Discussion Materials Dated January 28, 2010

EX-99.(C)(6) 3 dex99c6.htm DISCUSSION MATERIALS DATED JANUARY 28, 2010 Discussion Materials Dated January 28, 2010

Discussion Materials –

January 28, 2010

Exhibit (c)(6)

Table of Contents

Sale Process Update & Bid Summary

II.

Received Bid Letters

Page

Sale Process Update & Bid

Summary

Summary

(a)

One

the

bids

includes

two

separately

contacted

parties.

Total Contacted

Initial

Teaser &

Draft CA

Offering Memo/

Targeted

Contact

NDA Sent

Received

CA Signed

Bid Letter Sent

Bids Received

(a)

Strategic Contacts

Financial Contacts

Totals

Active

Initial

Teaser &

Draft CA

Offering Memo/

Targeted

Contact

NDA Sent

Received

CA Signed

Bid Letter Sent

Bids Received

Strategic Contacts

Financial Contacts

Totals

Passed

Initial

Teaser &

Draft CA

Offering Memo/

Targeted

Contact

NDA Sent

Received

CA Signed

Bid Letter Sent

Bids Received

Strategic Contacts

Financial Contacts

Totals

Passed After Initial Contact

Strategic Contacts

Alsea

Focus Brands

American Blue Ribbon Holdings

Galardi Group

AmRest Holdings

Garden Fresh Restaurant

Apple-American Group

Jack in the Box

AutoGrill Group

Jacmar Companies

Brinker International

M.H. Alshaya Co.

Carrols Restaurant Group

Mansour Group

Collins Food Group

Subway Restaurant

Compass Group

Taco Bueno Restaurant

Darden Restaurants

WKS Restaurant

Financial Contacts

Berkshire Partners

New Mountain Capital

Friedman Fleischer & Lowe

Olympus Partners

Goldner Hawn

Pacific Equity Partners

Gotham Equity Partners

PCG Capital

GS Capital

Towerbrook

J.H. Whitney & Co.

Weston Presidio

Kinderhook Industries

Received CA, Did Not Receive OM

Strategic Contacts

Amer Group

Quiznos

Americana Group

Shakey's USA

Berjaya

Sodexo

China Resource Enterprise

Wendy's/Arby's Group

Gala Corporation

Zensho

Financial Contacts

Alpine Investors

Mistral Equity

Black Canyon Capital

Palladium Equity Partners

CIC Partners

Sun Capital Partners

Hancock Park Associates

Tavistock Group

Jacobson Partners

TSG Consumer Partners

Received OM, Did Not Bid

Strategic Contacts

None

Financial Contacts

Acon Investments

Goode Partners

Altpoint Capital

HIG Capital

American Securities

Karp Reilly

Angelo Gordon

LNK Partners

Brentwood Associates

Mainsail Partners

Bruckmann, Rosser, Sherrill & Co

Milestone Partners

Bunker Hill Capital

ONCAP Management Partners

Castle Harlan

Quad-C Management

Centre Partners

Riverside Company

Charlesbank Capital Partners

Roark Capital Group

Consumer Capital Partners

Sentinel Capital Partners

Fairmont Capital

TPG Growth

Submitted First Round Bid

Strategic Contacts

None

Financial Contacts

Catterton Partners

Golden Gate Capital

Kayne Anderson Capital Advisors

Meruelo Group/Levine Leichtman Capital Partners

Mill Road Capital

Commentary

Many potential acquirers are avoiding restaurant investments or acquisitions, given the

uncertainty of the current economic and consumer environment

Potential strategic buyers showed little interest in acquiring Rubio’s as their focus is

inward rather than outward

Maintaining cash in order to navigate the ongoing storm

Fixing their own concepts

Interested in divesting non-core brands

Lack of synergy

For internationals, would only enter US organically or for national brand at attractive

valuation

For the few strategics

considering acquisitions, they are generally focused on distressed

or value-oriented situations

Financial

buyers

expressed

similar

concern

about

the

environment

addition

other

obstacles regarding the industry, concept, business model, company profile or their own

portfolio

Uncertain of the future restaurant landscape

Limited experience in the restaurant space, not the right time to enter

Mexican fast-casual is intensely competitive/overstored

Invested in a similar concept, don’t want overexposure in the category

California concentration of the restaurants

Lack of concept portability

Preference for franchised business models

Staying away from take private situations

Too small or large an investment for investment fund

Valuation, would not compete above previously rejected offer of $8.00

Commentary

Despite the aforementioned obstacles, potential acquirers were drawn to Rubio’s for a

variety of reasons

Positioning in the rapidly growing fast-casual segment

Differentiation of the concept

Continued improvement of the concept under the current management team

Stable financial results in an extremely challenging consumer environment

Opportunity for growth

These qualities compelled 5 potential acquirers to submit an initial indication of interest

Catterton

Partners

Golden Gate Capital

Kayne

Anderson

Meruelo

Group/Levine Leitchman

Mill Road

Summary of Received Bids

Overview of Initial Indications of Interest

Note:

EBITDA

and

cash

based

2009

year

end

estimates

from

projection

model.

(a)

Public

Comparable

EBITDA

excludes

impairment

and

loss

disposal.

(b)

Private

Company

EBITDA

excludes

impairment

and

loss

disposal,

pre-opening,

stock-based

compensation

and

public

company

costs.

Meruelo/

Bidder

Mill Road

Kayne

Anderson

Catterton

Partners

Levine Leichtman

Golden Gate

Price Range

Low

$9.50

$9.25

$8.83

$8.50

$8.00

High

9.50

10.00

9.42

8.50

8.25

Implied Public Comparable EBITDA Multiple

(a)

Low

7.7x

7.5x

7.1x

6.8x

6.3x

High

7.7x

8.2x

7.7x

6.8x

6.5x

Implied Private Company EBITDA Multiple

(b)

Low

6.5x

6.3x

5.9x

5.7x

5.3x

High

6.5x

6.9x

6.4x

5.7x

5.5x

Implied Premium

Current Price: $7.30 (1/22/10)

Low

30.1%

26.7%

21.0%

16.4%

9.6%

High

30.1%

37.0%

29.0%

16.4%

13.0%

Unaffected Price: $6.00 (10/14/09)

Low

58.3%

54.2%

47.2%

41.7%

33.3%

High

58.3%

66.7%

57.0%

41.7%

37.5%

Form of Consideration

Cash

Plan to Utilize Debt

Yes

Unclear

Financing Contingency

Likely

Executive in Residence

Alex Meruelo

Comparable/Cited Investments

Cossette, Galaxy Nutritional

Foods

None

Baja Fresh, PF Chang's,

Cheddars, Caribou Coffee,

La Madeline, Culinary

Concepts, Outback

Steakhouse

La Pizza Loca, Quiznos,

Cici's

Pizza, Wetzel's

Pretzels

Romano's Macaroni Grill, Express,

Eddie Bauer, J. Jill, Eye Care

Centers of America, Orchard

Brands, Apogee Retail

Other Advisors

Accounting

PriceWaterhouse

Coopers

Legal

Kirkland and Ellis

Timing

10 days within being selected

(+legal)

60 days within being

selected

"in a timely fashion"

45-60 days of exclusivity

"in a timely manner"

Necessary Approvals

None

Investment

Committee

None

Investment Committee

Held Additional Discussions with Cowen

Yes

Current Rubio's Ownership

4.9%

11.6%

Additional Diligence List Provided

Yes

Additional Comment

Founder was PNRA BOD

member; No intro necessary

Relative Stock Price Change

Stock

Price

Change

Relative

Comparable

Companies

Since

10/14/2009

(25.0%)

(15.0%)

(5.0%)

5.0%

15.0%

25.0%

35.0%

10/14/09

11/03/09

11/23/09

12/13/09

01/02/10

01/22/10

RUBO

Fast Casual

QSR

Micro Cap

S&P 500

Comparable

Restaurant

Analysis

}

Market

Statistics

Select Comparable Company Analysis

(US$ in millions, except per share data)

(a)

Enterprise Value = Market Value of Equity + Net Debt + Minority Interest.

(b)

From Wall Street research.

(c)

Rubio’s LTM EBITDA based on 2009 EBITDA per projection model.

Price

Enterprise

Enterprise Value

(a)

/ LTM

PE Ratios

(b)

5-Year

PE % of SGR

(b)

Company Name

1/22/2010

Mkt Cap

Value

(a)

Rev

EBITDA

2009E

2010E

SGR

(b)

2009E

2010E

Micro-Cap Restaurants

Ark Restaurants

$13.65

$47.6

$49.8

0.4x

6.5x

15.3x

Benihana

4.56

70.2

116.2

0.4x

4.7x

14.0%

Caribou Coffee

7.32

150.3

131.4

0.5x

6.0x

28.2x

20.9x

Cosi

0.67

27.4

22.8

0.2x

Famous Dave's

6.22

57.6

70.4

0.5x

4.8x

9.7x

8.8x

15.0%

64.8%

58.4%

J. Alexander's

3.40

20.2

40.7

0.3x

Jamba Juice

1.78

93.8

64.7

0.2x

Kona Grill

3.37

30.9

29.4

0.4x

23.0%

McCormick & Schmick's

7.99

118.4

134.8

0.4x

5.9x

22.8x

15.0%

152.2%

Mexican Restaurants Inc

2.30

7.6

12.5

0.2x

3.0x

Morton's

3.74

68.7

144.1

0.5x

18.7x

13.0%

143.8%

Pizza Inn

1.61

12.9

13.5

0.3x

5.2x

Ruth's Chris

3.03

73.2

219.1

0.6x

6.3x

8.2x

8.7x

12.0%

68.2%

72.1%

Mean

0.4x

5.3x

15.3x

16.0x

15.3%

66.5%

106.6%

Median

0.4x

5.5x

12.5x

18.7x

14.5%

66.5%

108.0%

Rubio's Restaurants (c)

$7.30

$74.8

$67.4

0.4x

5.7x

20.0%

Rubio's Restaurants (private) (c)

$7.30

$74.8

$67.4

0.4x

4.8x

20.0%

Restaurant M&A Transactions

(a)

Represents total consideration including the assumption of liabilities and residual cash (enterprise value) when available.

Selected M&A Transactions 2005-2009 YTD

(US$ in millions, except per share data)

Enterprise Value/

Date

Enterprise

LTM

Ann.

Target

Acquirer

Value (a)

Revenue

EBITDA

08/18/08

Romano's Macaroni Grill

Golden Gate Capital

109.9

0.2x

2.9x

06/18/08

Café Enterprises (Fatz Café)

Milestone Partners

60.0

0.7x

6.3x

04/28/08

Max & Erma's Restaurants

G&R Acquisition

58.7

0.3x

8.9x

01/29/08

Great American Cookie Company

NexCen Brands

93.4

3.6x

7.6x

11/06/07

Cameron Mitchell Restaurants

Ruth's Chris Steak House

92.0

0.9x

7.0x

08/07/07

Pretzel Time and Pretzelmaker

NexCen Brands

28.7

4.3x

7.1x

07/05/07

Champps Entertainment

F&H Acquisition Corp. (Fox & Hound)

70.9

0.3x

5.8x

06/11/07

Back Yard Burgers

BBAC (Cherokee Advisors)

38.3

0.8x

7.8x

02/27/07

Bugaboo Creek

Trimaran Capital (Charlie Brown's Acq. Corp.

24.0

0.2x

3.6x

10/11/06

Baja Fresh

Caliber Capital Group

31.0

6.2x

05/30/06

Catalina Restaurant Group

Zensho Co.

105.0

0.4x

6.4x

12/29/05

Shari's

Circle Peak Capital

80.0

0.5x

5.7x

Mean

1.1x

6.3x

Median

0.5x

6.4x

Small Cap restaurant

companies have generally

sold in a range of 5.0x to

8.0x

II.

Received Bid Letters

MILL ROAD CAPITAL

January 22, 2010

Rubio’s Restaurants, Inc.

c/o Cowen and Company, LLC

Attention: Owen L. Hart

555 California Street, Fifth Floor

San Francisco, CA 94104

Re: Indication of Interest

To Whom It May Concern:

As you are aware, Mill Road Capital, L.P. (“Mill Road”) has followed Rubio’s Restaurants, Inc. (“Rubio’s” or the “Company”) for many years and has been consistently impressed with the Company and its management team. We currently own approximately 4.9% of the Company’s common stock and continue to believe strongly in the long term potential of the Rubio’s concept. Accordingly, Mill Road is pleased to submit this non-binding indication of interest (the “Offer”) in accordance with the guidelines provided in your letter dated December 17, 2009.

The details of our Offer are as follows:

•

Purchase Price. Mill Road proposes to acquire 100% of the shares outstanding of the Company for $9.50 per share (the “Purchase Price”).

•

Form of Consideration. The Purchase Price would be payable in cash upon the closing of the proposed transaction.

•

Financing. Mill Road and its affiliates would provide all of the equity necessary for the proposed transaction. Mill Road has a longstanding relationship with a leading middle market lender and has conducted extensive discussions about the Offer with that lender. As a result of these discussions, we are highly confident in our ability to arrange appropriate debt financing to complement our equity investment in the proposed transaction. Accordingly, we intend to sign a transaction agreement with no financing contingencies.

•

Due Diligence. In April 2008, Mill Road signed a confidentiality agreement with the Company and completed all of the due diligence that was necessary at the time to make an offer to acquire the Company. Since then, we have become one of the Company’s largest shareholders, met frequently with management and followed all publicly reported developments in the Company. Based on our extensive restaurant experience and uniquely comprehensive knowledge of the Company, we believe that only very limited confirmatory business due diligence would be required. We would also require standard legal and accounting due diligence. See Exhibit A for a list of requested business diligence information.

382 Greenwich Avenue, Suite One • Greenwich, CT 06830 • (203) 987-3500

•

Required Approvals. We do not require any outside approvals to consummate a transaction.

•

Timing. Based on the work that we have performed to date and the limited and confirmatory nature of the information that we require, Mill Road is highly confident that we need no more than 10 days to finalize our business due diligence and that legal and accounting due diligence would be completed very shortly thereafter. Mill Road has a thorough understanding of the Company, does not require an introductory presentation from the management team, and is prepared to immediately commence confirmatory final due diligence.

•

Advisors. Mill Road will not be engaging a financial advisor in connection with this transaction. We plan to engage our customary legal and accounting advisors.

•

Contacts. Please direct any questions regarding our Offer to Scott Scharfman, Managing Director. His phone number is (203) 987-3504, email is sscharfman@millroadcapital.com and fax is (203) 621-3280.

Mill Road Capital is a Greenwich, Connecticut based investment firm. We invest on behalf of a prominent and highly respected group of limited partners including state pension funds, foundations, endowments and insurance companies. The investment professionals of Mill Road are largely former Blackstone Group professionals who have successfully completed several dozen control transactions with a cumulative transaction value of several billion dollars. No firm has more recent experience in micro cap going-private transactions than Mill Road. In December 2009, we successfully executed a $140 million take-private of Cossette Inc. (Former ticker symbol: KOS) the largest domestic advertising and marketing firm in Canada. Earlier in the year, Mill Road executed a successful tender offer to take private Galaxy Nutritional Foods, Inc. (Former ticker symbol: GXYF) the largest marketer of cheese alternative products in North America.

Mill Road professionals also have significant experience in the restaurant industry, which will enable us to complete the proposed transaction expeditiously. Thomas Lynch, our founder, has been an advisor to, and is a former Board Member of, Panera Bread Company, one of the most successful restaurant chains in the United States.

Page 2 of 4

We believe Rubio’s has a great future ahead of it, and we would appreciate the opportunity to further discuss our Offer. We are highly confident that with the support of the Board we can announce a fully negotiated and financed offer prior to the end of February 2010.


Best Regards, Mill Road Capital, L.P.

By:		Mill Road Capital GP LLC Its General Partner



By:		/s/ Scott Scharfman
		Scott Scharfman Managing Director

Page 3 of 4

Exhibit A – Business Due Diligence Request List

Note: This list is largely the same as we submitted in 2008 and is designed to allow us to update our prior analyses.

Company Information

•

Detailed monthly income statements, cash flows, and balance sheets for 2007, 2008, 2009 and YTD 2010 both at the consolidated and area levels

•

2010 budget and build up and drivers to the five year financial projections

•

Annual sales, GM%, EBITDAR, rent expense and capital expenditures by restaurant for 2007, 2008, 2009 and YTD 2010

•

Transaction count, customer count and average guest check information for each restaurant by period for 2007, 2008, 2009 and YTD 2010

•

Data on menu price and major item changes since 2006

•

Opening cost detail for all stores in 2008, 2009 and YTD 2010

•

Detailed prototype unit economics

•

Expansion / Renovation / Re-imaging plans with projected and actual ROI

•

Annual purchases of major food groups with units (e.g. lbs) and unit costs (e.g. $/lb) since 2006

•

Forward contract(s) detail, both historically and going forward

•

Applicable minimum wage information and planned changes

•

Seat count and square feet of each store (including breakout between serving and kitchen)

•

Owned building detail

•

List of commitments for future restaurants

•

Breakdown of $0.9mm of public company savings

Advertising and Promotion

•

Complete list of promotional programs over past three years with a description of the program, data on volume and sales results, cost and redemption rates

•

Advertising spend by market by media over past three years, effectiveness metrics

Other

•

Board presentations for the last three years

•

Customer research studies and output of any surveys, feedback, etc.

•

Industry studies and company rankings (food quality, service, etc.)

•

Analysis of competition

•

Major contracts and agreements

•

Organizational chart

•

Documents related to outstanding litigation

Page 4 of 4

[logo]

Kayne Anderson

Private Advisors, L.P.

Cowen and Company, LLC

CONFIDENTIAL

Attention: Owen L Hart

555 California Street, Fifth Floor

San Francisco, CA 94104

January 22, 2010

Re: Indication of Interest for Rubio’s Restaurants, Inc.

Dear Mr. Hart:

An affiliate of Kayne Anderson Private Advisors, L.P. (“KAPA”) is pleased to indicate its interest in a take-private of Rubio’s Restaurants, Inc. (“Rubio’s” or the “Company”). Based on the projected financials provided in the Confidential Information Memorandum, KAPA would envision a valuation range of $9.25 to $10.00 per share for the Company. Consideration would be entirely in cash, and sources of funding would include senior debt, mezzanine debt and equity.

Upon execution of a term sheet describing the principal terms of the transaction, we would expect to close the investment within 60 days. This letter constitutes an indication of interest only, subject to definitive documentation, and is therefore not a binding offer.

As background, Kayne Anderson was founded in 1984 with a broad mandate in investment management. Since its inception Kayne Anderson and its affiliates have grown assets under management to approximately $7.7 billion. Kayne Anderson invests in a broad array of public and privately negotiated opportunities. Our investment track record and experience give us a high degree of confidence that a transaction with Rubio’s may be consummated in an expeditious manner.

We are looking forward to working closely with you and Company management. If you have any additional questions please feel free to call me at (310) 282-2803, Doyl Burkett at (310) 282-2805 or Seema Shah at (310) 282-2832 to discuss this further.

Sincerely,

Taylor Beaupain

Kayne Anderson Private Advisors, L.P.

1800 Avenue of the Stars • Second Floor • Los Angeles, California 90067


CATTERTON				partners

599 West Putnam Avenue

Greenwich, CT 06830

January 25, 2009

PRIVATE AND CONFIDENTIAL

Owen Hart

Managing Director

Cowen & Company

555 California Street

San Francisco, CA 94104

Dear Owen:

Catterton Partners Management Company, L.L.C. (“Catterton”) is pleased to submit this preliminary, non-binding indication of interest to acquire Rubio’s Restaurants, Inc. (“Rubio’s” or the “Company”). We are highly impressed by the Company’s brand positioning and quality offering and are excited about the opportunity for its continued growth and unit expansion.

Catterton Partners was founded in 1990, and is one of the largest private equity firms in the U.S. focused exclusively on providing equity capital to growing consumer-focused enterprises. We are currently investing out of our sixth buyout fund, which gives us over $2.0 billion in capital under management. Catterton has a disciplined and proactive approach to investing in four key consumer industry “verticals”: Restaurants and Retail; Consumer Services and Branded Consumer Products; Food and Beverage; and Marketing Services. In our twenty-year history, and through our consumer-focused investment strategy, Catterton has acquired and/or capitalized over sixty consumer companies. We have considerable experience in seeking out and effectively utilizing consumer and market research to better understand the customer base of each of our portfolio companies, the markets in which our companies participate and the optimal positioning of our companies within those markets. In addition, Catterton has deep knowledge in the retail/restaurant space, including current and past investments in Baja Fresh, PF Chang’s, Cheddars Restaurants, First Watch Restaurants, Build-A-Bear Workshop, Caribou Coffee, La Madeline, Culinary Concepts by Jean-Georges (an international, upscale, multi-concept restaurant and licensing business), Restoration Hardware, Outback Steakhouse, Tabi (a Canadian-based woman’s apparel retailer), and Watch World. For more information about Catterton Partners please visit our website at www.cpequity.com.

Catterton devotes a great deal of time to assessing and analyzing current consumer trends and performing extensive proprietary research on the mind and habits of the consumer. Today’s consumer is more time pressed than ever and is extremely conscious of all of their economic decisions, not the least of which is food eaten or prepared away from home—and they have clearly exhibited a desire to “trade-down” to faster service and lower price points in the category. This has led consumers to seek out culinary experiences that provide them with the high-quality they became accustomed to prior to the recession, but at more attainable price points. Rubio’s

Rubio’s Restaurants, Inc.

Indication of Interest

Page 2 of 3

food quality and fast casual offering, along with its focus on one of the fastest growing ethnic food categories, fit squarely within some of the most prevalent consumer trends currently impacting the restaurant space.

As a result of all of these factors, we believe that Rubio’s is uniquely positioned for future growth. As such, we are very excited about the opportunities for the Company and are prepared to submit the following preliminary indication of interest:

Valuation / Price. Based upon the financial and other information available to us to date, Catterton would expect to acquire the Company (the “Transaction”) at a valuation based on a total enterprise value of $84 million - $91 million (the “Purchase Price”), which represents approximately 5.75x - 6.25x 2009 LTM Private Company EBITDA and an approximate 28% - 38% premium to its publicly-traded price This proposed valuation assumes the business (i) has achieved 2009 LTM Private Company EBITDA of $14.6 million based on the data outlined in the Confidential Information Memorandum; (ii) is sold on a cash-free, debt-free basis; (iii) has an adequate level of working capital required to operate the business post closing; (iv) has financial statements for the recent trailing twelve month periods at close that are in accordance with GAAP; and (v) has no material unrecorded liabilities. This offer also assumes that the adjustments to EBITDA and pro-forma assumptions are ultimately satisfactory to Catterton following the completion of our accounting and business due diligence. Further, this offer also assumes (i) the selling shareholders will be responsible for all current income taxes of the Company for all taxable periods ending on or before the closing date of the Transaction and the portion through the closing date and (ii) transaction costs associated with the sale of the business that are incurred by the Company (including costs of soliciting and obtaining stockholder approval) will be paid by the selling shareholders at or prior to closing.

Financing. We propose to finance the Transaction by means of a combination of debt and equity. Catterton believes strongly in letting the business plan and strategy for each respective portfolio company determine the appropriate capital structure for that investment. As such, the exact capital structure of Rubio’s would be determined at a later date. In any event, we tend to be moderately conservative in our use of leverage (as we are focused on making our returns through growing superiorly positioned consumer businesses). The equity portion of the Purchase Price would be funded by Catterton from committed equity funds and the balance of the Purchase Price would be funded by a combination of bank debt and subordinated debt, or through affiliates of Catterton. Our relationships with the most active providers of senior and subordinated debt to the middle-market are exceptionally strong. We would anticipate being able to execute debt financing for this transaction in a timely manner. Catterton will make this investment out of our $1 billion Fund VI which has approximately one-third of its capital remaining to be deployed.

Due Diligence. Catterton has extensive experience evaluating business opportunities and acquiring companies in the restaurant and retail industry. We believe that this experience enables us to rapidly and accurately assess potential transactions and complete our due diligence quickly. We have reviewed the

Rubio’s Restaurants, Inc.

Indication of Interest

Page 3 of 3

materials provided and believe that Rubio’s is well positioned for success. We are prepared to commence a more comprehensive due diligence review immediately upon notification by you that we have been selected to continue in the next phase of the process. This diligence will include customary legal, accounting, and business due diligence. Our business due diligence will largely focus on historical and projected unit-level performance, the 2009 corporate-level financials, confirmation of the Company’s current concept unit potential, and the consumer perception of the brand. We will also want to understand the desired roles and objectives of the existing management team and their desire to continue as managers of the business.

Timing. Catterton has extensive resources to complete due diligence and transaction documentation, and employs a decision-making process that allows us to review and complete desirable transactions in a highly expedient manner. Based upon our experience in evaluating and executing transactions similar to that proposed in this letter, we feel that we are in a strong position to work with you to accomplish our due diligence and close a potential Transaction in a timely fashion.

Required Approvals. No corporate, shareholder, or regulatory approvals are required for us to consummate the Transaction, except for perfunctory regulatory approvals (such as HSR, where approval should be a fait accompli), as applicable.

Advisors. Catterton uses a number of nationally known firms to perform due diligence and transaction support, all of whom have worked with Catterton numerous times and that will work professionally and productively with all parties involved.

Contacts. Please feel free to contact either Jon Owsley or Andrew Taub with any questions regarding our preliminary proposal at (203) 629-4901.

We appreciate the opportunity to evaluate this Transaction and are very excited about the potential of the Company. We look forward to hearing back from you.

Sincerely,

/s/ Jonathan H. Owsley

/s/ Andrew C. Taub

Jonathan H. Owsley

Partner

Andrew C. Taub

Partner

January 22, 2009

Rubio’s Restaurants, Inc.

c/o Mr. Owen Hart

Cowen and Company, LLC

555 California Street, Fifth Floor

San Francisco, CA 94104

owen.hart@cowen.com

Dear Owen:

We are pleased to submit this preliminary indication of interest to acquire 100% of the outstanding capital stock of Rubio’s Restaurants, Inc. (“Rubio’s” or the “Company”) for cash consideration of $8.50 per share (the “Purchase Price”). The transaction described in this preliminary indication of interest would be consummated by a group consisting of Alex Meruelo and certain of his affiliates (the “Meruelo Parties”) and Levine Leichtman Capital Partners, Inc., or an affiliate thereof (“LLCP” and, together with the Meruelo Parties, the “Investors”). This preliminary indication of interest is based on the assumption that immediately prior to the closing of the transaction (i) there will be 10,035,077 shares of common stock of the Company outstanding and the Company will not have issued any additional stock options, restricted stock units or similar awards since the date of this letter, (ii) the Company will be debt free, (iii) there will be approximately $7.4 million of cash on the Company’s balance sheet, and (iv) the Company will have adequate working capital to operate the business going forward in the ordinary course.

The Investors (together with cash available at Rubio’s at closing) will provide all of the capital required to fund and close this transaction. There will be no third party financing required to consummate this investment and no “financing contingency.” Furthermore, there are no consents required internally for either LLCP or the Meruelo Parties to fund the transaction. We are highly confident that we can quickly close on the terms set forth herein.

Immediately following the execution of a letter of exclusivity with Rubio’s, we will commence our confirmatory business and legal due diligence investigation of the Company and all of its subsidiaries and affiliates. We believe that within 45 to 60 days from the signing of a letter of exclusivity, we will be able to complete our confirmatory due diligence and negotiate the definitive documentation required to close the transaction.

The Meruelo Parties currently own approximately 11.6% of Rubio’s common stock and represent the Company’s largest non-institutional shareholder. Alex Meruelo is the principal shareholder, Chairman and CEO of the Meruelo Group, a minority owned and operated holding company with vested interests in food services, construction and engineering, real estate and private equity. In 1986, Alex established La Pizza Loca, a quick service restaurant catering to the Hispanic community, expanding it to more than 50 franchised and company owned stores.

Real estate development soon followed and the Meruelo Group now has a diversified portfolio of commercial/retail residential and industrial properties. In 1999, Alex purchased the first of four construction companies and the Meruelo Group now has a presence throughout Southern California. Alex is a founding shareholder and director of Commercial Bank of California, and sits on the board of William Lyon Homes and ExaDigm, Inc.

Levine Leichtman Capital Partners is a Los Angeles, California-based investment firm that manages approximately S5.0 billion of institutional investment capital through private equity partnerships and leveraged loan funds. LLCP is currently making new investments through Levine Leichtman Capital Partners IV, L.P. Successful investments in the restaurant industry include Quizno’s Corporation, Cici’s Pizza and Wetzel’s Pretzels.

While a high level of interest exists in consummating the transaction described above, this letter is not a commitment, a contract, or an offer to enter into a contract and should not be deemed to obligate LLCP or the Meruelo Parties in any manner whatsoever. This preliminary indication of interest should not be relied upon for any reason whatsoever.

This preliminary indication of interest supersedes the proposal letter delivered to the Company’s Board of Directors by the Investors on October 13, 2009, in its entirety.

We look forward to having the opportunity to work with you and the Rubio’s team on this transaction,

Sincerely,

/s/ Alex Meruelo

/s/ Lauren Leichtman

Alex Meruelo

Chairman and Chief Executive Officer

Meruelo Group

Lauren Leichtman

Chief Executive Officer

Levine Leichtman Capital Partners

[logo]

GOLDEN GATE CAPITAL

January 22, 2010

Rubio’s Restaurants, Inc.

c/o Cowen and Company, LLC

Attention: Owen L. Hart

555 California Street, Fifth Floor

San Francisco, CA 94104

Re: Acquisition of Rubio’s Restaurants, Inc.

Dear Mr. Hart:

We are pleased to submit the following proposal regarding the acquisition of Rubio’s Restaurants, Inc. (“Rubio’s” or the “Company”), pursuant to which an entity controlled by investment funds managed by Golden Gate Private Equity, Inc. (“Golden Gate Capital” or “GGC”) would acquire 100% of the outstanding stock of the Company (the “Transaction”).

We believe that Golden Gate Capital would be an excellent financial and strategic partner for the Company and is well positioned to consummate the transaction described herein:

•

Strong Track Record and Extensive Access to Capital: Golden Gate Capital, headquartered in San Francisco, is a private equity investment firm with over $9 billion of capital under management. GGC’s investors include leading educational endowments, non-profit foundations, investment banks, and selected entrepreneurs and managers. The firm’s charter is to partner with world-class management teams in making change-intensive and growth-oriented investments. The principals of Golden Gate Capital have a long and successful history of investing in these types of transactions. In aggregate, GGC’s professionals have participated in more than 100 investments aggregating to over $10.0 billion in enterprise value.

•

Significant Restaurant and Consumer Investment Expertise: The consumer sector is a significant focus area for our investment staff, with a specific emphasis on multi-channel retail and foodservice. In December 2008, we completed the acquisition of Romano’s Macaroni Grill from Brinker International. In addition, we have made over a dozen successful investments in multi-unit and multi-channel consumer companies including Express (the 6th largest specialty apparel retailer in the country), Eddie Bauer ($1B in annual sales across 350 stores, catalogs, and the web), J. Jill (a 220 store retailer of women’s apparel), Eye Care Centers of America (the second largest eye care retailer in the country), Orchard Brands (the largest multi-channel marketer of apparel and other products targeting the 55+ demographic), and

One Embarcadero Center, 39^th Floor, San Francisco, CA 94111

telephone 415.983.2700 fax 415.983.2701 web www.goldengatecap.com

Apogee Retail (the second largest chain of for-profit thrift stores in the country). We believe that our experience and focus gives us a strong understanding of the market and opportunities available to the Company, and that this differentiates us among potential financial sponsors.

We would be pleased to propose a Transaction on the following terms:

1.	Purchase Price. Based on our review of the materials provided to date as well as publicly available information, we are pleased to propose a purchase price of $8.00 -$8.25 per share for 100% of the outstanding stock of the Company.

Financing. Golden Gate Capital will provide 100% of the financing for the Transaction at the signing of the purchase agreement. There will be no financing conditions. We believe that our ability and willingness to provide a commitment for 100% of the purchase price significantly enhances the speed and certainty of a Transaction with Golden Gate.

3.	Necessary Approvals. As a privately held investment partnership, Golden Gate Capital does not require any corporate or shareholder approvals or other extraordinary conditions to consummate the Transaction.

Activities prior to Closing. As you are aware, Golden Gate Capital has significant experience with transactions of this nature. Our key due diligence activities would include the following: (i) confirmatory accounting review by PriceWaterhouseCoopers; (ii) confirmatory legal due diligence by Kirkland and Ellis LLP; (iii) receipt of all necessary and material governmental and third party approvals required to consummate the Transaction (if any); (iv) negotiation of a mutually satisfactory definitive purchase agreement; and (v) completion of our business due diligence.

5.	Key Contacts. Josh Olshansky (415/983-2728) and Josh Cohen (415/983-2784) of Golden Gate Capital are available to respond to any questions you might have regarding our proposal.

Confidentiality. Unless mutually agreed to in writing, no party hereto will make any disclosure to any third party (other than their respective officers, directors, employees, agents, potential financing sources and other representatives who have a need to know such information in furtherance of the transactions contemplated hereby) of the existence or contents of this letter, the transactions contemplated hereby, or the status of negotiations with respect thereto.

One Embarcadero Center, 39^th Floor, San Francisco, CA 94111

telephone 415.983.2700 fax 415.983.2701 web www.goldengatecap.com

We thank you for the opportunity to present our proposal. We are enthusiastic about this opportunity and are prepared to dedicate the necessary resources to expeditiously complete the proposed Transaction.

Sincerely,

Josh Olshansky

Golden Gate Capital

Office: (415) 983-2728

Fax: (415) 983-2828

jolshansky@goldengatecap.com

One Embarcadero Center, 39^th Floor, San Francisco, CA 94111

telephone 415.983.2700 fax 415.983.2701 web www.goldengatecap.com