Managing for Success Does it work? Industry-wide the average employee turnover rate is 150%. At Red Robin it’s 90%. Beyond attracting and keeping good team members, we work to provide managers with the information and tools that enable them to identify “best practices” and put those practices in effect at our restaurants. Our management education program helps managers analyze what is happening at the restaurant level. Data cubes allow us to determine the true ideal cost of menu items and control costs. We negotiate company-wide ingredients contracts with food companies and continually test menu enhancements. Our goal is to assure that each Red Robin restaurant operates profitably and upholds the Red Robin image, providing high quality service and great burgers and beverages. Growing the Robin Increasing revenues and profitability at Red Robin comes down to three basic strategies: (1) Opening new company-owned restaurants in attractive locations, (2) adding successful franchisee restaurants, and (3) leveraging overhead. We anticipate opening 18 restaurants in 2003, a 19% increase in company-owned restaurants. Our franchisees have committed to opening an additional 10 to 13 restaurants, giving us a projected total at year end of nearly 225 Red Robin restaurants in 26 states and Canada. By clustering restaurant development in attractive markets, we are able to leverage our general and administrative costs, further contributing to earnings growth.   With a proven concept and a seasoned management team, Red Robin has become a valued addition to retail centers. This has resulted in better sites for our restaurants, and more attractive opportunities to expand in markets where the Red Robin name is recognized. When you run a restaurant with good economics, then good sites are the key factor to exceptional returns. We’re also proud of our ability to attract new team members to our restaurants. A National Concept Our management team is experienced and has a history of achieving profitability at Red Robin. When it comes to operations issues – the ability to open restaurants, to communicate, to take care of team members and guests in an unbridled fashion – we think that we are pretty darn good at it, albeit we are always striving to do better. With the support of our shareholders and team members, we welcome the opportunity to build a truly national, casual dining restaurant concept. Sincerely, Mike Snyder Chairman, President and Chief Executive Officer