Investor presentation slides

Safe Harbor Statement

This presentation includes forward-looking statements. All statements other

than statements of historical fact are forward-looking statements. Forward-

looking statements are subject to certain risks, trends and uncertainties that

could cause actual results to differ materially from those projected. Among

those risks, trends and uncertainties are our estimate of the sufficiency of

existing capital sources, our ability to raise additional capital to fund cash

requirements for future operations, competition from other restaurant concepts,

our dependence on the services of certain key personnel and our ability to

manage our growth successfully. Although we believe that in making such

forward-looking statements our expectations are based upon reasonable

assumptions, such statements may be influenced by factors that could cause

actual outcomes and results to be materially different from those projected. We

cannot assure you that the assumptions upon which these statements are based

will prove to have been correct.

We cannot guarantee any future results, levels of activity, performance or

achievements. As a result, undue reliance should not be placed on the forward-

looking statements in this presentation.

•

Owns and manages two complementary full-service restaurant concepts and one quick

casual concept

–

Fine dining

•

5 restaurants

–

2 company owned, 3 joint ventures (JVs)

–

Upscale casual dining

•

24 restaurants

–

company owned (including Boston opening 5/5/08), 2 JVs, 8 managed and 1 licensed

–

Quick Casual

•

1 company owned

•

24-year history serving freshly prepared, made-from-scratch American grill fare

Company Overview

Key Milestones

1984

The first “Grill on the Alley”

Hills, CA

1988

The

first

“Daily

Grill”

1990 –

1994

Opened 5 additional California “Daily Grills”

1995

Grill Concepts, Inc. goes public

(NASDAQ:GRIL)

The “Grill on the Alley”

Restaurant Hall of Fame

1997

The first non-California “Daily Grill”

Washington, DC

2001

Entered into strategic alliance with Starwood

Hotels

opens in Beverly

opens

Brentwood,

inducted into the

opens in

Key Milestones -

Today

•

29 Restaurants

(of which 12 are hotel locations)

–

$68 million in consolidated sales, excluding management fees and

cost reimbursements

–

$102 million system-wide restaurant sales

•

Strategic acquisitions in 2007

–

HRP buyout –

acquired rights to current and future hotel management revenues

–

Downtown buyout –

acquired JV partner’s interest, converting to company-owned

restaurant

•

Greater financial flexibility to fund accelerated restaurant

expansion program

–

Expanded line of credit to $12 million in late 2006

–

Completed private placement offering raising gross proceeds of

$14.1 million in 2007

Experienced Management Team

Philip Gay

President & CEO

2004

Michael Weinstock

EVP

Co-founder

Robert Spivak

Director

Co-founder/Consultant

Philip

Kastel

Director R&D

2006

Dmitri Fagel

Director Openings and

Development

1993

Scott Sampson

Director Finance

2007

Area Directors

5 Regional

Average 10 years

Coni

Zingarelli

Director PDR

2003

Thomas

Kachani

Director Purchasing

2006

Lynch

Director FPA

2002

Michelle

Feinstein

Director Legal Affairs

2004

Louie Feinstein

SVP-Operations

1992

John Sola

SVP-Culinary

1984

Wayne Lipschitz

VP-CFO

2006

John Laporte

VP-IT

2007

Terri Henry

VP-Marketing

2000

Steven Carter

VP-Construction

2007

Chris Gehrke

VP-HR

2004

Our Culture

•

PEOPLE

are our #1 asset –

guests, team members,

shareholders and communities

Pride

Excellence

Opportunity

Profitability

Leadership

Enjoyment

•

Employer of choice –

our culture has led to significantly

lower turnover than the industry average

20%

40%

60%

80%

100%

120%

Hourly

Management

Industry Average

GRIL

Source: Industry research provided by The Hay Group, as of

February 2007.

Note: Grill Concepts data represents all restaurants open for

than 12 months, as of December 30, 2007

Annual Employee Turnover

•

Traditional American Grill

–

Fine dining segment

•

Average spend per person (pre tax and tip)

–

Dinner $65, lunch $31, breakfast $18

•

Sales mix

–

Dinner 73%, lunch and breakfast 27%

–

Food 66%, alcohol 28%, non-alcoholic

beverage 6%

•

Guest profile

–

Luxury lifestyle

–

Enjoys fine dining

–

Travels for pleasure frequently

–

Significant income level

–

Large repeat customer base

Refined Fine Dining

Note: Fiscal year 2007

Exquisite Dining Experience

•

Extensive menu featuring prime

steak and chops, fresh seafood

–

Freshly prepared, made-from-scratch

–

Expansive wine list

•

Reputed power-lunch spot

•

Culinary school-trained Chefs

•

Sophisticated atmosphere

•

Elegant presentation

•

Uncompromising service,

knowledgeable staff

“Classic American cooking and a warm welcome

make The Grill on the Alley in Beverly Hills

worth visiting again and again…

The service at The Grill is as good as it gets in L.A. –

always has been and probably always will be.”

September 13, 2006

“…The Grill on the Alley has been drawing the “let’s do lunch”

crowd…

for 23 years. The Power Tables: The four horseshoe-

shaped

booths

along

the

back

wall,

130

–

133,

are

where

the

VIPs can be in the spotlight as they survey the goings on

in the entire dining room.”

November 18, 2006

“Steak Tartar…

meat this good deserves to be appreciated

on its own, forkful by delicious forkful…

the Grill on the Alley eschews hot new foodie fads

in favor of upscale comfort fare, classically prepared.

And that’s a culinary trend to get behind.”

September 29, 2006

Restaurant Hall of Fame

Three locations honored with

distinguished DiRona

Award

for fine dining

“Rave”

Reviews

•

Traditional American Grill

–

Upper end of casual dining segment

•

Average spend per person (pre tax and tip)

–

Dinner $35, lunch $20, breakfast $18

•

Sales mix

–

Dinner 59%, lunch and breakfast 41%

–

Food 72%, alcohol 20%, non-alcoholic

beverage 8%

•

Guest profile

–

Mean age: 45

–

Career focused

–

High percentage of discretionary

income –

mean income: $98,000

–

Percent with kids: 25%

–

Mean visits to a Casual Dining

Restaurant per month: 16 (9 lunch, 7 dinner)

Upscale Casual Dining

Note: Fiscal year 2007

•

Extensive menu featuring American classics

–

Crisp salads, homemade soups, fresh

seafood, aged Midwestern Angus beef,

sumptuous desserts

–

Freshly prepared, made-from-scratch

•

Highly trained Chef-managed

kitchen

•

Casual, yet sophisticated

atmosphere

•

Friendly, attentive service,

knowledgeable staff

Excellent Dining Experience

Wine

Other

Liquor, Beer

& Soft Bev

17%

Desserts

Seafood

10%

Steaks &

Chops

14%

Poultry

Pastas,

Sides &

Breakfast

Appetizers

& Soups

12%

Salads

11%

Sandwiches

10%

Sales Mix

Wine

15%

Other

Poultry

Pastas

Sandwiches

Sides &

Breakfast

Desserts

Liquor, Beer

& Soft Bev

20%

Appetizers,

Soups &

Salads

16%

Seafood

11%

Steaks &

Chops

20%

Note: Fiscal year 2006

Strong, Growing Average Unit Sales

$3.8

$4.2

$4.6

$5.2

$5.5

$4.1

$3.7

$3.5

$3.3

$3.2

$3.1

$3.0

2002

2003

2004

2005

2006

2007

The Grill

Daily Grill

($ millions)

Note: Average unit sales includes Company restaurants open at least 18 months.

Current & High Growth Target Markets

The Grill on the Alley

Daily Grill

In Short Order –

Daily Grill

Coming Soon

Proven Portability of Concept…

Accelerating Expansion Plans

•

Developing 4 to 6 new restaurants each year

–

Opened 4 restaurants during 2007 –

Memphis

(1)

, Seattle

(1)

, Austin and Fresno Daily Grills

–

2008 Year-to-Date -

Opened In Short Order (in Seattle) and Boston Daily Grill (5/5/08)

•

New unit openings currently planned through 2009 –

7 executed leases and

management agreements

–

The Grill on the Alley

•

Aventura FL

•

Westlake CA

–

Daily Grills

•

Tulsa OK

(1)

•

Annapolis MD

•

LAX Westin CA

•

Phoenix AZ

•

Dallas TX II

Boston Daily Grill Rendering

Potential for 150+ locations for both concepts…

(1) Managed Location

New Quick Casual Concept

•

Located in the Seattle Sheraton Hotel lobby

–

Opened February 2008

•

Short

Order

–

Daily

Grill

–

Menu limited to soups, salads, beverages and desserts

–

Featuring high quality ingredients, freshly prepared food

–

Approximately 400 square feet

–

Average check anticipated between $6 and $9

–

Upscale or highly developed ambiance

–

Fills the space between casual dining and fast-food

Current Unit Economics

The Grills

California

Daily Grills

Newest California

Opening

(5)

Number of units

(2)

(4)

2007

(1)

% of

Sales

2007

(1)

% of

Sales

2007

(1)

% of

Sales

Restaurant sales

$5,550

100%

$3,478

100%

$4,007

100%

Food and beverage

costs

$1,674

30.2%

$952

27.4%

$1,097

27.3%

Gross margin

$3,876

69.8%

$2,526

72.6%

$2,910

72.7%

Restaurant cash flow

$854

15.4%

$363

10.4%

$580

14.4%

Cash investment

$1,908

$1,012

$1,769

Cash-on-cash ROI

44.8%

35.9%

32.8%

Expansion Beyond California Provides Enhanced Margins

Average Restaurant Economics

($ thousands)

(1) Twelve months ended 12/30/07, company owned and JVs

(2)

Excludes

Dallas

(Grill)

the

restaurant

has

been

open

less

than

months

(3) Excludes Seattle (Daily Grill) and Austin (Daily Grill) as the restaurants have been open less than 18 months

(4) Excludes Brentwood, Studio City and Universal City CA locations due to remodeling

(5) Downtown, Los Angeles (Fresno opened November 2007, but insufficient data for comparison)

Non-CA

Daily Grills

(3)

2007

(1)

% of

Sales

$4,064

100%

$1,085

26.7%

$2,979

73.3%

$637

15.7%

$1,322

48.1%

Attractive New Unit Economic Model

The Grills

Daily Grills

(1)

Average size

7-8,000 sq ft

6-7,000 sq ft

Revenue

$4.5 -

$6.0 MM

$3.8 -

$5.0 MM

Restaurant level cash flow

$750,000

15%

$640,000

16%

Pre-opening costs

$350-450,000

$350-$450,000

Total cash investment

(2)

$1.75 -

$2.75 MM

$1.5 -

$2.5 MM

Cash ROI

30 –

45%

30 –

40%

(1)

Represents

non-California

Daily

Grill

restaurants

(2)

Total

cash

investment

net

TIA

$100-$150

per

Managed Restaurant Structure

GRIL

•

Operations control

•

Management fee of

5-8% of revenues

Hotel

•

100% tenant

improvements

(TIA)

•

8-9% return on TIA

Clearly aligned goals to maximize income

Restaurant income

GRIL 25-40% Balance to Hotel

Premier third-party restaurant operator for hotels

(breakfast, lunch, dinner, banquets, bar and room service)

Managed Locations

$2.94

$3.22

$3.46

$3.96

$4.17

$3.20

2002

2003

2004

2005

2006

2007

Strong growth in managed locations will lead

to incremental cash flow with minimal capital outlay

Average Unit Sales

($ millions)

Note:

Excludes

subsidized

Long

Beach

location,

well

the

2007

openings

Seattle

and

Memphis.

All managed locations currently operate as Daily Grills.

Multiple Growth Strategies

•

Enhance and evolve concepts

–

Menu initiatives

–

Selected unit upgrades and remodeling

•

Continue to build and attract quality employees

–

Incentive and recognition programs

–

Maintain high AUVs

•

Enhance operating and profit margins

–

Modest menu pricing increases

–

Leverage existing infrastructure

–

Expand outside California

•

Leverage hotel unit potential and partners

–

Proven food and beverage solution to hotel operators

–

Multi-day parts, room service, choice of casual or fine dining

•

Focus on Company owned and managed operations

–

Hub & spokes in large MSAs

–

Incremental cash flow with minimal capital outlay

Strong System-Wide Sales Growth

($ millions except # of restaurants)

# of restaurants open at end of year

2006

was

53-week

fiscal

year

for

financial

statement

purposes.

For comparative purposes, the above FY 2006 totals represent a 52-wk year.

$49.9

$61.5

$68.0

$24.3

$27.1

$28.6

$34.4

$54.7

FY04

FY05

FY06

FY 07

Consolidated Sales

Managed and Licensed Restaurant Gross Sales

Annual EBITDA Generation

$1,733

$3,515

$2,610

$470

$3,236

$1,733

$3,236

$3,515

$3,080

FY04

FY05

FY06

FY07

EBITDA

SOX costs & EBITDA for remodeled restaurants

($ thousands)

(1) 2006 EBITDA excludes a one-time, non-recurring HRP transaction, net of tax benefit.

Refer to Appendix to see EBITDA reconciliation to net income (loss).

(2)

2007 EBITDA includes estimated SOX implementation costs ($350,000) and impact of the closure of

three restaurants for remodeling ($120,000)

FY04

(52 weeks)

FY05

(52 weeks)

FY06

(3)

(52-week

comparison)

FY07

(52 weeks)

Weighted average weekly sales per

restaurant

(1)

The Grill

$ 77,545

$ 85,110

$ 92,124

$ 100,113

Daily Grill

57,757

59,456

63,731

66,022

Comparable restaurant sales

(2)

The Grill

2.1%

9.8%

12.3%

11.7%

Daily Grill

4.6%

1.1%

5.5%

4.7%

Consolidated

3.7%

4.3%

7.9%

7.4%

Total sales (in thousands)

The Grill

$ 16,129

$ 17,703

$ 21,680

$ 26,029

Daily Grill

33,809

37,003

39,768

41,990

Total consolidated sales

$ 49,938

$ 54,706

$ 61,448

$ 68,019

% Growth

8.9%

9.5%

12.3%

10.7%

Strong Sales Momentum

(1) Weighted average weekly sales includes Company restaurants

(2) Change in comparable restaurant sales includes Company restaurants open at least 18 months

(3) As FY 2006 consisted of 53 weeks, the 52-week comparison is provided

Quarterly Same-Store Sales Comps

-6%

-4%

-2%

10%

12%

14%

16%

18%

20%

22%

The Grill

Daily Grill

2003 2004 2005

2006 2007

2008

Note:

4Q06

same-store

sales

comps

are

based

13-week

comparison.

4Q06

was

14-week

quarter,

while

all

other

represented quarters were 13 weeks.

4Q07 comparison based on a 12-week comparison. Week 13 in 4Q07 included Christmas, whereas 4Q06 did not. Same-

store

sales

13-week

comparison

would

have

been

<0.6%>

for

Daily

Grills

and

1.5%

for

Grills

Annual Same-Store Sales Comps

4.0%

5.5%

1.6%

7.8%

2.0%

-3.6%

6.1%

3.7%

4.3%

7.9%

7.4%

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Note:

2000

and

2006

same-store

sales

comps

are

based

52-week

comparison.

2000

and

2006

were

53-week

fiscal years, while all other represented years were 52 weeks.

Consistent Operating Cost Structure

28.7%

28.4%

29.0%

28.2%

10%

20%

30%

Cost of goods sold

Restaurant operating

costs

(1)

as a percentage of total restaurant sales

59.8%

59.5%

60.0%

61.2%

35%

45%

55%

65%

2004

2005

2006

2007

(1) Restaurant operating costs includes payroll expenses

Investing in Infrastructure for Growth

As a percentage of

consolidated revenue

(1)

7.5%

6.7%

6.0%

10%

2004

2005

2006

2007

As a percentage of

system-wide sales

10.8%

9.5%

8.7%

8.6%

10%

General and Administrative Expenses

(1)

Consolidated revenue includes company-owned restaurant sales and management and license fees

Note: 2007 G& A expenses include estimated SOX implementation costs of $350,000

Key Investment Highlights

•

Under-penetrated, proven dual-brand concept provides long-

term growth opportunity

•

High quality, expansive menu with broad guest appeal across

multiple-day parts

•

Accelerating development plans, with ample room to grow

•

Selected unit upgrades reinvigorating sales growth

•

Successful track record of performance; powerful same-store

sales growth

•

Attractive unit economics –

cash on cash returns of 30% -

45%

•

Strengthened financial structure, performance momentum

•

Experienced management team with significant infrastructure in

place to support long-term growth

Appendix

EBITDA Reconciliation

FY04

FY05

FY06

(1)

FY07

($ in thousands)

Net

$ 38

$ 939

$ 1,304

$ (1,300)

Add/(subtract):

Interest expense, net

272

128

258

164

Provision/(benefit) for income taxes

179

(4,489)

(483)

Depreciation & amortization

2,005

2,248

2,325

2,627

Pre-opening costs

167

301

483

1,401

Minority interest

(814)

(559)

254

201

Debt extinguishment costs

279

Contract termination costs

3,101

EBITDA

$ 1,733

$ 3,236

$ 3,515

$ 2,610

(1) 2006 EBITDA excludes a one-time, non-recurring HRP transaction, net of tax benefit.