Rainforest Cafe, Inc: Outline to Rainforest Cafe Research Report

Rainforest Cafe, Inc: Outline to Rainforest Cafe Research Report

CORPORATE BACKGROUND

History

Formation

Rainforest Cafe, Inc. was incorporated in Minnesota on February 3, 1994 to own

and operate restaurant and retail facilities under the name of "Rainforest Cafe

- A Wild Place to Shop and Eat."

Chairman of the Board and Chief Executive Officer

Election. Lyle Berman was elected Chairman and CEO of Rainforest Cafe at its

inception in February 1994.

Background. Berman has been Chairman and CEO of Grand Casinos, Inc. and its

predecessor since October 1990. He is also CEO and a director of Stratosphere

Corporation, and a director of G-III Apparel Group Ltd., Innovative Gaming

Corporation of America and New Horizon Kids Quest, Inc. He previously was the

President and CEO of Berman Specialty Stores, Inc. ("Bermans") from 1978 until

November 1988 when Bermans was acquired by Wilson Suede and Leather, a

subsidiary of Melville Corporation.

President and Chief Operating Officer

Election. Martin J. O'Dowd was elected in May of 1995. He is the first to hold

this position. As of November 18, 1996 O'Dowd has taken a 30 day leave of

absence for personal reasons. Dennis Nielson, analyst for R. J. Steichen,

predicts that if the leave is only 30 days there should not be a lasting impact

on the company (Nielson, November 18, 1996).

Background. O'Dowd is a director of Elephant and Castle Group, Inc. He was

previously the Corporate Director, Food & Beverage Services for Holiday Inn

Worldwide from July 1987 to May 1995. From August 1985 to July 1987, O'Dowd was

Vice President and General Operations Manager for the Hard Rock Cafe in New York.

Management Philosophy. Berman and O'Dowd stated that they are committed to

identifying and acquiring the resources that will allow them to continue their

high rate of growth.

Main Activities

Rainforest Cafe has two areas of each facility, the restaurant and the retail

area.

Restaurant

The company believes that its large menu selection is an important factor in the

appeal of its restaurants. The restaurant serves lunch and dinner entrees which

range in price from $7.95 to $15.95. The theme of the company is mirrored on

the menu with all food and beverage selections including a jungle reference

(Annual Report, 1995).

The restaurant derived approximately 74 percent of the companies total revenue

during the 52 week period ending December 31, 1995.

Retail Area

In order to enter the restaurant, all customers must pass through the retail

area. The inventory includes apparel and gifts with the Rainforest Cafe logo and

other items with a rainforest theme such as toys and educational games.

The retail area derived approximately 26 percent of the companies total revenue

during the 52 week period ending December 31, 1995.

Corporate Financial Results

Net Profits and Net Sales

The company incurred a net loss during its first year, February