Diversified Restaurant Holdings Earns $0.10 Per Share on $60.7 Million in Revenue for 2011

• Fourth quarter revenue expands 29.5% to $16.1 million on same-store-sales growth and six additional store openings; Net income was $0.5 million, or $0.02 per diluted share
• $6.6 million in cash generated from operations for the year, an increase of 44.6% over prior year
• Grows total stores to 28 in 2011 from 22 in 2010; Plans to have 68 total stores over next five years

SOUTHFIELD, Mich., April 11, 2012 (GLOBE NEWSWIRE) -- Diversified Restaurant Holdings, Inc. (OTCBB:DFRH) ("DRH" or the "Company"), the owner, operator, and franchisor of the unique, full-service, ultra-casual restaurant and bar Bagger Dave's Legendary Burger Tavern^® ("Bagger Dave's") and a leading franchisee for Buffalo Wild Wings^® ("BWW"), yesterday reported revenue grew 29.5% and 34.2% for its fourth quarter and fiscal year 2011, respectively. The Company's fiscal years 2011 and 2010 ended December 25, 2011 and December 26, 2010, respectively.

Michael Ansley, President and Chief Executive Officer of DRH, commented, "The strong growth realized in the quarter and full year were indicative of the success of our highly unique Bagger Dave's restaurants, focus on customer service and high quality food, and strategy to grow market share by continuing to methodically expand our store count. We believe our ability to effectively add new restaurants to our network, run our operations at best-in-class performance levels while creatively providing unique menu items, craveable food and an enticing atmosphere for family and friends will drive our growth while providing us competitive advantages."

Fourth quarter revenue of $16.1 million was up $3.7 million compared with the similar period in the prior year. Fiscal 2011 sales grew $15.5 million over the prior year. Sales growth was driven by the addition of six restaurants during the year, the benefit of stores opened during 2010, improved economic conditions in the areas in which the Company operates, as well as a 9.8% increase in same-store-sales for three Bagger Dave's restaurants and a 4.5% growth in same-store-sales for 18 BWW restaurants as growing customer awareness and satisfaction with quality food and service as well as fun, comfortable guest experiences attracts new visitors and drives return traffic. There were 28 total restaurants operating at the end of 2011 compared with 22 restaurants operating at the end of 2010. During the fourth quarter, a BWW restaurant was opened in University Park, Florida and the Company's sixth Bagger Dave's was opened in the greater Grand Rapids, Michigan region.

Net income in the fourth quarter of 2011 was $467 thousand improved over net income of $466 thousand in the same period the prior year. For fiscal 2011, net income grew measurably to $1.8 million, or $0.10 per diluted share, compared with net income of $168 thousand, or $0.01 per fully diluted share, in fiscal 2010.

Operating Performance

Operating expenses were up 35.0% and 30.9% in the fourth quarter and fiscal year, respectively, reflecting the addition of six new stores during the year, a 27.3% increase in the number of restaurants for DRH. 

DRH generated a significant increase in operating income, with results coming in at $3.6 million in 2011 compared with $1.6 million in 2010, primarily due to increased sales, carefully managed new restaurant opening costs, improved purchasing practices, and continued improvement in operational efficiencies.

David G. Burke, DRH's Chief Financial Officer, noted, "The initial costs associated with a new store opening can impact operating margins in the beginning. Leverage begins to be demonstrated within a 6 - 12 month period as systems and processes in each new location begin to flow as smoothly as our more mature operations. We have developed a systematic approach to training and integrating staff for new stores which helps to mitigate the challenges of initial openings as well as shorten the time to peak operating performance. We have also, over the last several months, instituted a review of various cost items and believe we can continue to reduce costs while maintaining the high level of quality our customers have come to expect."

Balance Sheet

Cash and cash equivalents were $1.5 million at December 25, 2011, compared with $1.4 million at December 26, 2010. The Company generated $6.6 million in cash from operations in 2011, up $2.0 million over the prior year, as a result of the significant increase in net income and careful working capital management.

Capital expenditures increased to $8.2 million in 2011. New restaurant construction accounted for $6.9 million, while $0.6 million was for real estate and $0.7 million was for existing store renovations. The Company is committed to reinvesting in its stores and is following a definitive schedule of continued improvements and remodeling to maintain a positive dining experience for guests.

Outlook

During 2012, DRH plans to increase from its current six Bagger Dave's restaurants and open three to four new stores, in addition to the first franchised operation planned to open during the year; two stores are currently under construction. DRH will also add one to two additional Buffalo Wild Wings restaurants during the year; one is currently under construction. 

Mr. Ansley concluded, "Based on our current success with Bagger Dave's, we feel expansion opportunities are unlimited as this is still a relatively new and unique concept that has successfully penetrated the market. We have an aggressive, yet disciplined, growth plan to reach 30 Bagger Dave's stores by 2017 through organic and franchise expansion. In addition, we expect to open 16 BWW stores to reach 38 stores by 2017 as well. 

"We believe that retaining high-quality restaurant managers, valuing our team members, and providing fast, friendly service to our guests are key factors to our continued success. And, importantly, the feedback we receive from our guests is that they crave our legendary burgers while appreciating our warm, inviting, and entertaining dining atmosphere."

About Diversified Restaurant Holdings

Diversified Restaurant Holdings, Inc. ("DRH" or the "Company") is the owner, operator, and franchisor of the unique, full-service, ultra-casual restaurant concept, Bagger Dave's Legendary Burger Tavern^® ("Bagger Dave's") and is a leading Buffalo Wild Wings^® ("BWW") franchisee. Between the two concepts, the Company currently operates 28 restaurants in Michigan and Florida. The Company routinely posts news and other important information on its Web site at www.diversifiedrestaurantholdings.com.

Bagger Dave's offers a full-service, family-friendly restaurant and bar with a casual, comfortable atmosphere. The menu features freshly made burgers (never frozen), accompanied by more than 30 toppings from which to choose, fresh-cut fries, hand-dipped milkshakes, and a selection of craft beer and wine. Signature items include Sloppy Dave's BBQ^®, Train Wreck Burger^®, and Bagger Dave's Amazingly Delicious Turkey Black Bean Chili^®. The Bagger Dave's concept emphasizes local flair by showcasing historical photos of the city in which each restaurant resides and features an electric train that runs above the dining room and bar areas. Currently, there are six corporate-owned locations in the state of Michigan and an executed area development agreement to franchise six Bagger Dave's in five states outside of Michigan. DRH is approved to franchise Bagger Dave's in the states of Illinois, Indiana, Kentucky, Michigan, Missouri, Ohio, and Wisconsin. For more information, visit www.baggerdaves.com.  

DRH operates 22 BWW restaurants: 14 in Michigan and eight in Florida. The Company continues to build new BWW restaurants in fulfillment of its 32-store Area Development Agreement ("ADA") with franchisor Buffalo Wild Wings, Inc. (Nasdaq:BWLD). This agreement, in addition to the six BWW restaurants opened prior to the ADA, suggests that the Company will operate 38 BWW restaurants in Michigan and Florida by 2017. 

Safe Harbor Regarding Forward Looking Statements

This news release contains "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995, as amended. Such statements consist of words like "anticipate," "expect," "project," "continue" and similar words. These statements are based on the Company's and its subsidiaries' current expectations and involve risks and uncertainties, which may cause results to differ materially from those set forth in the forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements, include consumer acceptance of the Company's products, its ability to deliver new products, the success of its strategy to broaden market channels and the relationships it has with retailers and distributors. The risks associated with any investment in CHDT, which is a small business concern and a "penny-stock Company" and, as such, a highly risky investment suitable for only those who can afford to lose such investment, should be evaluated together with the risks and uncertainties more fully described in the Company's Annual and Quarterly Reports filed with the Securities and Exchange Commission. DRH undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

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