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Non-Tech : RAINFOREST CAFE
RAIN 5.765+0.5%11:05 AM EST
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To: Rusti H who wrote (3470)11/5/1997 11:22:00 AM
From: Dennis Vail  Read Replies (1) of 4704
 
Hi NP Moe,

Welcome "home"!!!! Today's IBD features the Rainforest Cafe in their headline article of The New America section. (pg 5). It's a well done article except for claiming DW RAIN had $33 million in revs for 3Q.....but hey maybe next year....right. Two statements in the article should up the long-term earning estimates in my opinion:

1) Ten domestic units opening are planned for next year (instead of the previously stated nine (eight plus Palisades)

2) Rainforest Cafe "plans to have at least 100 U.S units WITHIN FIVE YEARS ". That's the first time I recall a timeline being put on the unit growth.

Yes, folks, that's a 1000% increase of units within the next five years. Wonder what the increase in international units will be.

The current First Call consensus five year growth rate is 42% with a high of 50% and a low of 30%. Asssuming the % for unit growth rate and earning growth rate will be roughly equal ( and I'd bet that actually earnings growth exceeds unit growth over the next five years)
then management is saying RAIN growth rate will be over 50% for the next five years. Unit growth from this moment (10 units) needs to be at 60% to reach 100 units in 5 years. From the end of 1997 it would have to be a flat 50%.

You have my condolences on your mom's passing, Rusti. Glad to have you back with us!! Gotta run.

Warm regards,
Dennis
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