Rainforest Cafe, Inc: Outline to Rainforest Cafe Research Report

Topics: Chief executive officer, Retailing, Theme restaurant Pages: 7 (1450 words) Published: October 8, 1999
Rainforest Cafe, Inc: Outline to Rainforest Cafe Research Report




Rainforest Cafe, Inc. was incorporated in Minnesota on February 3, 1994 to own and operate restaurant and retail facilities under the name of "Rainforest Cafe - A Wild Place to Shop and Eat."

Chairman of the Board and Chief Executive Officer

Election. Lyle Berman was elected Chairman and CEO of Rainforest Cafe at its inception in February 1994.

Background. Berman has been Chairman and CEO of Grand Casinos, Inc. and its predecessor since October 1990. He is also CEO and a director of Stratosphere Corporation, and a director of G-III Apparel Group Ltd., Innovative Gaming Corporation of America and New Horizon Kids Quest, Inc. He previously was the President and CEO of Berman Specialty Stores, Inc. ("Bermans") from 1978 until November 1988 when Bermans was acquired by Wilson Suede and Leather, a subsidiary of Melville Corporation.

President and Chief Operating Officer

Election. Martin J. O'Dowd was elected in May of 1995. He is the first to hold this position. As of November 18, 1996 O'Dowd has taken a 30 day leave of absence for personal reasons. Dennis Nielson, analyst for R. J. Steichen, predicts that if the leave is only 30 days there should not be a lasting impact on the company (Nielson, November 18, 1996).

Background. O'Dowd is a director of Elephant and Castle Group, Inc. He was previously the Corporate Director, Food & Beverage Services for Holiday Inn Worldwide from July 1987 to May 1995. From August 1985 to July 1987, O'Dowd was Vice President and General Operations Manager for the Hard Rock Cafe in New York.

Management Philosophy. Berman and O'Dowd stated that they are committed to identifying and acquiring the resources that will allow them to continue their high rate of growth.

Main Activities

Rainforest Cafe has two areas of each facility, the restaurant and the retail area.


The company believes that its large menu selection is an important factor in the appeal of its restaurants. The restaurant serves lunch and dinner entrees which range in price from $7.95 to $15.95. The theme of the company is mirrored on the menu with all food and beverage selections including a jungle reference (Annual Report, 1995).

The restaurant derived approximately 74 percent of the companies total revenue during the 52 week period ending December 31, 1995.

Retail Area

In order to enter the restaurant, all customers must pass through the retail area. The inventory includes apparel and gifts with the Rainforest Cafe logo and other items with a rainforest theme such as toys and educational games.

The retail area derived approximately 26 percent of the companies total revenue during the 52 week period ending December 31, 1995.

Corporate Financial Results

Net Profits and Net Sales

The company incurred a net loss during its first year, February 3, 1994 (inception) through January 1, 1995. It did not have any revenues during the period from the inception through October 3, 1994. At that point it had only one operating unit, at the Mall of America, until October 20, 1995, when the Woodfield Mall unit began operations. Much of the loss is attributed to development expenses (Hoover's, August 25, 1996).

On April 7, 1995 the company converted $1,222,500 of promissory notes into share of Common Stock at a conversion price of $4.00 per share. This conversion resulted in a charge to earnings of $1,053,128, or $0.22 per share.

YearNet Profits (millions)Net Sales (millions)

1994$(1,628)$ 2,066 1995
$ 112$13,451

Net Sales By Segment



The executive offices of Rainforest Cafe, Inc. are located at 720 South Fifth Street, Hopkins, Minnesota 55343. The telephone number is 612 945-5400.

Current Operating Units

Mall of America, Bloomington, MN. This unit, which opened October 3, 1994, is...

Bibliography: Berry, Kate. "Rainforest Cafe Makes A Splash." Investors Business Daily
September 6, 1996.
Melcher, Richard A. and Dale Kurschner. "Entrepreneurs: Lyle Berman."
Business Week September 5, 1996.
Nielson, Dennis. "Rainforest Cafe," Reuter 's Money Network Online. November

18, 1996.
Rainforest Cafe - A Wild Place to Shop and Eat, Annual Report. Minneapolis:
"Rainforest Cafe, Inc." Hoover 's Master List Database August 25, 1996.
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