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Red Robin Gourmet Burgers, Inc.
August 14, 2014
(RRGB-NASDAQ) Company Comment
Bryan C. Elliott, CFA, (404) 442-5856, Bryan.Elliott@RaymondJames.com
Brian M. Vaccaro, CFA, (404) 442-5866, Brian.Vaccaro@RaymondJames.com

Restaurants _________________________________________________________

Compelling Value on Cash Flow after Drop; Lower EPS; Reiterate Strong Buy

Recommendation: We reiterate our Strong Buy rating despite the ~20% intra-day decline
behind a disappointing EPS release. We emphasize that the slow Q2 sales (and attendant
margin pressures) is, in our view, a macro issue and not an indicator of a loss of competitive
positioning. On our new, lower 2015 numbers, RRGB is now trading near 6.0x on an
EV/EBITDA basis. This gives RRGB the lowest EV/EBITDA multiple in our broad restaurant
universe, which we believe is a material mispricing given 1) the company continues to grow
its market share; 2) the chainwide remodel program has yet to help sales; and 3) significant
white space remains for Red Robin to grow into a national chain.
Event: Q2 EPS of $0.68, vs. $0.77 in 2Q13, was well below our $0.93 estimate. Comp
sales of +1.2% was below our +3% estimate, causing margins to contract materially.
Analysis: Despite the Q2 comp miss, Red Robin sustained its strong historical pattern of
industry outperformance under the current management team (the Knapp-Track casual
dining index fell 1% in Q2). Factors include: 1) the dinner and a movie promotion (free
movie with $25 gift card purchase) in a period of materially weak movie attendance; 2)
we believe the July 4 shift cost ~50 bps of sales; and 3) some schools in the Northeast and
Midwest added many snow days to their late spring schedule (families come to Red Robin
much more frequently when school is out for the summer). This comp disappointment
pressured store margins (down 110 bp vs. our estimate of down 5). SG&A rose more than
expected on higher ad spending; thus EBITDA of $29.2 million was $5.3 million, or 15%,
below our forecast.
Future Comp Sales Drivers: We remain optimistic that RRGB can continue to drive
positive comp sales. We expect the marketing focus to return to an emphasis on the low
ticket Tavern Double burger (to counter increased competitive discounting) and on the
new premium burger line (to re-accelerate mix gains). The remodel program (~5% sales
lift in test) is accelerating and should result in close to 25% of the chain by Dec. 31, 2014,
vs. a bit over 10% today.
Estimates: We are lowering our 2014 EPS estimate by $0.40 to $2.40 and our 2015 EPS
estimate by $0.75 to $2.65.
Valuation: On our new, lower 2015 EBITDA forecast of $132.4 million, RRGB is currently trading
at an EV/EBITDA multiple of 6.2x. Note that RRGB depreciates its store assets much faster than
most public restaurant companies, understating its EPS relative to cash flow; this makes
EBITDA the key valuation metric in our opinion. Our new, lower $65 target price equates to an
EV/EBITDA multiple of 8.0x our new (and 11% lower) 2015 EBITDA forecast. This would still leave
RRGB near the bottom of our universe as shown on page 2.

Non-GAAP Q1 Q2 Q3 Q4 Full GAAP EPS Revenues
EPS Mar Jun Sep Dec Year Full Year (mil.)
2013A $0.66 $0.77 $0.32 $0.62 $2.37 $2.22 $1,017
Old 2014E 0.82A 0.93 0.36 0.70 2.80 2.80 1,158
New 2014E 0.82A 0.68A 0.30 0.61 2.40 2.38 1,133
Old 2015E 0.98 1.08 0.50 0.84 3.40 3.40 1,323
New 2015E 0.86 0.76 0.32 0.71 2.65 2.65 1,279
Rows may not add due to rounding. Non-GAAP EPS excludes one-time items.
Rating _________________________________
Strong Buy 1

Current and Target Price __________________
Current Price (Aug-14-14 12:52 p.m.) $51.17
Target Price: Old: $90.00 New: $65.00
52-Week Range $86.83 - $55.86
Suitability Aggressive Growth

Market Data ____________________________
Shares Out. (mil.) 14.5
Market Cap. (mil.) $745
Avg. Daily Vol. (10 day) 176,324
Dividend/Yield $0.00/0.0%
Book Value (Jul-14) $25.21
ROE 10%
LT Debt (mil.)/% Cap. $137/27%

Earnings & Valuation Metrics ______________
2013A 2014E 2015E
P/E Ratios (Non-GAAP)
21.6x 21.3x 19.3x
P/E Ratios (GAAP)
23.0x 21.5x 19.3x
Operating Margins
4.6% 4.5% 4.5%
EBITDA (mil.)
Old $109 $127 $148
New $109 $118 $132

Company Description ____________________
Red Robin Gourmet Burgers, Inc., headquartered in
Greenwood Village, Colorado, owns, operates, and
franchises almost 500 full-service casual dining
restaurants that serve a wide selection of gourmet
burgers (beef, chicken, fish, and turkey), salads, and
appetizers. The company hired a new CEO in the fall
of 2010 whose primary initial focus was improving the
profitability of the company's existing asset base
(2011/2012). In 2012 management's focus shifted
toward a multi-faceted brand transformation strategy
that includes significant menu innovation, evolving its
marketing strategy, and a system-wide remodel
program launching in 2014. We believe that the
company is still in the early innings of its
transformation, which, if successful, should result in
meaningful upside to the company's financial results.


Raymond James U.S. Research
2014 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. All rights reserved.
International Headquarters: The Raymond James Financial Center
|
880 Carillon Parkway
|
St. Petersburg, Florida 33716
|
800-248-8863 2
Raymond James Restaurant Universe - Valuations On Calendar Year Estimates
(8/14/14) Market EPS Estimates P/E Multiples Curr Ent. Value/EBITDA
Ticker Rating Price Cap CY-14 CY-15 CY-14 CY-15 CY-14 CY-15
Mature - Secular Unit Growth <6%
Darden Restaurants DRI MO-2 $47.04 $5,841 UR 2.62 UR 18.0x UR 8.8x
Brinker Int'l EAT MO-2 46.47 $3,105 2.89 3.29 16.1x 14.1x 8.5x 7.9x
Bloomin' Brands, Inc. BLMN MO-2 16.14 $2,067 1.07 1.20 15.1x 13.4x 7.1x 6.6x
Cheesecake Factory, Inc. CAKE MP-3 44.10 $2,330 2.20 2.57 20.0x 17.2x 8.9x 8.1x
Cracker Barrel OCS, Inc. CBRL MP-3 98.72 $2,367 5.81 6.30 17.0x 15.7x 9.0x 8.5x
Ruby Tuesday Inc. RT MU-4 5.99 $362 -0.39 -0.25 NMF NMF 9.4x 9.5x
Ruth's Hospitality Group, Inc. RUTH MO-2 10.69 $380 0.75 0.85 14.2x 12.6x 7.2x 6.6x
Carrols Restaurant Group, Inc. TAST SB-1 6.86 $305 -0.38 -0.18 NMF NMF 10.9x 9.4x
MEAN 16.5x 15.1x 8.7x 8.2x
MEDIAN 16.1x 14.9x 8.9x 8.3x
Growth Chains - Limited Service
Starbucks Corp. (4) SBUX NR 76.26 $58,430 2.81 3.30 27.2x 23.1x 15.1x 13.1x
Chipotle Mexican Grill CMG MO-2 679.47 $21,386 14.00 18.00 48.5x 37.7x 21.7x 17.4x
Panera Bread PNRA MU-4 147.22 $3,988 6.70 6.90 22.0x 21.3x 9.4x 9.0x
Fiesta Restaurant Group, Inc. FRGI SB-1 49.22 $1,293 1.30 1.55 38.0x 31.7x 15.9x 13.4x
Noodles & Company (4) NDLS NR 20.96 $651 0.43 0.56 48.5x 37.2x 13.2x 11.5x
Zoe's Kitchen, Inc. (4) ZOES NR 31.68 $610 0.02 0.08 2112.0x 386.3x 44.4x 31.3x
Potbelly (4) PBPB NR 12.42 $362 0.20 0.26 62.7x 48.1x 10.7x 8.7x
MEAN (ex ZOES) 41.1x 33.2x 14.3x 12.2x
MEDIAN 48.5x 37.2x 15.1x 13.1x
Growth Chains - Full Service
Buffalo Wild Wings, Inc. BWLD MP-3 142.32 $2,701 5.00 5.90 28.4x 24.1x 10.1x 8.9x
Texas Roadhouse, Inc. TXRH SB-1 25.57 $1,805 1.25 1.45 20.5x 17.6x 8.6x 7.6x
BJ's Restaurants Inc. (4) BJRI NR 35.15 $1,017 0.78 0.97 45.1x 36.2x 12.2x 10.0x
Red Robin Gourmet Burgers, Inc. RRGB SB-1 51.45 $747 2.38 2.65 21.6x 19.4x 7.0x 6.3x
Del Frisco's Restaurant Group, Inc. DFRG MP-3 21.52 $513 0.90 1.08 23.9x 19.9x 10.6x 8.9x
Chuy's Holdings, Inc. CHUY MO-2 28.31 $473 0.76 0.93 37.1x 30.5x 16.2x 13.5x
Kona Grill KONA MO-2 17.42 $199 0.07 -0.07 235.7x -260.8x 17.6x 15.0x
Ignite Restaurant Group, Inc. IRG MP-3 8.03 $207 -0.18 -0.20 NMF NMF 11.4x 10.3x
MEAN (ex-KONA) 29.5x 24.6x 10.9x 9.4x
MEDIAN 28.4x 19.9x 11.0x 9.5x
Franchisors
McDonald's Corporation MCD MP-3 93.46 $92,824 5.50 5.95 17.0x 15.7x 10.3x 9.8x
YUM! Brands, Inc. YUM MP-3 70.85 $32,237 3.38 3.75 21.0x 18.9x 11.4x 10.6x
Burger King Worldwide, Inc. (4) BKW NR 26.40 $9,454 0.98 1.14 27.0x 23.3x 16.1x 15.0x
Dunkin' Brands Group, Inc. DNKN MP-3 43.42 $4,688 1.77 2.05 24.5x 21.2x 16.1x 14.9x
Domino's Pizza Inc. (4) DPZ NR 74.47 $4,271 2.87 3.36 25.9x 22.2x 15.4x 14.0x
Wendy's Company (4) WEN NR 8.16 $3,203 0.35 0.39 23.5x 20.9x 10.7x 10.1x
Papa John's Int'l (4) PZZA NR 40.90 $1,746 1.72 2.06 23.8x 19.9x 12.1x 11.0x
DineEquity, Inc. DIN SB-1 84.41 $1,600 4.63 5.67 18.2x 14.9x 10.3x 10.2x
Sonic Corp. (4) SONC NR 21.55 $1,248 0.87 1.02 24.8x 21.2x 11.3x 10.5x
Papa Murphy's Inc. FRSH MO-2 9.00 $151 0.42 0.44 21.3x 20.6x 9.9x 9.5x
MEAN 22.7x 19.9x 12.4x 11.6x
MEDIAN 23.6x 20.8x 11.3x 10.5x
S&P 500: 1952.78 117.51 127.27 16.6x 15.3x
Notes:
1) EPS, Revenue, & EBITDA estimates are based on calendar year projections. P/E and EBITDA multiples also based on CY estimates.
2) Figures quoted in terms of $ Millions include Market Cap, Revenues, and EBITDA.
3) Bold EPS = Extra Accounting Week
4) Estimates are consensus estimates per Thomson Reuters
Source: Raymond James Estimates and Company Filings
Company


Raymond James U.S. Research
2014 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. All rights reserved.
International Headquarters: The Raymond James Financial Center
|
880 Carillon Parkway
|
St. Petersburg, Florida 33716
|
800-248-8863 3
RRGB EPS Reconciliation Q2:14 Q2:14 Q2:13
Reported RJ Est. Actual - RJ Est. Prior Year Actual Current - Prior
Operating Weeks 12 12 16
SSS - Company 1.2% 3.0% -1.8% 4.3%
Restaurant Sales 251,818 $ 260,781 $ (8,963) $ 234,490 $ 17,328 $
Franchise Income and Other 4,315 3,954 361 3,809 506
Total Revenues 256,133 7.5% 264,735 (8,602) 238,299 17,834
Cost of Sales 63,689 25.3% 65,573 25.1% (1,884) 58,024 24.7% 5,665
Labor Expenses 82,572 32.8% 84,720 32.5% (2,148) 76,648 32.7% 5,924
Operating Expenses 31,022 12.3% 31,394 12.0% (372) 28,463 12.1% 2,559
Occupancy Expense 18,618 7.4% 18,530 7.1% 88 16,779 7.2% 1,839
Store Level Cash Flow 55,917 22.2% 60,565 23.2% (4,648) 54,576 23.3% 1,341
SG&A (includes advertising) 29,776 11.6% 29,152 11.0% 624 28,386 11.9% 1,390
Stock Based Comp. (15% in Labor, 85% in G&A) (1,021) (1,103) 82 (1,050) 29
Cash G&A 28,755 11.2% 28,050 10.6% 705 27,336 11.5% 1,419
Franchise Development (pre-Q105) - - - - -
Pre-Opening Costs 1,626 1,500 126 1,291 335
Restaurant Closures and Impairments - - - - -
Gain on Lease Buy-Back - - - - -
Impairment of Real Estate Held For Sale - - - - -
Other Significant and Unusual Items 700 500 200 - 700
EBITDA (ex-stock based comp.) 29,151 11.4% 34,469 13.0% (5,318) 29,758 12.5% (607)
Depreciation and Amortization 14,120 5.5% 14,150 5.3% (30) 13,319 5.6% 801
Stock-Based compensation 1,021 1,103 (82) 1,050 (29)
Operating Income 14,010 5.5% 19,216 7.3% (5,206) 15,389 6.5% (1,379)
Interest Expense, Net (Beg. Mid-'05) 475 600 (125) 674 (199)
Interest (Income) - - - - -
Loss on Early Extinguishment of Debt - - - - -
Gain on Sale of Property - - - - -
Other - - - - -
Pre-Tax Income 13,535 18,616 (5,081) 14,715 (1,180)
Income Taxes 3,704 27.4% 5,119 27.5% (1,415) 3,576 24.3% 128
Net Income (Post-Option) 9,831 13,497 (3,666) 11,139 (1,308)
Diluted Shares Outstanding 14,528 14,590 (62) 14,391 137
Operating EPS 0.68 $ 0.93 $ (0.25) $ 0.77 $ (0.10) $


Raymond James U.S. Research
2014 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. All rights reserved.
International Headquarters: The Raymond James Financial Center
|
880 Carillon Parkway
|
St. Petersburg, Florida 33716
|
800-248-8863 4
Red Robin Condensed Cash Flow Statement ($000's)
FY-2011 FY-2012 FY-2013 FY-2014(E) FY-2015(E)
Net Income from Operations $20,577 $28,331 $32,239 $35,044 $39,091
Depreciation & Amortization 55,272 55,468 58,200 64,056 71,000
Stock Based Compensation 3,319 3,808 3,823 3,680 3,864
Other Operating Cash Flow (Net) 5,945 4,931 (1,802) (3,334) (3,025)
Gross Cash Flow 85,113 92,538 92,460 99,446 110,930
Net Change In Working Capital 10,584 1,841 21,069 5,000 5,000
Cash Flow from Operations 95,697 94,379 113,529 104,446 115,930
Total Capital Expenditures (44,085) (59,960) (78,876) (102,500) (100,000)
Free Cash Flow 51,612 34,419 34,653 1,946 15,930
Franchise Acquisitions - (3,247) - (47,958) -
Purchase of Treasury Stock (32,964) (24,304) (5,003) (7,500) -
Net Borrowings (Paydowns) (1,525) (22,049) (47,283) 64,000 (20,000)
Other Net Investing/Financing 24 2,585 12,301 6,544 5,195
Net Change In Cash and Investments 17,147 (12,596) (5,332) 17,032 1,125
Ending Cash and Investments 35,035 22,439 17,107 34,139 35,264
EBITDA 92,718 104,485 108,980 118,239 132,364
Ending Borrowings 156,931 134,995 88,714 152,698 132,698
Ending Debt/EBITDA 1.7x 1.3x 0.8x 1.3x 1.0x
Current Enterprise Value 826,110
EV/EBITDA @ per share price of: 51.17 $ 7.6x 7.0x 6.2x
Source: Company Filings and RJ Estimates



Raymond James U.S. Research
2014 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. All rights reserved.
International Headquarters: The Raymond James Financial Center | 880 Carillon Parkway | St. Petersburg, Florida 33716 | 800-248-8863 5
RED ROBIN GOURMET BURGERS, INC. Bryan C. Elliott, CFA Brian M. Vaccaro, CFA 8/14/2014
Earnings Model - ($ Thousands) (404) 442-5856 (404) 442-5866
Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 (E) Q4-14 (E) Q1-15 (E) Q2-15 (E) Q3-15 (E) Q4-15 (E)
FY-2012 4/21/2013 7/14/2013 10/6/2013 12/29/2013 FY-2013 4/20/2014 7/13/2014 10/5/2014 12/28/2014 FY-2014(E) 4/19/2015 7/12/2015 10/4/2015 12/27/2015 FY-2015(E)
Accounting Weeks in Period 53 16 12 12 12 52 16 12 12 12 52 16 12 12 12 52
Restaurant Sales 960,994 301,313 234,490 226,844 237,551 1,000,198 334,995 251,818 253,823 276,317 1,116,954 388,921 293,743 285,076 297,077 1,264,816
Franchise Royalties and Fees 14,678 5,036 3,809 3,829 4,375 17,049 5,489 4,315 3,323 3,353 16,480 4,440 3,327 3,089 3,524 14,381
Rent and Other Revenue 1,460 - - - - - - - - - - - - - - -
Total Revenues 977,132 306,349 238,299 230,673 241,926 1,017,247 340,484 256,133 257,146 279,670 1,133,433 393,361 297,070 288,164 300,601 1,279,197
Cost of Sales 242,641 74,982 58,024 57,253 59,978 250,237 84,220 63,689 64,951 70,595 283,455 98,944 74,880 73,518 76,493 323,835
Labor Expenses 323,100 101,882 76,648 76,624 79,959 335,113 110,921 82,572 86,752 93,698 373,944 129,943 97,054 97,434 100,738 425,169
Operating Expense (ex-advertising beg '08) 125,471 37,090 28,463 29,463 28,463 123,479 40,597 31,022 33,475 33,384 138,478 47,521 36,187 37,311 35,595 156,614
Occupancy Expense 70,971 22,573 16,779 17,132 17,595 74,079 24,282 18,618 19,677 20,743 83,320 28,580 21,718 22,100 22,301 94,698
Store Level Cash Flow 198,811 64,786 54,576 46,372 51,556 217,290 74,975 55,917 48,968 57,897 237,757 83,933 63,905 54,712 61,950 264,500
Reported SG&A (ex one-timers) 110,798 37,608 28,386 27,481 29,177 122,652 42,423 29,776 28,706 30,233 131,138 47,045 33,198 31,593 32,045 143,880
Selling Costs (included in SG&A) 27,082 8,641 6,518 6,834 8,007 30,000 10,323 9,878 8,122 8,842 37,166 12,445 9,400 9,122 9,506 40,474
Underlying G&A 83,716 28,967 21,868 20,647 21,170 92,652 32,100 19,898 20,584 21,391 93,973 34,599 23,798 22,470 22,539 103,406
Stock Based Comp. (15% in Labor, 85% in G&A) (3,808) (1,192) (1,050) (857) (724) (3,823) (1,009) (1,021) (900) (750) (3,680) (1,059) (1,072) (945) (788) (3,864)
Pre-Opening Costs 3,474 834 1,291 2,482 1,923 6,530 1,513 1,626 1,700 1,700 6,539 1,300 1,500 2,300 1,400 6,500
EBITDA (ex-stock based comp.) 104,485 32,572 29,758 21,095 25,555 108,980 36,937 29,151 22,135 30,017 118,239 41,088 33,606 24,853 32,816 132,364
Depreciation and Amortization 55,468 17,834 13,319 13,436 13,611 58,200 18,886 14,120 15,050 16,000 64,056 21,500 16,250 16,500 16,750 71,000
Stock-Based compensation 3,808 1,192 1,050 857 724 3,823 1,009 1,021 900 750 3,680 1,059 1,072 945 788 3,864
Operating Income 45,209 13,546 15,389 6,802 11,220 46,957 17,042 14,010 6,185 13,267 50,504 18,529 16,284 7,408 15,279 57,500
Interest Expense, Net 5,442 1,089 674 624 178 2,565 674 475 925 950 3,024 1,250 900 900 900 3,950
Pre-Tax Income 39,776 12,457 14,715 6,178 11,042 44,392 16,368 13,535 5,260 12,317 47,480 17,279 15,384 6,508 14,379 53,550
Income Taxes 9,546 2,977 3,576 1,517 1,914 9,984 4,424 3,704 920 3,387 12,435 4,665 4,154 1,757 3,882 14,458
Net Income 30,230 $ 9,480 $ 11,139 $ 4,661 $ 9,128 $ 34,408 $ 11,944 $ 9,831 $ 4,340 $ 8,930 $ 35,044 $ 12,613 $ 11,230 $ 4,751 $ 10,497 $ 39,091 $
Diluted Shares Outstanding 14,677 14,341 14,391 14,600 14,607 14,510 14,592 14,528 14,578 14,628 14,582 14,678 14,728 14,778 14,828 14,753
Earnings Per Share 2.06 $ 0.66 $ 0.77 $ 0.32 $ 0.62 $ 2.37 $ 0.82 $ 0.68 $ 0.30 $ 0.61 $ 2.40 $ 0.86 $ 0.76 $ 0.32 $ 0.71 $ 2.65 $
GAAPAdjustments (0.1) - - - (0.1) (0.1) - (0.0) - - (0.0) - - - - -
GAAP EPS 1.93 $ 0.66 $ 0.77 $ 0.32 $ 0.48 $ 2.22 $ 0.82 $ 0.65 $ 0.30 $ 0.61 $ 2.38 $ 0.86 $ 0.76 $ 0.32 $ 0.71 $ 2.65 $
Operating EPS Growth 16.8% -6.9% 48.4% 31.4% 66.3% 28.2% 23.8% -12.6% -6.8% -2.3% 1.3% 5.0% 12.7% 8.0% 16.0% 10.3%
Margin Analysis
Cost of Sales 25.2% 24.9% 24.7% 25.2% 25.2% 25.0% 25.1% 25.3% 25.6% 25.5% 25.4% 25.4% 25.5% 25.8% 25.7% 25.6%
Labor Expenses 33.6% 33.8% 32.7% 33.8% 33.7% 33.5% 33.1% 32.8% 34.2% 33.9% 33.5% 33.4% 33.0% 34.2% 33.9% 33.6%
Operating Expense (ex-advertising beg '08) 13.1% 12.3% 12.1% 13.0% 12.0% 12.3% 12.1% 12.3% 13.2% 12.1% 12.4% 12.2% 12.3% 13.1% 12.0% 12.4%
Occupancy Expense 7.4% 7.5% 7.2% 7.6% 7.4% 7.4% 7.2% 7.4% 7.8% 7.5% 7.5% 7.3% 7.4% 7.8% 7.5% 7.5%
Restaurant Cash Flow Margin 20.7% 21.5% 23.3% 20.4% 21.7% 21.7% 22.4% 22.2% 19.3% 21.0% 21.3% 21.6% 21.8% 19.2% 20.9% 20.9%
Selling, General & Admin (% of Total Rev.) 11.3% 12.3% 11.9% 11.9% 12.1% 12.1% 12.5% 11.6% 11.2% 10.8% 11.6% 12.0% 11.2% 11.0% 10.7% 11.2%
Selling Costs (% of Total Rev.) 2.8% 2.8% 2.7% 3.0% 3.3% 2.9% 3.0% 3.9% 3.2% 3.2% 3.3% 3.2% 3.2% 3.2% 3.2% 3.2%
Underlying G&A(% of Total Rev.) 8.6% 9.5% 9.2% 9.0% 8.8% 9.1% 9.4% 7.8% 8.0% 7.6% 8.3% 8.8% 8.0% 7.8% 7.5% 8.1%
Pre-Opening Costs (% of Total Rev.) 0.4% 0.3% 0.5% 1.1% 0.8% 0.6% 0.4% 0.6% 0.7% 0.6% 0.6% 0.3% 0.5% 0.8% 0.5% 0.5%
EBITDAMargin 10.7% 10.6% 12.5% 9.1% 10.6% 10.7% 10.8% 11.4% 8.6% 10.7% 10.4% 10.4% 11.3% 8.6% 10.9% 10.3%
Depreciation and Amortization 5.7% 5.8% 5.6% 5.8% 5.6% 5.7% 5.5% 5.5% 5.9% 5.7% 5.7% 5.5% 5.5% 5.7% 5.6% 5.6%
Stock-Based compensation 0.4% 0.4% 0.4% 0.4% 0.3% 0.4% 0.3% 0.4% 0.3% 0.3% 0.3% 0.3% 0.4% 0.3% 0.3% 0.3%
EBIT Margin 4.6% 4.4% 6.5% 2.9% 4.6% 4.6% 5.0% 5.5% 2.4% 4.7% 4.5% 4.7% 5.5% 2.6% 5.1% 4.5%
Pre-Tax Income 4.1% 4.1% 6.2% 2.7% 4.6% 4.4% 4.8% 5.3% 2.0% 4.4% 4.2% 4.4% 5.2% 2.3% 4.8% 4.2%
Effective Tax Rate 24.0% 23.9% 24.3% 24.6% 17.3% 22.5% 27.0% 27.4% 17.5% 27.5% 26.2% 27.0% 27.0% 27.0% 27.0% 27.0%
Net Income (Post-Option) 3.1% 3.1% 4.7% 2.0% 3.8% 3.4% 3.5% 3.8% 1.7% 3.2% 3.1% 3.2% 3.8% 1.6% 3.5% 3.1%
Year/Year Margin Changes (in bps)
Cost of Sales (1) (59) (63) 42 2 (23) 26 55 35 30 36 30 20 20 20 23
Labor Expenses (14) 35 (54) (42) (1) (12) (70) 10 40 25 (3) 30 25 0 0 0
Operating Expense (ex-advertising beg '08) (77) (39) (99) (54) (104) (71) (19) 18 20 10 5 10 0 (10) (10) (2)
Occupancy Expense 7 33 (2) (22) (10) 2 (24) 24 20 10 5 10 0 0 0 3
Restaurant Cash Flow Margin 86 31 218 76 112 104 88 (107) (115) (75) (44) (80) (45) (10) (10) (37)
Selling, General & Admin (% of Total Rev.) 31 96 48 44 89 72 18 (29) (75) (125) (49) (50) (45) (20) (15) (32)
Pre-Opening Costs (% of Total Rev.) (3) (6) 27 49 53 29 17 9 (41) (19) (7) (11) (13) 14 (14) (7)
EBITDAMargin 55 (59) 130 (24) (18) 2 22 (111) (54) 17 (28) (40) (7) 2 18 (8)
Depreciation and Amortization (37) 26 (1) (40) 22 4 (27) (8) 3 9 (7) (8) (4) (13) (15) (10)
Stock-Based compensation 3 (1) (4) (5) 3 (1) (9) (4) (2) (3) (5) (3) (4) (2) (1) (2)
EBIT Margin (Post-Option) 89 (84) 135 21 (43) (1) 58 (99) (54) 11 (16) (29) 1 17 34 4
Pre-Tax Income 99 (58) 163 45 1 29 74 (89) (63) (16) (17) (41) (11) 21 38 (0)
Net Income (Post-Option) 43 (43) 121 36 29 29 41 (84) (33) (58) (29) (30) (6) (4) 30 (4)
Growth Rates:
Restaurant Sales 6.9% 2.3% 6.6% 8.1% 0.4% 4.1% 11.2% 7.4% 11.9% 16.3% 11.7% 16.1% 16.6% 12.3% 7.5% 13.2%
Franchise Royalties and Fees 3.7% 13.1% 12.7% 19.7% 19.9% 16.2% 9.0% 13.3% -13.2% -23.4% -3.3% -19.1% -22.9% -7.0% 5.1% -12.7%
Total Revenues 6.9% 2.3% 6.5% 8.1% 0.5% 4.1% 11.1% 7.5% 11.5% 15.6% 11.4% 15.5% 16.0% 12.1% 7.5% 12.9%
Store Level Cash Flow 11.5% 3.8% 17.7% 12.3% 5.8% 9.3% 15.7% 2.5% 5.6% 12.3% 9.4% 11.9% 14.3% 11.7% 7.0% 11.2%
Reported SG&A(ex one-timers) 9.8% 11.0% 11.0% 12.3% 8.6% 10.7% 12.8% 4.9% 4.5% 3.6% 6.9% 10.9% 11.5% 10.1% 6.0% 9.7%
Pre-Opening Costs -1.5% -15.2% 114.5% 98.6% 200.9% 88.0% 81.4% 25.9% -31.5% -11.6% 0.1% -14.1% -7.7% 35.3% -17.6% -0.6%
EBITDA(ex-stock based comp.) 12.7% -3.1% 18.9% 5.4% -1.1% 4.3% 13.4% -2.0% 4.9% 17.5% 8.5% 11.2% 15.3% 12.3% 9.3% 11.9%
Operating Income 32.5% -14.0% 34.7% 16.6% -8.1% 3.9% 25.8% -9.0% -9.1% 18.2% 7.6% 8.7% 16.2% 19.8% 15.2% 13.9%
Pre-Tax Income 41.0% -10.5% 44.9% 30.3% 0.7% 11.6% 31.4% -8.0% -14.9% 11.5% 7.0% 5.6% 13.7% 23.7% 16.7% 12.8%
Net Income (Post-Option) 24.3% -10.2% 43.8% 31.9% 8.8% 13.8% 26.0% -11.7% -6.9% -2.2% 1.8% 5.6% 14.2% 9.5% 17.5% 11.5%
Store Counts
Red Robin -- Corporate - Full Size 334 337 339 345 355 355 362 365 404 410 410 414 419 426 430 430
Red Robin Burger Works 5 5 5 5 6 6 5 7 8 10 10 10 11 13 15 15
Red Robin -- Franchised 133 133 133 135 134 134 129 130 98 99 99 100 100 101 102 102
Same-Store Sales
Red Robin -- Corporate - Full Size 1.1% 2.2% 4.3% 5.7% 3.7% 4.0% 5.4% 1.2% 0.0% 1.0% 2.2% 1.0% 2.0% 2.0% 2.0% 1.7%

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Ratings and Definitions
Raymond James & Associates (U.S.) definitions
Strong Buy (SB1) Expected to appreciate, produce a total return of at least 15%, and outperform the S&P 500 over the next six to 12 months.
For higher yielding and more conservative equities, such as REITs and certain MLPs, a total return of at least 15% is expected to be realized
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Outperform (MO2) Expected to appreciate and outperform the S&P 500 over the next 12-18 months. For higher yielding and more
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Underperform (MU4) Expected to underperform the S&P 500 or its sector over the next six to 12 months and should be sold.
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Suspended (S) The rating and price target have been suspended temporarily. This action may be due to market events that made coverage
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Raymond James Ltd. (Canada) definitions
Strong Buy (SB1) The stock is expected to appreciate and produce a total return of at least 15% and outperform the S&P/TSX Composite Index
over the next six months.
Outperform (MO2) The stock is expected to appreciate and outperform the S&P/TSX Composite Index over the next twelve months.
Market Perform (MP3) The stock is expected to perform generally in line with the S&P/TSX Composite Index over the next twelve months and
is potentially a source of funds for more highly rated securities.
Underperform (MU4) The stock is expected to underperform the S&P/TSX Composite Index or its sector over the next six to twelve months
and should be sold.

Raymond James Latin American rating definitions
Strong Buy (SB1) Expected to appreciate and produce a total return of at least 25.0% over the next twelve months.
Outperform (MO2) Expected to appreciate and produce a total return of between 15.0% and 25.0% over the next twelve months.
Market Perform (MP3) Expected to perform in line with the underlying country index.
Underperform (MU4) Expected to underperform the underlying country index.
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Raymond James Euro Equities, SAS rating definitions
Strong Buy (1) Expected to appreciate, produce a total return of at least 15%, and outperform the Stoxx 600 over the next 6 to 12 months.
Outperform (2) Expected to appreciate and outperform the Stoxx 600 over the next 12 months.
Market Perform (3) Expected to perform generally in line with the Stoxx 600 over the next 12 months.
Underperform (4) Expected to underperform the Stoxx 600 or its sector over the next 6 to 12 months.
Suspended (S) The rating and target price have been suspended temporarily. This action may be due to market events that made coverage
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Rating Distributions
Coverage Universe Rating Distribution Investment Banking Distribution
RJA RJL RJ LatAm RJEE RJA RJL RJ LatAm RJEE
Strong Buy and Outperform (Buy) 55% 69% 50% 44% 23% 36% 0% 0%
Market Perform (Hold) 40% 28% 50% 40% 10% 22% 0% 0%
Underperform (Sell) 5% 3% 0% 16% 0% 33% 0% 0%

Suitability Categories (SR)
Total Return (TR) Lower risk equities possessing dividend yields above that of the S&P 500 and greater stability of principal.
Growth (G) Low to average risk equities with sound financials, more consistent earnings growth, at least a small dividend, and the potential
for long-term price appreciation.
Aggressive Growth (AG) Medium or higher risk equities of companies in fast growing and competitive industries, with less predictable earnings
and acceptable, but possibly more leveraged balance sheets.
High Risk (HR) Companies with less predictable earnings (or losses), rapidly changing market dynamics, financial and competitive issues,
higher price volatility (beta), and risk of principal.
Venture Risk (VR) Companies with a short or unprofitable operating history, limited or less predictable revenues, very high risk associated
with success, and a substantial risk of principal.

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Raymond James Relationship Disclosures
Raymond James expects to receive or intends to seek compensation for investment banking services from the subject companies in the
next three months.
Company Name Disclosure
Red Robin Gourmet
Burgers, Inc.
Raymond James & Associates makes a market in shares of RRGB.
Raymond James & Associates received non-securities-related compensation from RRGB within
the past 12 months.

Stock Charts, Target Prices, and Valuation Methodologies
Valuation Methodology: The Raymond James methodology for assigning ratings and target prices includes a number of qualitative and
quantitative factors including an assessment of industry size, structure, business trends and overall attractiveness; management effectiveness;
competition; visibility; financial condition, and expected total return, among other factors. These factors are subject to change depending on
overall economic conditions or industry- or company-specific occurrences. Only stocks rated Strong Buy (SB1) or Outperform (MO2) have
target prices and thus valuation methodologies.
Target Prices: The information below indicates our target price and rating changes for RRGB stock over the past three years.

Valuation Methodology: For Red Robin Gourmet Burgers, our valuation methodology is based on an enterprise value/EBITDA multiple.


Risk Factors
General Risk Factors: Following are some general risk factors that pertain to the projected target prices included on Raymond James research:
(1) Industry fundamentals with respect to customer demand or product / service pricing could change and adversely impact expected
revenues and earnings; (2) Issues relating to major competitors or market shares or new product expectations could change investor attitudes
toward the sector or this stock; (3) Unforeseen developments with respect to the management, financial condition or accounting policies or
practices could alter the prospective valuation; or (4) External factors that affect the U.S. economy, interest rates, the U.S. dollar or major
segments of the economy could alter investor confidence and investment prospects. International investments involve additional risks such as
currency fluctuations, differing financial accounting standards, and possible political and economic instability.
Specific Investment Risks Related to the Industry or Issuer
Restaurant Industry Risk Factors
Risks include 1) a decline in the ability or propensity for consumers to purchase meals outside the home; 2) a jump in raw food prices or
energy prices; and 3) a drop in market P/E levels.
Company-Specific Risks for Red Robin Gourmet Burgers, Inc.
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Red Robin's company-specific risks include: 1) increased competition from the emerging "better burger" fast casual segment; 2) the potential
for sales and profit disappointments at new units once expansion is re-accelerated; 3) the potential for new unit opening initiatives (especially
in new markets) to be ineffective; and 4) a high geographic exposure to states in the western U.S.
Macroeconomic Risk Factors
Broader macro and industry risk factors affecting Red Robin would include (but are not limited to) a further deterioration in consumer
spending and/or dining trends (higher gasoline prices, declining home prices, higher interest rates, absence of real wage growth, etc.) in
addition to increasing wage, benefits, and insurance costs.

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