Name: Christopher Chapman, Red Robin Junior Analyst To: Amanda Gates, Red Robin CEO Date: April

28, 2013 Subject: McDonalds Beats out Red Robin

It has been brought to my attention by various consumers as to the overall growth and direction of two very well-known corporations: Red Robin and McDonalds. In order for you to be able to make a clear judgment and be able to give out a clear report on both of these companies, I have come up with a set of criterias that you can use to help in the evaluation process. The five criterias that will be used are stock price, quick ratio, EPS, P/E ratio, and net income. The final results will help to give you a visual report as to which company consumers should feel more comfortable in. McDonalds end report results show that they lead Red Robin overall in all of the five criterias that was used to compare these two companies. Stock Prices for McDonalds grow over the last year In the last year, McDonalds has shown significant growth in its stock prices. A year ago stock prices for McDonalds were selling for $4.95. Six months ago stock prices for McDonalds continued to rise and were recorded at $14.18. As of April 26, 2013, McDonalds reported its stock prices at $100.89. Red Robins stock prices continued to go over the past year as the records indicate. A year ago Red Robins stock prices were selling at $11.15. Six months ago Red Robin reported that their stock prices had risen to $19.04 and then as of April 26, 2013 Red Robins stock prices were reported to be worth $46.52. Both companies showed tremendous growth in their stock prices, but it was McDonalds that showed more growth between these two companies. Sales for both Red Robin and McDonalds have been on the Rise Since 2010 The sales report for Red Robin has shown a steady increase from 2010 to 2012. In 2010, Red Robins sales were recorded at $864,269 by the end of the year. By 2011, sales for Red Robin increased by the end of 2011 to $914,850 in recorded sales and by the end of 2012, net sales for Red Robin increased to $977,132. This trend shows that Red Robin is on the steady increase in terms of their sales. McDonalds recorded sales have been steady over the last three years. In 2010, McDonalds reported sales increased from $24,074,000 to $27,006,000 which resulted in a gain of over $3,000,000 in just one year. By 2012, sales were up to $27,567,000 yielding an increase of $561,000 from 2011 to 2012. The trends for both Red Robin and McDonalds show the same directions in which both companies are heading in a positive direction. The P/E ratio and sales both work together in explaining the relationship between the two different criterias. McDonalds P/E Ratio Turns out Lower than Red Robins McDonalds recent P/E ratio that was reported that their yearly P/E ratio was lower than that of its competition in Red Robin. It was reported that McDonalds P/E ratio turned out to be 18.71. For Red Robin, their reported P/E ratio turned out to be 24.10 in comparison to McDonalds. The

difference between these two companies is separated by 5.39 shows that they have some differences in their P/E ratios. The P/E ratios have a direct impact on the net income which will let each company show where they current stand and where they are heading towards in the near future. Red Robins Net Income Shows Tremendous Financial Growth Red Robins records have shown that their net income has been moving in an extremely positive direction between the years of 2010 to 2012. In 2010, Red Robins net income turned out to be $7,299,000. By the end of 2011, tripled to $20,577,000 in just one year. At the end of 2012, Red Robins net income has risen to $28,331,000. This trend here based on the reports show that Red Robin is making serious moves forward in making serious financial gains for years to come. McDonalds net income has been slightly unstable over the years starting in 2010 when their reported net income was reported at $4,946,000, 2011 was reported at $5,503,000, and in 2012 the end of the year net income was reported at $5,464,000. The net income can be broken down to the EPS which is also known as the earnings per share. McDonalds EPS is substantially much higher than Red Robins McDonalds EPS is worth much more than Red Robins by $3.46. McDonalds stated that their EPS were worth $5.39 per share. But, when compared to Red Robins EPS it clearly shows that McDonalds EPS are worth a lot more. Red Robins EPS was reported to be worth only $1.93. The data here shows that consumers will be more inclined to invest in McDonalds as oppose to Red Robin.

Stock Price Red Robin 1-Year: $11.15 6-Months:$19.04 As of 1/29/13:$46.52

Sales 2009-$864,269 2010-$914,850 2011-$977,132

EPS $1.93/Share

P/E Ratio 24.10

Net Income

2010$7.29Million 2011$20.57Million 2012$28.31Million McDonalds 1-Year:$4.95 2010$5.39/Share 18.71 20106-Months:$14.18 $24.07Million $4.96Million As of 2011-$27Million 20111/29/13:$100.89 2012$5.50Million $27.56Million 2012$5.46Million Fig.1 Red Robins financial chart against one of its competitors McDonalds Over the last three years.