In stepped FM radar, the transmitter intermittently transmits narrowband pulse trains of frequencies that are incremented in steps, and the receiver performs phase detection on each pulse and applies the inverse discrete Fourier transform (IDFT) to create ultra-short pulses in the time domain. Furthermore, since the transmitted signal consists of a narrowband pulse train of different frequencies, the transmitter can avoid arbitrary frequency bands while sending the pulse train (spectrum holes), allowing these systems to coexist with other narrowband wireless systems. However, spectrum holes cause degradation in the distance resolution and range sidelobe characteristics of wireless systems. In this paper, we propose a spectrum hole compensation method for stepped FM radars using Khatri-Rao product extended-phase processing to overcome the problem of spectrum holes and investigate the effectiveness of this method through experiments. Additionally, we demonstrate that the proposed method dramatically improves the range sidelobe and distance resolution characteristics.