Going public: hunger for growth lures Red Robin to market.

Author:Taylor, Mike
Position:THE PUBLIC 250 - Red Robin Gourmet Burgers Inc.
 
FREE EXCERPT

Michael Snyder is asked if he relinquished some control when he took Red Robin Gourmet Burgers public in July of 2002.

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"Oh, God, I never had control," says the CEO of Red Robin with a laugh.

"The people inside our restaurants are the ones who are controlling this company."

Red Robin, a Greenwood Village-based casual dining chain, was founded in 1969 in Seattle. The enterprise consisted of only one restaurant when Snyder and his brother bought a franchise in 1979. Snyder bought out the franchiser in the mid-90s.

Since then the chain has grown to 102 company owned restaurants in 12 states and 97 additional restaurants operating under franchise or licensing agreements in 19 states and Canada. But Snyder saw much more growth potential and needed money to make it happen. The initial public offering raised $48 million to fuel that growth. The company plans to open 18 more restaurants this year.

"We have such a growth opportunity here," Snyder says. "Chili's has over 800 restaurants, Applebee's is over 1,500 restaurants. We have 200. And we have very high average unit-volumes and very high profitability and a great culture of passion and compassion for what we do. There's just so much opportunity to grow, and we needed growth capital. So I opted for the public route to fund our growth."

Red Robin ranks 43rd on this year's ColoradoBiz Public 250 list of Colorado companies, with revenues of $274.4 million in 2002, a 22.2 percent increase over the previous year. The company reported net income of $8.3 million last year. The list is ranked by 2002 revenues as reported to the U.S. Securities and Exchange Commission.

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Overall, 2002 was a tough year for Colorado-based public companies, as 80 out of the top 150 reported net losses. The top revenue producer among Colorado public companies in 2002 was the beleaguered Qwest Communications, with unaudited sales of $15.5 billion. The company also racked up a net loss of $35.9 billion.

The top growth company in Colorado for 2002 was Golden-based HealtheTech. The supplier of handheld medical devices and software had sales of $13.5 million, a 400 percent increase over the previous year, although it still suffered a net loss of $16.8 million.

Strictly based on revenues, Colorado-based public companies fared better in 2002 than the previous year, with the top 150 companies amassing total revenues of $87.4 billion, a 19 percent improvement over 2001.

Snyder, 52, comes from a family steeped in the tradition of the food-service business. In 1929 his grandfather launched a small wholesale bakery in Yakima, Wash., and later Snyder's father and uncle joined the business. They built it into one of the largest privately owned wholesale bakeries in the Pacific Northwest.

Snyder suggests he struck out on his own because he wasn't in line to take over the family business any time soon.

"My dad was only 20 years older than I," Snyder says. "I had to get out and kind of do my own thing. And that's when I approached that one person who had that one Red Robin in Seattle. My brother and I became the original franchisee in 1979, and my dad funded it."

Even the ebullient Snyder admits that mid-2002 wasn't the most favorable time to go public. During a grueling week-and-a-half-long road show, when he met with eight to 10 institutions and portfolio managers each day, he watched the stock market spiral downward.

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"Gosh, one of the most difficult public-offering times in this century, I think," Snyder says. "I think we were the only company that went public that week. The market dropped, oh gosh, hundreds and hundreds and hundreds of points from the start of our road show to the completion of our deal. And when it came down to 'Are we going to do it or not?' at the end of our road show, we were 2 1/2 times oversubscribed at the price level that we came out at. So the final decision was, 'Do we have the money we need to execute our growth plan?' And the answer was yes. So we said, 'Let's go.'"

Snyder, who told the Red Robin story dozens of times during his pre-IPO road show, says it is an easy story to tell: a low-tech, no-fancy-moving-parts business taking care of guests with gourmet burgers in a fun atmosphere--a segment he says Red Robin virtually owns, although Chili's, Applebee's and TGI Fridays might have something to say about that.

"And we make money," Snyder says. "That's always kind of a novel approach."

Hard to argue with that. As the Red Robin radio commercial goes, "If loving a burger is wrong, you don't want to be right."

THE COLORADOBIZ PUBLIC 250 TOP 150 COLORADO-BASED COMPANIES COBIZ 2003 RANK* COMPANY NAME TICKER BUSINESS DESCRIPTION 1 Qwest Communications Q Telecommunications International Inc. 2 First Data Corp. FDC Financial services 3 Transmontaigne Inc. TMG Refined petroleum, pipelines 4 Echostar Communications DISH Cable and pay television Corp. 5 Ball Corp. BLL Aerospace, metal cans 6 (Adolph) Coors Co. RKY Brewery, beverages 7 Level 3 Communications LVLT Fiber-optic network Inc. 8 Great West Life & GWL Insurance Annuity Insurance Co. 9 Newmont Mining Corp., NEM Mining 10 Western Gas Resources WGR Natural gas transmission, Inc. distribution 11 MDC Holdings Inc. MDC Home builder 12 Regal Entertainment RGC Motion picture exhibitor Group 13 Liberty Media Corp. (1) L Cable TV programming 14 Storage Technology STK Computer storage devices Corp. 15 Mail-Well Inc. MWL Envelopes 16 UnitedGlobalCom Inc. UCOMA Cable television 17 Apartment Investment & AIV Real estate trust Management Inc. (AIMCO) 18 Archstone-Smith Trust ASN Real estate trust 19 Graphic Packaging GPK Packaging International Corp. 20 Gart Sports Co.(2) GRTS Sporting goods stores 21 Teletech Holdings Inc. TTEC Business services 22 Wild Oats Markets Inc. OATS Grocery stores 23 J.D. Edwards & Co. JDEC Software manufacturer 24 StarTek Inc. SRT Business services 25 Samsonite Corp. SAMC.OB Luggage 26 Ultimate Electronics ULTE Retail electronics (Soundtrack) 27 Time Warner Telecom TWTC Telecommunications Inc. 28 Prologis Trust PLD Real estate trust 29 Vail Resorts Inc. MTN Resort operator 30 CSG Systems Intl. Inc. CSGS Software 31 Ciber Inc. CBR Computer services 32 Forest Oil Corp. FST Oil and natural gas production 33 Katy Industries Inc. KT Electronic Industries Inc. 34 Frontier Airlines Inc. FRNT Airline 35 Coram Healthcare Corp. CRHEQ.OB Home health-care services 36 ICG Communications (3) ICGC.OB Telecommunications 37 Westport Resources WRC Petroleum and natural gas Corp. 38 Navigant International FLYR Business travel Inc. 39 Titanium Metals Corp. TIE Metal products 40 Coorstek (4) CRTK Manufacturing 41 McData Corp. MCDTA Computer storage switches 42 Westmoreland Coal Co. WLB Coal mining 43 Red Robin Gourmet RRGB Restaurant chain Burgers Inc. 44 Chateau Communities CPJ Real estate trust Inc. 45 Advanced Energy AEIS Manufacturing Industries Inc. 46 Tom Brown Inc. TMBR Oil and natural gas 47 Penford Corp. PENX Grain mill products 48 Patina Oil & Gas Corp. POG Oil, natural gas production 49 St. Mary Land & MARY Oil and natural gas Exploration Co. production 50 Horizon Organic HCOW Dairy Holdings Corp. 51 Markwest Hydrocarbon MWP Oil-field services Inc. 52 Crown Media Holdings CRWN Cable and pay television Inc. 53 Champps Entertainment CMPP Restaurants Inc. 54 American Coin AMCN Coin-operated machines Merchandising Inc. 55 Applied Films Corp. AFCO Electronic components 56 Exabyte Corp. EXBT Computer storage devices 57 Air Methods Corp. AIRM Air transport 58 Evergreen Resources EVG Petroleum and natural gas Inc. 59 Gaiam Inc. GAIA Natural products 60 Intrado Inc. (5) TRDO 911 support systems 61 Colorado Medtech Inc. CMED Medical equipment 62 Quovadx (6) QVDX Business integration software 63 Factual Data Corp. FDCC Information retrieval services 64 SpectraLink Corp. SLNK Wireless systems 65 Raindance RNDC Telecommunications Communications (7) 66 Hauser Inc. HAUS.OB Pharmaceuticals 67 ACT Teleconferencing ACTT Telecommunications Inc. 68 New Frontier Media Inc. NOOF Adult entertainment distribution 69 Concepts Direct Inc. CDIR Mail order service 70 Heska Corp. HSKA Pharmaceutical preparations 71 Ramtron International RMTR Semiconductors Corp. 72 Carrier Access Corp. CACS Telecommunications 73 Matrix Bancorp Inc. (8) MTXC Bank holding company 74 Dynamic Materials Corp. BOOM Metal heat-treating 75 Rogue Wave Software RWAV Pre-packaged software Inc. 76 Fischer Imaging Corp. (9) FIMG X-ray and related equipment 77 Allied Motion Technologies AMOT Motion Control Products Inc. (10) 78 CoBiz Inc. (11) COBZ Bank holding company 79 Golden Star Resources Ltd. GSRSF.OB Mining 80 Koala Corp. KARE Manufacturing 81 Array Biopharma Inc. ARRY Biotechnology and drugs 82 NaPro Biotherapeutics NPRO Biotechnology and drugs 83 Century Casinos Inc. CNTY Casino developer, operator 84 SAN Holdings Inc. SANZ.OB Data storage management 85 Prima Energy Corp. PENG Petroleum and natural gas 86 HIA Inc. HIAI.OB Farm equipment 87 Birner Dental Management BDMSD.BE Dental services (Perfect Services Inc. Teeth) 88 Inland Resources Inc. INLN.OB Oil and gas development/ prodution 89 Spectranetics Corp. SPNC Electro medical equipment 90 Metretek Technologies Inc. MTEK Energy measurement 91 Atrix Labs Inc. ATRX Biotechnology and drugs 92 Vail Banks Inc. (12) VAIL Bank holding company 93 Scott's Liquid Gold SLGD.OB Household products, cosmetics 94 Equitex Inc. EQTX Credit card services 95 eCollege.Com ECLG Software, services for universities 96 Evolving Systems Inc. EVOL Computer services 97 Advanced Nutraceuticals ANII Wholesale drugs and Inc. druggists' sundries 98 UQM Technologies Inc. UQM Alternative energy technology 99 Vari-L Co. VARL Electronic components 100 Rocky Mountain Chocolate RMCF Candy franchisor Factory Inc. 101 UCAP Inc. UCAP Mortgage Banking 102 Multi Link MLNK Communications services Telecommunications Inc. 103 Optika Inc. OPTK Pre-packaged software 104 Good Times...

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