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RARE Hospitality International Reports Second Quarter Earnings Increase of 43.3% to $0.43 Per Diluted Share; Company Also Announces 3-For-2 Stock Split

ATLANTA--(BUSINESS WIRE)--July 26, 2000--Philip J. Hickey, Jr., President and Chief Executive Officer of RARE Hospitality International, Inc. (Nasdaq NM:RARE), today announced financial results for the second quarter and first six months of 2000. Total revenues increased 18.2% for the second quarter, a 13-week period ended July 2, 2000, to $110,419,000 from $93,391,000 for the second quarter of 1999, a 13-week period ended June 27, 1999. Net earnings increased 46.5% to $5,584,000 from $3,811,000. Diluted earnings per share for the second quarter were $0.43, up 43.3% from $0.30 for the second quarter of 1999.

For the first six months of 2000, a 27-week period, total revenues rose 24.0% to $231,031,000 from $186,370,000 for the first six months of 1999, a 26-week period. Net earnings for the first half of 2000 were up 56.3% to $12,481,000, before a nonrecurring item relating to the settlement of a previously disclosed legal dispute, from $7,984,000, before cumulative effect of change in accounting principle, for the comparable period a year ago. Diluted earnings per share increased 53.1% to $0.98 from $0.64, before the nonrecurring item and cumulative effect of change in accounting principle.

RARE also announced today that its Board of Directors has approved a 3-for-2 stock split, which will be effected in the form of a 50% stock dividend to shareholders of record as of the close of business on August 15, 2000. The new stock certificates will be distributed on September 5, 2000. As of July 26, 2000, the Company had approximately 12,386,000 shares of common stock outstanding. The stock split will increase the number of shares of common stock outstanding to approximately 18,579,000 shares.

Mr. Hickey said, "RARE Hospitality has produced another quarter of substantial profitable growth through daily execution of a simple but effective strategy: consistent earnings growth through the superior performance of our existing restaurant base, a moderate pace of new restaurant development, and increasing operating efficiencies. We believe our consistent implementation of this strategy has been primarily accountable for the Company's performance improvement during the past two years. The Board's approval of the 3-for-2 stock split recognizes this accomplishment.

"All three elements of the strategy contributed to our better-than-expected financial results for the second quarter. Our strong revenue growth created operating leverage, which drove increased profitability. As a result, our operating profit margin for the quarter increased to 8.9% from 7.5% for the second quarter last year, and our net profit margin rose to 5.1% from 4.1%."

LongHorn Steakhouse - Revenues for LongHorn Steakhouse increased 21.6% for the second quarter to $77,941,000. This growth is primarily attributable to the 14.4% increase in the number of LongHorn Steakhouse restaurants in operation to 127 at the end of the second quarter from 111 at the same time last year. Three new LongHorn Steakhouse restaurants opened during the second quarter, bringing total restaurants opened during the first half of 2000 to nine. The concept remains on schedule to open 17 to 19 new restaurants during 2000.

This growth in revenues also reflects a 4.4% expansion in same-store sales for the quarter, LongHorn Steakhouse's 10th consecutive quarterly increase in same-store sales. The concept's newer restaurants, which are not in the same-store sales base, also continued to generate revenue growth above the system average, evidenced by the 5.9% increase in the concept's overall average weekly unit volume for the quarter.

The Capital Grille - One of the nation's premier steakhouse concepts, The Capital Grille, again produced consistently strong results with a 10.8% increase in same-store sales for the second quarter. This performance represents the Capital Grille's 15th consecutive quarter of increased same-store sales results. RARE had 11 The Capital Grille restaurants in operation at both the end of the second quarter of 2000 and the end of the second quarter of 1999, and expects to open one to two additional restaurants during the second half of 2000.

Bugaboo Creek - Revenues for Bugaboo Creek increased 12.0% for the second quarter, and, with a same-store sales increase of 5.8%, the concept generated its fourth consecutive quarter of positive same-store sales growth. There were 18 Bugaboo Creek restaurants in operation at the end of the quarter compared with 17 at the same time last year. One additional restaurant is scheduled to open late in the fourth quarter of 2000.

"RARE Hospitality enters the second half of 2000 with three great concepts and strong management teams overseeing each concept," added Mr. Hickey. "These teams are fully committed to driving superior performance by providing our guests high quality dining experiences and building their intent to return. We continue to invest in the ongoing training and development of our people. We believe in the full service restaurant business, those with the best people win."

-TMF Jeanie
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