RARE Hospitality Announces Second-Quarter Earnings from Continuing Operations of $0.41 Per...

Adjusted Second-Quarter Earnings from Continuing Operations Total $0.42 Per Diluted Share

Revises Fiscal 2007 Earnings Guidance

ATLANTA -- RARE Hospitality International, Inc. (NASDAQ: RARE) today announced financial results for the second quarter and six months ended July 1,

2007. Total revenues for the quarter increased 13.5% to $269,169,000 from $237,125,000 for the second quarter of fiscal 2006. Net earnings from continuing operations for the second quarter of fiscal 2007 were $12,743,000, or $0.41 per diluted share, which included an approximate $0.01 per diluted share income tax valuation allowance from the sale of Bugaboo Creek. Excluding this valuation allowance, adjusted net earnings from continuing operations for the second quarter of fiscal 2007 were $12,918,000, or $0.42 per diluted share. Net earnings from continuing operations for the second quarter of fiscal 2006 were $13,239,000, or $0.38 per diluted share. See page 5 for a reconciliation of all non-GAAP measurements to GAAP financial results discussed in this news release.

Operating highlights for the Company's continuing operations follow.

LongHorn Steakhouse - For the second quarter of fiscal 2007, LongHorn revenues increased 12.2% to $210,309,000. This growth reflected both a 1.1% increase in LongHorn's same-store sales for the quarter and an 11.5% expansion in the number of restaurants in operation to 282 at the end of the second quarter of fiscal 2007 from 253 at the end of the second quarter of fiscal 2006. RARE opened eight LongHorn restaurants during the second quarter and 18 for the first half of fiscal 2007. The Company plans to open seven to eight LongHorns during the third quarter. An aggregate of 32 to 34 openings is scheduled for the fiscal year.

The Capital Grille - Revenue for Capital Grille increased 19.6% for the second quarter of fiscal 2007 to $56,686,000. Capital Grille again produced strong growth in same-store sales, which increased 6.9% for the second quarter and which represented the concept's twenty-first consecutive quarterly improvement in same-store sales. The Company opened one Capital Grille during the second quarter, contributing to the 16.7% expansion in the number of restaurants in operation to 28 at the end of the second quarter of fiscal 2007 from 24 at the end of the second quarter of fiscal 2006. RARE plans to open a total of four Capital Grilles during fiscal 2007, with one opening in each quarter of the year.

"We are pleased with Capital Grille's outstanding results for the second quarter and with the improvement in LongHorn's same-store sales performance relative to the first quarter of 2007," stated Philip J. Hickey, Jr., Chairman and Chief Executive Officer of RARE. "We have tempered our earnings outlook for the second half of the fiscal year due to greater than expected margin pressure, in part because of uncertainty in the futures market for beef."

Financial Guidance

Third-Quarter Fiscal 2007 - Based primarily on the Company's results for the first half of fiscal 2007 and the third quarter to-date, RARE today established its guidance for net earnings from continuing operations per diluted share for the third quarter of fiscal 2007 in a range of $0.21 to $0.24, compared with $0.13 for the third quarter of fiscal 2006, which included an asset impairment charge of $0.09 per diluted share. The Company's guidance for the third quarter of fiscal 2007 is based on an assumed range of same-store sales growth of 0% to 2% for LongHorn Steakhouse and 3% to 4% for Capital Grille, as well as the restaurant opening plans discussed above.

Full-Year Fiscal 2007 - RARE also today revised its guidance for adjusted net earnings from continuing operations per diluted share for fiscal 2007 to a range of $1.52 to $1.59 from the previous range of $1.59 to $1.64. The Company's guidance for fiscal 2007 is based on an assumed range of same-store sales growth for the remaining two quarters of 0% to 2% for LongHorn Steakhouse and 3% to 4% for Capital Grille. The Company's guidance is also based on planned openings of 36 to 38 total restaurants during fiscal 2007. See page 5 for a reconciliation of all non-GAAP measurements to GAAP financial results discussed in this news release.

Of course, the statements contained in the preceding paragraphs are forward-looking statements, and the achievement of these targets is dependent not only on RARE's continued execution of its goals, but also on risks and uncertainties listed below that could cause actual results, performance or developments to differ materially from those expressed or implied by these forward-looking statements.

Conference Call

RARE Hospitality International will hold a conference call to discuss this release tomorrow, July 26, at 9:00 a.m. Eastern time. Participants will have the opportunity to listen to the conference call over the Internet by going to www.rarehospitality.com and clicking on Investor Relations or by going to www.investorcalendar.com. Participants are encouraged to go to the selected web site at least 15 minutes early to register, download, and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available at these sites shortly after the call through the end of business on October 25, 2007.

Safe Harbor Provision

Statements contained in this press release concerning future results, performance or expectations are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include statements regarding the intent, belief or current expectations of the Company and members of its management team, as well as assumptions on which such statements are based. All forward-looking statements in this press release are based upon information available to the Company on the date of this press release. Forward-looking statements involve a number of risks and uncertainties, and other factors, that could cause actual results, performance or developments to differ materially from those expressed or implied by those forward-looking statements including the following: failure of facts to conform to necessary management estimates and assumptions regarding financial and operating matters; the Company's ability to identify and secure suitable locations for new restaurants on acceptable terms, open the anticipated number of new restaurants on time and within budget, achieve anticipated rates of same-store sales, hire and train additional restaurant personnel and integrate new restaurants into its operations; the continued implementation of the Company's business discipline over a large and growing restaurant base; increases in the cost of construction of new restaurants; unexpected increases in cost of sales or employee, pre-opening or other expenses; the economic conditions in the new markets into which the Company expands and possible uncertainties in the customer base in these areas; fluctuations in quarterly operating results; seasonality; unusual weather patterns or events; changes in customer dining patterns; the impact of any negative publicity or public attitudes related to the consumption of beef or other products sold by the Company; unforeseen increases in commodity pricing; disruption of established sources of product supply or distribution; competitive pressures from other national and regional restaurant chains; legislation adversely affecting the restaurant industry, including (without limitation) minimum wage and mandatory healthcare legislation; business conditions, such as inflation or a recession, or other negative effect on dining patterns, or some other negative effect on the economy, in general, including (without limitation) war, insurrection and/or terrorist attacks on United States soil; growth in the restaurant industry and the general economy; changes in monetary and fiscal policies, laws and regulations; and other risks identified from time to time in the Company's SEC reports, including the annual report on Form 10-K for fiscal 2006, quarterly reports on Form 10-Q and its current reports on Form 8-K, registration statements, press releases and other communications. Any forward-looking statement speaks only as of the date it was made, and the Company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time.

RARE Hospitality International, Inc. currently owns, operates and franchises 317 restaurants, including 287 LongHorn Steakhouse restaurants and 28 Capital Grille restaurants.

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