share holders letter:
October, 1999
Dear Shareholders:
Exciting things Since the company that owned Rick Tanner's Original Grill
beginning to restaurants merged into Harvest Restaurant Group, Inc. in
happen! January 1999, we have spoken with many of you over the phone
and know that we need to do a better job of communicating
what is happening at our company. Therefore, I'm sending you
this letter so that you can be up-to-date.
We changed our As I am sure you know, we are no longer the Harvest
name Restaurant Group, although our stock trading symbol, ROTI,
remains the same. When we merged in January, we changed the
company's name to reflect the merger, and became Tanner's
Restaurant Group, Inc.
$6 million in With the merger, we received a commitment from third party
funding investors to invest $6 million into the company. The first
installment of $2 million had already been invested in
Harvest Restaurant Group in May 1998, and we received the
balance of $4 million in 1999, with the final installment of
$1.5 million being invested last month.
Our focus Since the merger, we have been working diligently to
position the company for growth and profitability. We have
focused on three areas: (1) cleaning up the problems of
Harvest Restaurant Group, 2) revising the Rick Tanner's
restaurant concept to maximize profitability, and 3)
developing, or acquiring, a restaurant concept with the
potential to provide superior returns to our shareholders.
Making changes In the process of improving our Rick Tanner's restaurants,
for improved one of our franchised restaurants closed in February 1999,
operations and we closed two under-performing company-owned restaurants
in March 1999. That leaves us with ten Rick Tanner's
Original Grill restaurants, eight of which we own, and two
of which are franchised. Of the remaining company-owned Rick
Tanner's restaurants, we have been working to improve
operations and profitability by changing restaurant layouts,
installing new restaurant ordering and food management
systems, modifying menus and increasing margins. We have
already seen a 1-2% margin improvement.
Rick Tanner's We believe the Rick Tanner's restaurant concept has a
is not enough regional appeal in the Atlanta region. Rick Tanner was an
Atlanta resident, and through an active participation in
community events developed a recognizable name. However,
beyond the Atlanta area we believe the Rick Tanner's
restaurant concept would be less successful than necessary
to satisfy our shareholders.
Here's what Therefore, we began the process of identifying a restaurant
we're doing next concept that would have national appeal, and that would fit
in well with today's lifestyles and budgets. We believe that
Crabby Bob's, a restaurant concept based in southern
California, will meet these objectives. Crabby Bob's is run
by John Creed, formerly the CEO of the well-known Chart
House restaurant chain.
What is the Crabby Bob's features fresh fish and other seafood and
Crabby Bob's changes its menu daily to offer customers only the freshest
concept? fish and seafood selections. A full-service bar offers
seasonal mixed drinks, popular beers, and a very moderately
priced list of high-quality wines. The restaurants feature
an eclectic, casual environment with high-energy, friendly
service. A fresh seafood market is located in most
restaurants for those patrons who prefer preparing their
food at home.
Crabby Bob's is We were so impressed with the concept that we entered into
a winner! an agreement to acquire all of the Crabby Bob's restaurants.
In the mean time, we opened a Crabby Bob's in Atlanta under
a license agreement and our Macon, Georgia Tanner's
franchise is now in the process of converting to a Crabby
Bob's.
Work on our So what can you expect from Tanner's going forward? First,
debt even though we have just received funding, certain aspects
of our capital structure make it difficult for us to
accomplish everything we would like. Therefore, we are
having ongoing discussions with our lenders to
the terms of some of our debt.
Close the Crabby Next, we want to close on the Crabby Bob's acquisition. Once
Bob's acquisition the acquisition is complete, we will have 14 Crabby Bob's
and Tanner's restaurants, with two beachheads--Southern
California and Georgia, and estimated total revenues of
close to $17 million per year going forward. John Creed has
already started working with us on a management contract
basis for Tanner's as well as Crabby Bob's, and he will take
over as President and CEO upon conclusion of the deal. I
will remain as Chairman.
More Crabby Then, our intention is to roll out the Crabby Bob's concept.
Bob's! We will continue the Crabby Bob's thrust in Georgia and
California, where we already have three additional
restaurants in the development phase. We also believe the
concept is strong enough for national roll out, and we are
actively looking for franchise partners who can operate
multiple restaurants on a regional franchise or joint
venture basis.
We need capital Clearly, to continue our growth, we will have to raise
to grow additional capital. However, we believe that once the
acquisition of Crabby Bob's is completed, we will have the
base to attract the expansion capital we need. Both John and
I have previously operated national restaurant chains, and
we both believe that under our guidance, Crabby Bob's will
be, in the not too distant future, a national restaurant
success story.
We might change To go along with our focus on Crabby Bob's, we are
our name again! considering changing our name again. If we do, our stock
symbol will also change. Obviously, we would like a name
that better reflects our strategy for the company, as we
move into the twenty-first century. We will keep you
informed when this name and stock symbol change occurs.
Magnum To assist in communicating with our existing shareholders,
Financial and potential future shareholders, we have engaged the
Group services of Magnum Financial Group, LLC, a full service
financial communications and investor relations firm, based
in Los Angeles. A principal of the firm, Mr. Michael
Manahan, is working closely with our management to ensure
accurate and timely information is disseminated to the
investment community. I encourage all stockholders with
further questions to contact Mr. Manahan, at 213-488-0443 |
