Kona Grill’s road to becoming America’s best happy hour could face a roadblock. The Nasdaq Stock Market notified Kona Grill it failed to comply with market rules and could be delisted.
On January 4, the Arizona-based company filed documents, which notified the Securities and Exchange Commission that the company received a deficiency notice from the Nasdaq Stock Market. According to the documents, Kona Grill fell below Nasdaq’s listing standard of $15 million minimum market value within the previous 30 consecutive business days.
According to the SEC filing, “Based on the number of publicly held shares on the date of this filing, in order to satisfy the $15 million market value requirement, the closing bid price of the Company’s common stock would need to be at least $1.89 per share for ten consecutive business days.”
On Friday, Kona’s shares traded at $1.29 when the market closed.
During the third quarter of 2018, the polished 44-unit chain witnessed a same-store sales drop of 14.1 percent, driven primarily by a double-digit decrease in customer traffic. Stacked on the prior-year quarter’s 7.2 percent fall, Kona Grill is riding a 20-plus percent two-year decline of comparable results.
The company made strategic moves, including a menu refresh in the summer and another one in the fall, throughout 2018 to help kick start the brand’s turnaround. In November 2018, the company’s board of directors appointed Marcus Jundt and Steven Schussler are taking over as co-CEOs. Jundt is one of the founders of Kona Grill, and previously served as CEO from 2006–2009. Schussler founded several recognizable brands, including Rainforest Café, T-Rex Café, Yak & Yet, and The Boathouse. Jundt and Schussler are current directors of Kona Grill.
The turnaround plan at Kona Grill seemed straightforward one according to Jundt: “… the board’s directive is to revitalize the Kona Grill brand with what has made us successful over the years. These areas include becoming once again America’s best happy hour with items that provide a great value proposition without significantly impacting gross margin.”
Kona Grill will have 180 days or until June 26 to regain compliance with Nasdaq. “The company may consider applying to transfer the company’s securities to the Nasdaq Capital Market,” Kona Grill said in its SEC filing.