover and back pages of this prospectus, Brick House Tavern + Tap and the design, and Romano's Macaroni Grill and the design, which are protected under applicable intellectual property laws. We believe that our trademarks and other proprietary rights are important to our success and our competitive position, and, therefore, we devote resources to the protection of our trademarks and proprietary rights. The protective actions that we take, however, may not be enough to prevent unauthorized use or imitation by others, which could harm our image, brand or competitive position. If we commence litigation to enforce our rights, we will incur significant legal fees.

        We cannot assure you that third parties will not claim infringement by us of their proprietary rights in the future. Any such claim, whether or not it has merit, could be time-consuming and distracting for executive management, result in costly litigation, cause changes to existing menu items or delays in introducing new menu items, or require us to enter into royalty or licensing agreements. As a result, any such claim could have a material adverse effect on our business, results of operations and financial condition.

Our quarterly operating results may fluctuate significantly and could fall below the expectations of securities analysts and investors due to seasonality and other factors, some of which are beyond our control, resulting in a decline in our stock price.

        Our quarterly operating results may fluctuate significantly because of several factors, including:

        Our business is also subject to seasonal fluctuations. Our revenues are typically highest in the summer months (June, July and August) and lowest in the winter months (November, December and January) with respect to Joe's Crab Shack restaurants and highest in the winter months with respect to Macaroni Grill restaurants. As a result, our quarterly and annual operating results and comparable

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restaurant sales may fluctuate significantly as a result of seasonality and the factors discussed above. Accordingly, results for any one fiscal quarter are not necessarily indicative of results to be expected for any other fiscal quarter or for any fiscal year and comparable restaurant sales for any particular future period may decrease. In the future, operating results may fall below the expectations of securities analysts and investors. In that event, the price of our common stock would likely decrease.

Significant adverse weather conditions and other disasters could negatively impact our results of operations.

        Adverse weather conditions and acts of god, such as regional winter storms, fires, floods, hurricanes, tropical storms and earthquakes, and other disasters, such as oil spills and nuclear meltdowns, could negatively impact our results of operations. In particular, a number of our restaurants are located in states which are particularly susceptible to hurricanes, tropical storms, flooding and earthquakes.

Any strategic transactions or initiatives that we consider in the future may have unanticipated consequences that could harm our business and our financial condition.

        From time to time, we evaluate potential mergers, acquisitions of restaurants joint ventures or other strategic initiatives to acquire or develop additional restaurant brands. To successfully execute any acquisition or development strategy, we will need to identify suitable acquisition or development candidates, negotiate acceptable acquisition or development terms and obtain appropriate financing. Any acquisition or future development that we pursue, whether or not successfully completed, may involve risks, including:

We are a party to franchise relationships and are pursuing additional franchise relationships and any current or future franchisees could take actions that could be harmful to our business.

        With the acquisition of Macaroni Grill, a portion of the newly acquired business consists of the payment of royalties by franchisees. In addition, we have recently launched efforts to begin to franchise our Brick House brand. Our ability to pursue future franchise relationships depends in part upon our ability to find and attract quality franchisees. Any franchisees will be contractually obligated to operate their restaurants in accordance with our standards and all applicable laws. However, although we will attempt to properly train and support any franchisees, franchisees are independent third parties that we will not control, and the franchisees own, operate and oversee the daily operations of their restaurants. As a result, the ultimate success and quality of any franchised restaurant rests with the franchisee. Adverse events beyond our control, such as quality issues related to a food product or a failure to maintain quality standards at a franchised restaurant, could negatively impact our brand, business and results of operations. In addition, the failure of any future franchisees or any of their restaurants to remain financially viable could result in their failure to pay royalties owed to us. Furthermore, the Macaroni Grill acquisition added an international component to our business through franchising, and

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we intend to pursue additional international franchise relationships for all of our brands. The addition of operations in foreign jurisdictions through franchising involves additional risks to us, including complying with foreign regulatory requirements and general economic and political conditions in such foreign markets, and we may be unsuccessful in complying with such requirements.

We have incurred and expect to continue to incur increased costs as a result of operating as a public company.

        Prior to the IPO, we had not been subject to the reporting requirements of the Exchange Act or the other rules and regulations of the Securities Exchange Commission, or the SEC, or any securities exchange relating to public companies. Following the IPO, we identified those areas in which changes should be made to our financial and management control systems to manage our growth and our obligations as a public company. These areas included corporate governance, corporate control, internal audit, disclosure controls and procedures and financial reporting and accounting systems. We have made, and may continue to make, changes in these and other areas. Ongoing compliance with the various reporting and other requirements applicable to public companies also require considerable time and attention of management, particularly if we are no longer an "emerging growth company."

        Congress enacted the Jumpstart Our Business Startups Act of 2012, or the "JOBS Act," on April 5, 2012. Pursuant to the provisions of the JOBS Act, we qualify as an "emerging growth company." Section 102 of the JOBS Act provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. However, we chose to "opt out" of such extended transition period, and as a result, we comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Our decision to opt out of the extended transition period was irrevocable.

        For as long as we remain an "emerging growth company" as defined in the JOBS Act, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies" including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We may take advantage of these reporting exemptions until we are no longer an "emerging growth company." Some investors may find our common stock less attractive if we continue to rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

        We anticipate that we will remain an "emerging growth company" until the earlier of the end of the fiscal year during which we have total annual gross revenues of $1.0 billion or more and May 10, 2017.

Risks Related to This Offering and Ownership of Our Common Stock

Concentration of ownership by J.H. Whitney VI may prevent new investors from influencing significant corporate decisions.

        J.H. Whitney VI owns, in the aggregate, approximately 68% of our outstanding common stock. Following completion of this offering, J.H. Whitney VI will own approximately        % of our outstanding common stock, or approximately      % if the underwriters' option to purchase additional shares is fully exercised. See "Principal and Selling Stockholders" for more information on our beneficial ownership. As a result, J.H. Whitney VI will continue to be able to exercise control over all matters requiring stockholder approval, including the election of directors, amendment of our amended

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and restated certificate of incorporation and approval of significant corporate transactions and will continue to have significant control over our management and policies. In addition, two of the seven members of our board of directors are principals of J.H. Whitney. J.H. Whitney VI can take actions that have the effect of delaying or preventing a change in control of us or discouraging others from making tender offers for our shares, which could prevent stockholders from receiving a premium for their shares. These actions may be taken even if other stockholders oppose them. The concentration of voting power with J.H. Whitney VI may have an adverse effect on the price of our common stock. The interests of J.H. Whitney VI may not be consistent with your interests as a stockholder. After the lock-up period expires, J.H. Whitney VI will also be able to transfer control of us to a third-party by transferring their common stock, which would not require the approval of our board of directors or our other stockholders.

        Our amended and restated certificate of incorporation provides that the doctrine of corporate opportunity does not apply against J.H. Whitney, or any of our directors who are employees of or affiliated with J.H. Whitney, in a manner that would prohibit them from investing or participating in competing businesses. To the extent J.H. Whitney affiliated funds invest in such other businesses, they may have differing interests than our other stockholders. For example, J.H. Whitney affiliated funds may choose to own other restaurant brands through other investments, which may compete with our brands.

We are a "controlled company" within the meaning of The NASDAQ Stock Market rules, and, as a result, we rely on exemptions from certain corporate governance requirements that provide protection to stockholders of other companies.

        Upon completion of this offering, J.H. Whitney VI will continue to own more than 50% of the total voting power of our common stock and therefore, we will continue to be a "controlled company" under The NASDAQ Stock Market corporate governance listing standards. As a controlled company, we are exempt under The NASDAQ Stock Market listing standards from the obligation to comply with certain of The NASDAQ Stock Market corporate governance requirements, including the requirements:

Our stock price may be volatile or may decline regardless of our operating performance, and you may not be able to resell your shares at or above the public offering price.

        The market price of our common stock may fluctuate significantly in response to a number of factors, most of which we cannot control, including those described under "—Risks Related to Our Business" and the following:

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        In addition, the stock markets, and in particular The NASDAQ Global Select Market, have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many food service companies. In the past, stockholders have instituted securities class action litigation following periods of market volatility. If we were involved in securities litigation, we could incur substantial costs and our resources and the attention of management could be diverted from our business.

Future sales of our common stock, or the perception in the public markets that these sales may occur, may depress our stock price.

        Sales of substantial amounts of our common stock in the public market after this offering, or the perception that these sales could occur, could adversely affect the price of our common stock and could impair our ability to raise capital through the sale of additional shares. The shares of common stock offered in this offering will be freely tradable without restriction under the Securities Act, except for shares of our common stock that may be held or acquired by our directors, executive officers and other affiliates, as that term is defined in the Securities Act, which will be restricted securities under the Securities Act. Restricted securities may not be sold in the public market unless the sale is registered under the Securities Act or an exemption from registration is available. J.H. Whitney VI has the right, subject to certain conditions, to require us to file additional registration statements registering additional shares of common stock, and J.H. Whitney VI and members of management have the right to require us to include shares of common stock in registration statements that we may file for ourselves or J.H. Whitney VI. In order to exercise these registration rights, the holder must be permitted to sell shares of its common stock under applicable lock-up restrictions described below. Subject to compliance with applicable lock-up restrictions and restrictions under the registration rights agreement (both of which may be waived), shares of common stock sold under these registration statements can be freely sold in the public market. In the event such registration rights are exercised and a large number of shares of common stock are sold in the public market, such sales could reduce the trading price of our common stock. These sales also could impede our ability to raise future capital. See "Description of Capital Stock—Registration Rights." In addition, we would incur certain expenses in connection with the registration and sale of such shares.

        We, each of our officers and directors and the selling stockholders have agreed, subject to certain exceptions, with the underwriters not to dispose of or hedge any of the shares of common stock or securities convertible into or exchangeable for shares of common stock during the period from the date of this prospectus continuing through the date 90 days after the date of this prospectus, except, in our case, for the issuance of common stock upon exercise of options under existing option plans. Credit

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Suisse Securities (USA) LLC may, in its sole discretion, release any of these shares from these restrictions at any time without notice. See "Underwriting."

        In the future, we may also issue our securities in connection with investments or acquisitions. The amount of shares of our common stock issued in connection with an investment or acquisition could constitute a material portion of our then-outstanding shares of our common stock.

Anti-takeover provisions in our charter documents and Delaware law might discourage or delay acquisition attempts for us that you might consider favorable.

        Our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that may make the acquisition of our company more difficult without the approval of our board of directors. These provisions:

        These anti-takeover provisions and other provisions under Delaware law could discourage, delay or prevent a transaction involving a change in control of our company, even if doing so would benefit our stockholders. These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing and to cause us to take other corporate actions you desire.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.

        The trading market for our common stock depends in part on the research and reports that securities or industry analysts publish about us or our business. If one or more of the analysts who covers us downgrades our common stock or publishes inaccurate or unfavorable research about our business, our stock price would likely decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for our common stock could decrease, which could cause our stock price and trading volume to decline.

We do not expect to pay any cash dividends for the foreseeable future.

        The continued operation and expansion of our business will require substantial funding. Accordingly, we do not anticipate that we will pay any cash dividends on shares of our common stock for the foreseeable future. Any determination to pay dividends in the future will be at the discretion of our board of directors and will depend upon results of operations, financial condition, contractual restrictions, including our senior secured credit facility and other indebtedness we may incur, restrictions imposed by applicable law and other factors our board of directors deems relevant.

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FORWARD-LOOKING STATEMENTS

        This prospectus contains statements about future events and expectations that constitute forward-looking statements. Forward-looking statements are based on our beliefs, assumptions and expectations of our future financial and operating performance and growth plans, taking into account the information currently available to us. These statements are not statements of historical fact. Forward-looking statements involve risks and uncertainties that may cause our actual results to differ materially from the expectations of future results we express or imply in any forward-looking statements and you should not place undue reliance on such statements. Factors that could contribute to these differences include, but are not limited to, the following:

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        Words such as "anticipates," "believes," "continues," "estimates," "expects," "goal," "objectives," "intends," "may," "opportunity," "plans," "potential," "near-term," "long-term," "projections," "assumptions," "projects," "guidance," "forecasts," "outlook," "target," "trends," "should," "could," "would," "will" and similar expressions are intended to identify such forward-looking statements. We qualify any forward-looking statements entirely by these cautionary factors. Other risks, uncertainties and factors, including those discussed under "Risk Factors," could cause our actual results to differ materially from those projected in any forward-looking statements we make. We assume no obligation to update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

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USE OF PROCEEDS

        The selling stockholders will receive all of the proceeds from this offering. We will not receive any of the proceeds from the sale of our common stock by the selling stockholders.

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DIVIDEND POLICY

        On March 24, 2011, we paid a cash dividend in the aggregate amount of $80.0 million indirectly to J.H. Whitney VI through JCS Holdings. The cash dividend was paid as a return of capital to J.H. Whitney VI for its 2006 investment in us. At no other time have we paid any dividends on our common stock since our incorporation. We currently intend to retain all available funds and any future earnings to fund the development and growth of our business and to repay indebtedness, and therefore we do not anticipate paying any cash dividends in the foreseeable future. Additionally, our ability to pay dividends on our common stock is limited by restrictions on the ability of our subsidiaries and us to pay dividends or make distributions to us under the terms of the agreements governing our indebtedness. Any future determination to pay dividends will be at the discretion of our board of directors, subject to compliance with covenants in current and future agreements governing our indebtedness, and will depend upon our results of operations, financial condition, capital requirements and other factors that our board of directors deems relevant.

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MARKET PRICE FOR COMMON STOCK

        Our common stock has been listed on The NASDAQ Global Select Market under the symbol "IRG" since our IPO in May 2012. Before then, there was no public market for our common stock. On July 5, 2013, the closing price of our common stock was $19.12. As of June 1, 2013, we had 22 stockholders of record.

        The following table sets forth, for the periods indicated, the high and low sales prices of our common stock as reported by the NASDAQ Global Select Market:

Period
  High   Low  

For the period from May 11, 2012 to June 18, 2012

  $ 19.23   $ 16.50  

For the period from June 19, 2012 to September 10, 2012

  $ 19.87   $ 12.50  

For the period from September 11, 2012 to December 31, 2012

  $ 15.30   $ 10.80  

For the period from January 1, 2013 to April 1, 2013

  $ 16.81   $ 12.09  

For the period from April 2, 2013 to July 1, 2013

  $ 20.50   $ 14.44  

For the period from July 2, 2013 to July 5, 2013

  $ 19.84   $ 18.29  

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CAPITALIZATION

        The following table sets forth our cash and cash equivalents and our capitalization as of April 1, 2013.

        You should read the following table in conjunction with the sections entitled "Selected Historical Consolidated Financial and Operating Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and our consolidated financial statements and related notes included elsewhere in this prospectus.

 
  As of April 1, 2013
(unaudited)(1)
 
 
  (in thousands)
 

Cash and cash equivalents

  $ 7,824  
       

Long-term debt, including current portion:

       

Revolving Credit Facility

  $ 45,000  

Term Loan Facility

     
       

Total

    45,000  
       

Stockholders' equity:

       

Common stock, $0.01 par value, 500,000,000 shares authorized, 25,640,602 shares issued and outstanding

    256  

Additional paid-in capital

    85,943  

Accumulated earnings

    22,418  
       

Total stockholders' equity

    108,617  
       

Total capitalization

  $ 153,617  
       

(1)
Amendment No. 1 to this Registration Statement will include the capitalization of the Company as of July 1, 2013, which will give effect to the acquisition and the related financing transaction.

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OPERATING DATA

        The following table provides a summary of our historical and unaudited pro forma consolidated financial and operating data for the periods and as of the dates indicated. We derived the statement of operations data presented below for the fiscal years ended January 3, 2011, January 2, 2012 and December 31, 2012 and selected balance sheet data presented below as of January 2, 2012 and December 31, 2012 from our audited consolidated financial statements included elsewhere in this prospectus. The selected statement of operations data for the fiscal years ended December 29, 2008 and December 28, 2009 and the selected balance sheet data as of December 29, 2008, December 28, 2009 and January 3, 2011 have been derived from audited consolidated financial statements not included in this prospectus. We derived the statement of operations data for the twelve weeks ended March 26, 2012 and the thirteen weeks ended April 1, 2013 and the selected balance sheet data as of April 1, 2013 from our unaudited condensed consolidated financial statements included elsewhere in this prospectus. The unaudited condensed consolidated financial statements have been prepared on the same basis as our audited consolidated financial statements and, in the opinion of our management, reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of these data. The results for any interim period are not necessarily indicative of the results that may be expected for a full fiscal year.

        Our fiscal year ends on the Monday nearest to December 31 of each year. Fiscal years 2008, 2009, 2011 and 2012 were 52-week years ended on December 29, 2008, December 28, 2009, January 2, 2012 and December 31, 2012, respectively, while fiscal year 2010 was a 53-week year ended on January 3, 2011. Prior to fiscal year 2013, the first three quarters of our fiscal year consisted of 12 weeks, and our fourth quarter consisted of 16 weeks for 52-week fiscal years and 17 weeks for 53-week fiscal years. Commencing in fiscal year 2013, we changed our quarterly accounting periods to be comprised of 13 weeks, except in the case of a 53-week fiscal year for which the fourth quarter will be comprised of 14 weeks. As such, the twelve weeks ended March 26, 2012 and the thirteen weeks ended April 1, 2013 are not comparable.

        The historical results presented below are not necessarily indicative of the results to be expected for any future period. This information should be read in conjunction with "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and our audited consolidated financial statements and unaudited condensed consolidated financial statements and each of their related notes included elsewhere in this prospectus.

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  Fiscal Year Ended   Twelve
Weeks
Ended
March 26,
2012(1)
  Thirteen
Weeks
Ended
April 1,
2013(1)
 
 
  December 29,
2008
  December 28,
2009
  January 3,
2011
  January 2,
2012
  December 31,
2012
 
 
  (dollars in thousands, except per share data)
 

Statement of Operations Data:

                                           

Revenues

  $ 273,359   $ 307,801   $ 351,327   $ 405,243   $ 465,056   $ 103,430   $ 118,240  

Restaurant operating costs and expenses

                                           

Cost of sales

    80,573     89,845     103,981     127,607     145,451     32,915     36,321  

Labor expenses

    80,604     87,920     98,162     111,721     127,331     28,047     31,907  

Occupancy expenses

    21,668     25,425     27,715     30,708     33,846     7,532     8,554  

Other operating expenses

    57,900     58,606     64,382     72,296     81,219     18,568     21,804  

General and administrative

    15,408     18,783     20,719     23,556     31,725     6,223     10,291  

Depreciation and amortization

    13,678     12,268     13,190     16,011     18,572     3,949     4,813  

Pre-opening costs

    805     1,474     4,627     4,855     3,871     1,528     1,091  

Restaurant impairments and closures

    680     15     909     333     115     49     17  

Loss on disposal of property and equipment

    1,252     1,244     3,242     1,295     2,296     89     195  
                               

Total costs and expenses

    272,568     295,580     336,927     388,382     444,426     98,900     114,993  
                               

Income from operations

    791     12,221     14,400     16,861     20,630     4,530     3,247  

Interest expense, net

    (5,659 )   (3,867 )   (3,831 )   (9,215 )   (9,366 )   (1,997 )   (395 )

Gain (loss) on insurance settlements

        1,192     589     1,126     (799 )       300  
                               

Income (loss) before income taxes

    (4,868 )   9,546     11,158     8,772     10,465     2,533     3,152  

Income tax expense (benefit)

    90     507     1,456     (3,291 )   1,751     648     967  
                               

Net income (loss)

  $ (4,958 ) $ 9,039   $ 9,702   $ 12,063   $ 8,714   $ 1,885   $ 2,185  
                               

Per Share Data(2):

                                           

Net income (loss) per share:

                                           

Basic and diluted

  $ (0.26 ) $ 0.47   $ 0.51   $ 0.63   $ 0.37   $ 0.10   $ 0.09  

Weighted average shares outstanding:

                                           

Basic

    19,178     19,178     19,178     19,178     23,328     19,178     25,624  

Diluted

    19,178     19,178     19,178     19,178     23,329     19,178     25,630  

Selected Other Data:

                                           

Restaurants open at end of period

    116     119     126     135     144     138     146  

Change in comparable restaurant sales(3)

    1.9 %   9.5 %   4.9 %   6.9 %   2.2 %   5.3 %   (1.4 )%

Average weekly sales

  $ 45   $ 51   $ 54   $ 59   $ 63   $ 63   $ 63  

Average unit volumes

  $ 2,354   $ 2,599   $ 2,810   $ 2,970   $ 3,050   $ 714   $ 767  

Restaurant-level profit margin(4)

    12.3 %   15.4 %   16.6 %   15.8 %   16.9 %   16.2 %   16.9 %

EBITDA(5)

  $ 14,469   $ 25,681   $ 28,179   $ 33,998   $ 38,403   $ 8,479   $ 8,360  

Adjusted EBITDA(5)

  $ 19,517   $ 29,786   $ 39,352   $ 43,270   $ 51,991   $ 10,927   $ 11,233  

Adjusted EBITDA margin(6)

    7.1 %   9.7 %   11.2 %   10.7 %   11.2 %   10.6 %   9.5 %

Capital expenditures

  $ 6,779   $ 17,858   $ 32,420   $ 39,442   $ 44,226   $ 6,648   $ 8,947  

 
  December 29,
2008
  December 28,
2009
  January 3,
2011
  January 2,
2012
  December 31,
2012
  April 1,
2013
 
 
  (in thousands)
 

Selected Balance Sheet Data:

                                     

Cash and cash equivalents

  $ 5,110   $ 4,976   $ 12,572   $ 3,725   $ 6,929   $ 7,824  

Working capital (deficit)

    (2,732 )   3,727     (1,780 )   (15,707 )   (12,856 )   (14,506 )

Total assets

    122,933     127,329     152,549     177,835     201,438     209,931  

Total debt

    35,381     34,988     34,833     117,757     45,000     45,000  

Total stockholders' equity(2)

  $ 64,050   $ 73,238   $ 83,207   $ 15,799   $ 106,217   $ 108,617  

(1)
Commencing in fiscal year 2013, we changed our quarterly accounting periods to be comprised of 13 weeks as opposed to three 12 week quarters and one 16 or 17 week quarter. We did not believe it was practicable to recast the prior year quarter to 13 weeks. However, we were able to recast revenues on a 13-week basis for the first quarter of fiscal year 2012. On a thirteen week comparable quarter for 2012, revenues would have been $113.1 million. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Change in Quarterly Accounting Periods."

(2)
Immediately prior to the completion of our IPO, we effected a 19,178.226-to-1 stock split. We also reduced the par value of our common stock from $1.00 per share to $0.01 per share. The share and per share information for 2008 to 2011 included in these consolidated financial statements were retroactively adjusted to reflect the stock split. We issued 6.4 million shares in relation to our IPO in May 2012 and received net proceeds of $81.1 million.

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(3)
Our comparable restaurant base includes restaurants open for at least 104 weeks, or approximately 24 months. Change in comparable restaurant sales represents the change in period-over-period sales for the comparable restaurant base. On a thirteen week comparable quarter for 2012, change in comparable restaurant sales would have been 5.3%.

(4)
Restaurant-level profit margin represents revenues (x) less (i) licensing revenue not attributable to core restaurant operations, (ii) cost of sales, (iii) labor expenses, (iv) occupancy expenses, and (v) other restaurant operating expenses (y) plus deferred rent expense, as defined in footnote 5(a) below. Restaurant-level profit is a supplemental measure of operating performance of our restaurants that does not represent and should not be considered as an alternative to net income or revenues as determined by U.S. generally accepted accounting principles, or U.S. GAAP, and our calculation thereof may not be comparable to that reported by other companies. Restaurant-level profit has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under U.S. GAAP. Management believes restaurant-level profit is an important component of financial results because it is a widely used metric within the restaurant industry to evaluate restaurant-level productivity, efficiency and performance. Management uses restaurant-level profit as a key metric to evaluate our financial performance compared with our competitors, to evaluate the profitability of incremental sales and to evaluate our performance across periods.

 
  Fiscal Year Ended   Twelve
Weeks
Ended
March 26,
2012
  Thirteen
Weeks
Ended
April 1,
2013
 
 
  December 29,
2008
  December 28,
2009
  January 3,
2011
  January 2,
2012
  December 31,
2012
 
 
  (dollars in thousands)
 

Revenues

  $ 273,359   $ 307,801   $ 351,327   $ 405,243   $ 465,056   $ 103,430   $ 118,240  

Less: Licensing and other revenues

    (64 )   (89 )   (373 )   (584 )   (340 )   (65 )   (65 )
                               

Restaurant sales(A)

  $ 273,295   $ 307,712   $ 350,954   $ 404,659   $ 464,716   $ 103,365   $ 118,175  
                               

Restaurant operating costs and expenses

                                           

Cost of sales

    80,573     89,845     103,981     127,607     145,451     32,915     36,321  

Labor expenses

    80,604     87,920     98,162     111,721     127,331     28,047     31,907  

Occupancy expenses

    21,668     25,425     27,715     30,708     33,846     7,532     8,554  

Other operating expenses

    57,900     58,606     64,382     72,296     81,219     18,568     21,804  

Deferred rent expense

    (1,075 )   (1,344 )   (1,597 )   (1,806 )   (1,536 )   (447 )   (398 )
                               

Restaurant-level profit(B)

  $ 33,625   $ 47,260   $ 58,311   $ 64,133   $ 78,405   $ 16,750   $ 19,987  
                               

Restaurant-level profit margin(B÷A)

    12.3 %   15.4 %   16.6 %   15.8 %   16.9 %   16.2 %   16.9 %
(5)
EBITDA represents earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA further adjusts EBITDA to reflect the additions and eliminations described in the table below. EBITDA and Adjusted EBITDA are supplemental measures of operating performance that do not represent and should not be considered as alternatives to net income or cash flow from operations, as determined by U.S. GAAP, and our calculation thereof may not be comparable to that reported by other companies. EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation, or as a substitute for analysis of our results as reported under U.S. GAAP. Some of the limitations are:

EBITDA and Adjusted EBITDA do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments;

EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs;

EBITDA and Adjusted EBITDA do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments on our debt;

EBITDA and Adjusted EBITDA do not reflect our tax expense or the cash requirements to pay our taxes;

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements; and

other companies in the restaurant industry may calculate EBITDA and Adjusted EBITDA differently than we do, limiting their usefulness as comparative measures.

Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as measures of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our U.S. GAAP results and using EBITDA and Adjusted EBITDA only supplementally. We further believe that our presentation of these U.S. GAAP and non-GAAP financial measurements provide information that is useful to analysts and investors because they are important indicators of the strength of our operations and the performance of our core business.

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In addition, this measurement is used by investors as a supplemental measure to evaluate the overall operating performance of companies in our industry. Management believes that investors' understanding of our performance is enhanced by including this non-GAAP financial measure as a reasonable basis for comparing our ongoing results of operations. Many investors are interested in understanding the performance of our business by comparing our results from ongoing operations from one period to the next and would ordinarily add back events that are not part of normal day-to-day operations of our business. By providing this non-GAAP financial measure, together with reconciliations, we believe we are enhancing investors' understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing strategic initiatives.

We also present Adjusted EBITDA because it is a measure which is used in calculating financial ratios in material debt covenants in our senior secured credit facility. Some of the adjustments included in Adjusted EBITDA are subject to certain limitations under our credit facility for purposes of calculating our debt covenants. For the fiscal quarter ending July 1, 2013, we are required to maintain a fixed charge coverage ratio (ratio of free cash flow to fixed charges) of 1.35x and an effective leverage ratio (ratio of rent adjusted debt to Adjusted EBITDAR) of less than 5.50x. As of April 1, 2013, we had $45.0 million of outstanding borrowings under the revolving credit facility, outstanding letters of credit of approximately $2.8 million and the ability to borrow up to an additional $52.2 million under the revolving credit facility. Failure to comply with our material debt covenants could cause an acceleration of outstanding amounts under the credit facility and restrict us from borrowing amounts under the revolving credit facility to fund our future liquidity requirements. We believe that inclusion of supplementary adjustments to EBITDA applied in presenting Adjusted EBITDA is appropriate to provide additional information to investors about how the covenants in those agreements operate. The material covenants in our senior secured credit facility are discussed further in "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources."

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  Fiscal Year Ended   Twelve
Weeks
Ended
March 26,
2012
  Thirteen
Weeks
Ended
April 1,
2013
 
 
  December 29,
2008
  December 28,
2009
  January 3,
2011
  January 2,
2012
  December 31,
2012
 
 
  (in thousands)
 

Net income (loss)

  $ (4,958 ) $ 9,039   $ 9,702   $ 12,063   $ 8,714   $ 1,885   $ 2,185  

Income tax expense (benefit)

    90     507     1,456     (3,291 )   1,751     648     967  

Interest expense, net

    5,659     3,867     3,831     9,215     9,366     1,997     395  

Depreciation and amortization

    13,678     12,268     13,190     16,011     18,572     3,949     4,813  
                               

EBITDA

  $ 14,469   $ 25,681   $ 28,179   $ 33,998   $ 38,403   $ 8,479   $ 8,360  
                               

Adjustments:

                                           

Deferred rent expense(a)

    1,072     1,339     1,675     1,813     1,544     457     386  

Restaurant impairments and closures(b)

    680     15     909     333     115     49     17  

Non-cash loss on disposal of property and equipment(c)

    1,173     1,243     3,110     1,269     2,245     89     168  

Sponsor management fees(d)

    1,048     1,008     1,025     1,060     388     244      

Loss (gain) on insurance settlements(e)

        (1,192 )   (589 )   (1,126 )   799         (300 )

Restatement expenses(f)

                    1,873          

Pre-opening costs(g)

    805     1,474     4,627     4,855     3,871     1,528     1,091  

Transaction costs(h)

                579     1,714     40     1,018  

Stock-based compensation(i)

        9     44     36     628     9     215  

Other expenses(j)

    270     209     372     453     411     32     278  
                               

Adjusted EBITDA

  $ 19,517   $ 29,786   $ 39,352   $ 43,270   $ 51,991   $ 10,927   $ 11,233  
                               

(a)
Deferred rent expense represents the non-cash rent expense calculated as U.S. GAAP rent expense in any year less amounts payable in cash under the leases during the year. In measuring our operational performance, we focus on our cash rent payments. See Note 2 to our audited consolidated financial statements for additional details.

(b)
Impairment charges were recorded in connection with the determination that the carrying value of certain of our restaurants exceeded their estimated fair value. Also consists of expenses incurred following the closure of restaurants. See Note 2 to our audited consolidated financial statements for additional details.

(c)
Loss (gain) on disposal of property and equipment represents the net book value of property and equipment less proceeds received, if applicable, on assets abandoned or sold.

(d)
Sponsor management fees consist of fees and expenses paid to J.H. Whitney under the management services agreement. We terminated this agreement in connection with the completion of the IPO during fiscal year 2012.

(e)
Gain on insurance settlements consists of proceeds in excess of the net book value of assets lost and related costs from property insurance claims at restaurants temporarily closed due to hurricane damage, flooding and/or foundational issues and other insurance recoveries.

(f)
Restatement expenses consists of non-recurring expenses related to our restatement that was completed in October 2012.

(g)
Pre-opening costs include expenses directly associated with the opening of new restaurants and are incurred prior to the opening of a new restaurant. See Note 2 to our audited consolidated financial statements for additional details.

(h)
Transaction costs consist of fees and expenses related to corporate transactions such as debt or equity issuances, including the IPO, amendments to debt agreements or acquisitions.

(i)
Stock-based compensation consists of expense for stock-based compensation awards, which is equal to the fair value of the awards at grant date, incurred ratably over the requisite service period.

(j)
Other expenses consist of costs related to abandoned new restaurant developments, fees payable to the agent under historic credit facilities, and compensation and expenses paid to certain members of our board of directors and prior to the IPO, the management committee of our former parent company, JCS Holdings.
(6)
Adjusted EBITDA margin is defined as the ratio of Adjusted EBITDA to total revenues. We present Adjusted EBITDA margin because it is used by management as a performance measurement of Adjusted EBITDA generated from total revenues. See footnote 5 above for a discussion of Adjusted EBITDA as a non-GAAP measurement and a reconciliation of net income to EBITDA and Adjusted EBITDA.

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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

        The unaudited pro forma combined condensed financial statements for the year ended December 31, 2012 and the twenty-six weeks ended July 1, 2013 were derived by applying pro forma adjustments to the historical consolidated financial statements of Ignite and Romano's Macaroni Grill. The pro forma adjustments are described in the accompanying notes presented below.

        On April 9, 2013, Ignite completed the acquisition of Macaroni Grill from Golden Gate Capital, management and other investors (collectively, the "Sellers"). The aggregate acquisition price paid at closing was approximately $60.8 million in cash, consisting of $54.1 million paid directly to the Sellers and $6.7 million paid to other third parties related to outstanding indebtedness and transaction-related expenses of the Sellers, subject to a working capital adjustment.*

        The unaudited pro forma combined condensed statement of operations for the fiscal year ended December 31, 2012 gives effect to (i) the IPO in May 2012 and to the application of a portion of the net proceeds from the IPO to reduce outstanding indebtedness, (ii) the debt refinancing transaction that occurred in October 2012, and (iii) Ignite's acquisition of Macaroni Grill and related financing transaction as if each had occurred on the first day of fiscal year 2012. The pro forma adjustments related to the acquisition of Macaroni Grill give effect to pro forma events that are (1) directly attributable to the acquisition and the related financing transaction, (2) factually supportable, and (3) with respect to the income statement, expected to have a continuing impact on the combined results of Ignite and Macaroni Grill. Ignite's statement of operations information for the fiscal year ended December 31, 2012 was derived from its audited consolidated statement of operations for the fiscal year ended December 31, 2012 included in this prospectus and Ignite's statement of operations information for the twenty-six weeks ended July 1, 2013 was derived from its unaudited consolidated statement of operations for the twenty-six weeks ended July 1, 2013 included in this prospectus. Macaroni Grill's statement of operations information for the twelve months ended December 26, 2012 was derived by adding its unaudited statement of operations for the six months ended December 26, 2012 to its audited statement of operations for the year ended June 27, 2012 and then subtracting its unaudited statement of operations for the six months ended December 28, 2011. Macaroni Grill's audited statement of operations for the year ended June 27, 2012 is included in this prospectus, and its unaudited statements of operations for the six months ended December 28, 2011 and December 26, 2012 are included in our Current Report on Form 8-K/A filed with the SEC on June 25, 2013, which is incorporated by reference into this prospectus. Macaroni Grill's statement of operations information for the period from December 27, 2012 through April 8, 2013 was derived from its unaudited statement of operations for the period from June 28, 2012 through April 8, 2013, which includes the period from December 27, 2012 through April 8, 2013. The unaudited pro forma combined condensed financial statements should be read in conjunction with the accompanying notes to the unaudited pro forma combined condensed financial statements and the historical consolidated financial statements and accompanying notes of Ignite and Macaroni Grill for the applicable periods.**

        The unaudited pro forma combined condensed financial statements are presented for informational purposes only and do not purport to represent the combined company's actual financial condition or results of operations if such transactions had been completed as of the dates or for the periods indicated above or that may be achieved as of any future date or for any future period. The pro forma adjustments related to the acquisition are based on preliminary estimates and information available at the time of the preparation of this prospectus. Differences between these preliminary estimates and the final acquisition accounting will occur, including in connection with the final

   


*
Pro forma balance sheet information omitted as Amendment No. 1 will include a balance sheet for the Company as of July 1, 2013, which will reflect the Macaroni Grill acquisition.

**
Pro forma statement of operations through July 1, 2013 to be updated in Amendment No. 1 to this Registration Statement on Form S-1.

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determination of working capital and finalization of the valuation of the acquired assets and assumed liabilities, and these differences could have a material impact on the accompanying unaudited pro forma combined condensed financial statements and the combined company's future results of operations and financial position.

        The unaudited pro forma combined condensed financial statements do not reflect any cost savings, operating synergies or revenue enhancements that the combined company may achieve as a result of the acquisition, the costs to combine the operations of Ignite and Macaroni Grill or the costs necessary to achieve these cost savings, operating synergies and revenue enhancements.

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IGNITE RESTAURANT GROUP, INC.
Unaudited Pro Forma Combined Condensed Statement of Operations
For the Fiscal Year Ended December 31, 2012
(in thousands, except earnings per share)

 
   
  Pro Forma Adjustments for
Transactions Prior to the Acquisition
   
   
   
 
 
   
   
  Pro Forma
Adjustments
Related to the
Acquisition
   
 
 
  Historical
Ignite
  IPO   Debt
Refinancing
  Pro Forma
Ignite
  Historical
Macaroni
Grill(1)
  Pro Forma
Combined
 

Revenues

  $ 465,056               $ 465,056   $ 388,004         $ 853,060  

Cost and expenses

                                           

Restaurant operating costs and expenses

                                           

Cost of sales

    145,451                 145,451     104,160           249,611  

Labor expenses

    127,331                 127,331     128,055           255,386  

Occupancy expenses

    33,846                 33,846     30,697     (191) (7)   64,352  

Other operating expenses

    81,219                 81,219     111,689           192,908  

General and administrative

    31,725     (1,388) (3)         30,337     25,116     (1,406) (8)   54,047  

Depreciation and amortization

    18,572                 18,572     6,276     2,125 (7)   26,973  

Pre-opening costs

    3,871                 3,871     263           4,134  

Restaurant impairments and closures

    115                 115     706           821  

Loss on disposal of property and equipment

    2,296                 2,296               2,296  
                               

Total costs and expenses

    444,426     (1,388 )       443,038     406,962     528     850,528  
                               

Income from operations

    20,630     1,388         22,018     (18,958 )   (528 )   2,532  

Interest income (expense), net

    (9,366 )   2,090 (4)   5,784 (6)   (1,492 )   (162 )   (3,179) (9)   (4,833 )

Gain (loss) on insurance settlements

    (799 )               (799 )   3,199           2,400  
                               

Income (loss) before income taxes

    10,465     3,478     5,784     19,727     (15,921 )   (3,707 )   99  

Income tax expense (benefit)

    1,751     1,356 (2)   2,256 (2)   5,363     (2,461 )   (1,446) (2)   (2,193 )

                                  (3,649) (10)      
                               

Net income (loss)

  $ 8,714   $ 2,122   $ 3,528   $ 14,364   $ (13,460 ) $ 1,388   $ 2,292  
                               

Net income (loss) per share

                                           

Basic

  $ 0.37               $ 0.56               $ 0.09  

Diluted

  $ 0.37               $ 0.56               $ 0.09  

Weighted average shares outstanding

                                           

Basic

    23,328                 25,624 (5)               25,624  

Diluted

    23,329                 25,625 (5)               25,625  

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Unaudited Pro Forma Combined Condensed Statement of Operations (for the fiscal year ended December 31, 2012):

General

IPO

Elimination of the historical interest expense

  $ (910 )

Elimination of the historical amortization of debt issuance costs

    (126 )

Elimination of historical write-off of unamortized debt issuance costs

    (1,054 )
       

Net pro forma adjustment to interest expense for IPO

  $ (2,090 )
       

Debt Refinancing

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Pro forma interest expense of the new credit facility

  $ 1,164  

Elimination of the historical interest expense

    (3,989 )

Decrease in amortization of debt issuance costs

    (732 )

Elimination of historical write-off of unamortized debt issuance costs

    (2,227 )
       

Net pro forma adjustment to interest expense for the debt refinancing

  $ (5,784 )
       

Pro Forma Adjustments Related to the Acquisition

Pro forma interest expense on the amended and restated credit facility

  $ 4,085  

Elimination of interest expense on the October 2012 debt refinancing

    (1,164 )

Pro forma amortization of debt issuance costs on the April 2013 debt refinancing

    643  

Elimination of historical amortization of debt issuance costs

    (328 )

Pro forma interest expense of Macaroni Grill using Ignite's amended and restated (April 2013) credit facility

    105  

Elimination of historical interest expense of Macaroni Grill related to its prior credit facility

    (162 )
       

Net pro forma adjustment to interest expense for the acquisition

  $ 3,179  
       

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IGNITE RESTAURANT GROUP, INC.
Unaudited Pro Forma Combined Condensed Statement of Operations
For the Twenty-Six Weeks Ended July 1, 2013
(in thousands, except earnings per share)

 
  Historical
Ignite
  Historical
Macaroni
Grill(1)
  Pro Forma
Adjustments
Related to the
Acquisition
  Pro Forma
Combined
 

Revenues

  $     $                

Cost and expenses

                         

Restaurant operating costs and expenses

                         

Cost of sales

                         

Labor expenses

                         

Occupancy expenses

                620 (3)      

Other operating expenses

                         

General and administrative

                (358) (4)      

Depreciation and amortization

                283 (3)      

Pre-opening costs

                         

Restaurant impairments and closures

                         

Loss on disposal of property and equipment

                         
                   

Total costs and expenses

                545        
                   

Income from operations

                         

Interest income (expense), net

                (545) (5)      

Gain (loss) on insurance settlements

                (931 )      
                   

Income (loss) before income taxes

                (1,476 )      

Income tax expense (benefit)

                (576) (2)      

                (2,827) (6)      
                   

Net income (loss)

  $     $       1,927        
                   

Net income (loss) per share

                         

Basic

                         

Diluted

                         

Weighted average shares outstanding

                         

Basic

                         

Diluted

                         

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Unaudited Pro Forma Combined Condensed Statement of Operations (for the twenty-six weeks ended July 1, 2013):

General

Pro Forma Adjustments Related to the Acquisition

Pro forma interest expense on the amended and restated credit facility including Macaroni Grill's use of Ignite's amended and restated credit facility

  $ 1,197  

Elimination of interest expense on the October 2012 debt refinancing

    (349 )

Pro forma amortization of debt issuance costs on the April 2013 debt refinancing

    172  

Elimination of historical amortization of debt issuance costs

    (74 )

Elimination of historical interest expense of Macaroni Grill related to its prior credit facility

    (20 )
       

Net pro forma adjustment to interest expense for the acquisition

  $ 931  
       

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

        You should read the following discussion together with "Selected Historical Consolidated Financial and Operating Data" and the historical financial statements and related notes included elsewhere in this prospectus. The statements in this discussion regarding industry outlook, our expectations regarding our future performance, liquidity and capital resources and other non-historical statements in this discussion are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in "Risk Factors" and "Forward-Looking Statements" included in this prospectus. Our actual results may differ materially from those contained in or implied by any forward-looking statements.

        Our fiscal year ends on the Monday nearest to December 31 of each year. Fiscal years 2012 and 2011 were 52-week years, while fiscal year 2010 was a 53-week year. Prior to fiscal year 2013, the first three quarters of our fiscal year consisted of 12 weeks and our fourth quarter consisted of 16 weeks for 52-week fiscal years and 17 weeks for 53-week fiscal years. Commencing in fiscal year 2013, we changed our quarterly accounting periods to be comprised of 13 weeks, except for 53-week fiscal years for which the fourth quarter will be comprised of 14 weeks. While the financial results for the quarter ended April 1, 2013 are reflected on a 13-week period basis, the financial results for the quarter ended March 26, 2012 are reflected on a 12-week period basis because it was impracticable to recast on a 13-week period basis. Due to the timing of our recent acquisition of Romano's Macaroni Grill, the results of operations of Romano's Macaroni Grill are not yet included in our historical financial and operating data contained in this prospectus, including this "Management's Discussion and Analysis of Financial Condition and Results of Operations."

Overview

        As of April 1, 2013, Ignite Restaurant Group, Inc. operated two restaurant brands, Joe's Crab Shack and Brick House Tavern + Tap. Each of our restaurant brands offers a variety of high-quality food in a distinctive, casual, high-energy atmosphere. Joe's Crab Shack and Brick House Tavern + Tap operate in a diverse set of markets across the United States. As of April 1, 2013, we owned and operated 131 Joe's Crab Shack and 15 Brick House restaurants in 33 states.

        Joe's Crab Shack is an established, national chain of casual seafood restaurants. Joe's serves a variety of high-quality seafood items, with an emphasis on crab. Joe's is a high-energy, family-friendly restaurant that encourages guests to "roll up your sleeves and crack into some crab." Brick House Tavern + Tap is a casual restaurant brand that provides guests an elevated experience appropriate for every day usage.

        On April 9, 2013, we completed the acquisition of Romano's Macaroni Grill for an aggregate purchase price of approximately $60.8 million in cash, consisting of $54.1 million paid directly to the Sellers and $6.7 million paid to other third parties related to outstanding indebtedness and transaction-related expenses of the Sellers, subject to a working capital adjustment. The acquisition includes 186 company-owned and twelve franchised restaurants across 36 states and Puerto Rico as well as twelve additional franchised units throughout nine foreign countries. For the twelve months ended December 31, 2012, Macaroni Grill generated $388.0 million in revenues.

        On July 18, 2012, we announced that, following an internal assessment of our lease accounting policies, we had determined it necessary to correct non-cash related errors related to our accounting treatment of certain leases, and we commenced a detailed review of our historical accounting for fixed assets and related depreciation expense in prior periods as a private company. Following the completion of this review, we restated our previously issued financial statements as of January 3, 2011 and January 2, 2012 and for the years ended December 28, 2009, January 3, 2011 and January 2, 2012 and as of March 26, 2012 and for the twelve week periods ended March 28, 2011 and March 26, 2012.

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Outlook

        We believe that a significant portion of the casual dining industry, particularly the traditional bar & grill segment, has become undifferentiated and the competitive landscape presents a significant growth opportunity for distinctive casual dining restaurants. Similar to the way the bar & grill segment emerged as an alternative to traditional family dining restaurants in the 1990s, we believe that distinctive casual dining restaurants like ours are now positioned to capture market share from conventional bar & grill restaurants. We intend to continue to position our restaurants to capitalize on that trend by constantly refining our brands, elevating food and service, and offering an aspirational experience to our guests. We expect that the casual dining segment will follow broader macroeconomic trends. However, over the past three fiscal years, we have substantially outperformed the rest of the casual dining segment in same store sales performance. We expect the factors above will continue to position our restaurant businesses favorably against our casual dining competitors.

        Our acquisition of Macaroni Grill, with 186 company-owned and 24 franchised units, more than doubled our existing restaurant count. Due to the timing of the closing in the second quarter of 2013 and the acquisition-related costs, we do not expect Macaroni Grill to be accretive to earnings until 2014. We expect to incur approximately $8.7 million in acquisition-related costs including legal, accounting and bank fees, as well as specific integration costs such as relocation and severance. Approximately $3.5 million of these costs, primarily related to debt issuance cost and hardware and software investments to support the integration, will be capitalized. The remaining acquisition-related costs, primarily related to legal, accounting and severance, will be expensed as incurred. We expensed $1.0 million of acquisition-related costs in the first quarter of fiscal year 2013.

        During the thirteen weeks ended April 1, 2013, we opened two Joe's Crab Shack restaurants, one of which was converted from a Brick House Tavern + Tap. Subsequent to the end of the current quarter we opened two additional Joe's Crab Shack restaurants. For the remainder of the fiscal year, we expect to open as many as nine more new restaurants, a vast majority of which will be new Joe's Crab Shack restaurants, and converting as many as three existing restaurants to either a Joe's Crab Shack or a Brick House Tavern + Tap. With the acquisition of Macaroni Grill, we are evaluating our current restaurant development options.

Key Performance Indicators

        In assessing the performance of our business, we consider a variety of performance and financial measures. The key measures for determining how our business is performing are comparable restaurant sales growth, average weekly sales, restaurant operating weeks, average check, average unit volume and number of restaurant openings.

        Comparable restaurant sales growth reflects the change in year-over-year sales for the comparable restaurant base. We define the comparable restaurant base to include those restaurants open for at least 104 weeks, or approximately 24 months. As of the fiscal years ended January 2, 2012 and December 31, 2012 and the thirteen weeks ended April 1, 2013, there were 114, 123 and 126 restaurants, respectively, in our comparable restaurant base. Comparable restaurant sales growth can be generated by an increase in guest counts and/or by increases in the average check amount resulting from a shift in menu mix and/or increase in price. This measure highlights performance of existing restaurants as the impact of new restaurant openings is excluded.

        Average weekly sales is a key measure of individual restaurant economic performance of new and existing restaurants. Average weekly sales reflects total sales of all restaurants divided by restaurant

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operating weeks, which is the aggregate number of weeks that restaurants are in operation over a specified period of time. This measure is subject to seasonality for periods less than one year.

        Restaurant operating weeks is the aggregate number of weeks that our restaurants are in operation over a specific period of time.

        Average check is calculated for Joe's Crab Shack by dividing net sales by guest counts for a given time period. Management uses this indicator to analyze the dollars spent in our Joe's Crab Shack restaurants per guest. This measure aids management in identifying trends in guest preferences, as well as the effectiveness of menu price increases and other menu changes.

        Guest counts represent the estimated number of guests served in our Joe's Crab Shack restaurants. The count is estimated based on the number of entrées sold. Our estimates may vary from actual guest counts due to the variability in the level of sharing of certain entrée items on our menu. Given the significant level of alcohol sales and appetizer sales at Brick House, guest count is more difficult to quantify and therefore, we do not currently calculate average check as a key performance indicator for that brand. We expect to calculate average check for Macaroni Grill using a similar methodology as Joe's Crab Shack.

        Average unit volume represents the average sales for restaurants included in the comparable restaurant base for a given time period, typically annually. Average unit volume reflects total sales for restaurants in our comparable restaurant base divided by the number of restaurants in our comparable restaurant base. This measure is subject to seasonality for periods less than one year.

        Number of restaurant openings reflects the number of restaurants opened or converted during a particular reporting period. Before we open new restaurants or convert existing restaurants, we incur pre-opening costs, which are defined below. Typically, new restaurants open with an initial start-up period of higher than normalized sales volumes, which subsequently decrease to stabilized levels. While sales volumes are generally higher during the initial opening period, new restaurants typically experience normal inefficiencies in the form of higher cost of sales, labor and other direct operating expenses for several months and as a result, restaurant operating margins are generally lower during the start-up period of operation. The number and timing of restaurant openings has had, and is expected to continue to have, an impact on our results of operations.

Key Financial Definitions

        Revenues primarily consist of food and beverage sales, net of promotional allowances, discounts and employee meals. Revenues are influenced by new restaurant openings, comparable restaurant sales and total operating weeks.

        Cost of sales consists primarily of food and beverage related costs. The components of cost of sales are variable in nature, change with sales volume, are influenced by menu mix and are subject to increases or decreases based on fluctuations in commodity costs.

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        Labor expenses include all restaurant-level management and hourly labor costs, including salaries, wages, benefits and performance incentives, payroll taxes and other indirect labor costs.

        Occupancy expenses include fixed and variable portions of rent, common area maintenance and property taxes.

        Other operating expenses include all other restaurant-level operating costs, the major components of which are operating supplies, utilities, repair and maintenance costs, marketing and advertising costs and credit card fees.

        General and administrative expense is comprised of expenses associated with corporate and administrative functions that support the development and operations of restaurants, including multi-unit management and Restaurant Support Center staff compensation and benefits, travel expenses, Restaurant Support Center costs, stock compensation costs, legal and professional fees, costs related to abandoned new restaurant development sites and other related corporate costs.

        Depreciation and amortization includes the depreciation of fixed assets, capitalized leasehold improvements and amortization of intangibles.

        Pre-opening costs consist of costs incurred prior to opening a new restaurant and are made up primarily of manager salaries, employee payroll and other costs related to training and preparing new restaurants for opening.

        We review long-lived assets, such as property and equipment and intangibles, for impairment when events or circumstances indicate the carrying value of the assets may not be recoverable and record an impairment charge when appropriate. Expenses incurred following the closure of restaurants are also included.

        Loss on disposal of property and equipment represents the net book value of property and equipment less proceeds received, if applicable, on assets abandoned or sold. These losses are related to normal disposals in the ordinary course of business, along with disposals related to restaurant closures and selected restaurant remodeling activities.

        Interest expense, net consists primarily of interest expense related to our debt and amortization of debt issuance costs, net of interest income.

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        Gain on insurance settlements represents proceeds received from insurance claims in excess of the net book value of assets lost and related costs.

Change in Quarterly Accounting Periods

        As described above, in the first quarter of fiscal year 2013, we changed our quarterly accounting periods from 12 weeks for the first three quarters and 16 weeks for the fourth quarter to all 13-week quarters, except for 53-week fiscal years where the fourth quarter changes from 17 weeks to 14 weeks. We believe that a reporting basis comprised of four equal 13-week quarters is a more typical reporting format comparable to most companies in the casual and family dining segment of the restaurant industry, and is easier to understand for our investors.

        In addition, Macaroni Grill uses the four equal 13-week quarterly reporting periods. We believe that the Macaroni Grill quarterly reporting periods are more appropriate for the post-acquisition consolidated entity. The financial results for the quarter ended March 26, 2012 are reflected on a 12-week period basis because it was impracticable to recast on a 13-week period basis. The only financial information we were able to recast on a 13-week basis for the first quarter of 2012 was revenues. We also report restaurant operating weeks and change in comparable restaurant sales for the comparable 13-week period of fiscal year 2012. We believe it is impracticable to recast other financial information because we do not have weekly cutoff procedures that would allow us to distribute expenses or cash flows to the appropriate periods in order to report the prior year on a 13-week basis.

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Results of Operations

        The following table presents the consolidated statement of operations for the past three fiscal years, the twelve weeks ended March 26, 2012 and the thirteen weeks ended April 1, 2013 expressed as a percentage of revenues.

 
   
   
   
  Twelve
Weeks
Ended
  Thirteen
Weeks
Ended
 
 
  Fiscal Year*  
 
  March 26,
2012
  April 1,
2013
 
 
  2010   2011   2012  

Revenues

    100.0 %   100.0 %   100.0 %   100.0 %   100.0 %

Restaurant operating costs and expenses

                               

Cost of sales

    29.6     31.5     31.3     31.8     30.7  

Labor expenses

    27.9     27.6     27.4     27.1     27.0  

Occupancy expenses

    7.9     7.6     7.3     7.3     7.2  

Other operating expenses

    18.3     17.8     17.5     18.0     18.4  

General and administrative

    5.9     5.8     6.8     6.0     8.7  

Depreciation and amortization

    3.8     4.0     4.0     3.8     4.1  

Pre-opening costs

    1.3     1.2     0.8     1.5     0.9  

Restaurant impairments and closures

    0.3     0.1     0.0     0.0     0.0  

Loss on disposal of property and equipment

    0.9     0.3     0.5     0.1     0.2  
                       

Total costs and expenses

    95.9 %   95.8 %   95.6 %   95.6 %   97.3 %
                       

Income from operations

    4.1     4.2     4.4     4.4     2.7  

Interest expense, net

    (1.1 )   (2.3 )   (2.0 )   (1.9 )   (0.3 )

Gain on insurance settlements

    0.2     0.3     (0.2 )       0.3  
                       

Income before income taxes

    3.2 %   2.2 %   2.3 %   2.4 %   2.7 %

Income tax expense

    0.4     (0.8 )   0.4     0.6     0.8  
                       

Net income

    2.8 %   3.0 %   1.9 %   1.8 %   1.8 %
                       

*
The percentages reflected are subject to rounding adjustments.

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        The following table sets forth additional operating information that we use in assessing our performance as of fiscal years 2012, 2011 and 2010:

 
  Fiscal Year  
 
  2010   2011   2012  

Selected Other Data(1)(2):

                   

Number of restaurants open (end of period):

                   

Joe's Crab Shack

    113     119     129  

Brick House Tavern + Tap

    13     16     15  
               

Total restaurants

    126     135     144  

Average weekly sales (in thousands)

  $ 54   $ 59   $ 63  

Restaurant operating weeks

    6,499     6,871     7,367  

Comparable Restaurant Data(1)(2):

                   

Comparable restaurant base (end of period)

    111     114     123  

Average unit volume (in thousands)

  $ 2,810   $ 2,970   $ 3,050  

Change in comparable restaurant sales

    4.9 %   6.9 %   2.2 %

Average check (Joe's only)

  $ 22.00   $ 23.07   $ 23.80  

(1)
Includes both Joe's Crab Shack and Brick House Tavern + Tap unless otherwise noted.

(2)
See the definitions of key performance indicators beginning on page 58.

        The following table sets forth additional operating information that we use in assessing our performance for the thirteen weeks ended April 1, 2013 and twelve weeks ended March 26, 2012:

 
  Twelve
Weeks
Ended
March 26,
2012
  Thirteen
Weeks
Ended
April 1,
2013
 

Selected Other Data(1)(2):

             

Number of restaurants open (end of period):

             

Joe's Crab Shack

    122     131  

Brick House Tavern + Tap

    16     15  
           

Total restaurants

    138     146  

Average weekly sales (in thousands):

             

Joe's Crab Shack

  $ 64   $ 64  

Brick House Tavern + Tap

  $ 55   $ 60  

Restaurant operating weeks(3):

             

Joe's Crab Shack

    1,446     1,677  

Brick House Tavern + Tap

    192     195  

Comparable Restaurant Data(1)(2):

             

Comparable restaurant base (end of period):

             

Joe's Crab Shack

    111     112  

Brick House Tavern + Tap

    7     14  
           

Total restaurants

    118     126  

Change in comparable restaurant sales(4):

             

Joe's Crab Shack

    5.4 %   (2.0 )%

Brick House Tavern + Tap

    2.0 %   3.9 %

Total restaurants

    5.3 %   (1.4 )%

(1)
Includes both Joe's Crab Shack and Brick House Tavern + Tap unless otherwise noted.

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(2)
See the definitions of key performance indicators beginning on page 58.

(3)
On a thirteen week comparable first quarter for fiscal year 2012, restaurant operating weeks would have been 1,569 and 208 for Joe's Crab Shack and Brick House Tavern + Tap, respectively.

(4)
Comparable restaurant sales for the first quarter of 2013 compares the thirteen weeks ended April 1, 2013 to the comparable thirteen week period of 2012.

Thirteen Weeks Ended April 1, 2013 Compared to Twelve Weeks Ended March 26, 2012

        With the change in our fiscal quarters, as noted above, the first quarter of 2013 represents 13 weeks of activity and the first quarter of 2012 represents only 12 weeks of activity. As such, the two quarters are not comparable. We did not believe it was practicable to recast the prior year quarter to 13 weeks. The only financial information that we were able to recast on a 13-week basis for the first quarter of 2012 was revenues. We also report restaurant operating weeks and change in comparable restaurant sales for the comparable 13-week period of fiscal year 2012. The following are highlights of our performance for the thirteen weeks ended April 1, 2013 compared to the twelve weeks ended March 26, 2012:

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        The following table sets forth information comparing the components of net income for the thirteen weeks ended April 1, 2013 and the twelve weeks ended March 26, 2012 (dollars in thousands).

 
  Twelve Weeks
Ended
March 26, 2012
  Thirteen Weeks
Ended
April 1, 2013
  Increase
(Decrease)
 
 
  (dollars in thousands)
 

Revenues

  $ 103,430     100.0 % $ 118,240     100.0 % $ 14,810     14.3 %

Costs and expenses

                                     

Restaurant operating costs and expenses

                                     

Cost of sales

    32,915     31.8     36,321     30.7     3,406     10.3  

Labor expenses

    28,047     27.1     31,907     27.0     3,860     13.8  

Occupancy expenses

    7,532     7.3     8,554     7.2     1,022     13.6  

Other operating expenses

    18,568     18.0     21,804     18.4     3,236     17.4  

General and administrative

    6,223     6.0     10,291     8.7     4,068     65.4  

Depreciation and amortization

    3,949     3.8     4,813     4.1     864     21.9  

Pre-opening costs

    1,528     1.5     1,091     0.9     (437 )   (28.6 )

Restaurant impairments and closures

    49     0.0     17     0.0     (32 )   (65.3 )

Loss on disposal of property and equipment

    89     0.1     195     0.2     106     119.1  
                           

Total costs and expenses

    98,900     95.6     114,993     97.3     16,093     16.3  
                           

Income from operations

    4,530     4.4     3,247     2.7     (1,283 )   (28.3 )

Interest expense, net

    (1,997 )   (1.9 )   (395 )   (0.3 )   1,602     (80.2 )

Gain on insurance settlements

            300     0.3     300     100.0  
                           

Income before income taxes

    2,533     2.4     3,152     2.7     619     24.4  

Income tax expense

    648     0.6     967     0.8     319     49.2  
                           

Net income

  $ 1,885     1.8 % $ 2,185     1.8 % $ 300     15.9 %
                           

        As reported, revenues were $118.2 million during the thirteen weeks ended April 1, 2013, an increase of $14.8 million, or 14.3%, compared to revenues of $103.4 million during the twelve weeks ended March 26, 2012. If we used our revised quarterly reporting period in the prior year, revenues would have been $113.1 million during the thirteen weeks ended April 2, 2012. This would have resulted in an increase of $5.1 million, or 4.5% in the current year period. This increase is primarily from new restaurant development partially offset by a decrease of 1.4% in comparable restaurant sales when comparing the thirteen weeks ended April 1, 2013 to the revised 13-week quarterly reporting period in the prior year.

        Revenues at Joe's Crab Shack increased 4.9% to $106.6 million in fiscal year 2013 versus $101.6 million in the comparable 13 weeks of the prior year. This increase is related to new store openings partially offset by a 2.0% decrease in comparable restaurant sales. The comparable restaurant sales decrease is comprised of a 3.8% decrease in guest count partially offset by a 1.0% increase in pricing and a 0.8% mix benefit.

        Brick House Tavern + Tap revenues increased 0.8% to $11.6 million in fiscal year 2013 versus $11.5 million in the comparable 13 weeks of the prior year due to a 3.9% increase in comparable restaurant sales partially offset by a store that was closed and converted to a Joe's Crab Shack. The comparable restaurant sales increase is comprised of a 2.4% increase in pricing and a 1.5% increase from mix and traffic.

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        Restaurant operating costs and expenses increased over the prior year due to the additional week in the current year quarter and the increased operating weeks from new store openings. With the change in our fiscal quarters, as described herein, we do not believe a comparison of restaurant operating costs and expenses in the 13-week first quarter of fiscal year 2013 to the 12-week first quarter of fiscal year 2012 provides meaningful information to our investors. However, we believe that the restaurant operating costs and expenses as a percentage of revenues do provide a meaningful basis for comparison when comparing the financial results for the 13 weeks ended April 1, 2013 to the twelve weeks ended March 26, 2012. As a percent of revenue, cost of sales decreased from 31.8% to 30.7% primarily due to favorable shellfish pricing and a continued mix move to more favorable margin items. Labor expenses and occupancy expenses as a percent of revenue remained fairly consistent period over period at 27.0% and 7.2%, respectively. Other operating expenses increased as a percentage of revenue from 18.0% to 18.4% primarily due to higher national marketing expenses related to our new advertising campaign.

        General and administrative expense increased by $4.1 million, or 65.4%, from $6.2 million during the twelve weeks ended March 26, 2012 to $10.3 million during the thirteen weeks ended April 1, 2013. As a percent of revenue, expenses increased from 6.0% to 8.7%. The increase from the prior year is primarily due to $1.1 million from higher professional fees related to being a public-company, $1.0 million of expenses related to the Macaroni Grill acquisition, $208 thousand from higher stock-based compensation expense, and the impact of the additional week in the current year quarter.

        Depreciation and amortization expense increased by $864 thousand, or 21.9%, from $3.9 million during the twelve weeks ended March 26, 2012 to $4.8 million during the thirteen weeks ended April 1, 2013. As a percent of revenue, depreciation and amortization increased from 3.8% to 4.1%. The increase from the prior year is mainly due to higher depreciable base from new restaurants opened and an extra week of depreciation and amortization expense in the current year.

        Pre-opening costs decreased by $437 thousand, or 28.6%, from $1.5 million during the twelve weeks ended March 26, 2012 to $1.1 million during the thirteen weeks ended April 1, 2013. We opened one new restaurant and converted one restaurant during the thirteen weeks ended April 1, 2013 and opened three restaurants during the twelve weeks ended March 26, 2012. We incurred pre-opening cost in both periods for other openings in progress during the period.

        Interest expense, net decreased by $1.6 million, or 80.2%, from $2.0 million during the twelve weeks ended March 26, 2012 to $395 thousand during the thirteen weeks ended April 1, 2013 primarily due to the lower interest rate and lower average debt balances as a result of the pay down of debt with proceeds from our IPO in May 2012 and the October 2012 refinancing.

        Income tax expense increased by $319 thousand, or 49.2% from $0.6 million during the twelve weeks ended March 26, 2012 to $1.0 million during the thirteen weeks ended April 1, 2013. The effective income tax rate increased from 25.6% to 30.7% primarily due to a lower benefit from the

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FICA tax credit in the thirteen weeks ended April 1, 2013 and certain nondeductible Macaroni Grill transaction costs.

        As a result of the foregoing, net income increased by $300 thousand, or 15.9%, from $1.9 million for the twelve weeks ended March 26, 2012 to $2.2 million for the thirteen weeks ended April 1, 2013.

Fiscal Year 2012 (52 Weeks) Compared to Fiscal Year 2011 (52 Weeks)

        The following are highlights of our performance for fiscal year 2012 compared to fiscal year 2011:

        The following table sets forth information comparing the components of net income for the fiscal year ended December 31, 2012 and January 2, 2012.

 
  Fiscal Year    
   
 
 
  2011   2012   Increase (Decrease)  
 
  (dollars in thousands)
 

Revenues

  $ 405,243     100.0 % $ 465,056     100.0 % $ 59,813     14.8 %

Costs and expenses

                                     

Restaurant operating costs and expenses          

                                     

Cost of sales

    127,607     31.5     145,451     31.3     17,844     14.0  

Labor expenses

    111,721     27.6     127,331     27.4     15,610     14.0  

Occupancy expenses

    30,708     7.6     33,846     7.3     3,138     10.2  

Other operating expenses

    72,296     17.8     81,219     17.5     8,923     12.3  

General and administrative

    23,556     5.8     31,725     6.8     8,169     34.7  

Depreciation and amortization

    16,011     4.0     18,572     4.0     2,561     16.0  

Pre-opening costs

    4,855     1.2     3,871     0.8     (984 )   (20.3 )

Restaurant impairments and closures

    333     0.1     115     0.0     (218 )   (65.5 )

Loss on disposal of property and equipment

    1,295     0.3     2,296     0.5     1,001     77.3  
                           

Total costs and expenses

    388,382     95.8     444,426     95.6     56,044     14.4  
                           

Income from operations

    16,861     4.2     20,630     4.4     3,769     22.4  

Interest expense, net

    (9,215 )   (2.3 )   (9,366 )   (2.0 )   (151 )   1.6  

Gain on insurance settlements

    1,126     0.3     (799 )   (0.2 )   (1,925 )   (171.0 )
                           

Income before income taxes

    8,772     2.2     10,465     2.3     1,693     19.3  

Income tax expense

    (3,291 )   (0.8 )   1,751     0.4     5,042     (153.2 )
                           

Net income

  $ 12,063     3.0 % $ 8,714     1.9 % $ (3,349 )   (27.8 )%
                           

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        Revenues were $465.1 million for fiscal year 2012, an increase of $59.9 million, or 14.8%, compared to revenues of $405.2 million for fiscal year 2011. Comparable restaurant sales contributed $8.0 million, or 2.0%, of the total revenue increase, while non-comparable restaurants contributed $51.9 million, or 12.8%, of the total revenue increase. Comparable restaurant sales increased 2.2% as a result of 1.8% in pricing and 0.4% in guest count and mix impacts achieved through the execution of five distinct marketing campaigns with signature menu items driving a successful shift in menu mix toward our signature dishes. This has also increased our average weekly sales per restaurant from approximately $59 thousand to $63 thousand. Restaurant operating weeks increased from 6,871 in 2011 to 7,367 in 2012 due to net restaurant development.

        Cost of sales increased by $17.9 million, or 14.0%, from $127.6 million for fiscal year 2011 to $145.5 million for fiscal year 2012 primarily due to an increase in revenues. As a percentage of revenues, cost of sales decreased to 31.3% from 31.5% due primarily to favorable costs of crab and seafood items.

        We anticipate that cost of sales in our new restaurants will be higher than our mature restaurant base. This occurs as managers learn to optimally predict, order and make the signature menu items that our brands serve to our guests. We also anticipate that our strategy for opening restaurants will result in higher crab and lobster mix than our mature restaurant base. This increases total cost of goods while providing increased contribution. Additionally, significant number of restaurant openings in any period may have a material impact on cost of sales.

        Labor expenses increased by $15.6 million, or 14.0%, from $111.7 million for fiscal year 2011 to $127.3 million for fiscal year 2012 primarily due to incremental operating weeks. As a percentage of revenues, labor expenses decreased from 27.6% to 27.4% primarily due to leverage related to pricing and sales growth partially offset by increases in average wage rate and unemployment tax rates.

        Occupancy expenses increased by $3.1 million, or 10.2%, from $30.7 million for fiscal year 2011 to $33.8 million for fiscal year 2012 primarily due to new restaurant openings. As a percentage of revenues, occupancy expenses decreased from 7.6% to 7.3% due to leverage from higher unit volumes partially offset by increases in contingent rent.

        Other operating expenses increased by $8.9 million, or 12.3%, from $72.3 million for fiscal year 2011 to $81.2 million for fiscal year 2012 mainly due to new restaurant openings and higher national advertising spending. As a percentage of revenues, other operating expenses decreased from 17.8% to 17.5% mainly due to favorable debit card rates caused by recent legislation and favorable utility rates partially offset by increased spending in national televised marketing.

        General and administrative expenses increased by $8.1 million, or 34.7%, from $23.6 million for fiscal year 2011 to $31.7 million for fiscal year 2012 due primarily to nonrecurring restatement-related expenses of $1.9 million, and IPO-related expenses of $1.9 million, which includes $1.0 million in fees related to the termination of our management agreement with J.H. Whitney and $0.4 million in

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IPO-related cash bonuses. In addition, general and administrative expenses increased due to the addition of 11 new restaurants, legal and professional fees associated with being a public company, implementation of a stock-based compensation program, and increased staffing and travel expenses. As a percentage of revenues, general and administrative expenses increased from 5.8% to 6.8% primarily caused by the nonrecurring expenses related to our IPO and restatement.

        Depreciation and amortization expense increased by $2.6 million, or 16.0%, to $18.6 million for fiscal year 2012 from $16.0 million for fiscal year 2011 primarily due to a higher depreciable base from newly opened restaurants. As a percentage of revenue, depreciation and amortization was flat from last year at 4.0%.

        Pre-opening costs decreased by $1.0 million, or 20.3%, to $3.9 million for fiscal year 2012 from $4.9 million for fiscal year 2011 mainly due to the timing of scheduled restaurant openings and the decrease in average spending per restaurant opening due to improved efficiency in travel, hiring and training spending. We opened 11 new restaurants in both 2012 and 2011. We also incurred pre-opening costs in both years for restaurants opened in the subsequent fiscal year.

        Loss on disposal of property and equipment increased by $1.0 million to $2.3 million for fiscal year 2012 from $1.3 million for fiscal year 2011. The loss in fiscal year 2012 was primarily due to a $1.0 million write-off of property and equipment for one Joe's Crab Shack restaurant location that was closed in a prior year, $0.6 million in asset retirement losses for converted and remodeled restaurants, and replacement of restaurant equipment and facilities improvements. The loss in fiscal year 2011 was primarily due to a $0.6 million write-off of property and equipment for a Brick House location to be converted to a Joe's in fiscal year 2012, write-offs for abandoned remodel projects and $0.5 million in replacement of restaurant equipment and facilities improvement.

        Interest expense, net increased by $151 thousand, or 1.6%, primarily due to write-off of debt issuance costs related to refinancing and debt repayment transactions in fiscal years 2012 and 2011, amounting to approximately $3.3 million in fiscal year 2012 and $1.4 million in fiscal year 2011 and the lower interest capitalized of $0.3 million in fiscal year 2011 to $0.1 million in fiscal year 2012. This is offset by lower average debt balances and lower interest rates in fiscal year 2012 compared to fiscal year 2011 causing a decrease in interest expense of approximately $1.3 million. In addition, we recorded a $0.4 million expense related to the termination of our interest rate swap in fiscal year 2011.

        The loss on insurance settlements during fiscal year 2012 was caused by property damage write-off, business interruption losses and clean-up costs from Hurricane Sandy amounting to $1.0 million. These losses were partially offset by a $0.2 million final insurance recovery settlement related to hurricane damage sustained at one of our restaurants in fiscal year 2008. The gain in fiscal year 2011 was due to the receipt of insurance recoveries for property and business interruption losses that were recorded in prior years.

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        Income tax expense increased by $5.1 million from a $3.3 million income tax benefit in fiscal year 2011 to a $1.8 million income tax expense in fiscal year 2012 mainly caused by the higher pre-tax income and the release of a $4.7 million valuation allowance in fiscal year 2011. Excluding the effect of the release of the valuation allowance, the effective income tax rate increased from 15.6% in fiscal year 2011 to 16.7% in fiscal year 2012.

        As a result of the foregoing, net income decreased by $3.4 million, or 27.8%, to $8.7 million for fiscal year 2012 from $12.1 million for fiscal year 2011.

Fiscal Year 2011 (52 Weeks) Compared to Fiscal Year 2010 (53 Weeks)

        The following are highlights of our performance for fiscal year 2011 compared to fiscal year 2010:

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        The following table sets forth information comparing the components of net income for fiscal year 2011 and fiscal year 2010.

 
  Fiscal Year    
   
 
 
  2010   2011   Increase (Decrease)  
 
  (dollars in thousands)
 

Revenues

  $ 351,327     100.0 % $ 405,243     100.0 % $ 53,916     15.3 %

Costs and expenses

                                     

Restaurant operating costs and expenses          

                                     

Cost of sales

    103,981     29.6     127,607     31.5     23,626     22.7  

Labor expenses

    98,162     27.9     111,721     27.6     13,559     13.8  

Occupancy expenses

    27,715     7.9     30,708     7.6     2,993     10.8  

Other operating expenses

    64,382     18.3     72,296     17.8     7,914     12.3  

General and administrative

    20,719     5.9     23,556     5.8     2,837     13.7  

Depreciation and amortization

    13,190     3.8     16,011     4.0     2,821     21.4  

Pre-opening costs

    4,627     1.3     4,855     1.2     228     4.9  

Restaurant impairments and closures

    909     0.3     333     0.1     (576 )   (63.4 )

Loss on disposal of property and equipment

    3,242     0.9     1,295     0.3     (1,947 )   (60.1 )
                           

Total costs and expenses

    336,927     95.9     388,382     95.8     51,455     15.3  
                           

Income from operations

    14,400     4.1     16,861     4.2     2,461     17.1  

Interest expense, net

    (3,831 )   (1.1 )   (9,215 )   (2.3 )   (5,384 )   140.5  

Gain on insurance settlements

    589     0.2     1,126     0.3     537     91.2  
                           

Income before income taxes

    11,158     3.2     8,772     2.2     (2,386 )   (21.4 )

Income tax expense

    1,456     0.4     (3,291 )   (0.8 )   (4,747 )   (326.0 )
                           

Net income

  $ 9,702     2.8 % $ 12,063     3.0 % $ 2,361     24.3 %
                           

        Revenues were $405.2 million for fiscal year 2011, an increase of $53.9 million, or 15.3%, as compared to revenues of $351.3 million for fiscal year 2010. The revenue increase was driven by an increase in comparable restaurant sales and sales from non-comparable restaurants. Comparable restaurant sales and non-comparable restaurant sales contributed 4.9% and 10.4% of the total revenue increase, respectively. Comparable restaurant sales increased 6.9% for fiscal year 2011 compared to an increase of 4.9% for fiscal year 2010.

        Cost of sales increased $23.6 million, or 22.7%, to $127.6 million for fiscal year 2011, as compared to $104.0 million for fiscal year 2010 due to the growth in revenues from new restaurants and existing restaurants. As a percentage of revenues, cost of sales increased to 31.5% for fiscal year 2011 from 29.6% for fiscal year 2010. The increase in cost of sales as a percentage of revenues was primarily driven by the higher cost of crab and certain other commodities along with menu mix changes, which were partially offset by pricing and operating efficiency improvements. While the menu mix shift contributed to a higher cost of sales as a percentage of revenues, the shift yielded higher gross profit dollars.

        Labor expenses increased by $13.5 million, or 13.8%, to $111.7 million for fiscal year 2011 from $98.2 million for fiscal year 2010, primarily due to new restaurant openings and higher sales from the comparable restaurant base. As a percentage of revenues, labor expenses decreased to 27.6% for fiscal year 2011 from 27.9% for fiscal year 2010. The improvement was primarily due to better leveraging of restaurant management personnel and efficiencies gained from implementing a new labor scheduling software system, partially offset by higher incentive payouts.

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        Occupancy expenses increased by $3.0 million, or 10.8%, to $30.7 million for fiscal year 2011 from $27.7 million for fiscal year 2010, primarily due to new restaurant openings. As a percentage of revenues, occupancy expenses decreased to 7.6% for fiscal year 2011 from 7.9% for fiscal year 2010 primarily due to improved leverage relative to comparable restaurant sales growth.

        Other operating expenses increased by $7.9 million, or 12.3%, to $72.3 million for fiscal year 2011 from $64.4 million for fiscal year 2010 primarily due to new restaurant openings. As a percentage of revenues, other operating expenses decreased to 17.8% for fiscal year 2011 from 18.3% for fiscal year 2010, primarily due to improved leverage relative to comparable restaurant sales growth. As a percentage of revenue, restaurant supplies, repair and maintenance costs, utility costs, and marketing and advertising costs all decreased as a result of the improved leverage and were the main drivers of the decrease in operating costs relative to revenues.

        General and administrative expenses increased by $2.9 million, or 13.7%, to $23.6 million for fiscal year 2011 from $20.7 million for fiscal year 2010 primarily driven by higher personnel costs from increased Restaurant Support Center headcount to manage and support the increase in new restaurants, higher incentive expenses due to improved operating performance, and higher travel expenses due to restaurant development activity. As a percentage of revenues, general and administrative expenses decreased slightly to 5.8% for fiscal year 2011 from 5.9% for fiscal year 2010.

        Depreciation and amortization expense increased by $2.8 million, or 21.4%, to $16.0 million for fiscal year 2011 from $13.2 million for fiscal year 2010 primarily due to a higher depreciable base from new restaurants opened. As a percentage of revenues, depreciation and amortization increased to 4.0% for fiscal year 2011 from 3.8% for fiscal year 2010.

        Pre-opening costs increased by $0.3 million, or 4.9%, to $4.9 million for fiscal year 2011 from $4.6 million for fiscal year 2010. The increase was due to the timing of restaurant openings during 2011 and 2010. Eleven restaurants were opened during 2011 (including one conversion), and eleven restaurants were opened during 2010 (including one rebuild of an existing restaurant).

        There were no impairments in fiscal year 2011. Year-over-year impairment expense for fiscal year 2011 decreased by $0.3 million. Fiscal year 2011 restaurant closure expense of $0.3 million is a $0.3 million reduction on a year-over-year basis.

        Loss on disposal of property and equipment decreased by $1.9 million to $1.3 million for fiscal year 2011 from $3.2 million for fiscal year 2010. The loss in fiscal year 2011 was primarily due to a $0.6 million writeoff of property and equipment for a Brick House location to be converted to a Joe's in 2012, a closure of one Joe's Crab Shack restaurant, writeoffs for abandoned remodel projects and $0.5 million in replacement of restaurant equipment and facilities improvement. The loss in fiscal year 2010 was primarily due to the writeoff of property and equipment for two Joe's Crab Shack restaurant

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locations; one was razed and rebuilt due to the condition of the facility, while the other underwent construction to re-brand it as a Brick House restaurant and the replacement of restaurant equipment and facilities improvements.

        Interest expense, net increased by $5.4 million to $9.2 million for fiscal year 2011 from $3.8 million for fiscal year 2010 primarily due to the write-off of debt issuance costs related to the refinancing of our debt prior to the end of March 2011, the cost to terminate an interest rate swap agreement associated with that debt and the higher average outstanding debt balance.

        Gain on insurance settlements increased by $0.5 million due to an insurance claim for one restaurant that was severely flooded and rebuilt in 2010 and an additional $1.1 million gain recognized in fiscal year 2011 related to a restaurant damaged by a hurricane in late 2008.

        Income tax expense decreased by $4.8 million from $1.5 million income tax expense in fiscal year 2010 to $3.3 million income tax benefit in fiscal year 2011. The decrease is primarily due to the release of a $4.7 million deferred tax asset valuation allowance caused by our then current and expected future taxable position. Our assessment of the valuation allowance indicated that it is more likely than not that our deferred tax assets, which are primarily established for FICA credit carryforwards, would be realized, hence, the reversal of the valuation allowance and the consequent reduction in income tax expense.

        As a result of the foregoing, net income increased $2.4 million, or 24.3%, in fiscal year 2011 compared to fiscal year 2010.

Quarterly Results and Seasonality

        The following table sets forth certain unaudited financial and operating data in each fiscal quarter during fiscal years 2010, 2011 and 2012. The unaudited quarterly information includes all normal recurring adjustments that we consider necessary for a fair presentation of the information shown. This information should be read in conjunction with the audited consolidated and unaudited condensed consolidated financial statements and related notes thereto appearing elsewhere in this prospectus. There is a seasonal component to Joe's Crab Shack's business which typically peaks in the summer months (June, July and August) and slows in the winter months (November, December, January). Because of the seasonality of our business, results for any fiscal quarter are not necessarily indicative of the results that may be achieved for future fiscal quarters or for the full fiscal year. All quarterly periods presented below for fiscal years 2010, 2011, 2012 include 12 weeks, except for the fourth quarter of fiscal years 2011 and 2012, which included 16 weeks and the fourth quarter of fiscal year

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2010, which included 17 weeks. The quarterly period presented below for fiscal year 2013 includes 13 weeks, based on our recent change to our quarterly accounting periods, as described above.

 
  Fiscal Year 2010   Fiscal Year 2011   Fiscal Year 2012   Fiscal
Year
2013
 
 
  First
Quarter
  Second
Quarter
  Third
Quarter
  Fourth
Quarter
  First
Quarter
  Second
Quarter
  Third
Quarter
  Fourth
Quarter
  First
Quarter
  Second
Quarter
  Third
Quarter
  Fourth
Quarter
  First
Quarter
 

Number of restaurants open at end of period

    122     123     123     126     129     133     135     135     138     143     145     144     146  

Total revenues (in millions)

  $ 71.9   $ 88.5   $ 102.6   $ 88.3   $ 87.4   $ 103.2   $ 113.2   $ 101.4   $ 103.4   $ 120.0   $ 129.1   $ 112.6   $ 118.2  

Change in total comparable restaurant sales

    5.1 %   3.4 %   4.9 %   6.5 %   9.4 %   6.0 %   5.5 %   7.3 %   5.3 %   3.0 %   0.4 %   0.8 %   (1.4 )%
                                                       

Average weekly sales (in thousands)

  $ 50   $ 60   $ 69   $ 42   $ 57   $ 66   $ 70   $ 47   $ 63   $ 71   $ 75   $ 49   $ 63  

Liquidity and Capital Resources

        Our primary sources of liquidity and capital resources have been cash provided from operating activities, cash and cash equivalents, the senior secured revolving credit facility, and the net proceeds from our IPO. Our primary requirements for liquidity and capital are new restaurant development, working capital and general corporate needs. Our operations have not required significant working capital and, like many restaurant companies, we have been able to operate, and expect to continue to operate with negative working capital. Our requirement for working capital is not significant since our restaurant guests pay for their food and beverage purchases in cash or payment cards (credit or debit) at the time of sale. Thus, we are able to sell many of our inventory items before we have to pay our suppliers for such items. Our restaurants do not require significant inventories or receivables.

        We believe that these sources of liquidity and capital will be sufficient to finance our continued operations and expansion plans for at least the next twelve months.

        The following table shows summary cash flows information for fiscal years 2010, 2011 and 2012, the twelve weeks ended March 26, 2012 and the thirteen weeks ended April 1, 2013:

 
   
   
   
  Twelve
Weeks
Ended
March 26,
2012
  Thirteen
Weeks
Ended
April 1,
2013
 
 
  Fiscal Years  
 
  2010   2011   2012  
 
  (in thousands)
 

Net cash provided by (used in):

                               

Operating activities

  $ 37,679   $ 32,279   $ 40,632   $ 10,291   $ 10,273  

Investing activities

    (29,928 )   (39,379 )   (44,012 )   (5,523 )   (9,271 )

Financing activities

    (155 )   (1,747 )   6,584     (757 )   (107 )
                       

Net increase (decrease) in cash and cash equivalents

  $ 7,596   $ (8,847 ) $ 3,204   $ 4,011   $ 895  
                       

        Net cash provided by operating activities was $10.3 million for the thirteen weeks ended April 1, 2013 and the twelve weeks ended March 26, 2012 due to the increase in sales and a reduction in the amount of interest paid offset primarily by higher general and administrative costs.

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        Net cash provided by operating activities increased from $32.3 million for fiscal year 2011 to $40.6 million for fiscal year 2012 primarily due to the increase in sales and restaurant-level profit, partially offset by an increase in costs associated with our IPO, restatement costs and expenses, and higher interest and income taxes paid in fiscal year 2012 compared to fiscal year 2011.

        Net cash provided by operating activities was $32.3 million for fiscal year 2011 compared to $37.7 million for fiscal year 2010. The decrease was primarily due to an increase in cash paid for interest in fiscal year 2011 related to increased borrowings under our new senior secured credit facility, settlement of the interest rate swap agreement, and an increase in cash paid for taxes due to our increased profitability and prior utilization of historic net operating losses.

        Net cash used in investing activities increased $3.8 million to $9.3 million for the thirteen weeks ended April 1, 2013 compared to the net cash used in investing activities of $5.5 million for the twelve weeks ended March 26, 2012. Capital expenditures increased to $8.9 million in the current year compared to $6.6 million in the prior year primarily due to the timing of new restaurant openings. Capital expenditures are primarily for investments in new restaurant development and the replacement of restaurant equipment or facility improvement. We opened one new restaurant, converted one restaurant and remodeled one restaurant during the thirteen weeks ended April 1, 2013 compared to opening three new restaurants during the twelve weeks ended March 26, 2012. This was partially offset by proceeds from property insurance claims of $300 thousand in the current year compared to $1.1 million in the prior year.

        Net cash used in investing activities was $44.0 million, $39.4 million, and $29.9 million in 2012, 2011, and 2010, respectively. The net cash used was primarily attributable to capital expenditures for fiscal years 2012, 2011 and 2010 of $44.2 million, $39.4 million and $32.4 million, respectively. In each year, development of new locations accounted for most of the expenditures. Year-over-year variances in capital expenditures are due to the number and timing of new or updated locations under construction.

        We estimate our capital expenditures for fiscal year 2013 will be approximately $55.0 million to $60.0 million substantially related to new restaurant development including estimated construction-in-progress disbursements for fiscal 2014 openings.

        Net cash used in financing activities was $107 thousand for the thirteen weeks ended April 1, 2013 compared to $757 thousand net cash used in financing activities for the twelve weeks ended March 26, 2012. In the current year, financing activity cash flows represent the payment of deferred financing costs related to our new credit facility, while the prior year activity includes our first quarter scheduled repayment of long-term debt.

        Net cash provided by financing activities was $6.6 million for fiscal year 2012 compared to the net cash used in financing activities of $1.7 million for fiscal year 2011, which was primarily caused by our IPO and the prepayment of a portion of our term loan as a result of the IPO.

        We completed our IPO on May 16, 2012 in which we received $81.1 million in net proceeds, after deducting direct offering costs of $9.0 million. We also prepaid $42.5 million of our term loan from the net proceeds of our IPO. We paid $0.3 million in debt issuance costs related to the amendment of our debt facility and another $1.4 million in debt issuance costs related to the new senior secured credit facility (see below). With the new senior secured credit facility, we paid down the remaining $74.5 million balance of our term loan after the IPO with a revolving credit borrowing of $45.0 million from the new senior secured credit facility and $29.5 million of cash on hand. Prior to the IPO, we had also made a scheduled payment on the term loan amounting to $0.8 million in the first quarter of 2012.

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        Net cash used in financing activities for fiscal year 2010 was $155 thousand and increased to $1.7 million in fiscal year 2011 primarily due to our dividend payment partially offset by net proceeds from the refinancing of our senior secured credit facility.

        On October 29, 2012, we entered into a $100.0 million five-year senior secured revolving credit facility, which includes a letter of credit sub-facility of up to $10.0 million and a swing line sub-facility of up to $15.0 million, with a syndicate of commercial banks and other financial institutions.

        The initial interest rate for borrowings under the facility was equal to, at our option, either (a) the London Interbank Offered Rate, or "LIBOR", plus a margin of 2.00%, or (b) the base rate (as defined in the agreement) plus a margin of 1.00%. Thereafter, the applicable margins were subject to adjustment based on our leverage ratio as determined on a quarterly basis. In addition, we were required to pay a commitment fee on the unused portion of the revolving credit facility. The commitment fee rate was 0.30% per annum, and was also subject to adjustment thereafter on a quarterly basis based on our leverage ratio.

        The revolving credit facility contained financial covenants including a leverage ratio and a minimum fixed charge coverage ratio, as described in the agreement. The facility also contained other covenants which, among other things limited our ability to incur additional indebtedness, create liens on our assets, make certain investments, guarantees or loans, merge, consolidate or otherwise dispose of assets other than in the ordinary course of business, make acquisitions, and pay dividends or make other restricted payments. The facility was guaranteed by each of our subsidiaries and secured by substantially all of our present and future assets and a lien on the capital stock or other equity interests of our direct and indirect subsidiaries.

        On April 9, 2013, we completed our acquisition of Romano's Macaroni Grill. To finance the acquisition, on April 9, 2013, we entered into an amendment to our revolving credit facility and added a $50.0 million term loan facility. The initial interest rate for borrowings under the new credit facility will be at the LIBOR plus a margin of 3.5%, or the base rate (as defined in the agreement) plus a margin of 2.5%, as we may elect. Thereafter, the applicable margins are subject to adjustment based on our maximum leverage ratio (as defined in the agreement), as determined on a quarterly basis, with the margins ranging from 1.25% to 4.25% on LIBOR-based loans, and from 0.25% to 3.25% on base rate-based loans. In addition, we are required to pay commitment fees on the unused portion of the new revolving credit facility. The commitment fee rate is 0.50% per annum, and is subject to adjustment thereafter on a quarterly basis based on our leverage ratio. The principal amount of the term loan is payable in consecutive quarterly installments, commencing on September 30, 2013, with the balance thereof payable in full on the fifth anniversary of the closing date. Total payments due of $1.3 million, $3.1 million, $3.8 million, $4.4 million and $5.0 million are due during fiscal 2013, 2014, 2015, 2016 and 2017, respectively, with the balance of $32.4 due in 2018. The new revolving credit facility will mature and all amounts outstanding thereunder will be due and payable on April 9, 2018. Similar to the prior senior secured credit facility, the new credit facility contains financial covenants including a leverage ratio and a minimum fixed charge coverage ratio, as described in the agreement. The new credit facility allows for (a) a maximum leverage ratio of (i) 5.50x through December 29, 2013, (ii) 5.25x from December 30, 2013 through June 29, 2014, (iii) 5.0x from June 30, 2014 through December 28, 2014 and (iv) 4.75x thereafter and (b) a minimum fixed charge ratio of 1.35x through December 29, 2013 and 1.50x thereafter. The new credit facility also contains other covenants which, among other things, limit our ability to incur additional indebtedness, create liens on our assets, make certain investments, guarantees or loans, merge, consolidate or otherwise dispose of assets other than

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in the ordinary course of business, make acquisitions, and pay dividends or make other restricted payments.

Off-Balance Sheet Arrangements

        Except for restaurant operating leases, we have no material off-balance sheet arrangements.

Contractual Obligations

        The following table sets forth our contractual obligations and commercial commitments as of December 31, 2012:

 
  Payments Due by Period in Years  
 
  Total   Less than
1 year
  1 - 3 years   3 - 5 years   More than
5 years
 
 
  (in thousands)
 

Revolving credit facility(a)

  $ 45,000   $   $   $ 45,000   $  

Operating leases

    281,651     26,157     51,994     48,735     154,765  

Interest payments(a)

    5,177     1,071     2,142     1,964      

Uncertain tax positions(b)

                     
                       

Total

  $ 331,828   $ 27,228   $ 54,136   $ 95,699   $ 154,765  
                       

(a)
The amounts in the table above are based on our prior revolving credit facility, which was in place as of December 31, 2012. We estimate future interest payments based on interest rates and applicable margin at December 31, 2012.

To finance the acquisition, on April 9, 2013, we entered into an amendment to our revolving credit facility, of which $10.0 million was drawn at closing, and added a $50.0 million term loan facility. This amended revolving credit facility expires on April 9, 2018 and all amounts outstanding under the revolving credit facility will be due and payable on that date. The principal amount of the term loan facility is payable in consecutive quarterly installments, commencing on September 30, 2013, with the balance thereof payable in full on April 9, 2018. Total principal payments in respect of the term loan facility of $1.3 million, $3.1 million, $3.8 million, $4.4 million and $5.0 million are due during fiscal 2013, 2014, 2015, 2016 and 2017, respectively, with the balance of $32.4 million due in 2018. Total interest payments on the term loan facility and the $55 million outstanding of the revolving credit facility as of July 1, 2013, are $2.9 million, $3.8 million, $3.7 million, $3.6 million, $3.4 million and $0.9 million which are due during fiscal 2013, 2014, 2015, 2016, 2017 and 2018, respectively, based on the initial interest rate and applicable margin at closing. The foregoing principal and interest payment amounts in respect of the term loan facility and interest payment amounts in respect of the revolving credit facility are not included above. The foregoing principal payment amount in respect of the revolving credit facility are inclusive of the payment schedule of the revolving credit facility set forth in the table above.

(b)
We have $1.1 million of uncertain tax positions, including interest and penalties, recorded in other long-term liabilities or as a reduction to net operating loss carryforwards. It is not reasonably possible to predict at this time when (or if) any of these assessments will be settled.

        We are parties to certain indemnifications to third parties in the ordinary course of business. The probability of incurring an actual liability under such indemnifications is sufficiently remote so that no liability has been recorded.

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Segment Reporting

        We own and operate the Joe's Crab Shack, Brick House Tavern + Tap and Romano's Macaroni Grill restaurant brands in the United States. All of our restaurants compete in the full-service casual dining industry, providing in-restaurant, full service, casual dining, food away from home to our guests. Our brands also possess similar production methods, distribution methods, and economic characteristics, resulting in similar long-term expected financial performance characteristics. We believe we meet the criteria for aggregating our restaurant operations into a single reporting segment.

Impact of Inflation

        Our profitability is dependent, among other things, on our ability to anticipate and react to changes in the costs of key operating resources, including food and beverages, labor, energy and other services. Substantial increases in costs and expenses could impact our operating results to the extent such increases cannot be passed along to our guests. Apart from the commodity effects discussed above, in general, we have been able to substantially offset restaurant and operating cost increases resulting from inflation by altering our menu items, increasing menu prices, making productivity improvements or other adjustments. However, certain areas of costs, notably labor and utilities, can be significantly volatile or subject to significant changes due to changes in laws or regulations, such as the minimum wage laws. There can be no assurance that we will continue to generate increases in comparable restaurant sales in amounts sufficient to offset inflationary or other cost pressures.

Recent Accounting Pronouncements

        In July 2012, the Financial Accounting Standards Board issued Accounting Standards Update No. 2012-02, Intangibles—Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment, which allows an entity the option to first assess qualitatively whether it is more likely than not that the indefinite-lived intangible asset is impaired, thus necessitating a quantitative impairment test. An entity is not required to calculate the fair value of an indefinite-lived intangible asset and perform the quantitative test unless it determines that it is more likely than not that the asset is impaired. This update is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Our adoption of this update effective January 1, 2013 did not have a significant impact on our consolidated financial statements.

Critical Accounting Policies

        We prepare our consolidated financial statements in conformity with U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Critical accounting policies are those that management believes are both most important to the portrayal of our financial condition and operating results, and require management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. We base our estimates on historical experience, outside advice from parties believed to be experts in such matters, and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Judgments and uncertainties affecting the application of those policies may result in materially different amounts being reported under different conditions or using different assumptions. Our significant accounting policies can be found in Note 2 to our audited consolidated financial statements. We consider the following policies to be the most critical in understanding the judgments that are involved in preparing our consolidated financial statements.

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        We evaluate the recoverability of the carrying amount of long-lived assets, which include property and equipment and intangible assets with definite useful lives, whenever events or changes in circumstances indicate that the carrying value may not be fully recoverable. Our review for impairment of these long-lived assets takes into account estimates of future undiscounted cash flows. Factors considered include, but are not limited to, significant underperformance relative to historical or projected future operating results, significant changes in the manner of use of the acquired assets or the strategy for the overall business, and significant negative industry or economic trends. Our asset group for impairment testing is comprised of the assets and liabilities of each of our individual restaurants, since this is the lowest level of identifiable cash flows. An impairment loss is recognized if the future undiscounted cash flows associated with the assets are less than their carrying value. Impairment losses are measured as the amount by which the carrying values of the assets exceed their fair values. For assets held for sale or disposal, we measure fair value using quoted market prices or an estimation of net realizable value.

        From time to time, we have decided to close or dispose of restaurants. Typically, such decisions are made based on operating performance or strategic considerations and must be made before the actual costs or proceeds of disposition are known, and management must make estimates of these outcomes. Such outcomes could include the sale of a leasehold, mitigating costs through a tenant or subtenant, or negotiating a buyout of a remaining lease term. In these instances, management evaluates possible outcomes, frequently using outside real estate and legal advice, and records provisions for the effect of such outcomes. The accuracy of such provisions can vary materially from original estimates, and management regularly monitors the adequacy of the provisions until final disposition occurs.

        We currently lease all of our restaurant locations under leases classified as operating leases. Minimum base rent for our operating leases, which generally have escalating rentals over the term of the lease, is recorded on a straight-line basis over the lease term. As such, an equal amount of rent expense is attributed to each period during the term of the lease regardless of when actual payments occur. Lease terms begin on the date we take possession under the lease and include cancelable option periods where failure to exercise such options would result in an economic penalty. The difference between rent expense and actual cash payments is classified as deferred rent in our consolidated balance sheets.

        Some of our leases provide for contingent rent, which is determined as a percentage of sales in excess of specified minimum sales levels. We recognize contingent rent expense prior to the achievement of the specified sales target that triggers the contingent rent, provided achievement of the sales target is considered probable.

        We maintain large deductibles on workers' compensation, general liability, property, and business interruption insurance coverage. These policies have been structured to limit our per-occurrence exposure. We record a liability for workers' compensation and general liability for all unresolved claims based on actuarial information provided by our insurance brokers and insurers, combined with management judgments regarding economic conditions, including future medical and indemnity costs, the frequency and severity of claims and claim development history, case jurisdiction, applicable legislation and settlement practices. Changes in any of these factors in the future may produce materially different amounts of expense than otherwise would be reported under these insurance programs.

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        We are subject to U.S. federal income tax and income taxes imposed in the state and local jurisdictions where we operate our restaurants. Deferred income taxes are provided on temporary differences between financial statement and income tax reporting. Temporary differences are differences between the amounts of assets and liabilities reported for financial statement purposes and their tax bases. Deferred tax assets are recognized for temporary differences that will be deductible in future years' tax returns and for operating loss and tax credit carryforwards. Deferred tax assets are reduced by a valuation allowance if it is deemed more likely than not that some or all of the deferred tax assets will not be realized. In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. We consider the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Deferred tax liabilities are recognized for temporary differences that will be taxable in future years' tax returns.

        We account for uncertain tax using a minimum probability threshold that a tax position must meet before a financial statement benefit is recognized. The minimum threshold is defined as a tax position that is more likely than not to be sustained upon examination by tax authorities, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. See Note 8 to our audited consolidated financial statements for information regarding changes in our unrecognized tax benefits.

        We recognize expense for stock-based compensation awards, which is equal to the fair value of the awards at grant date, ratably, in general, and administrative expenses in our consolidated statements of operations over the requisite service period.

        Calculating stock-based compensation expense requires the input of subjective assumptions. We determine the fair value of each stock appreciation right grant using the Black-Scholes option-pricing model with assumptions based primarily on historical data. Specific inputs to the model include the expected life of the stock-based awards, stock price volatility, dividend yield and risk-free interest rate. Restricted stock is valued using the closing stock price on the business day prior to the grant date.

        Since we do not have historical exercise experience on stock appreciation rights, we used the simplified method of estimating expected term. As a newly public company, we estimated expected volatility using the volatility of a peer group over a recent historical period equal to the same expected term of the award. The expected dividend yield is based on our history of not paying regular dividends in the past and our current intention to not pay regular dividends in the foreseeable future. Risk-free rate is based on the U.S. Treasury yield curve in effect at the time of the grant using the term equal to our expected term.

        We recognize legal claims and other loss contingencies when information becomes available indicating that a liability has been incurred and the loss amount can be reasonably estimated. Predicting the outcome of claims and litigation involves substantial uncertainties that could cause actual results to vary materially from estimates. We recognize legal expenses, including those related to loss contingencies, as incurred.

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        Generally, we do not recognize gain contingencies until all contingencies have been resolved, but we recognize gain contingencies that are recoveries of previously recognized contingent losses when realization of the recovery is deemed probable and reasonably estimable.

New and Revised Financial Accounting Standards

        We qualify as an "emerging growth company" pursuant to the provisions of the JOBS Act. Section 102 of the JOBS Act provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. However, we chose to "opt out" of this extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-"emerging growth companies." Our decision to opt out of the extended transition period is irrevocable.

Controls and Procedures

        We maintain disclosure controls and procedures defined in Rule 13a-15(e) under the Exchange Act, that are designed to ensure that the information required to be filed or submitted with the SEC under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to management of the company with the participation of its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.

        In connection with the preparation of the consolidated financial statements for the quarter ended April 1, 2013, an evaluation was performed under the supervision and with the participation of management, including the chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. In the evaluation, we considered the restatement of our previously issued financial statements. Based on that evaluation, the material weaknesses described below and the fact that we have not yet completed our formal evaluation of internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, the chief executive officer and chief financial officer have concluded that our disclosure controls and procedures were ineffective as of April 1, 2013.

        Management previously concluded that there was a material misstatement that occurred and determined it appropriate to restate our previously issued financial statements as of January 3, 2011 and January 2, 2012 and for the years ended December 28, 2009, January 3, 2011 and January 2, 2012 and as of March 26, 2012 and for the twelve week periods ended March 28, 2011 and March 26, 2012. The restatement corrected historic accounting errors for the following:

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        In management's evaluation of the misstatement, the following deficiencies were identified as material weaknesses:

        Since the time management concluded that there was a material misstatement that occurred and determined it appropriate to restate our previously issued financial statements, we have completed a number of remediation steps to address the material weaknesses in internal controls described above. Specifically, the following were implemented:

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        Although we have designed and implemented certain new internal controls in an effort to remediate the material weaknesses, management continues to conclude that the material weaknesses in internal control were not remediated as of April 1, 2013. Management believes that significant improvements to the processes and controls have been achieved during 2012 and 2013, but these processes were not sufficiently mature to remediate the material weaknesses as of April 1, 2013.

        In an effort to remediate the material weaknesses, we plan to continue the implementation of our remediation plan by undertaking the following during the remainder of fiscal year 2013:

Quantitative and Qualitative Disclosures about Market Risk

        Many of the food products we purchase are affected by commodity pricing that is subject to price volatility caused by weather, production problems, delivery difficulties and other factors that are outside our control and are generally unpredictable. For the thirteen weeks ended April 1, 2013 and fiscal year 2012, crab, lobster and shrimp accounted for approximately 50% and 49%, respectively, of total food purchases. Crab and lobster are wild caught and sourced from government regulated and sustainable fisheries. Crab costs are currently at historical norms. Other categories affected by the commodities markets, such as seafood, beef and fish, may each account for approximately 5% to 7% of our food purchases. While we have some of our food items prepared to our specifications, our food items are based on generally available products, and if any existing suppliers fail, or are unable to deliver in quantities we require, we believe that there are sufficient other quality suppliers in the marketplace that our sources of supply can be replaced as necessary. Furthermore, while seafood has historically

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accounted for a substantial portion of our total food purchases, in light of our acquisition of Macaroni Grill, we expect our total food purchases to become more heavily weighted towards items such as beef, chicken, flour and other items that have historically comprised a smaller portion of our food costs, and such items may subject us to additional volatility in price and availability.

        We also recognize, however, that commodity pricing is extremely volatile and can change unpredictably and over short periods. Our purchasing department negotiates prices and quantities for all of our ingredients through either cancellable contracts (with varying length terms), spot market purchases or commodity pricing formulas. Changes in commodity prices would generally affect us and our competitors similarly, depending on the terms and duration of supply contracts. We also enter into fixed price supply contracts for certain products in an effort to minimize volatility of supply and pricing. In many cases, or over the longer term, we believe we will be able to pass through some or all of the increased commodity costs by adjusting menu pricing. From time to time, competitive circumstances, or judgments about consumer acceptance of price increases, may limit menu price flexibility, and in those circumstances, increases in commodity prices can have an adverse effect on margins.

        We are subject to interest rate risk in connection with borrowings under our senior secured credit facility, which bear interest at variable rates. As of April 1, 2013, we had $45.0 million outstanding under our senior secured credit facility. Derivative financial instruments, such as interest rate swap agreements and interest rate cap agreements, may be used for the purpose of managing fluctuating interest rate exposures that exist from our variable rate debt obligations that are expected to remain outstanding. Interest rate changes do not affect the market value of such debt, but could impact the amount of our interest payments, and accordingly, our future earnings and cash flows, assuming other factors are held constant. A 100 basis point change in the interest rate on the outstanding balance of our floating rate debt would result in a $0.5 million change in our annual results of operations.

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BUSINESS

Our Company

        Ignite Restaurant Group, Inc. is a diversified restaurant company that operates a portfolio of three restaurant brands, Joe's Crab Shack, Brick House Tavern + Tap and Romano's Macaroni Grill. Each of our restaurant brands offers a variety of high-quality food and beverages in a distinctive, casual, high-energy atmosphere, and operates in a diverse set of markets across the United States. As of June 30, 2013, we owned and operated 134 Joe's Crab Shacks, 16 Brick House Tavern + Taps and 186 Romano's Macaroni Grills.

        Since the beginning of their tenures (starting in 2007), our management team has been developing and implementing many of the initiatives and strategies that serve as the foundation for what our company is today. The impact of these strategies began to take effect in fiscal year 2008. From the fiscal year ended December 29, 2008 through the fiscal year ended December 31, 2012, total revenues and Adjusted EBITDA (a non-GAAP financial measure) have improved at compounded annual growth rates of 14.2% and 27.8%, respectively. Over the same period, our total revenues increased from $273.4 million to $465.1 million, net income increased from a net loss of $5.0 million to net income of $8.7 million and Adjusted EBITDA increased from $19.5 million to $52.0 million. In addition, we have grown our comparable restaurant sales by 27.9% on a cumulative basis over the last five years, which has outperformed the KNAPP-TRACK growth rate of (6.7%) by more than 3,400 basis points on a cumulative basis over the same period of time. During fiscal year 2012, 2011 and 2010, our comparable restaurant sales increased by 2.2%, 6.9% and 4.9%, respectively, over the comparable period in our prior fiscal year.

        On April 9, 2013, we completed the acquisition of Romano's Macaroni Grill for an aggregate purchase price of approximately $60.8 million in cash, consisting of $54.1 million paid directly to the Sellers and $6.7 million paid to other third parties related to outstanding indebtedness and transaction-related expenses of the Sellers, subject to a working capital adjustment. Through the acquisition, we acquired 186 company-owned and twelve franchised restaurants across 36 states and Puerto Rico as well as twelve additional franchised units throughout nine foreign countries. For the twelve months ended December 31, 2012, Romano's Macaroni Grill generated $388.0 million in revenues and had average unit volumes of $2.1 million.

Our Business Strengths

        We are focused on developing brands that have category leading and defendable positions within the casual dining segment. As a result, our core business strengths with respect to the restaurant brands we have historically operated, Joe's Crab Shack and Brick House Tavern + Tap, include the following:

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        In addition to the above strengths, we intend to transform our newly acquired Romano's Macaroni Grill into a leading restaurant brand using the following business strengths:

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Our Strategy

        Our strategies include the following:

        Disciplined New Restaurant Growth.    We believe there are meaningful opportunities to grow the number of restaurants of both Joe's Crab Shack and Brick House Tavern + Tap. We seek to maximize free cash flow for reinvestment into new restaurants at attractive returns. For both our Joe's Crab Shack and Brick House Tavern + Tap brands, we target new restaurant cash-on-cash returns, which we define as restaurant-level profit per store divided by total build-out cost (excluding capitalized interest) and cash pre-opening costs, in excess of 25%.

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        For fiscal year 2013, we target opening as many as 12 new Company-owned restaurants, the vast majority of which will be new Joe's Crab Shack restaurants, and may convert as many as four existing restaurants to either a Joe's Crab Shack or a Brick House Tavern + Tap. Historically, our new restaurant growth had been substantially weighted towards new Joe's Crab Shack restaurants. However, given the compelling new unit volumes and returns recently achieved at our Brick House Tavern + Tap restaurants and the addition of the Macaroni Grill brand, we are in the process of evaluating our future growth strategy. We do not currently anticipate opening any new Company-owned Macaroni Grill's while we are in the process of transforming the brand.

        Focus on Comparable Restaurant Sales Growth.    We believe the following strategies have contributed to our successful growth and will allow us to generate comparable restaurant sales growth in the future:

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        Leverage our Scale to Enhance our Profitability.    We believe we have a scalable infrastructure and can continue to expand our margins as we execute our strategy. While each of our three brands have independent field operations, we use our shared services platform to handle many of the administrative functions for all brands. In connection with our acquisition of Macaroni Grill, we expect to realize further savings due to administrative synergies, as well as extra benefits of economies of scale, which we plan to utilize as we continue to integrate the brand. Such benefits include, but are not limited to, our ability to cost efficiently employ the most sought after advertising and marketing agencies for all of our brands and efficiencies associated with being able to utilize a single distribution model for all of our restaurants. Our leverageable structure should further our ability to enhance our profitability as we grow.

Our Restaurants

Joe's Crab Shack

        Joe's Crab Shack is a come-as-you-are, family restaurant that offers guests an environment that is laid-back, comfortable, fun, and energetic. Most locations offer an outdoor patio for guests to enjoy eating and drinking and a children's playground as part of the "I'm relaxed" restaurant experience. Joe's also has many locations that are located on waterfront property. Interior design elements include a nautical, vacation theme to invoke memories of beach vacations and a genuine crab shack experience. Table tops are decorated with art to prompt dinner conversation, while picnic tables across the patio and interior help guests feel the relaxed tropical vacation experience. Joe's Crab Shack restaurants are largely free-standing and average 8,000 square feet with over 200 seats. Most Joe's Crab Shack bars are separated from the dining area to provide for a distinct place to grab a drink while waiting for a table. Colorful party lights, a disco ball and bright paint colors enhance the dining experience. Many of our restaurants also include a small gift shop where guests can purchase souvenirs to commemorate their dining experience. Our new restaurant prototype, introduced in fiscal year 2010, contemporizes many of our key brand elements, while maintaining our authentic crab shack appeal.

        Joe's Crab Shack restaurants perform well in targeted markets with high population density and a propensity for seafood, as well as "destination" markets with national and regional tourist attractions, both of which are key characteristics of our site selection strategy.

Brick House Tavern + Tap

        Brick House is a trend-forward chef-inspired "tavern" set in an inviting, comfortable and modern venue that provides a distinct guest experience. Brick House's interior décor includes custom lighting, dark mahogany woods, open sight lines, HD TVs, and an inviting fireplace. The interior design of Brick House Tavern + Tap consists of diverse seating and gathering areas where guests can pick multiple ways to enjoy their experience. In addition to a traditional dining room and bar area, Brick House also offers large communal tables and a section of leather recliners positioned in front of large HD TVs where guests receive their own TV tray for dining. Each restaurant has a state-of-the-art entertainment package and provides guests with a clear line of sight to at least two HD TVs from every seat, making Brick House restaurants an ideal gathering place for sports enthusiasts. Outdoor seating is also available on the patio or around an open fire pit at nearly all locations. The typical Brick House

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restaurant is approximately 8,500 square feet and averages approximately 250 seats, which includes both traditional tables and unique seating options.

Romano's Macaroni Grill

        Romano's Macaroni Grill is a polished casual family restaurant that aims to be a place where family and friends can come together and celebrate a big night or any night featuring wine, an abundant meal and a premium, comfortable and never intimidating experience. Macaroni Grill's interior includes open kitchens, which imbue energy and give the guest the feeling of being at home, as well as brick ovens, festive string lights and fresh-cut flowers. We are also in the process of bringing many of the original brand elements that historically made a visit to Macaroni Grill a memorable experience back to our Macaroni Grill restaurants. For example, we have begun to restore wine as the key focus of a Macaroni Grill visit by, among other things, reviving our house honor system wine as a feature at every table, which we believe was a key element of Macaroni Grill's early success. We have also reintroduced the consistent presence of opera singers to our Macaroni Grill restaurants system-wide to provide entertainment that elevates our guests' dining experience to an authentic Italian experience. The seating at Macaroni Grill consists of traditional tables as well as seating at a full bar. The typical Macaroni Grill restaurant is between 6,500 and 8,000 square feet and averages approximately 275 seats.

Menu and Menu Development

        We are focused on continually elevating our distinctive and high-quality food and beverage offerings. Born out of consumer insights, our in-house Marketing department continually creates new chef-driven food and beverage products for both Joe's Crab Shack and Brick House Tavern + Tap, which are intended to exceed guest expectations. In addition, we expect to introduce a revamped wine program and food menu at our Romano's Macaroni Grill restaurants in August of 2013. A variety of research tools are used to identify opportunities and evaluate current offerings, including a brand-tracker program, segmentation and core menu studies, brand screens, focus groups and in-restaurant surveys. We use a third-party econometric consulting firm to provide statistical analysis around pricing, allowing us to make fact-based decisions on pricing and menu engineering.

Joe's Crab Shack

        Joe's Crab Shack aims to offer signature, craveable items to its guests by continuously seeking to innovate our menu offerings. For example, we have dramatically shifted the menu mix at Joe's to focus on entrées featuring crab over the last five fiscal years. Crab is strategically positioned center stage in our menu through the Steampots and Crab in a Bucket categories, highlighting the importance of the menu item that defines Joe's Crab Shack. Joe's Steampot and Crab in a Bucket offerings allow guests to choose among four varieties of crabs (Queen, Snow, Dungeness and King) and lobster. Steampots, our bestselling item, are overflowing with generous portions of crab, other seafood, red potatoes, a fresh ear of corn and sausage seasoned to our guests' tastes. Our Crab in a Bucket entrées allow guests to pair their favorite crab selection with several distinct preparations ranging from Spicy Citrus to Chesapeake Style or Garlic Herb. Joe's Crab Shack also leverages its crab-forward menu with other craveable crab items, including made-from-scratch Crab Cakes, Crab Nachos and Crazy-Good Crab Dip. As a result of this strategy, the percentage of entrées at Joe's featuring crab is currently over 50% of total food revenues. We believe this crab-focused menu mix has contributed to increases in guest satisfaction, comparable restaurant sales and restaurant-level profit. In addition to our core crab-focused menu, Joe's also offers a broad range of entrées featuring a variety of seafood, including the Get Stuffed Snapper, Surf 'N Turf Burger and The Big Hook Up, as well as a wide range of traditional seafood entrées like the Fisherman's Platter. Joe's also offers several "out of water" options such as Cheesy Chicken and Whiskey Smoked Ribs. In addition, alcoholic beverages have significantly evolved

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to support the elevated food strategy, with vacation-style drinks, including the 'Shark Bite,' 'Category 5 Hurricane' and Mason Jar cocktails emerging as guests' top choices.

        Joe's menu includes more than 29 items made with either Queen, Snow, Dungeness or King Crabs sourced from government regulated and sustainable fisheries. Our current menu offers 14 appetizers, including Mussels Diablo, Crab Nachos and Crazy-Good Crab Dip, and over 50 entrées, including Steampots, Crab in a Bucket, Skillet Paella, Redfish Orleans and "out of water" options like Whiskey Smoked Ribs. For fiscal year 2012, Joe's average check was $23.80, lunch and dinner represented 27% and 73% of revenue, respectively, and revenue distribution was 86% food, 13% alcohol and 1% retail merchandise. Prices currently range from $6.79 to $46.99 for items on Joe's menu, including appetizers ordered as entrées and entrées that are frequently shared.

        Menu implementation roll-outs typically occur in April/May and November but new menu items are commonly introduced more often as we continue to focus on constant innovation. For all new menu roll-outs, new product launches are combined with a new menu design and updated pricing to reflect the current economic environment, as well as the current strategic marketing and creative plan. A menu change typically includes the introduction of four to seven new menu items while maintaining a balance of approximately 75 total menu items, including appetizers. Menu items are added or removed only after thorough testing and analysis, which includes guest satisfaction feedback.

Brick House Tavern + Tap

        The Brick House Tavern + Tap food and beverage menu was created to make the brand feel aspirational while inherently approachable. We believe Brick House's elevated menu has changed the game for the bar and grill customer by offering an innovative premium food selection, along with approximately 80 varieties of beer.

        Brick House offers its guests a broad selection of high-quality, chef-inspired, contemporary tavern food. Brick House's menu includes 17 appetizers and over 53 entrées. Unique handcrafted appetizers include Deviled Eggs, Meat and Cheese Board and Fried Stuffed Olives. Brick House offers an array of burgers, including The Kobe, which is hand formed from high-quality American Wagyu beef. Guests can also choose from a broad selection of homemade entrées such as Prosciutto Wrapped Meatloaf, Drunken Chops, BBQ Baby Backs and Chicken & Waffles. A seasonal Daily Special menu encourages continued innovation with featured classic tavern food items with a twist like Chicken Pot Pie, Shrimp & Grits and Prosciutto Crusted Halibut. In addition, Brick House's Brick Burgers, including the Gun Show Burger and the Greek Lamb Burger, offer guests a distinct take on the traditional burger. A Brick House Pizza section offers our take on traditional pizzas, as well as the more unique Kobe Brick Pizza and Wild Mushroom Pizza. We also recently introduced meatballs to our menu, including Greek, buffalo chicken and drunken pork varieties. Brick House's beverage selection includes imported and domestic beers along with hand-pulled cask beer. Beer is served in vessels unique to our industry such as 40s and Brick House's signature tap-at-your table beer bongs. All Brick House restaurants have a full bar that supports a variety of liquor drinks, wine and beer cocktails like the Grizzly and Bee Sting as well as specialty cocktails like the Dark & Stormy, Blood Orange Whiskey Sour, Basil Gimlet and the Bloody Good Mary. For fiscal year 2012, Brick House had four full day parts with lunch, afternoon, dinner and late night accounting for 19%, 25%, 39% and 17%, respectively, and Brick House's revenue distribution was approximately 54% food and 46% alcohol. Brick House's entrées range in price from $6.50 to $20.00.

        Continuous menu innovation is a key strategy for Brick House Tavern + Tap. We revise the Brick House Tavern + Tap menu at least twice a year with design, pricing and product offerings assessed before each menu implementation. New menu offerings are created to reinforce differentiation in our appetizers, entrées and beverage offerings as part of our effort to provide our guests with exceptional food. Testing of new menu items is executed in-restaurant before a new item is rolled out system-wide.

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Romano's Macaroni Grill

        Romano's Macaroni Grill offers guests a blend of authentic Italian food with innovative Italian preparation. Macaroni Grill currently offers guests an expansive food and beverage menu that features fresh, classic pastas and wine. We also offer a wide variety of pizzas, meats, seafood, salads and desserts utilizing fresh, seasonal ingredients. In addition, as part of the August 2013 revamp of our wine program and food menu, we plan to launch revitalized pasta and classic Italian dishes as well as introduce a new line of braisers that include slow-cooked meats served tableside. We intend to build on this strong menu foundation by refocusing on wine as a central aspect of the Macaroni Grill experience. We believe the honor wine system was an original cornerstone of the brand that guests fondly associate with Macaroni Grill and that a full restoration of the honor wine system coupled with a broader effort to refocus on wine as a central menu component are important elements in our transformation plans for Macaroni Grill. Therefore, in addition to restoring our honor system wine at every table, we intend to introduce a combination of Italian and American wines that match well with our new menu offerings. Our objective is to improve on the quality of existing menu items while offering premium options for guests that are looking for a big night out and want to have an Italian steakhouse experience. For the twelve months ended December 31, 2012, Macaroni Grill's lunch and dinner day parts represented approximately 22% and 78% of revenue, respectively, and revenue distribution was approximately 87% food and 13% alcohol. Macaroni Grill's entrées range in price from $7.00 to $23.00.

        Continuous menu innovation will remain a key strategy for Macaroni Grill and we expect to revise the menu regularly during the transformation process with new product launches combined with a new design and updated pricing to reflect the current economic environment. Menu items will be added or removed only after thorough testing and analysis.

Marketing

        Over 80% of our marketing budget is invested in advertising through television (national cable, syndication and satellite), and digital advertising (including location-based media, on-demand media as well as in the social media such as Facebook and Twitter), with the balance of the budget being spent on marketing research, in-restaurant advertising, menus and production costs. Our marketing strategy is fact-based, using consumer insights to build brand affinity, and drive menu optimization. Our marketing expenditures were 4.4%, 4.4% and 4.9% of revenues for the fiscal years 2012, 2011 and 2010, respectively.

        Joe's Crab Shack's advertising campaigns typically occur four times per year and are annual, seasonal and frequency-focused campaigns aimed at attracting guests and communicating new menu items through quality-focused messaging. For example, we recently began our new 100% shore campaign and launched a nine-week Summer on the shore campaign that emphasizes our authentic, southern coastal heritage and features southern summer items such as our Corona Beach Bake, Coastal Wave Steampot and Southern Coastal Catch.

        We engage in a national cable advertising campaign for Joe's that currently consists of 24 weeks on air. We supplement Joe's national advertising with innovative media support, including digital advertising, social media outreach, location-based mobile media, weather-triggered advertising, cause-based marketing and added-value media. The Joe's email club currently has approximately 450,000 members. Our marketing efforts are aimed at maintaining the focus on "celebratory occasions" but increasing frequency through everyday enjoyable moments. Brick House Tavern + Tap's marketing efforts are focused on menu innovation and local marketing initiatives. Local marketing includes events such as bike nights and pint nights. In April 2011, we added a Happy Hour program using local sports radio, in-house promotion through check attachments, posters and banners, and social media to support the rollout. The Brick House email club currently has approximately 60,000 members and has more

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than doubled since January 2011. Digital advertising and public relations have also been used to support initiatives around March Madness, football season, menu launches, and live music series.

        We are in the process of revamping the Macaroni Grill marketing plan and intend to optimize media and take our new and improved brand story national by shifting from local television efforts to national cable. Romano's Macaroni Grill advertising campaigns will be annual and seasonal and will focus on culinary and beverage "news" to attract current and new guests. We will focus on a national cable advertising campaign that we expect will cover all of the Macaroni Grill restaurants located in the United States and consists of 23 weeks on air, as opposed to an average of only 61% of Macaroni Grill restaurants that were covered with television advertising prior to the acquisition. We will also supplement Macaroni Grill's national advertising campaign with innovative media support, including social media outreach, location-based mobile media and added-value media.

        We also promote all of our brands using other in-restaurant sales initiatives, which are typically focused on products and are not price point promotions.

Guest Satisfaction

        We use third-party vendors to systematically gather, record and analyze key guest data for Joe's Crab Shack and Brick House Tavern + Tap, and we expect to begin such recording and analysis for Macaroni Grill. Our marketing research tools include:

        We use the insights gathered from market research and data analytics to support strategic and tactical decisions. We embrace and rely on the use of market research as a tool to better understand our business and drive improved performance. These market research and data analytics provide us with critical guest feedback that guide us to change or refine individual menu items and implement operational initiatives to drive positive results on "Satisfaction," "Likely to Return" and "Likely to Recommend" metrics. Our AAU also guides us on changes to perception and awareness of the Joe's Crab Shack brand when considering shifts in our marketing and advertising strategies and tactics. We believe improved performance of our menu items, in our restaurants and in the effectiveness of our advertising is driven by understanding guest feedback and making changes accordingly.

        In particular, we use a third party vendor to conduct detailed guest satisfaction surveys of our current guests and provide comparable industry satisfaction survey data for industry peers. Several surveys have been conducted since 2008 for Joe's Crab Shack and 11 other anonymous national and regional casual dining restaurant chains. We have also initiated the same guest satisfaction survey for Brick House. Brick House is also currently undergoing a customer segmentation study. We also intend to initiate a similar guest satisfaction survey for Macaroni Grill beginning in July 2013. We believe this survey will help us improve performance in our restaurants, our menu items and the effectiveness of our advertising.

Restaurant Operations and Shared Services

        While each of our brands have independent field operations, we maintain a shared services platform, which handles many of the administrative functions for our brands. We believe this provides a scalable infrastructure, which will allow us to increase our profitability and continue to grow.

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Joe's Crab Shack

        Joe's Crab Shack operations are currently led by a brand president and three regional vice presidents. Each regional vice president oversees five to eight directors of operations, who typically manage seven to ten restaurants. Restaurant-level management at Joe's typically includes a general manager, an assistant general manager, a restaurant manager and flex managers, as required. The flex manager is an hourly employee that is trained during the off-season and may be called upon to perform a managerial role during the peak season. Each restaurant also has a brand ambassador that coordinates with members of the local community on behalf of Joe's for group sales and fundraisers. Our restaurant managers have bonus incentives that are based on sales and restaurant-level profits.

        The Joe's Crab Shack training has three distinct levels. Our manager training is designed to fit all manager levels from the hourly flex manager to general manager. This comprehensive program is up to nine weeks in length, depending on the knowledge base and skill of the trainee and is both classroom and on-the-job based. Our certified trainer training is a special workshop designed to develop training specialists that reside in a restaurant or market that can oversee the training programs in that area. In order to be a certified trainer, candidates must be a fully validated hourly team member with recommendations from their general manager and director of operations. Hourly trainees are orientated by the general manager of their home restaurant with their program, schedule of activities and on-the-job training then set by the certified trainer. Through the training process, hourly trainees will attend classroom sessions, take examinations, watch videos and work alongside a certified trainer or a highly recommended individual that reports back to the certified trainer on performance and progress.

Brick House Tavern + Tap

        The Brick House team is led by a brand president who oversees three directors of operations who, in turn, each manage five to seven restaurants. Typical restaurant management at Brick House includes a general manager, service manager, back-of-the-house manager, whom we refer to as our "executive chef," and bar manager. Brick House restaurant managers have bonus incentives that are based on sales and restaurant-level profits.

        Our training programs are seven weeks for all salaried managers and one to two weeks for all hourly positions. Our new hire training program is conducted by in-house trainers who have been certified by our restaurant lead trainer. At the end of training, there is a comprehensive written test and an on-the-job training review that must be completed before permission to work independently is granted.

Romano's Macaroni Grill

        The Macaroni Grill team is led by a brand president who oversees three regional vice presidents. Each regional vice president oversees six to eight directors of operations, who typically manage seven to ten restaurants. Typical restaurant management at Macaroni Grill includes a general manager, service manager, back-of-the-house manager, whom we refer to as our "executive chef," and bar manager. Romano's Macaroni Grill restaurant managers have bonus incentives that are based on sales and restaurant level profits.

        Our training programs at Macaroni Grill are eight weeks for all salaried managers and approximately one week for all hourly positions. Our new hire training program is conducted by in-house trainers who have been certified by our restaurant lead trainer. At the end of training, there is a comprehensive written test and an on-the-job training review that must be completed before permission to work independently is granted.

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Shared Services

        Each of our brands is supported by our Restaurant Support Center located in Houston, Texas. As part of the integration process, which we expect to complete by August 2013, Romano's Macaroni Grill's support services will be completely transferred to our Restaurant Support Center. The Restaurant Support Center provides support services to our brands including marketing, menu development, accounting, real estate and development, human resources, legal, purchasing and information systems. We believe our Restaurant Support Center allows us to leverage our scale and share best practices across key functional areas that are common to both of our brands.

Site Selection

        We focus our development strategy for Joe's Crab Shack on new locations in narrowly defined geographic regions with high population density and a propensity for seafood and in close proximity to regional and national tourist attractions. Our development strategy for Brick House Tavern + Tap is largely intended to focus on opening new locations in the top 50 designated market areas across the country. We are currently evaluating our development strategy for Romano's Macaroni Grill, which has many locations in the top 100 DMAs with long-term leases. We are also exploring the possibility of converting certain underperforming Macaroni Grill restaurants into Joe's or Brick House restaurants. We have a dedicated development team that takes an analytical, data-driven approach to selecting new sites, which is largely based upon, but not limited to, the following criteria:

Restaurant Development and Economics

        We have experienced in-house real estate and development capabilities. During 2012, we opened 11 new restaurants (all Joe's), which included one conversion of an existing Brick House restaurant, using our new prototype. Our capital investment, which includes build-out costs and cash pre-opening costs, amounted to $41.7 million for restaurants opened in 2012. Factors contributing to the fluctuation in capital investment per restaurant include size of the property, geographical location, type of construction, cost of liquor and other licenses, and concessions received from landlords. A majority of the Joe's Crab Shack restaurants opened during 2012 were newly developed and built restaurants. Conversions of existing restaurants to Joe's or Brick House typically require less capital investment than newly developed and built restaurants. During the past three fiscal years, we have converted one Joe's Crab Shack restaurant to a Brick House restaurant and one Brick House restaurant to a Joe's Crab Shack restaurant, and we converted one Brick House restaurant to a Joe's Crab Shack restaurant

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during the thirteen weeks ended April 1, 2013. Our targets for build-out costs and pre-opening costs for typical Joe's and Brick House restaurants are $3.1 million and $2.6 million, respectively.

        We target steady state new restaurant average unit volumes of approximately $3.9 million for Joe's Crab Shack and $3.2 million for Brick House, and cash-on-cash returns, which is defined as restaurant-level profit per store divided by total build-out costs and cash pre-opening costs, to exceed 25%. As of April 1, 2013, we have successfully opened 22 new restaurants using this new prototype and development strategy. Twelve of these restaurants opened using this new prototype have been open for at least twelve months and generated average unit volumes of $4.5 million for the twelve month period ended April 1, 2013. It is common for new restaurants to initially open with sales volumes well in excess of their steady state levels. During the several months following the opening of new restaurants guest traffic and sales volumes will gradually adjust to their steady state levels.

        During the thirteen weeks ended April 1, 2013, we opened two Joe's Crab Shack restaurants, one of which was converted from a Brick House Tavern + Tap. Subsequent to the end of the current quarter we opened two additional Joe's Crab Shack restaurants. For the remainder of the fiscal year, we expect to open as many as nine more new restaurants, a vast majority of which will be new Joe's Crab Shack restaurants, and converting as many as three existing restaurants to either a Joe's Crab Shack or a Brick House Tavern + Tap. With the acquisition of Macaroni Grill, we are evaluating our current restaurant development options.

        Performance of any new restaurant location will usually differ from its originally targeted performance due to a variety of factors, and these differences may be material. New restaurants typically encounter significant guest traffic and high sales in their initial months, which may decrease over time. Accordingly, the average sales volumes provided above for certain Joe's and Brick House restaurants may not be indicative of their future results. Furthermore, average sales volumes of our new restaurants are impacted by a range of risks and uncertainties beyond our control, including those described under the caption "Risk Factors."

        We are also currently in the process of testing a limited remodeling project with respect to certain of our Joe's Crab Shack restaurants to make such locations more consistent with our current prototype. We may expand this project in the future if we determine there is a positive impact on the results of operations of these restaurants post-remodel.

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Restaurant Locations and Other Properties

        As of June 30, 2013, we own 134 Joe's Crab Shack restaurants in 33 states, 16 Brick House Tavern + Tap restaurants in 10 states and 186 Romano's Macaroni Grill restaurants in 35 states, as shown in the chart below.

State
  Joe's Crab Shack   Brick House
Tavern + Tap
  Romano's Macaroni
Grill
  Total  

Alabama

    1         3     4  

Arkansas

            1     1  

Arizona

    3         7     10  

California

    13         30     43  

Colorado

    3     1     7     11  

Delaware

    1         1     2  

Florida

    14     2     24     40  

Georgia

    6         7     13  

Idaho

    1             1  

Illinois

    4     2     2     8  

Indiana

    3         2     5  

Iowa

    1         1     2  

Kansas

    1         1     2  

Kentucky

    2     1     1     4  

Louisiana

    2         2     4  

Maine

            1     1  

Maryland

    5         6     11  

Massachusetts

    1         2     3  

Michigan

    3         5     8  

Minnesota

    1         3     4  

Missouri

    3     1     6     10  

Nebraska

    1         1     2  

Nevada

    2         4     6  

New Jersey

    5     1     6     12  

New Mexico

            1     1  

New York

    6     1     2     9  

North Carolina

    1         7     8  

Ohio

    1     1     6     8  

Oklahoma

    3         2     5  

Pennsylvania

    4     1     4     9  

South Carolina

    3         2     5  

Tennessee

    3         7     10  

Texas

    29     5     22     56  

Utah

    2         3     5  

Virginia

    5         6     11  

Washington

    1         1     2  
                   

Total

    134     16     186     336  

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        As of June 30, 2013, we also have 24 franchised units of Romano's Macaroni Grill across 4 states and 10 other jurisdictions, as shown in the chart below.

State/Country
  Romano's Macaroni Grill
(franchised units)
 

Bahrain

    2  

Canada

    1  

Dubai

    2  

Egypt

    1  

Florida

    1  

Germany

    1  

Hawaii

    2  

Illinois

    1  

Japan

    1  

Mexico

    2  

Puerto Rico

    7  

Qatar

    1  

Taiwan

    1  

Texas

    1  
       

Total

    24  

        A summary of new restaurant openings, converted restaurant openings, restaurants permanently closed and restaurants closed for conversions during the last three fiscal years and the period from January 1, 2013 through April 1, 2013 is provided in the table below. The table below only reflects Joe's and Brick House restaurants as we did not own any Macaroni Grill restaurants during the periods listed in the table below.

 
  Fiscal Year    
 
 
  Period from
January 1, 2013
to April 1, 2013
 
 
  2010   2011   2012  

Ignite Restaurant Group

                         

Restaurants at beginning of period

    119     126     135     144  

New restaurants opened during period

    10     10     10     1  

Converted restaurants opened during period

        1     1     1  

Restaurants permanently closed during period

    (2 )   (1 )        

Restaurants closed for conversion during period(a)

    (1 )   (1) (b)   (2 )    
                   

Restaurants at end of period

    126     135     144     146  

Joe's Crab Shack

                         

Restaurants at beginning of period

    114     113     119     129  

New restaurants opened during period

    2     7     10     1  

Converted restaurants opened during period

            1     1  

Restaurants permanently closed during period

    (2 )   (1 )        

Restaurants closed for conversion during period(a)

    (1 )       (1 )    
                   

Restaurants at end of period

    113     119     129     131  

Brick House Tavern + Tap

                         

Restaurants at beginning of period

    5     13     16     15  

New restaurants opened during period

    8     3          

Converted restaurants opened during period

        1          

Restaurants permanently closed during period

                 

Restaurants closed for conversion during period(a)

        (1) (b)   (1 )    
                   

Restaurants at end of period

    13     16     15     15  
                   

(a)
Represents Joe's Crab Shack restaurants converted to Brick House restaurants or vice versa.

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(b)
Represents a Brick House Tavern + Tap that was closed in the fourth quarter of fiscal year 2011 for conversion into a Joe's Crab Shack restaurant in the second quarter of fiscal year 2012.

        Our Restaurant Support Center is located in Houston, Texas. We occupy this facility under a lease for approximately 31,000 square feet that expires on October 31, 2015. Due to the acquisition of Romano's Macaroni Grill, we also currently have a lease through October 2015 for a facility that has historically been the headquarters for Macaroni Grill. However, we expect to fully transition all of our employees from such facility to our Restaurant Support Center by the end of July and may determine to buy out the lease.

        All of our restaurant locations are leased under individual lease agreements. Leases are noncancelable and in general, have 10 to 15 year terms, with three to five-year extensions. Only four of our leases are set to expire without provisions for renewal within the next five years and these properties are not ranked within the top third of our restaurants. Most of our leases contain a minimum base rent, which generally have escalating base rent increases over the term of the lease. Some of our leases provide for contingent rent, which is determined as a percentage of sales in excess of specified minimum sales levels.

Purchasing and Distribution

        Our dedicated purchasing team sources, negotiates and purchases all food supplies, operating supplies, and all restaurant equipment, furniture and fixtures. We have developed an extensive network of suppliers, with many relationships dating back several years. We maintain relationships with many suppliers and have the ability to shift purchasing among suppliers, should more favorable terms become available in the market. In addition, we maintain multiple approved suppliers for all key components of our menu to mitigate risk and ensure supply. Suppliers are chosen based upon their ability to provide (i) a continuous supply of product that meets all safety and quality specifications, (ii) logistics expertise and freight management, (iii) product innovation, (iv) customer service, (v) transparency of business relationship and (vi) competitive pricing. Specified products are distributed to our Joe's Crab Shack and Brick House Tavern + Tap restaurants through a national distribution company under a negotiated contract, and we expect our Macaroni Grill restaurants to be integrated into the same distribution network by the end of August 2013. This distributor delivers products directly to our restaurants either two or three times per week depending on restaurant requirements. Produce is predominantly purchased locally from an approved supplier network to maximize operating efficiencies and to ensure freshness and product quality.

        Our top selling menu items are based on Queen Crab, Snow Crab, Dungeness Crab, King Crab, whole lobster and shrimp, which collectively accounted for approximately 49% of our total food purchases in fiscal year 2012. We have established long-term relationships with key seafood vendors and usually source product directly from producers to get advantageous product access at the most competitive prices. As market conditions warrant, we can use these relationships to lock in forward pricing for six to 18 months. Pricing agreements are entered into for a minimum volume of product and are structured around current and historical prices and the projected menu mix. We employ a team at the Restaurant Support Center that is solely responsible for actively managing these contracts, which typically roll on a continuous basis.

        While seafood has historically accounted for a substantial portion of our total food purchases, in light of our acquisition of Macaroni Grill, we expect our total food purchases to become more heavily weighted towards items such as beef, chicken, flour and other items that have historically comprised a smaller portion of our food costs, and such items may subject us to additional volatility in price and availability. However, we do expect to achieve some purchasing synergies from the overall increase in our food purchases and the increased purchases of items common to two or more of our brands, such as seafood and poultry.

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        In addition to using fixed price contracts, our Joe's menu provides inherent flexibility to help manage food cost. Crab is deliberately placed center stage as a defining item to the Joe's experience. Joe's Steampot and Crab in a Bucket offerings allow guests to choose between four varieties of crabs (Queen, Snow, Dungeness and King) and lobster. Each of these species has multiple fisheries and seasons. In addition to the ability to direct guests to other crab varieties, Steampots, the top selling item on the menu, provide additional product flexibility. The Steampot is a variety of both shellfish and non-seafood items served together in a simmering pot that have individual ingredients that can be adjusted based on prevailing market prices and general input availability. We believe this strategy greatly reduces our reliance on individual inputs and is largely opaque to the guest. In addition, should input prices increase, we have the ability to adjust menu prices very quickly, even within a few days, if appropriate. While certain of Macaroni Grill's food purchases are currently single sourced, we are in the process of obtaining second and sometimes third supply sources for each inventory item, as well as domestic source suppliers for inventory items that are produced internationally.

        Crab is harvested during seasons and in accordance with regulations which are determined by various regulatory agencies. Crab is processed, frozen and shipped to either cold storage or to the master distributor. The master distributor fulfills restaurant orders by delivering frozen crab, which our restaurants store in a frozen state until preparation for service to the guest. We believe our strong supplier relationships, coupled with the inherent flexibility of our menu, minimizes our exposure to seafood supply chain shortages and market price increases. Cost of sales as a percentage of revenues for fiscal year 2012, 2011 and 2010 were 31.3%, 31.5%, and 29.6%, respectively. In fiscal year 2012, our largest supplier accounted for 20% of our total food purchases.

Food Safety

        We have food safety and quality assurance programs which are designed to ensure that our restaurant team members and managers are trained in proper food handling techniques. Our restaurants operate in various municipalities, which require us to have systems in place to adhere to various locals standards. With the goal of achieving industry leadership in the area of restaurant food safety and sanitation, we have implemented a national operating standard, which includes comprehensive, unannounced inspections by a third-party service provider. Restaurant managers receive feedback and coaching as an integral part of the semi-annual visits to each restaurant.

        Our operations, procurement and culinary teams work in close coordination to exceed industry standards. Our procurement team works to ensure that product fulfillment fits to the specifications set by our culinary experts. This process requires that our seafood products are caught, produced or processed in environments that meet and often exceed legal requirements. Our culinary team works to use products that are safe for processing and handling in our restaurants' environment. Our training team provides both proprietary and non-proprietary materials and programs to educate salaried and hourly team members, while our operations team implements programs and sets standards for measurement of performance to ensure consistent performance at our restaurants.

        We require all of our suppliers to adhere to strict Hazard Analysis and Critical Control Points, or HACCP, quality control and environmental standards in the development, harvest, catch, and production of food products. We require chemical, physical and microbiological testing of seafood and other commodities for conformance to safety and quality requirements.

        All potential suppliers are required to meet our specified minimum standards to achieve approved supplier status for the Ignite system.

Information Systems and Restaurant Reporting

        All of our restaurants use computerized management information systems, which are designed to improve operating efficiencies, provide restaurant and Restaurant Support Center management with

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timely access to financial and operating data and reduce administrative time and expense. Our integrated management information systems platform is a combination of in-house and outsourced systems. The major management information systems are divided by function:

        All of our restaurants are equipped with computerized point-of-sale, or POS, and back-of-house systems. We use a third-party vendor for our restaurant POS System. We have the ability to generate weekly and period-to-date operating results on a company-wide, brand-wide, regional and/or individual restaurant basis. Together, this allows us to closely monitor sales, food and beverage costs and labor and operating expenses at each of our restaurants. Our system was updated in 2010 and runs on non-proprietary hardware with open architecture, intuitive touch screen interface and integrated credit and gift card processing. Our back-of-house systems include a kitchen display system for many of our restaurants. These systems also run on non-proprietary hardware with open architecture.

        Currently, the Macaroni Grill restaurants utilize the same restaurant POS as our Joe's and Brick House brands and technology that provides the same level of data as the Joe's and Brick House brands. We expect to transition all of our brands to one technology platform over the longer term.

        We contract with a third-party service provider for outsourced business process services that include accounts payable, general ledger and internal financial reporting. Our third-party service solution provides a complete web-based reporting package allowing for detailed profit and loss visibility at the restaurant level. Our accounting department prepares period and year-to-date profit and loss statements, which provide a detailed analysis of sales and costs, and which are compared to budgets and to prior periods. Additionally, we use outsourced payroll processing and human resources information systems. These outsourced systems support standard payroll functions as well as hiring, promotion, and benefits administration.

Employees

        As of June 24, 2013, we employed approximately 23,600 employees, of whom 187 were Restaurant Support Center, executive management and multi-unit restaurant management personnel, 1,060 were restaurant level management personnel and the remainder were hourly restaurant personnel. As of June 24, 2013, approximately 11,100 of our employees were Romano's Macaroni Grill management and restaurant personnel. During 2012, a period in which we did not own any Romano's Macaroni Grill restaurants, total employee counts ranged from 12,800 during peak summer season to 9,700 during the winter. None of our employees are covered by collective bargaining agreements, and we believe we have good relations with our employees.

Competition

        The restaurant industry is fragmented and intensely competitive. We believe guests make their dining selection based on a variety of factors such as menu offering, taste, quality and price of food offered, perceived value, service, atmosphere, location and overall dining experience. Our competitive landscape includes nationally branded restaurant chains as well as regional and local restaurant operators.

        For Joe's Crab Shack, our primary competitors in the casual seafood segment include Red Lobster, Bonefish Grill, Landry's Seafood and Bubba Gump Shrimp Company. Joe's is America's only national

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crab house. Red Lobster is our only large scale, nationally branded seafood competitor. The primary competitors of Romano's Macaroni Grill are Olive Garden and Carrabba's Italian Grill and other local, regional and national Italian restaurants. All of our brands also compete with a broader range of other casual dining restaurants including newer brands such as BJ's Restaurants, Yard House, Cheesecake Factory, Bravo Brio and Buffalo Wild Wings, as well as traditional brands such as Applebee's, Chili's, T.G.I. Friday's, Texas Roadhouse and Outback Steakhouse.

Seasonality

        There is a seasonal component to Joe's Crab Shack's business which typically peaks in the summer months (June, July and August) and slows in the winter months (November, December, January), while the seasonal component to Macaroni Grill's business typically peaks in the winter months. Because of the seasonality of our system-wide business, results for any fiscal quarter are not necessarily indicative of the results that may be achieved for future fiscal quarters or for the full fiscal year.

Trademarks and Service Marks

        Our registered trademarks and service marks include Joe's Crab Shack® and logo design, Brick House Tavern + Tap® and logo design and Romano's Macaroni Grill® and logo design. We have used or intend to use all the foregoing marks in connection with our restaurants. We believe that our trademarks and service marks have significant value and are important to our brand building efforts and identity and the marketing of our restaurant brand.

Licensing and Franchising Arrangements

        In addition to Company-owned Macaroni Grills, on April 9, 2013, we acquired twelve franchised restaurants across 36 states and Puerto Rico as well as twelve additional franchised units throughout nine foreign countries. Our acquisition of Macaroni Grill provided us with a franchise element to our business that provides an opportunity for us to explore franchise opportunities across our brands. Therefore, we intend to evaluate the expansion of our brands through franchising in the United States and internationally.

        We have a Vice President of Franchising who is responsible for overseeing our franchising activities. We would expect any future franchising arrangements to provide for revenue to us through initial franchising fees, ongoing royalties and marketing fees and all start-up costs paid by the franchisee. Our license agreements also require and any future agreements will require the franchisee to operate restaurants in accordance with certain defined operating procedures, adhere to our established menus and meet applicable quality, service, health and cleanliness standards.

        We are in the process of instituting what we believe is a rigorous and disciplined approach to developing a pipeline to drive franchising sales both domestically and internationally. We believe that international franchising may present an opportunity to provide higher returns on investment, while significantly reducing the capital and infrastructure required to own and operate international restaurants. Our established international franchising program with Macaroni Grill provides us with the capability to seek further expansion in international markets with our other brands. We seek franchising partners that have adequate financial resources, the ability to build-out a market, an established customer-facing interface and a track record of successful brand stewardship and awareness. For example, in March 2013, we entered into a franchise agreement pursuant to which a new franchisee has agreed to open five Macaroni Grill restaurants in Saudi Arabia, with the first restaurant planned to be opened by August 31, 2014 and four additional restaurants opened by 2020.

        In addition to our Joe's Crab Shack restaurant operations, we have a licensing agreement to provide branded seafood options under the Joe's Crab Shack brand at various retailers. We receive royalty revenues in connection with the license of the Joe's Crab Shack brand name based on a

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percentage of product sales, subject to a minimum royalty requirement. Furthermore, Romano's Macaroni Grill currently offers a premium line of seven brand frozen meals in numerous retail outlets throughout the U.S. through an exclusive licensing agreement with General Mills. We receive ongoing royalty revenues based on a percentage of product sales. We believe that these initiatives further enhance each of Joe's Crab Shack and Romano's Macaroni Grill brand awareness to prospective guests of our restaurants.

Government Regulation

        We are subject to a variety of federal, state and local laws. Each of our restaurants is subject to permits, licensing and regulation by a number of government authorities, relating to alcoholic beverage control, health, safety, sanitation, building and fire codes, including compliance with the applicable zoning, land use and environmental laws and regulations. Difficulties in obtaining or failure to obtain required licenses or approvals could delay or prevent the development of a new restaurant in a particular area.

        Alcoholic beverage control regulations require each of our restaurants to apply to a state authority and, in certain locations, county or municipal authorities for a license that typically must be renewed annually and may be revoked or suspended for cause at any time. Alcoholic beverage control regulations affect many aspects of restaurant operations, including minimum age of patrons and employees, hours of operation, advertising, trade practices, wholesale purchasing, inventory control and handling, storage and dispensing of alcoholic beverages.

        We are subject in certain states to "dram shop" statutes, which generally provide a person injured by an intoxicated person the right to recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated person. We carry liquor liability coverage as part of our comprehensive general liability insurance policy.

        Our restaurant operations are also subject to federal and state laws governing employment (including the Fair Labor Standards Act of 1938 and the Immigration Reform and Control Act of 1986) regarding such matters as the minimum hourly wage, unemployment tax rates, sales tax and similar matters. Significant numbers of our service, food preparation and other personnel are paid at rates related to the federal minimum wage, which currently is $7.25 per hour. The tip credit allowance is the amount an employer is permitted to assume an employee receives in tips when the employer calculates the employee's hourly wage for minimum wage compliance purposes. Increases in the federal minimum wage, directly or by either a decrease in the tip credit amount or an insufficient increase in the tip credit amount to match an increase in the federal minimum wage, would increase our labor costs.

        In addition, our restaurants must comply with the applicable requirements of the ADA and related state accessibility statutes. Under the ADA and related state laws, we must provide equivalent service to disabled persons and make reasonable accommodation for their employment, and when constructing or undertaking significant remodeling of our restaurants, we must make those facilities accessible.

        We are also subject to laws and regulations relating to nutritional content, nutritional labeling, product safety, menu labeling and other regulations imposed by the FDA, including the Food Safety Modernization Act. Regulations relating to nutritional labeling may lead to increased operational complexity and expenses and may impact our sales.

Litigation

        Occasionally, we are a defendant or otherwise involved in lawsuits arising in the ordinary course of our business including claims resulting from "slip and fall" accidents, "dram shop" claims, construction related disputes, employment related claims, and claims from guests or employees alleging illness, injury or other food quality, health or operational concerns. When the potential liability can be estimated and the loss is considered probable, we record the estimated loss. Due to uncertainties

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related to the resolution of lawsuits and claims, the ultimate outcome may differ from our estimates. As of the date of this prospectus, we do not believe the potential exposure with respect to any of these pending lawsuits and claims will have a material adverse effect on our consolidated financial position, results of operations or cash flows.

        On July 18, 2012, we announced our intention to restate our financial statements for the years ended December 28, 2009, January 3, 2011 and January 2, 2012 and the related interim periods. On July 20, 2012, a putative class action complaint was filed in the U.S. District Court for the Southern District of Texas against us, certain of our current directors and officers and the underwriters in our IPO. The plaintiffs allege that all the defendants violated Section 11 of the Securities Act and certain of our directors and officers have control person liability under Section 15 of the Securities Act, based on allegations that in light of the July 18, 2012 restatement announcement, our IPO registration statement and prospectus contained untrue statements of material facts, omitted to state other facts necessary to make the statements made therein not misleading, and omitted to state material facts required to be stated therein. The plaintiffs seek unspecified compensatory damages and attorneys' fees.

        We believe this lawsuit is without merit. We have filed a motion to dismiss the case and will continue to vigorously defend the lawsuit. However, we are unable to predict the outcome of this case and any future related cases.

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MANAGEMENT

        Set forth below are the name, age, position and a description of the business experience of each of our executive officers, directors and other key employees as of June 5, 2013:

Name
  Age   Position(s)

Raymond A. Blanchette, III

    46   Chief Executive Officer and Director

Michael J. Dixon

    50   President and Chief Financial Officer

James F. Mazany

    46   President, Joe's Crab Shack

James W. Kuhn

    51   President, Brick House Tavern + Tap

David Catalano

    56   President, Macaroni Grill

Robin N. Ahearn

    43   Senior Vice President and Chief Marketing Officer

Edward W. Engel

    62   Senior Vice President of Legal, Corporate Secretary and General Counsel

Edward J. McGraw

    49   Senior Vice President and Chief Development Officer

Brian N. Cherry

    38   Director

Ann Iverson

    69   Director

Zane Leshner

    70   Director

Joseph N. Stein

    52   Director

Paul R. Vigano

    40   Chairman of the Board

Fritzi Woods

    53   Director

Background of Executive Officers and Directors

        Raymond A. Blanchette, III has served as our Chief Executive Officer since February 2013, prior to which he served as our President and Chief Executive Officer since joining Ignite in May 2007 and has been a member of our board of directors since that time. Prior to joining Ignite, Mr. Blanchette served as President and Chief Operating Officer for Pick Up Stix, a leader in the quick-casual dining segment from April 2006. Mr. Blanchette also held multiple leadership positions both domestically and internationally during his 18-year tenure with Carlson Restaurants Worldwide (T.G.I. Friday's and Pick Up Stix), or "Carlson Restaurants," including Executive Director of International Business. Mr. Blanchette has more than two decades of restaurant experience and was the voluntary Chairman of the Great American Dine Out, an annual charity event sponsored by Share Our Strength, a non-profit organization which brings together thousands of restaurants nationwide to raise funds to end childhood hunger in America. Mr. Blanchette holds an M.B.A. from Southern Methodist University in Dallas, Texas. Mr. Blanchette has been elected to our board of directors until our 2014 annual meeting of stockholders.

        Mr. Blanchette's knowledge of our opportunities and challenges gained through his day-to-day leadership as our Chief Executive Officer, as well as his significant knowledge and understanding of the industry, specifically the casual dining segment, and his extensive associations in the restaurant industry, provide him with the qualifications and skills to serve as a director.

        Michael J. Dixon has served as our President and Chief Financial Officer since February 19, 2013. Mr. Dixon previously served as Senior Vice President and Chief Financial Officer of the Company since January 2, 2013. Prior to his employment with the Company, Mr. Dixon served as the Chief Financial Officer of Pinkberry, Inc., a premium frozen yogurt retailer with over 220 outlets, a position he had held since 2008. Prior to joining Pinkberry, he served as Senior Vice President of Finance and Chief Financial Officer of The Cheesecake Factory from 2004 to 2008, and Vice President and Controller from 2000 to 2004. In 2000, he was Vice President and Controller of Petsmart.com, and prior to that, he served as Director of Finance and Business Development at The Walt Disney Company from 1994 to 2000. Before joining The Walt Disney Company, Mr. Dixon spent nine years at Coopers & Lybrand, a predecessor firm to PricewaterhouseCoopers LLP. Mr. Dixon holds a Masters in

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Accounting and a Bachelor's degree in Business Administration from the University of Michigan. Mr. Dixon also formerly served as a member of the board of directors of Brinker International, Inc., the owner, operator and franchisor of the Chili's Grill & Bar and Maggiano's Little Italy restaurant brands.

        James F. Mazany has served as President of Joe's Crab Shack since February 19, 2013. Mr. Mazany was previously Senior Vice President and Chief Operating Officer of Joe's Crab Shack since December 2010. He joined Ignite in July 2007 and initially served as Regional Vice President for the East Coast and then served as our Senior Vice President of Operations for Joe's Crab Shack. Prior to joining Ignite, Mr. Mazany served as Vice President of Operations for Apple Gold Group, the second largest Applebee's franchise group, since July 2005. Mr. Mazany has over 25 years of restaurant experience, which includes serving as Director of Operations for T.G.I. Friday's, where he oversaw the highest volume T.G.I. Friday's market in the country.

        James W. Kuhn has served as President of Brick House Tavern + Tap since February 19, 2013. Mr. Kuhn was previously Senior Vice President and Chief Operating Officer of Brick House Tavern + Tap since December 2010. He initially joined Ignite in July 2007 and served as our Vice President of Operations and then as our Senior Vice President of Growth and Technology as of February 2009 until his appointment as Senior Vice President and Chief Operating Officer of Brick House Tavern + Tap. Prior to joining Ignite, Mr. Kuhn served as Regional Vice President for Ruby Tuesday's since May 2005, where he was responsible for improvement in key areas including sales growth, people development, margin and facilities. Mr. Kuhn has more than 35 years of restaurant experience, including serving as Vice President of Operations for Sbarro's, and as a Regional Vice President for Bertucci's restaurants. Mr. Kuhn holds B.S. degrees in accounting and management from Jacksonville University.

        David Catalano has served as President of Macaroni Grill since April 9, 2013. Prior to joining Ignite, Mr. Catalano was Executive Vice President and Chief Operating Officer of Rave Cinemas, an owner and operator of movie theatres, since March 2012. From September 2011 to March 2012, Mr. Catalano was Chief Operating Officer of Al Copeland Investments, the owner and operator of a variety of restaurant concepts, and from January 2007 to September 2011 he was President of Catalano Management & Consulting. He also served as Chief Operating Officer for Apple Gold, an Applebee's franchisee with approximately 70 locations, Chief Operating Officer for Hard Rock Café and spent 15 years with T.G.I. Friday's holding a variety of leadership positions including Vice President of Operations.

        Robin N. Ahearn has served as our Senior Vice President and Chief Marketing Officer since December 2010. Ms. Ahearn joined Ignite in April 2007 and initially served as our Vice President of Marketing in charge of marketing and menu development and then as our Senior Vice President of Marketing as of January 2010. Prior to joining Ignite, Ms. Ahearn served in several different leadership capacities, including as Media and National Campaign Director, for Applebee's International, Inc., where she was employed since July 1998. Ms. Ahearn has a broad range of marketing, advertising and media experience. Ms. Ahearn worked for the Associates Financial Services Corporation, where she managed the campaign to introduce home equity lending to the consumer, and for TracyLocke, a marketing agency, where she handled the Pepsi core brands and the new products account. She also managed the in-house media department for Michaels Stores, Inc., the largest arts-and-crafts retailer in the country. Ms. Ahearn is a member of the Marketing Advisory Board for Great American Dine Out and Women's Foodservice Forum. Ms. Ahearn holds an M.B.A. from Texas Christian University in Fort Worth, Texas, and a bachelor's degree in radio, television and film from Baylor University in Waco, Texas.

        Edward W. Engel has served as our Senior Vice President and General Counsel since January 1, 2010. He initially joined Ignite in November 2006 and served as our Vice President and General

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Counsel. Prior to joining Ignite, Mr. Engel spent five years as Associate Counsel for Landry's Restaurants, Inc., working primarily in the areas of mergers and acquisitions, real estate and international franchises. Mr. Engel has more than 30 years of legal experience, which includes functioning as chief legal counsel to Rainforest Cafe, Inc. and as a member of the board of directors of companies in England, Japan and Hong Kong. Additionally, he has successfully negotiated franchise agreements throughout the Middle East. Mr. Engel is a current member of the Texas College of Real Estate Attorneys and a former member of the College of the State Bar. Mr. Engel holds a J.D. from the South Texas College of Law and a B.B.A. from the University of Texas at Austin.

        Edward J. McGraw has served as our Chief Development Officer since February 19, 2013. Mr. McGraw was previously our Senior Vice President of Development since December 2010. He joined Ignite in July 2009 and served as our Vice President of Development. Mr. McGraw has over 20 years of business experience with a focus on restaurant real estate and legal matters. Prior to joining Ignite, Mr. McGraw held senior level development positions with Carlson Restaurants, Wagamama and David's Bridal. Mr. McGraw is an attorney with civil litigation experience. Mr. McGraw holds a J.D. from Widener University School of Law, where he graduated cum laude and was a member of the law review, and an M.B.A. and B.A. from the State University of New York at Buffalo.

        Each executive officer serves at the discretion of our board of directors and holds office until his successor is elected and qualified or until his earlier death, resignation or removal.

        Brian N. Cherry was elected as a member of our board of directors in May 2012. Mr. Cherry is a Managing Director of J.H. Whitney, a Connecticut-based private equity firm, where he has worked since 2000. Prior to joining J.H. Whitney, he was an investment professional with Cornerstone Equity Investors and prior to that he was a member of the merchant banking group at Donaldson, Lufkin & Jenrette, Inc. Mr. Cherry holds an A.B from Princeton University and an M.B.A. from The Wharton School of the University of Pennsylvania. Mr. Cherry currently serves as a director of several private companies. Mr. Cherry has been elected to our board of directors until our 2015 annual meeting of stockholders.

        Mr. Cherry's involvement with his respective firms' investments in many branded consumer companies over the past 12 years, including all of the firm's restaurant investments and his in-depth knowledge and industry experience, coupled with his skills in corporate finance, strategic planning and leadership of complex organizations, provides him with the qualifications and skills to serve as a director.

        Ann Iverson was elected as a member of our board of directors in December 2012. Ms. Iverson has provided international consulting services in Carefree, Arizona, since 1998. Prior to that, Ms. Iverson served as chief executive officer of Laura Ashley Holdings plc, Mothercare plc and Kay-Bee Toy Stores and chairman of Brooks Sports, Inc. She has also held executive positions with Bloomingdales and Federated Department Stores, Inc. Ms. Iverson is Chairman of the Board of Trustees of Thunderbird—The School of Global Management, and a member of Financo Global Consulting. Ms. Iverson is a member of the Board of Directors at Owens Corning, a publicly-traded manufacturer of composite and building materials systems, where she serves on the Audit and Finance Committees. Previously she served on a number of other public company boards including Shoe Pavilion, Inc. and Iconix. Ms. Iverson has been elected to our board of directors until our 2014 annual meeting of stockholders.

        Ms. Iverson has significant leadership experience as a chief executive officer in both the public and private sectors and as a business consultant. She provides the board a global perspective, with over 10 years experience as chief executive officer of large multinational companies. Among other skills and qualifications, Ms. Iverson's expertise in finance, branding, international business and marketing provide her with the qualifications and skills to serve as a director. We also value Ms. Iverson's contributions as an "audit committee financial expert" on our board of directors.

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        Zane Leshner was elected as a member of our board of directors in May 2012. Mr. Leshner has served as a restaurant and food service industry consultant since 1997. Throughout his 40 year career, Mr. Leshner has served in a variety of domestic and international executive positions with Burger King, Taco Bell, California Pizza Kitchen and also developed start-up restaurant concepts. Mr. Leshner holds a Bachelor of Science degree in Economics from Western Michigan University and a Juris Doctor from Memphis State University.

        Mr. Leshner's experience as a senior executive officer and senior legal counsel in the restaurant and food service industries provides him valuable and relevant experience in brand management, as well as significant experience dealing with domestic expansion, strategic planning and leadership of complex organizations and provides him with the qualifications and skills to serve as a director. Mr. Leshner has been elected to our board of directors until our 2016 annual meeting of stockholders.

        Joseph N. Stein was elected as a member of our board of directors in June 2013. Mr. Stein has served as a restaurant and franchise consultant since February 2011. Mr. Stein is also a CFO Partner of Accordion Partners CFO Leadership Group, a financial services firm. From January 2009 to February 2011, Mr. Stein was the Senior Vice President of Strategy & Innovation for El Pollo Loco, Inc., a restaurant concept, and was previously the Senior Vice President and Chief Financial Officer of El Pollo Loco, Inc. from 2002 to 2009. Mr. Stein has served in a variety of executive positions with other restaurant companies during his over 25 year career, including with Rubio's Restaurants, Inc., Checkers Drive-In Restaurants, Inc. and CKE Restaurants, Inc. Mr. Stein was also previously a certified public accountant for KPMG LLP. Mr. Stein is also a director of ROI Acquisitions Corp., a special purpose acquisition corporation in the restaurant and consumer goods industry. Mr. Stein has been elected to our board of directors until our 2016 annual meeting of stockholders.

        Mr. Stein's extensive experience as a senior executive officer in the restaurant industry, his accounting and financial expertise and his experience with strategic transactions provide him with the qualifications and skills to serve as a director. We also value Mr. Stein's contributions as an "audit committee financial expert" on our board of directors.

        Paul R. Vigano was elected as Chairman of our board of directors in May 2012. Mr. Vigano has served as Co-Managing Partner at J.H. Whitney, a Connecticut-based private equity firm, since April 2010 and has been a Managing Director since 2001. Mr. Vigano joined J.H. Whitney in 1998. Prior to joining J.H. Whitney, he was a member of the mergers and acquisitions group at Goldman, Sachs & Co. Mr. Vigano holds a B.B.A. degree from the University of Michigan where he graduated Phi Beta Kappa and an M.B.A. from Stanford Graduate School of Business. Mr. Vigano has been elected to our board of directors until our 2015 annual meeting of stockholders.

        Mr. Vigano currently serves as a director of several private companies, including several consumer product companies. His in-depth knowledge and experience in the branded consumer products industry, coupled with his skills in corporate finance, strategic planning and leadership of complex organizations, provides him with the qualifications and skills to serve as a director.

        Fritzi G. Woods was appointed as a member of our board of directors in March 2013. Ms. Woods has been the President and CEO of Women's Foodservice Forum, a corporate leadership development association dedicated to creating and implementing gender diverse leadership strategies for mid and senior level executives in some of the world's largest foodservice companies, since 2010. Ms. Woods was previously the chairman and CEO of PrimeSource Foodservice Equipment, Inc., a leading restaurant equipment distribution company, from 2003 to 2010. Prior to joining PrimeSource, Ms. Woods served in multiple senior executive roles at The Dallas Morning News, as finance controller for the Semi-Conductor Manufacturing Division of Motorola, executive deputy director for the Office of Administration at the State of Texas Natural Resources Conservation Commission, and as chief financial officer and vice president of finance and administration at the Greater Houston Convention & Visitors Bureau. Ms. Woods started her career as an auditor with Arthur Andersen & Co. Ms. Woods

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is also a member of the board of directors of Jamba, Inc., a publicly-traded chain of drink and smoothie retailers. She is also formerly a member of the board of directors of BUCA, a multi-chain restaurant company. Ms. Woods is a certified public accountant. Ms. Woods has been appointed to our board of directors until our 2015 annual meeting of stockholders.

        Ms. Woods has significant leadership experience as a chief executive officer in the restaurant industry. Among other skills and qualifications, Ms. Woods' expertise in accounting, finance and the restaurant industry provide her with the qualifications and skills to serve as a director. We also value Ms. Woods' contributions as an "audit committee financial expert" on our board of directors.

Corporate Governance

        Our amended and restated bylaws provide that our board of directors shall consist of such number of directors as determined from time to time by resolution adopted by a majority of the total number of directors then in office. Our board of directors currently consists of seven members, Raymond A. Blanchette, III, Brian N. Cherry, Ann Iverson, Zane Leshner, Joseph N. Stein, Paul R. Vigano and Fritzi G. Woods. Our amended and restated certificate of incorporation provides that our board of directors is divided into three classes, with each director serving a three-year term. Messrs. Leshner and Stein serve as Class I directors with their current term expiring in 2016. Mr. Blanchette and Ms. Iverson serve as Class II directors with their current term expiring in 2014. Messrs. Cherry and Vigano and Ms. Woods serve as Class III directors with their current term expiring in 2015. Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the total number of directors. Our classified board structure will continue and be in effect until the annual meeting of stockholders to be held in 2016. At the 2014 annual meeting of stockholders, the Class II directors will be elected for a term expiring at the 2016 annual meeting of stockholders, and at the 2015 annual meeting of stockholders, the Class III directors will be elected for a term expiring at the 2016 annual meeting of stockholders. Beginning with the 2016 annual meeting of stockholders, directors will be elected for a term expiring at the next annual meeting of stockholders and until his or her successor shall be elected and qualified, subject, however to prior death, resignation, retirement, disqualification or removal from office.

        We follow the director independence standards set forth in The NASDAQ Stock Market corporate governance standards and the federal securities laws.

        The board of directors has reviewed and analyzed the independence of each director. The purpose of the review was to determine whether any particular relationships or transactions involving directors or their affiliates or immediate family members were inconsistent with a determination that the director is independent for purposes of serving on the board of directors and its committees. During this review, the board of directors examined whether there were any transactions and/or relationships between directors or their affiliates or immediate family members and the Company and the substance of any such transactions or relationships.

        As a result of this review, the board of directors affirmatively determined that Messrs. Leshner and Stein and Mss. Iverson and Woods are "independent" for purposes of serving on the board of directors and meet the requirements set forth in our director independence guidelines.

        J.H. Whitney VI controls a majority of the voting power of our outstanding common stock and following completion of this offering will continue to control a majority of the voting power of our outstanding common stock. As a result, we are a "controlled company" under The NASDAQ Stock

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Market corporate governance standards. As a controlled company, exemptions under the standards free us from the obligation to comply with certain corporate governance requirements, including the requirements:

        These exemptions do not modify the independence requirements for our Audit Committee, and we currently comply with the requirements of Rule 10A-3 of the Exchange Act and the rules of The NASDAQ Stock Market required by such rules as described below.

        To the extent the ownership of J.H. Whitney VI is less than 50% following the completion of this offering, the Company will no longer be a "controlled company" under The NASDAQ Stock Market corporate governance standards.

        Mr. Vigano serves as the Chairman of our board of directors. Although we do not have a formal policy on whether the role of the Chief Executive Officer and Chairman should be separate, we believe that having Mr. Vigano serve as a non-employee Chairman is preferable at this time. Our Chairman provides leadership to ensure that the board functions in an independent, cohesive fashion.

        We believe our Chief Executive Officer should be principally responsible for running the Company, while our Chairman is responsible for running the board. The board of directors has considered the time that is required of Mr. Blanchette as Chief Executive Officer and believes that by having another director serve as Chairman of the board, Mr. Blanchette is able to focus his entire energy on running Ignite. Under our Corporate Governance Guidelines and our bylaws, our Chairman:

        Our Chairman also has access to management and financial and other information as he deems appropriate from time-to-time to assist him and the board of directors in discharging their responsibilities.

        The board of directors determines its leadership structure from time to time. As part of the annual board self-evaluation process, the Corporate Governance and Nominating Committee and the board evaluate the board's leadership structure to ensure that the structure is appropriate for Ignite and its stockholders. We recognize that different board leadership structures may be appropriate for Ignite in

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the future, depending upon applicable circumstances. However, the board of directors believes the current leadership structure, with Mr. Blanchette as Chief Executive Officer and Mr. Vigano as Chairman of the board, is the appropriate structure for Ignite at this time.

        Our board of directors has established an Audit Committee, a Compensation Committee and a Corporate Governance and Nominating Committee. Each of the committees reports to the board of directors as they deem appropriate, and as the board may request. The composition, duties and responsibilities of these committees are described below. The table below sets forth the current membership of each of the committees:

Director
  Audit   Compensation   Corporate
Gov