TWST: Can we start with an overview of Red Robin?

Mr. Snyder: Red Robin has been around for over 20 years. I first became involved with Red Robin in 1979 when I became the first franchisee of Red Robin. There was one Red Robin when I got involved and I convinced the person who had that one Red Robin to do something of substance with it. So I continued to be a franchisee for a number of years and in the mid-1990s that person who I convinced to become a franchisor subsequently had sold Red Robin, the franchisor, to a large foodservice company in Japan and they weren't having the best of luck with it. So I went to Tokyo as the most successful and largest franchisee of Red Robin. I came back from Tokyo and I took over the company. In the year 2000, I merged my franchisee company into the franchisor, creating the one company that we have here today, Red Robin Gourmet Burgers. In July 2002, we went public. Red Robin is in the casual dining sector of the foodservice business industry. We are known as America's gourmet burger maker. We aspire to take better care of America's families than any other concept out there. We believe we have a competitive advantage with our great food and beverage, great demographics, a $10 per person ticket average, and, a service sequence that allows our guests to be in control of their own time. This has enabled us to enjoy 24 consecutive quarters of same-store sales growth.

TWST: So you serve in the casual dining rather than the fast food business?

Mr. Snyder: Clearly.

TWST: What is it that sets you apart from the fast food side?

Mr. Snyder: We are 6,400 square feet. We have a full bar. We have full table service. Red Robin is full service casual dining.

TWST: What are the locations typically?

Mr. Snyder: We like to locate near large traffic generators. That could be a regional mall, a life style center, a big box center, a large entertainment complex with 24 screen theater, for example.

TWST: Are they company owned or are you still franchising?

Mr. Snyder: It's about half and half. We have about 99 company- owned restaurants and about 97 franchised restaurants. We have over 200 in the system.

TWST: You mentioned the average check. What is your typical check?

Mr. Snyder: Just a little over $10 and that's pretty low in the casual dining arena. I really like playing in that $10 check average per person arena in North America. The first reason is I believe it gives some inflationary and recessionary protection. When times are good, people can trade up to us from the lower ticket average concepts and conversely when times are not so good, like perhaps these days, people can trade down to us from higher ticket average concepts. Over the past 23 years of owning and operating Red Robins, this ticket average arena that we operate in has served us well.

TWST: Whom do you view as your competition?

Mr. Snyder: We don't have anybody that does exactly what we do. There aren't many other players in the gourmet burger segment of casual dining. Clearly, we are in the casual dining sector. That said, one could argue that any other casual dining restaurant is a competitor.

TWST: And it's not exactly an empty field?

Mr. Snyder: It is not.

TWST: Why hasn't anybody else done the gourmet burger approach?

Mr. Snyder: I don't know. In over 23 years of doing it and successfully, we are proud of what we are doing and we are proud of what we have been able to accomplish to date. There just haven't been a lot of people that have tried to emulate us successfully.

TWST: As you look out, what are the expansion plans?

Mr. Snyder: We are looking at growing our company-owned restaurants by about approximately 17% to 20% annually. That means this year, 2003, we will open approximately 18 company- owned restaurants. On the franchise side of our business, we expect franchise revenue, fees and royalties, to grow at about 10%-15% annually. So for the year 2003, our franchisees will open approximately 10-13 new Red Robins.

TWST: Is there some minimum they have to open?

Mr. Snyder: We are not looking for one-offs; we are looking for larger area developers. There are a couple of things that you need to become a franchisee at Red Robin. Number one, you have to have successful food service operating experience. And number two, you have to have the financial wherewithal to execute the growth plan that we work out with you. So typically, an area developer signing up with us today would do a minimum of five restaurants in five years. It just so happens the average of late is about seven restaurants in five years.

TWST: Are you still having adding area developers?

Mr. Snyder: We are. And we are turning down approximately nine applicants per every one we accept. We are very choosy and want to align ourselves with those folks who share our values and can really do what they say they'd like to do.

TWST: Are you are finding enough candidate so that you can be that selective?

Mr. Snyder: We are and especially after our increased public awareness after the IPO last July. The IPO has given us more exposure.

TWST: What has comparable store sales growth been over the last year or two?

Mr. Snyder: In 2002, we averaged for the company 1.6%. Over the past five years, we've averaged closer to 5%, but we are feeling some of the unemployment issues going on in a couple of our large markets. That said, we are giving guidance, going forward, of 1.5%-2.5% comp store sales increases.

TWST: How much of that is going to be price and how much physical volume?

Mr. Snyder: I'll give you the five-year history. We've averaged a 1.2% price increase. This January, we took a 1% increase. A good portion of comp sales increases is going to be guest account and mix really doesn't enter into the math with our concept.

TWST: Do you change the menu much?

Mr. Snyder: About one to two times a year. At any one given point in time, we'll have about 30-40 different menu items in some form of test; after the initial testing stages, we put it into test restaurants that are located in various parts of the country. If it's still a go on the item, then we will feature it on our quarterly promotion and if the guest acceptance there is where we think it should be and all the other aspects of the menu item are go, like price preference, productivity, profit, then it's a strong candidate to go on the menu. So we make these changes very carefully and once or twice a year.

TWST: Are the changes within the context of gourmet burger?

Mr. Snyder: With respect to the burger side, yes, clearly. We like to have fun with it. We like to say, 'Anything you can put between two buns could be a candidate for a gourmet burger.' That's kind of a tongue in cheek way that we look at trying to create unique and unusual menu items. So we have a lot of fun with it, but yes, it's got to fit within the price range of that average ticket that we were talking about earlier. It's got to produce a reasonable amount of profit, and the productivity factor of the item is extremely important as well. It's got to be very easy to make in our eight-minute production times. So you put all this together, we've got a menu that's engineered for the guest to be in control of their experience and generate a large amount of profit as well.

TWST: From an operating point of view, are the units clustered?

Mr. Snyder: We are using a cluster strategy of development. I can give you an example. Of the 18 company-owned restaurants in 2003 this year, all but two or three of them will be in existing markets. These two new markets are Oklahoma and Nebraska, and we've already opened two restaurants in Omaha. They are exceeding our pro forma expectations.

TWST: As you open stores, do you own the facilities or are you leasing?

Mr. Snyder: We would like to buy the ground if we can, but most of the time the ground is not available for sale. It looks like we will be able purchase approximately 25% of our new deals going forward, just because many of the great sites aren't for sale.

TWST: How difficult is it at this point to get the staff you need for the stores?

Mr. Snyder: We are not finding that to be a major problem. I'm not going to be so cavalier and say that any aspect of our business doesn't have challenges. But when you have average unit volumes of $3 million out of 6,400 square feet, a $10 check average, taking care of one of the strongest American demographic groups today, high income women, teens and tweens, you have a lot of people who want to associate with that concept. Managers, servers, all team members can make quite a bit of money at Red Robin. It's not hard to find superstar people to work inside our restaurants.

TWST: Are you training them yourself or you taking them from other people?

Mr. Snyder: I can give you some examples on our general managers. About 65% of our GMs come from within. We like to promote from within. We actually have an incentive program for those existing General Managers who have team members who are promoted to management. They'll get a financial bonus for people development. So the answer is both from within and externally.

TWST: As you look at the market, do you see any big changes taking place in the competitive environment?

Mr. Snyder: I don't. The good part, I think, the only answer I have for you right now, would be that being in the casual dining sector is a great place to be. I think the fast casual concepts have slowed down a little and we all know the challenges that the fast food industry has with the couponing, discounting and all that. Clearly, if there is any real change in the market out there that I am noticing is that casual dining continues to be a great segment in the foodservice industry..

TWST: What are the goals that you've set for the company for the next two or three years?

Mr. Snyder: We have a values-based culture. This is going to sound a little esoteric, but we believe it to be true. We have an unbridled culture of passion, compassion, and caring. We try to surround ourselves with people who share our values and can make an impact. That's the biggest part of this people business, to make sure that those with whom you associate yourself with share your values and goals. Financial goals ' I see this as a 1,000 unit concept. We have just over 200 in our system right now. Only 175 in the United States. I see a potential for another 850 or so in the United States, taking that to about a 1,000 restaurants. So that's the goal I have set for myself and for our company. And when you compare our low number of units to some of the other larger casual diners out there ' and again I am repeating myself but we have a $3 million average unit volume, a great demographic group we take care of and an enviable ticket average, 35% cash on cash unit return. We have a lot of opportunity for growth.

TWST: Do you have the management team at the top to support that?

Mr. Snyder: I believe we do. And we have quite a few of our management team who have been with me for a long time. And so it's easy for us to demonstrate that we have a stable and experienced Red Robin management team.

TWST: Not if you want them to move, I guess?

Mr. Snyder: I am not going through this exercise to show you how old we are. I'm just trying to make a point that I have been doing it for 23 years and people that I have aligned myself with to help do this have been with Red Robin for a long time and/or in the foodservice business. So we are in good shape with respect to that.

TWST: From a balance sheet point of view, do you have the resources?

Mr. Snyder: I believe we do. The IPO combined with a line of credit with a group of banks at the time of IPO enabled us to execute the growth plan that we have in place. We also have the ability to continue our growth plan, be it additional borrowing if need be. So I think we are in good shape, being able to take advantage of whatever financial opportunities may arise.

TWST: Is the market appropriately valuing the company these days?

Mr. Snyder: We are a very young public company, just public since last July, hasn't been a year yet, and I think it is only appropriate that investors take a careful look at new public companies., Our job is to make sure we do what we say we are going to do. We will gain credibility and the market will appropriately value us. All associated with RRGB will be handsomely rewarded for our operational consistency.

TWST: When you talk to investors, what's their key question these days?

Mr. Snyder: It varies so much. The people who don't know about us sometimes confuse us with fast food. So they question exactly what is your concept all about and so we do like to emphasize that we are firmly entrenched in the casual dining sector and not fast food. That seems to come up a lot with folks who have not heard of Red Robin before.

TWST: I guess having no units in the east doesn't help?

Mr. Snyder: We do have Red Robins in the east and are expanding in that part of the country.

TWST: Is the toughest part of your message to get across is that you are not fast food?

Mr. Snyder: I think so. It's an easy story to tell because we've had so much success. We've had consistency with management. We've had consistency with performance. It's an easy concept to understand. There is no fancy financial maneuverings. It's just sales and profits. It's a pretty easy concept for people to grasp and we are getting a lot of interest from other potential franchisees and investors.

TWST: If you were sitting down with some potential investors today, what are the two or three reasons you'd give them to take a look at Red Robin?

Mr. Snyder: A consistent management team that has proven it can produce year after year after year. Combine that with the enviable demographic group in North America that we cater to ' higher income women, teens, and tweens ' that leads retail developers to give us great sites. Combine that with our affordable $10 per person check average, combined with our 35% cash on cash unit level return, you have a concept that has a lot of room to grow. So it's all about execution. It's about the fundamentals and executing the growth plan.

TWST: Thank you. (TM)

MICHAEL SNYDER Chairman, President & CEO Red Robin Gourmet Burgers, Inc. 5575 DTC Parkway Suite 110 Greenwood, CO 80111 (303) 846-6000 www.redrobin.com

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