FOOL CONFERENCE CALL SYNOPSIS*
By Rick Munarriz (MF Edible)

Rainforest Cafe <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: RAIN)") else Response.Write("(NASDAQ: RAIN)") end if %>
607 Washington Avenue, Suite 204
Minneapolis, MN 55415
(612) 945-5400
http://www.rainforestcafe.com/

MIAMI, FL, November 4, 1996/FOOLWIRE/ --- Rainforest Cafe reported earnings of $.13 a share for the thirteen weeks ended September 29, 1996 (Q3 1996). Revenues and income grew to $15.7 million and $1.9 million respectively for the quarter, well above the $3.1 million in sales, $535,000 in net income, and $.06 a share in earnings they reported in 1995's third quarter.

INCREASE DUE TO EXPANSION. The increase in sales was attributed to expansion as they grew from one unit to four over the last year. Also included in revenues was a $750,000 payment from their licensing agreement with Mexican based ECE which accounted for a one-time net income of $422,000, or $.03 a share. After the secondary offering completed in September the company closed out the quarter with $163 million in cash and no long term debt.

The breakdown of revenues per store:

MOA       ($2,531,000 restaurant, $738,000 retail)
Woodfield ($2,859,000 restaurant, $800,000 retail)
Gurnee    ($2,202,000 restaurant, $508,000 retail)
Disney    ($3,733,000 restaurant, $1,597,000 retail) 

NEW OPENINGS DURING Q3. The location at Disney World in Florida was open on July 25th, so the $5.3 million in revenues was based on just 65 days, or a little more than $80,000 per day in sales. The first month was averaging $78,500 so September has shown improvement, which President Martin O'Dowd indicated "continues to grow week by week."

RETAIL ENVIRONMENT & "SAME STORE" SALES. The only site open in last year's third quarter, Mall of America, had a 2% rise in same store sales. While the restaurant sales at MOA were up 6% the retail area struggled over the summer. It was down 13% in August, down 9% in September, but is now flat to down 2% in October thanks to the introduction of the Rainforest Animals line of clothing. The line is based on eight proprietary characters the company created which were launched at the Walt Disney World location and have since been introduced into the other locations. While the Rainforest Animals product line presently consists of only left chest embroidered shirts, many new hard and soft lines based on the characters will be rolled out in the middle of next year. By the end of next year the company expects retail store sales to be between 80-90% of private brand merchandise.

GENERAL & ADMINISTRATIVE EXPENSES. G&A was up slightly sequentially but $90,000 of that was related to the pursuit of the $750,000 licensing payment from ECE. The deal with ECE in Mexico, for each of the 7 units planned there, finds that ECE will pay an initial $100,000 fee per unit ($50k for development, $50k for licensing). Then Rainforest Cafe will get 6% of food sales and 10% of retail sales. ECE runs the Planet Hollywoods and Hard Rock Cafes in Mexico and they average about $11 million in revenues per unit. While G&A ran at 8% of revenues for the quarter the company expects that figure to drop to 5% by the end of next year as revenue growth outpaces expenses at the corporate level. There are presently 37 people working at the company office and that is expected to rise to 51 by next year, but with the exception of two posts, the new people will be mostly low-level pay hires.

NEW ANNOUNCEMENT. Next week they should make an announcement for a new unit to come online in the 4th quarter of next year. Stratosphere is in "wait and see" mode and is not being used in their 1997 projections. Palisades has been bumped to the 3rd quarter while the London licensed unit has now been moved up to open in the 2nd quarter. So after Sawgrass Mills in South Florida (set to open the week of November 18th), the next opening won't be until April.

NEW UNIT OPENING SCHEDULE. The order of new units will be South Coast Plaza (Los Angeles), Cancun, London, and Taj Mahal (Atlantic City) in the 2nd quarter; The Source (Long Island, NY) and Palisades (West Nyack, NY) in the 3rd quarter; with MGM Grand (Las Vegas), Grapevine Mills (Dallas), and the new location to close out 1997 with nine new units, fifteen in total. Three 1998 openings (Disney's Animal Kingdom, Aventura Mall in Miami, and Cherry Creek in Denver) round out the list of official lease announcements. Rainforest Cafe is negotiating two more international deals which Martin O'Dowd expects to finalize in the next two months.

EXPANSION AT EXISTING UNITS. The Walt Disney World unit has now added 60 outdoor patio seats which are used on a weather-permitting basis. Awnings should be installed in two weeks to shield the area and keep the seating at 610 seats (there are 550 seats inside). Tysons now has 350 seats, but that will grow to 395 seats. Rainforest Cafe is in talks with Disney for units at all their theme parks. Tokyo is firming up and while Disney really wants a restaurant at Disneyland Paris, Rainforest Cafe is not "terribly excited" about the prospects of opening there. Negotiations for a unit at Disneyland, California will begin no sooner than next year to discuss a plot in the second gate at Disneyland (which will open around 2001).

COST OF NEW UNITS. With the exception of the standalone Taj Majal unit, the company is projecting that the new units will cost $6.5 million to build. With the average landlord contribution coming in at $1.5 million, the net cost to the company remains at $5 million per restaurant.

SHARES OUTSTANDING should grow to 17.9 million by the end of the year due mostly to the secondary offering. They are now factoring in a 36% tax rate, up from the 35% they used over the first two quarters.

ADVERTISING & PROMOTION. The company continues its low-key approach to advertising by sticking to area billboards and presence in community affairs with activities like sending their bird curators to speak at area schools. To keep the concept fresh, the company has invested $100,000 to re-engineer the audio-animatronics at Mall of America.

MINIMUM WAGE IMPACT. The minimum wage hike has had a minimal impact on the company. Half of the employees are paid partly in tips and therefore are exempt from the wage hike due to the tax tip credit. The back-of-the-house employees are all above the proposed minimums as well. The only area where they are materially affected is during entry-level training, when new employees are paid minimum wage. CFO Mark Robinow said "We are very excited about the fourth quarter."

* A Fool conference call synopsis represents an effort to highlight the salient points of a conference call and should not be taken as an authoritative accounting or transcription of the entire event. Note: Statements made by a company other than historical information may constitute forward-looking statements for which the company can claim protection under the Safe Harbor Act. Please consult the company's filings with the SEC for information on risk factors which might cause actual results to differ materially from the information contained in these forward-looking statements.