1137047--4/3/2006--SMITH_&_WOLLENSKY_RESTAURANT_GROUP

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RISKS RELATED TO OUR BUSINESS Our unfamiliarity with new markets may present risks, which could have a material adverse effect on our future growth and profitability. Our success in profitably pursuing our strategy of expansion will depend on our ability to open new restaurants efficiently. Our planned expansion involves a number of risks, which could delay or prevent the opening of new restaurants. Terrorism and war may have material adverse effect on our business. Our profitability is dependent in large measure on food, beverage and supply costs which are not within our control. The restaurant industry is affected by changes in consumer preferences and discretionary spending patterns that could result in a reduction in our revenues. The failure to enforce and maintain our trademarks and trade names could adversely affect our ability to establish and maintain brand awareness. Certain of our material agreements may be terminated if Alan Stillman is no longer our chief executive officer, if Mr. Stillman ceases to direct our business, or if Mr. Stillman s ownership interests fall below certain levels. Mr. Stillman s duties to St. James Associates and MW Realty Associates on the one hand, and us on the other hand, may result in a conflict of interest. Because we maintain a small number of restaurants, the negative performance of a single restaurant could have a substantial impact on our operating results. Our geographic concentration in New York City could have a material adverse effect on our business, results of operations and financial condition. We plan to incur substantial costs over the long-term in connection with our future expansion plans. We may need to seek additional financing sooner than we anticipate, which may not be available on acceptable terms or at all: Our operating results may fluctuate significantly due to seasonality and other factors beyond our control. The failure to reopen our restaurant in New Orleans in the near future or the failure to collect an adequate amount of insurance proceeds could have a material adverse effect on our business, results of operations and financial condition. Our expansion may strain our infrastructure, which could slow restaurant development. We could face labor shortages, increased labor costs and other adverse effects of varying labor conditions. Unanticipated costs or delays in the development or construction of future restaurants could prevent our timely and cost-effective opening of new restaurants. We may not be able to obtain and maintain necessary federal, state and local permits which could delay or prevent the opening of future restaurants. The restaurant industry is affected by litigation and publicity concerning food quality, health and other issues, which can cause guests to avoid our restaurants and result in liabilities. The covenants contained in the agreements governing our indebtedness may limit our ability to expand our business and our ability to comply with these covenants may be affected by events that are beyond our control. RISKS RELATED TO OUR COMMON STOCK The large number of shares of our common stock eligible for public sale and the fact that a relatively small number of investors hold our publicly traded common stock could cause our stock price to fluctuate. Our certificate of incorporation and by-laws may delay or prevent a change of control transaction. Ownership of approximately 18.5% of our outstanding common stock by five stockholders will limit your ability to influence corporate matters. The price of our common stock may fluctuate significantly.

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1137047--4/3/2006--SMITH_&_WOLLENSKY_RESTAURANT_GROUP_INC