Good day and welcome to the Red Robin Gourmet Burger’s Incorporated third quarter 2008 financial results conference call. (Operator Instructions) It is now my pleasure to turn the floor over to your host, Miss Katie Scherping, Chief Financial Officer of Red Robin.

Thanks Andrea. Before I get started I need to remind everyone that part of today’s discussions, particularly but not limited to our outlook and development expectations, will include forward-looking statements. These statements will include but not be limited to references to our earnings guidance, margins, new restaurant openings or NROs, trends, costs, and administrative expenses and other expectations. Also these statements are based on what we expect as of this conference call and we undertake no obligation to update these statements to reflect events or circumstances that might arise after this call. These forward-looking statements are not guarantees of future performance and therefore investors should not place undue reliance on them. We refer all of you to our 10-K and our 10-Q filings with the SEC for a more detailed discussion of the risks that could impact our future operating results and financial conditions. I also want to inform our listeners that we will make some references to non-GAAP financial measures today during our call. You will find supplemental data in our press release on Schedules 1 and 2 which reconcile our non-GAAP measures to our GAAP results. Now I’d like to turn the call over to Denny Mullen, Chairman and Chief Executive Officer. Den.

Thanks Katie and thanks everyone for joining us today. We also have with us Eric Houseman, our President and Chief Operating Officer. Eric will provide an update on some of our key initiatives in this very challenging business environment and Katie will review in detail our most recent financial results and discuss guidance. So here are some of the headlines for our third quarter results. For the third quarter revenues, total revenue increased 10.6% and restaurant revenues increased 10.8%, while company owned comparable restaurant sales decreased 2.2% compared to the third quarter of 2007. GAAP diluted earnings per share were $0.43 compared to $0.49 a year ago. On a non-GAAP basis after considering one time charges in both quarters are diluted, EPS for the third quarter of 2008 was $0.45 versus $0.50 a year ago, a decrease of 10%. Included in our results is an asset impairment charge of $928,000 in the third quarter related to two of our restaurants. Katie will provide more detail on year-over-year comparisons in a few minutes. The third quarter of 2008 was unusually challenging for Red Robin and for the casual dining industry as a whole. The shock effect of the financial crisis on the capital markets intensified pressure on consumers who are already feeling pressure from higher energy costs, food and other costs along with declining home values. These events have caused us and many restaurant operators to reassess our business and operating plans. We are on target to open 31 new company restaurants in 2008. So far this year, we have opened 27 company restaurants in Q3 and 3 more so far in Q4. Our final 2008 restaurant will be opened this coming Monday. Our franchisees have opened seven restaurants through Q3 and one more has opened in Q4. Including the new company owned restaurant that will open next week and two additional franchise restaurants that will open in Q4, we have ten company owned and five franchised restaurants currently under construction. We are still cautious about the macroeconomic factors influencing the casual dining industry as well as real estate developments generally. We plan to open up to 20 new company owned restaurants in 2009. As we said in our last earnings call, we will fund new restaurant development next year from our operating cash flow. So during this challenging period we are maintaining our focus on our fundamental driver of the business which include growing top line sales, managing costs, generating free cash flow, and monitoring our debt. With that I’d like to turn the call over to Eric.

Thanks Denny. Good afternoon everybody. In the third quarter of 2008 our comp store sales decreased 2.2%. This consisted of a 3.8 increase in price and mix which was more than offset by 6% decrease in guest traffic. For comparison purposes, we reported a 4.8% comp store sales increase in the third quarter of 2007 which was driven by a 3.7 higher price in mix and a 1.1 increase in guest counts. As you may recall, last year’s third quarter significantly benefited from our second flight of television advertising. It’s also important to note that our two year comp trends have been positive, up 2.6%. This two year trend gives us confidence that while we’re facing a very difficult economic environment right now, we believe that the long term health of our brand and prospects for improved guest counts down the road remain strong. You’ll also recall that a restaurant enters our comparable base five full quarters after it opens. Our third quarter had 233 company owned comparable restaurants out of the 291 total company owned restaurants. Average weekly sales for these restaurants in our comparable base were $62,182 during the quarter compared to $63,568 for those same units last year. Average weekly sales for the 44 non-comp units were $56,111 during the third quarter this year compared to $59,299 for the 46 non-comparable restaurants previous year. The 17 franchise restaurants that we acquired in the second and third quarters of last year were added to the comp base during the third quarter of this year. The 15 existing franchise restaurants that we acquired in the second quarter of this year will be included in the comp base beginning in the third quarter of 2009. These 15 restaurants AEVs were $54,562 during the third quarter of this year. Our third…

Thanks Eric. First of all if you haven’t already seen our news release for the quarter’s results you can find it on our website at RedRobin.com in the Investor Relations section. The third quarter 2008 was a 12 week period ending October 5. Total revenues for the quarter which consist of restaurant sales and franchise royalties increased 10.6% to $208.6 million from $188.7 million last year. Restaurant sales grew 10.8% to $205.3 million from $185.2 million and consisted of $170.2 million in sales from our 233 comp restaurants, $9.7 million from the 15 restaurants acquired in the second quarter of this year and $25.4 million in sales from our 44 non-comparable restaurants. As Eric mentioned, the 17 California franchise restaurants acquired in mid-2007 have been added to our comp base beginning in Q3 of this year, but the 15 franchise restaurants acquired in the second quarter of 2008 have not been included in our comp store metrics yet. Franchise royalties [in seized] decreased 3.6% in the third quarter to $3.3 million and exclude the royalty contributions from the 15 restaurants acquired in the second quarter this year from which we recognize $384,000 in royalty revenue in the third quarter of last year. The 94 comp restaurants in the U.S. franchise system reported a 2.9% decrease in same store sales while the 18 comp restaurants in the Canadian franchise system reported a 1.9% increase for same store sales for the third quarter. Our restaurant level operating profit margin was 18.5% which compares to 20.3% reported last year. The 180 basis point margin decline is attributed to approximately 80 basis points of higher food and beverage costs, approximately 120 basis points of increased operating costs and 70 basis points of increased occupancy costs which were offset by 90 basis points of labor…

Thanks Katie. While it is still a difficult operating environment, we remain focused on the things we can control, such as our continued efforts to grow sales, increase restaurant operating efficiencies, maintain our financial flexibility, streamline our development costs and build the Red Robin brand. As always, I want to thank our team members who welcome guests 14 shifts a week and the team members here in the home office and in the field who support them for making sure we always deliver great gourmet burgers and excellent service to our guests, that our guest expect. Because of their passion and talent we will build the Red Robin brand, grow our company, and overcome any obstacles to our continued success. With that we’re ready for your questions. Thank you.

Your first question comes from Matt Difrisco – Oppenheimer & Co. Matt Difrisco – Oppenheimer & Co.: Given the incremental advertising spend that you are doing, do you think this is the environment if we’re doing a negative comp this significantly? Do you think there is a – as a response could we pull back the advertising for the fourth quarter or anything that might be planned for the first quarter to defend margins a little bit and wait for a day when the consumer might have some more dollars in his pocket to respond to the advertising?

Matt, good points or good questions. The fourth quarter advertising is over next week so there’s no opportunity clearly on the national plan to pull that out. That was purchased in ’07. In terms of the ’08 plans we’re currently looking at that. We’re talking to our franchise partners. We’re looking at the environment. We’ll talk about our plans consistent as we have in the past on the February call. That’ll include whatever we’re doing in the marketing arena. Matt Difrisco – Oppenheimer & Co.: And then also just thinking about G&A in the fourth quarter, is that still going to be a significant point of leverage in your guidance assumptions or has that also obviously with the sales still coming down, I mean I could figure that out, but as far as has anything changed as far as absolute dollar terms potentially being flat to maybe even down than a year ago?

We estimate that full year will get 60 basis points of leverage over last year’s percentage so that includes the $2 million – or the $1.6 million we’ll reverse on the marketing spend that we already had forecasted. So that plus some bonus reversals in Q4 that we are just newly forecasting will help gain that EPS. Matt Difrisco – Oppenheimer & Co.: Can you just remind us on was that pricing consistent in the quarter with your assumption for the embedded in the fourth quarter comp?

The fourth quarter – the previous price that we had embedded was 4.0. We’ve revised that to a price mix of 3.6 for the full year. Matt Difrisco – Oppenheimer & Co.: Can you tell us – just help me with the math, what is that for the fourth quarter?

It’s about two two for the fourth quarter.

Your next question comes from Brad Ludington – Keybanc Capital Markets. Brad Ludington – Keybanc Capital Markets: Just to follow up on the G&A I mean on the off chance, I know the environment is negative and this is very unlikely, but on the off chance that the sales improve a little bit, the traffic improves some in November, December, is there a possibility that some of those bonus reversals will come back and hurt your G&A leverage?

No. Brad Ludington – Keybanc Capital Markets: And then looking into ’09, is there any idea of the timing of those up to 20 openings? Or is that somewhat set in stone at this point?

Well, as we said nine or I believe it’s nine are under construction which will be open in the – through the first quarter which is a 16 week quarter. Some of them may dribble over into the second quarter. But when we decided to slow it down from the pace we were on, it was a – most of those will be front end loaded for ’09 then. We could have as many as nine of the up to 20 in the first quarter of next year. Brad Ludington – Keybanc Capital Markets: Do you think there’s any risk in any of these commercial developments being pushed back or cancelled that you’re planning to open in ’09?

Well, there’s always a risk especially as you get later in the year and we monitor those even if the sites are – have been approved. So we have until we actually go under construction, we try to maintain as much flexibility as possible to make sure that the developers are delivering what they said they were going to deliver.

Your next question comes from John Glass – Morgan Stanley. John Glass – Morgan Stanley: In your fourth quarter comp guidance you’re assuming things get better from down eight in October I presume? If I quickly back into it you’re looking for what like a down five for the quarter? Is that true or no?

Yes, between down five and down seven. But we get easier comparison in the last two periods of the year. John Glass – Morgan Stanley: Is there any evidence yet though to date that things have actually gotten better or –

Only two extra days so I think it’s a little too early to comment on that. But we had a negative eight for the first four weeks. John Glass – Morgan Stanley: And then you know you’re talking about up to 20 units next year and I appreciate the pullback from earlier but it isn’t a change from when I think you talked about that over the summer. Why not? Can you not slow down more? One would think that opening nine stores in the first quarter when things may be even worse than they are now would not be optimal –

Let me talk to the last call. Those nine were committed well along and ones we felt very comfortable with. The rest of the stores for the development plan as we have the ability to take, slow those down if we so choose as we continue to monitor the environment. John Glass – Morgan Stanley: So beyond the nine you could cut back is what you’re saying?

And our new openings are doing very well in the markets that they’re in. John Glass – Morgan Stanley: And then can you – you mentioned your covenants, two-and-a-half times coverage is the – I guess what you need to achieve. What will you be at for the year based on your new guidance?

It should be just over two. We’re two and a smidge. John Glass – Morgan Stanley: So you’re just over two times EBITDA coverage versus the two-and-a-half times that you need.

Right. John Glass – Morgan Stanley: And what happens if you went above – what if you broke the covenant? What is the remedy?

We don’t plan to. John Glass – Morgan Stanley: But there is a [recure] in the debt covenant probably?

We’d probably have to go and ask for a waiver. John Glass – Morgan Stanley: And which would imply higher interest rate probably?

Yes. That’s purely speculation at this point. That’s pretty far out.

We have a lot of room in that two-and-a-half covenant and if we project it forward if there was any issues moving towards it, we would take other courses of action. John Glass – Morgan Stanley: And then I guess just any optimism on the commodities front, given that seems to be one area where there may be some possibility for ’09? Have you discussed that with any of your vendors for next year?

There is not much optimism on the commodities front compared to this past year. Certainly some commodities are coming down but the drivers for us are hamburger and French fries and those are still difficult issues which we’re working on. So we expect upward pressure on both of those on the commodity front and as long as we’re on the cost pressure front, we might as well talk about minimum wage. We’ve got automatic minimum wages tied to cost of living kicking in January 1, which will cost about 40 basis points due to those states.

Your next question comes from [Unidentified Analyst] – Banc of America Securities. Unidentified Analyst – Banc of America Securities: Could you discuss comp trends regionally and then what you’re seeing at lunch versus dinner on a sequential basis?

Well I’ll answer the last question first. The lunch/dinner mix has not changed on a year-over-year basis so no change there, it’s still about 50-50. The regional we commented because it was material when we saw Arizona, California and Nevada decline. I’d say from the decline in costs has been generally across the board, not in any one particular region in any material respect. Unidentified Analyst – Banc of America Securities: And then back to commodities, do you have any contracts coming up in the fourth quarter?

Our hamburger contract expires – this is the first year we’ve been on a fixed contract with hamburger. It expires at the end of this year.

Your next question comes from Nicole Miller – Piper Jaffray. Nicole Miller – Piper Jaffray: Katie what tax rate for next year just given the volatility in the tax rate this year?

It will depend on our forecast for 2009 which we haven’t given any insight on at this point. Nicole Miller – Piper Jaffray: And CapEx for this year, is it still going to be in the range of 80 to 85?

We say approximately 80 now. Nicole Miller – Piper Jaffray: And does 16 next year seem reasonable? I guess we can just do the same back into how much per store.

Yes. We run an average of about 2.2 per unit plus about 275 in pre-opening. Nicole Miller – Piper Jaffray: And you still have poultry contract is through what part of ’09?

All of ’09. Nicole Miller – Piper Jaffray: And is there anything else contracted for next year?

Yes, Nicole, we have obviously as we said poultry through December of ’09. Our seafood contracts are through December of ’09 as well as our bacon contract through December of ’09. We’ve got our new prime rib contract through September of ’09, cheese through April of ’09, fries that we just re-contracted through October of ’09, bread through April of ’09, oil through October ’09 and then the mayonnaise and dressings through April of ’09. Nicole Miller – Piper Jaffray: That’s a lot so given all that, what is the general inflation that you’re seeing so far?

As of today we’re still – with fries it’s just done within the last hour probably, so we’re still running that. And the big wild card is hamburger. The hamburger market’s substantially above where we are on our contract right now. So we’re waiting, negotiating, and we feel fairly confident that we will not sign a full year contract and I’m fairly confident that the suppliers wouldn’t sign a full year contract on hamburger again. We need to get that better quantified. Nicole Miller – Piper Jaffray: So general, kind of industry rates of inflation on the things that are contracted?

I don’t know about industry rates but they have been marginally up for the ones we contracted, with oil, fries and hamburger being the biggest ones which happen to be the three we use the most of. Or the chicken which is last year’s price. Nicole Miller – Piper Jaffray: And just seeing what advertising for next year, do you expect to hold the percentage [sitting] at one-and-a-half and what kind of dollar amount and weeks would that translate to?

I think I answered that. That was Matt’s question is that we’re working on the media programs and plans with our franchise partners and our advisors at this point, and haven’t formulated definitively what we’re going to do and to the extent, certainly given this environment. And we’ll get that quantified as we go forward. In the past two years we haven’t started the media plans until sometime between mid-February and April anyway. We wouldn’t expect to start anything this year if we did it until that same timeframe. Nicole Miller – Piper Jaffray: And just so we can be better educated, it sounds like you don’t have – you can buy that kind of right in front of actually turning it on.

Well you need some lead time but you don’t have to buy in the up front markets, like six or 12 months in advance. Nicole Miller – Piper Jaffray: As you think about that what are you thinking about is the tone? I mean, it would just be more branding message or do you feel like you could add a value component to that?

No, we said in the third quarter call that we’ve – as we look forward we will move from branding to product news, new news. And we have a number of new products in the pipeline that we’ve been working on that would fit that bill in terms of new news, whether that’s done on national television and/or some other vehicle remains to be seen.

Your next question comes from Steven Rees – J.P. Morgan. Steven Rees – J.P. Morgan: Denny, we’re seeing a lot of discounting and extreme value promotions out there in the casual dining sector and specifically in bar and grill with some coupons for sandwiches and what-not. Do you think this is impacting your business in any or your markets? And I guess I’d just be curious about your general thoughts on the discounting out there and if you think you need to participate in some way?

That’s the ultimate question, discounting. We are not going to participate in discounting, have not. If we do product promotions and they’re at a different price, they wouldn’t be an off menu item. So we want to protect the integrity of the menu and the brand. So we don’t expect that we’ll participate in the discounting frenzy that’s going on.

And I think with everyone with down sale trends, I think it’s fair to say that I’m not sure that anyone’s taking a significant market share in this environment. Steven Rees – J.P. Morgan: Katie, I mean, one of the things that you guys talked about at your investor conference this last year was the opportunity to improve the new store opening margins. And it looks like you made a lot of improvement on the sales this year. They’ve been pretty steady. But can you just talk about how the new stores are opening up from a margin perspective? I think you showed a chart that showed them at like a low double-digit rate and then ramping up to the system average over three years. Have they improved and has that ramp up time changed at all?

Yes, Steven, Houseman here, I’ll answer that one. We have seen dramatic improvement that we’re pretty happy with, both with the top line as well as how these restaurants are normalizing. You know, we’re still fairly into this year. Some of the restaurants that opened in the second or third quarter are still coming off their honeymoon and have only been open ten weeks after that. But we are seeing great improvements and really seeing those things close the gap from that three year run rate that we were experiencing. Steven Rees – J.P. Morgan: Just finally on the pricing, it looks like you dropped off I think you said 2.2 in the fourth quarter. How are you thinking out pricing next year, 2008 was a pretty high pricing year for you all, sounds like commodities are going to be up and do you think you have room to take pricing in ’09 close to what you took in ’08?

Well, the short answer is we haven’t decided. ’08 was a pricing – fairly aggressive pricing year for the industry in reaction – the shocked reaction, frankly, to the commodities driven by corn, etc. So we at this point we’re not taking price, we have a 30 to 45 day window, once we make the decision to pull the trigger to do a menu run assuming we’re not changing products on that menu. But we’re very cautious about pricing in this environment.

Your next question comes from Dustin Tompkins – Morgan Keegan. Dustin Tompkins – Morgan Keegan: Katie I had one clarification first. I think you were saying on the debt covenants if you assumed your guidance for the remainder of the year that would put you at a little over two times at the end of the year. Is that correct?

That’s right. Dustin Tompkins – Morgan Keegan : Is that a fully loaded debt to EBITDAR or is it book debt to EBITDA?

It’s EBITDA and we get to add back non-cash charges which would be all of our stock compensation expense and the impairment charge. So those are added back to the trailing 12 month EBITDA calculation. Dustin Tompkins – Morgan Keegan: And then on the G&A the lumpiness of advertising, it sounded like it came in at $1.5 million this quarter and you had previously said at $2 million? Is that correct?

No, I think it was $1.6 and we were just a little bit shy of what we booked in Q3. Dustin Tompkins – Morgan Keegan: And if you back that out, was there – what else – what helped keep G&A a little bit lower in the quarter?

Lower performance bonuses. Dustin Tompkins – Morgan Keegan: And then lastly on labor, is there an opportunity that you can sustain, the favorability that you’ve been running in labor, does it get a lot harder as you lap some of the benefits that you saw in Q4 of last year?

Yes, Q4 is going to get a little more difficult. We did start seeing some benefit of as Eric said our focus on labor last fourth quarter and really hunkering down on these NROs, they’re really benefiting us. So can we sustain it? That’s a good question. I mean we’d like to think we can, but our adjustment doesn’t include – our forecast for Q4 doesn’t include a significant benefit.

Your next question comes from Jeff Omohundro – Wachovia Capital Markets. Jeff Omohundro – Wachovia Capital Markets: Just another question on the menu, is the planned update on the menu for Q1 still on track and if so how significant an update are you expecting?

You know, Jeff, right now we’re taking a look at a lot of different things in the pipeline. We will do a new menu run sometime in Q1. You know, there’s still a lot of questions out there in terms of price, if any, or how much. So it won’t be in the January timeframe but when we do a new menu run, we will make some changes. It won’t be significant. You’re not going to see, you know, steaks on the menu or something. Jeff Omohundro – Wachovia Capital Markets: On the label leverage in the quarter, which was clearly quite significant, I wonder if you’d give us just a bit more color around how you achieved that? What control of areas really benefited you? And also an update on staffing levels and changes in staffing levels.

In terms of the initiatives we’ve been talking to a lot of those we saw the benefit that the NROs in terms from a labor standpoint are becoming normalized sooner so there’s less drag on the comp base, as well as in the comp base we obviously are focused utilizing our proprietary scheduling software program, New Stars. We’ve seen some great efforts as well as looking at different ways in terms of how we’re doing things in the heart of the house. We’re fully staffed at the, both in the comp as well as the NRO environment. I think we talked about before one of our initiatives is getting far enough ahead in the season’s, GMs and KMs, and we’ve almost already identified, I think we have identified 95% of the GM and KMs for the 2009 openings. So that’s helping as well. I did mention that we’re implementing our team member selection program and we have been utilizing that tool at the management ranks and we’ve been seeing some decent reduction in terms of turnovers. So we’re pleased with where we stand from a people standpoint.

We also continue to see a reduction in our benefit costs, including our workers comp insurance, we’re seeing some nice savings there and have all year long.

Your next question comes from Conrad Lyon – Global Hunter Securities LLC. Conrad Lyon – Global Hunter Securities LLC: Maybe a follow up on the labor question and maybe just gear it towards you, Eric. How flexible are you with your staffing given if the comp’s going to be down 8% is there opportunity to have fewer people on the floor during those periods where you think your sales are going to be weaker than normal?

Great question, Conrad, yes. Our program takes into a very sophisticated sales forecasting program so obviously it’s built around our parameters of four table sections, that kind of thing. So it naturally does that based on a reduced forecast in sales so that you don’t give up the service aspect of it. Conrad Lyon – Global Hunter Securities LLC: One other question, maybe this goes toward Katie. I just wanted to double check here. What’s it looking like to build out a unit these days?

It’s about $2.2 million CapEx and then about $275 for pre-opening expense.

Your next question is a follow up from Brad Ludington – Keybanc Capital Markets. Brad Ludington – Keybanc Capital Markets: Denny, you mentioned that January 1 wage increases would be 40 basis points. Would that be in those states where they hit or system wide?

This is system wide. That’s the effect of the system wide increase.

And it appears there are no further questions today.

Okay. Thank you very much.

Thank you all very much. We appreciate it. Go Red Robin team members.

Thanks guys.

And once again that does conclude today’s conference. We thank you for your participation and ask that you have a wonderful day.