<PAGE>

                                                                    Exhibit 10.3

                              AMENDED AND RESTATED

                         RED ROBIN GOURMET BURGERS, INC.

              2000 MANAGEMENT PERFORMANCE COMMON STOCK OPTION PLAN

     1.   Purpose. The purpose of this Red Robin Gourmet Burgers, Inc. 2000
Management Performance Common Stock Option Plan (the "Plan") is to further the
long term stability and financial success of Red Robin Gourmet Burgers, Inc.
(the "Company") by attracting and retaining key employees of the Company and its
Subsidiaries and directors of the Company through the use of stock incentives.
It is believed that ownership of Company Stock will stimulate the efforts of
those employees and directors upon whose judgment and interest the Company is
and will be largely dependent for the successful conduct of its business. It is
also believed that Option Awards granted to such employees and directors under
this Plan will strengthen their desire to remain with the Company and will
further the identification of those employees' and directors' interests with
those of the Company's shareholders.

     2.   Definitions. As used in the Plan, the following terms have the
meanings indicated:

          (a) "Applicable Withholding Taxes" means the aggregate amount of
     federal, state and local income and payroll taxes that the Company is
     required to withhold in connection with any exercise of a Nonstatutory
     Stock Option.

          (b) "Board" means the board of directors of the Company.

          (c) "Change of Control" means the closing date of any sale or other
     disposition of substantially all the Company Stock or assets of the Company
     other than in the ordinary course of business.

          (d) "Code" means the Internal Revenue Code of 1986, as amended.

          (e) "Committee" means the Board or the committee appointed by the
     Board as described under Section 12.

          (f) "Company" means Red Robin Gourmet Burgers, Inc., a Nevada
     corporation.

          (g) "Company Stock" means Common Stock, $0.001 par value, of the
     Company. If the par value of the Company Stock is changed, or in the event
     of a change in the capital structure of the Company (as provided in Section
     11), the shares resulting from such a change shall be deemed to be Company
     Stock within the meaning of the Plan.

<PAGE>

          (h) "Control Transfer" means one or a series of related transactions
     as a result of which (i) any Third Party, or group of Third Parties acting
     in concert, acquires, directly or indirectly, a majority of the Company's
     voting shares (on a Fully-Diluted Basis), (ii) the Company consolidates
     with or merges into or with, or effects any plan of share exchange with,
     any Person and after giving effect to such consolidation or merger or plan
     of share exchange any Third Party or group of Third Parties acting in
     concert owns, directly or indirectly, a majority of the voting shares of
     the Person (on a Fully-Diluted Basis) surviving such consolidation or
     merger or (iii) in one transaction or a series of related transactions, all
     or substantially all of the assets of the Company are sold, leased,
     exchanged or otherwise transferred as an entirety to any Third Party or
     group of Third Parties acting in concert (the "Acquiring Persons") and
     after giving effect to such transaction any Third Party or group of Third
     Parties acting in concert owns, directly or indirectly, a majority of the
     voting shares of the Acquiring Persons (on a Fully-Diluted Basis).

          (i) "Date of Grant" means the date on which an Option Award is granted
     by the Committee.

          (j) "Disability" or "Disabled" means a condition determined in good
     faith by the Committee to be a Disability, with such determination to be
     conclusive.

          (k) "Fair Market Value" means as of the Date of Grant (or, if there
     were no trades on the Date of Grant, the last preceding day on which
     Company Stock is traded) (i) if the Company Stock is traded on an exchange
     the average of the highest and lowest registered sales prices of the
     Company Stock at which it is traded on such day on the exchange on which it
     generally has the greatest trading volume, (ii) if the Company Stock is
     traded on the over-the-counter market, the average between the closing high
     bid and low asked prices as reported by NASDAQ, or (iii) if shares of
     Common Stock are not traded on any exchange or over-the-counter market, the
     fair market value shall be determined by the Committee using any reasonable
     method in good faith.

          (l) "Nonstatutory Stock Option" means an Option that does not meet the
     requirements of Code section 422, or, even if meeting the requirements of
     Code section 422, is not intended to be an incentive stock option and is so
     designated.

          (m) "Option" means a right to purchase Company Stock granted under the
     Plan, at a price determined in accordance with the Plan.

          (n) "Option Award" means the award of an Option under the Plan.

          (o) "Parent" means, with respect to any corporation, a parent of that
     corporation within the meaning of Code section 424(e).

                                      -2-

<PAGE>

          (p) "Participant" means any employee or director who receives an
     Option Award under the Plan.

          (q) "Shareholders Agreement" the shareholders agreement among the
     Company and certain of its shareholders dated May 11, 2000, as amended.

          (r) "Subsidiary" means, with respect to any corporation, a subsidiary
     of that corporation within the meaning of Code section 424(f).

          (s) "Third Party" means a Person who was not (i) a shareholder of the
     Company on April 30, 2000, (ii) a Permitted Transferee (as defined in the
     Shareholders Agreement) of a transferor who was, or whose predecessor in
     interest was, a shareholder of the Company on April 30, 2000 or (iii) an
     Affiliate of the Company or any shareholder or (iv) an employee of the
     Company on the date such person became a shareholder.

     3.   General. Only Nonstatutory Stock Options may be granted under Option
Awards pursuant to the Plan.

     4.   Stock. Subject to Section 11 of the Plan, there shall be reserved for
issuance under the Plan an aggregate of 2,836,500 shares of Company Stock; which
shall be authorized, but unissued shares. Shares allocable to Options or
portions thereof granted under the Plan that expire or otherwise terminate
unexercised may again be subjected to an Option Award under the Plan. The
Committee is expressly authorized to make an Option Award to a Participant
conditioned upon the surrender for cancellation of an Option granted under an
existing Option Award. For purposes of determining the number of shares that are
available for Option Awards under the Plan, such number shall include the number
of shares surrendered by an optionee or retained by the Company in payment of
Applicable Withholding Taxes.

     5.   Eligibility.

          (a)  All present and future employees of the Company (or any Parent or
Subsidiary of the Company, whether now existing or hereafter created or
acquired) whom the Committee determines to be key employees shall be eligible to
receive Option Awards under the Plan. All present and future directors of the
Company shall also be eligible to receive Option Awards under the Plan. The
Committee shall have the power and complete discretion, as provided in Section
12, to select eligible persons to receive Option Awards and to determine for
each such selected person the terms and conditions and the number of shares to
be allocated to him or her as part of each Option Award.

         (b)  The grant of an Option Award shall not obligate the Company or
any Parent or Subsidiary of the Company to pay any person any particular amount
of remuneration, to continue the employment or service of any person after the
grant or to make further grants to the person at any time thereafter.

                                      -3-

<PAGE>

     6.   Stock Options.

          (a) Whenever the Committee deems it appropriate to grant Options,
notice shall be given to the Participant stating the number of shares for which
Options are granted, the Option price per share, and the conditions to which the
grant and exercise of the Options are subject. This notice, when duly accepted
in writing by the Participant, shall become a stock option agreement between the
Company and the Participant.

          (b) The exercise price of shares covered by an Option may be less than
the Fair Market Value of such shares on the Date of Grant, as determined by the
Committee.

          (c) Options may be exercised in whole or in part at such times as may
be specified by the Committee in the Participant's stock option agreement.


          (d) The Committee may, in its discretion, grant Options that by their
terms become fully exercisable upon a Change of Control, notwithstanding other
conditions on exercisability in the stock option agreement.

     7.   Method of Exercise of Options.

          (a) Options may be exercised by the Participant giving written notice
of the exercise to the Company, stating the number of shares the Participant has
elected to purchase under the Option. Such notice shall be effective only if
accompanied by the exercise price in full in cash; provided, that if the terms
                                                   --------
of an Option so permit, or if so determined by the Committee, the Participant
may deliver shares of Company Stock (valued at their Fair Market Value on the
date of exercise) that have been held by the Participant for more than six
months in satisfaction of all or any part of the exercise price.

          (b) The Company may place on any certificate representing Company
Stock issued upon the exercise of an Option any legend deemed desirable by the
Company's counsel to comply with federal or state securities laws, and the
Company may require a customary written indication of the Participant's
investment intent. Until the Participant has made any required payment,
including any Applicable Withholding Taxes, and has had issued a certificate for
the shares of Company Stock acquired, he or she shall possess no shareholder
rights with respect to the shares.

          (c) Each Participant shall agree as a condition of the exercise of an
Option to pay to the Company, or make arrangements satisfactory to the Company
regarding the payment to the Company of, Applicable Withholding Taxes. Until
such amount has been paid or arrangements satisfactory to the Company have been
made, no stock certificate shall be issued upon the exercise of an Option.

          (d) As an alternative to making a cash payment to the Company to
satisfy Applicable Withholding Taxes, the Committee may establish procedures
permitting the

                                      -4-

<PAGE>

Participant to elect to deliver shares of Company Stock (valued at Fair Market
Value on the date of delivery) that have been held by the Participant for more
than six months that would satisfy all or a specified portion of the Federal,
state and local tax liabilities of the Participant arising in the year the
Option Award becomes subject to tax. Any such election shall be made only in
accordance with procedures established by the Committee.

     8.  Nontransferability of Options. Options by their terms, shall not be
transferable except by will or by the laws of descent and distribution or to the
Participant's spouse or children or a family limited partnership, trust or other
similar entity solely for the benefit of the Participant's spouse or children (a
"Permitted Transferee"), and shall be exercisable, during the Participant's
lifetime, only by the Participant or by his or her guardian, duly authorized
attorney-in-fact or other legal representative or by the Permitted Transferee to
whom they have been transferred.

     9.  Effective Date of the Plan. The effective date of the Plan is May 11,
2000.


     10. Termination, Modification, Change. If not sooner terminated by the
Board, this Plan shall terminate at the close of business on April 15, 2010. No
Option Awards shall be granted under the Plan after its termination. The Board
may terminate the Plan or may amend the Plan in such respects as it shall deem
advisable. A termination or amendment of the Plan shall not, without the consent
of the Participant, adversely affect a Participant's rights under an Option
Award previously granted to him.

     11. Change in Capital Structure.

         (a) In the event of a stock dividend, stock split or combination of
shares, recapitalization or merger in which the Company is the surviving
corporation or other change in the Company's capital stock (including, but not
limited to, the creation or issuance to shareholders generally of rights,
options or warrants for the purchase of common stock or preferred stock of the
Company), the number and kind of shares of stock or securities of the Company to
be subject to the Plan and to Options then outstanding or to be granted
thereunder, the maximum number of shares or securities which may be delivered
under the Plan, the exercise price and other relevant provisions shall be
appropriately adjusted by the Committee, whose determination shall be binding on
all persons. If the adjustment would produce fractional shares with respect to
any unexercised Option, the Committee may adjust appropriately the number of
shares covered by the Option so as to eliminate the fractional shares.

         (b) In the event of a Control Transfer, each outstanding Option that
either has theretofore vested or becomes vested by reason of such Control
Transfer and is not exercised prior to the consummation of the Control Transfer,
shall, as determined by the Committee, either (i) be honored or assumed or new
rights substituted therefor, or (ii) be canceled in exchange for a payment in
cash of an amount equal to the excess, if any, of the net proceeds to be
received per Common Share in the Control Transfer over the exercise price for
the Option.

                                      -5-

<PAGE>

          (c) Notwithstanding anything in the Plan to the contrary, the
Committee may take the foregoing actions without the consent of any Participant,
and the Committee's determination shall be conclusive and binding on all persons
for all purposes.

     12.  Administration of the Plan. The Plan shall be administered by the
Committee, which shall consist of not less than two members of the Board, who
shall be appointed by the Board. In the absence of appointment of the Committee,
the entire Board shall constitute the Committee. The Committee shall have
general authority to impose any limitation or condition upon an Option Award the
Committee deems appropriate to achieve the objectives of the Option Award and
the Plan and, without limitation and in addition to powers set forth elsewhere
in the Plan, shall have the following specific authority:

          (a) The Committee shall have the power and complete discretion to
     determine (i) which eligible persons shall receive Option Awards, (ii) the
     number of shares of Company Stock to be covered by each Option Award, (iii)
     the exercise price of Nonstatutory Stock Options; (iv) the Fair Market
     Value of Company Stock, (v) the time or times when an Option Award shall be
     granted, (vi) whether an Option Award shall become vested over a period of
     time and when it shall be fully vested, (vii) when Options may be
     exercised, (viii) whether a Disability exists, (ix) the manner in which
     payment will be made upon the exercise of Options, (x) conditions relating
     to the length of time before disposition of Company Stock received upon the
     exercise of Options is permitted, (xi) whether to approve a Participant's
     election to deliver shares of already owned Company Stock to satisfy
     Applicable Withholding Taxes, (xii) notice provisions relating to the sale
     of Company Stock acquired under the Plan, and (xiii) any additional
     requirements relating to Option Awards that the Committee deems
     appropriate. The Committee shall have the power to amend the terms of
     previously granted Option Awards so long as the terms as amended are
     consistent with the terms of the Plan and provided that the consent of the
     Participant is obtained with respect to any amendment that would be
     detrimental to him or her.

          (b) The Committee may adopt rules and regulations for carrying out the
     Plan. The interpretation and construction of any provision of the Plan by
     the Committee shall be final and conclusive. The Committee may consult with
     counsel, who may be counsel to the Company, and shall not incur any
     liability for any action taken in good faith in reliance upon the advice of
     counsel.

          (c) A majority of the members of the Committee shall constitute a
     quorum, and all actions of the Committee shall be taken by a majority of
     the members present. Any action may be taken by a written instrument signed
     by all of the members, and any action so taken shall be fully effective as
     if it had been taken at a meeting.

          (d) The Board from time to time may appoint members previously
     appointed and may fill vacancies, however caused, in the Committee.

                                      -6-

<PAGE>

     13.  Notice. All notices and other communications required or permitted to
be given under this Plan shall be in writing and shall be deemed to have been
duly given if delivered personally or mailed first class, postage prepaid, as
follows (a) if to the Company - at its principal business address to the
attention of the Chief Executive Officer; (b) if to any Participant - at the
last address of the Participant known to the sender at the time the notice or
other communication is sent.

     14.  Interpretation. The terms of this Plan shall be governed by the laws
of the State of Colorado.

     IN WITNESS WHEREOF, the Company has caused this Amended and Restated Plan
to be executed this 23rd day of October, 2000.


                                              RED ROBIN GOURMET BURGERS, INC.



                                              By: /s/ James P. McCloskey
                                                  -----------------------------
                                                  James P. McCloskey
                                                  Chief Financial Officer

                                      -7-

<PAGE>

                  FORM OF STOCK OPTION AGREEMENT - TIME VESTED
              2000 Management Performance Common Stock Option Plan


                                  [Insert Date]


[Insert Name]
[Insert Address]


Dear ______________________:

     Red Robin Gourmet Burgers, Inc. (the "Company") has designated you to be a
recipient of an option (the "Option") to purchase shares of Common Stock, $.001
par value, of the Company on the terms set forth in this letter and in the
Company's 2000 Management Performance Common Stock Option Plan (the "Plan").

     The Option is awarded pursuant to the Plan, which was effective on May 11,
2000. The Plan is administered by the Committee.

     Please refer to the Plan for certain conditions not set forth in this
letter. All provisions of this Option are subject to the terms of the Plan, and
the terms of the Plan are hereby incorporated into this letter by this
reference. Capitalized terms which are not defined herein shall have the
meanings given those terms in the Plan.

     A. Option. In consideration of your agreements contained in this letter and
        ------
subject to the vesting requirements set forth below, the Company hereby grants
you an Option to purchase from the Company [insert number of stock options
granted] Common Shares, at $2.25 per Common Share. The Option is a Non Statutory
Stock Option. The award of the Option is subject to the terms and conditions set
forth below.

     B. Terms of Option.
        ---------------

        (1) The Option will become exercisable when the vesting provisions
described below are met.

        (2) The Option will become vested, without duplication, as to [insert
50% of the total number granted] Common Shares on [insert date], and will become
vested as to the remaining [insert 50% of the total number granted] Common
Shares on [insert date]; provided, that you must continue to be an employee of
the Company at all times through the appropriate vesting date in order for the
Option to become vested.

<PAGE>

[insert name]
[insert date]
Page 2


        (3) Subject to the limitations set forth in this letter and in the Plan,
after the Option becomes vested, you may exercise the vested portion of the
Option, in whole or in part, at any time until: the earlier of (i) the effective
time of termination of your employment with the Company for "Cause" (as defined
below) or by you for any reason; (ii) the later of (x) ninety (90) days after
termination of your employment with the Company by the Company other than for
Cause (and other than by reason of death, Disability or retirement at, or after,
age 65) and (y) thirty (30) days following the occurrence of a Liquidity Event
(provided, that if you are subject to a "lock-up agreement" pursuant to such
Liquidity Event, thirty (30) days following the expiration of such agreement);
(iii) a Company Transfer; or (iv) [ten (10) years from grant].

        (4) You may exercise all or any portion of the Option by giving written
notice of the exercise to the Company, stating the number of Common Shares that
you are purchasing and transmitting cash or check (subject to collection) in the
amount of the full purchase price. Attached is a Notice of Exercise form to be
used to give the Company written notice of the exercise of your Option.

        (5) This Option is not transferable by you except by will or by the laws
of descent and distribution or to a Related Transferee, and the Option may be
exercised during your lifetime only by you or your Related Transferees to whom
the Option has been transferred. All agreements made by you in this letter shall
be binding on your heirs and descendants.

        (6) For purposes of this letter and the Plan, "Cause" shall mean with
respect to the termination by the Company of an employee of the Company or a
Subsidiary of the Company: (i) continual deliberate neglect by the employee in
the performance of his material duties; (ii) failure by the employee to devote
substantially all of his working time to the business of the Company and its
Subsidiaries; (iii) the employee's engaging willfully in misconduct in
connection with the performance of any of his duties, including, without
limitation, the misappropriation of funds or securing or attempting to secure
personally any profit in connection with any transaction entered into on behalf
of the Company or its Subsidiaries; (iv) the employee's willful failure to
follow the lawful directives of the Board or Chief Executive Officer of the
Company in any material respect, or violation, in a material respect, of any
code or standard of behavior generally applicable to employees of the Company or
its Subsidiaries; (v) the employee's breach of the provisions of any
non-competition, non-interference, non-disclosure, confidentiality or other
similar agreement executed by the employee with the Company or any of its
Subsidiaries or other active disloyalty to the Company or any of its
Subsidiaries (including, without limitation, aiding a competitor or unauthorized
disclosure of confidential information); or (vi) the employee's engaging in
conduct which is reasonably likely to result in material injury to the
reputation of the Company or any of its Subsidiaries, including, without
limitation, commission of a felony, fraud, embezzlement or other crime involving
moral turpitude; provided that with respect to the events set forth in clauses
(i), (ii), (iii) and (iv), the employee shall have been given written notice of
the act, omission or event constituting Cause and shall not have cured such act,
omission or event within 30 days after the giving of such notice.

<PAGE>

[insert name]
[insert date]
Page 3



     C. Other Conditions.
        ----------------

        (1) As provided in the Plan, appropriate adjustments shall be made in
the number and kind of Common Shares for which the Option may be exercised and
the Option price should there be a change in the capital structure of the
Company, and the Board shall take appropriate actions in good faith with respect
to the Option in the event of a significant corporate transaction.

        (2) By signing this letter, you agree to make arrangements satisfactory
to the Company to comply with any income and payroll tax withholding
requirements that may apply upon the exercise of the Option.

        (3) By signing this letter, you agree to hold all of the Common Shares
acquired pursuant to the exercise of the Option for investment purposes and not
with a view to resale or distribution to the public, unless and until such time
as the Common Shares so acquired shall have been registered under applicable
state and federal securities laws or an exemption from such registration is
available. By signing this letter, you hereby agree to execute such documents as
the Company may require with respect to applicable state and federal securities
laws, and you agree to any restrictions on the resale of the Common Shares that
may pertain.

        (4) By signing this letter, neither you nor any other person shall
become the beneficial owner of the Common Shares subject to the Option, nor have
any rights to distributions or other rights as a shareholder with respect to any
such Common Shares, until you have exercised the Option in accordance with the
provisions hereof and of the Plan.

     D. Notice. Written notice is deemed to have been given to the Company
        ------
and the Board if delivered personally or mailed first class, postage prepaid, to
the President of the Company at the principal business address of the Company or
at such other address or to the attention of such other person as the recipient
shall have specified by prior written notice to you. Written notice is deemed to
have been given to you if delivered personally or mailed first class, postage
prepaid, to you at the address set forth above.

     E. Inconsistency with Plan. Notwithstanding any provision herein to the
        -----------------------
contrary, the Option provides you with no greater rights or claims than are
specifically provided for under the Plan. If and to the extent that any
provision herein is inconsistent with the Plan, the Plan shall govern.

     F. Severability. If any of the provisions of this letter should be
        ------------
deemed unenforceable, the remaining provisions shall remain in full force and
effect.

     G. Modification. This letter may not be modified or amended, nor may any
        ------------
provision hereof be waived, in any way except in writing signed by the parties
hereto.

     F. Agreement. In consideration of the grant of the Option, you hereby
        ---------
agree that you will comply with such other conditions as the Board may impose on
the exercise of the Option

<PAGE>

[insert name]
[insert date]
Page 4

and will perform such duties as may be assigned to you from time to time by the
Board or by the executive officers of the Company; provided that the provisions
of this sentence shall not be interpreted as affecting any right that the
Company may have to terminate your employment at any time.

     This Agreement shall be governed by the laws of the State of Colorado.

                  [Remainder of page intentionally left blank]

<PAGE>

     If you agree to the foregoing terms and conditions, please execute the
attached copy of this letter and return it to the President of the Company.

                                            Sincerely,

                                            RED ROBIN GOURMET BURGERS, INC.


                                            By:
                                               ---------------------------------
                                               James P. McCloskey,
                                               Chief Financial Officer



     I hereby accept the foregoing Option according to the terms set forth in
this letter and in the Red Robin Gourmet Burgers, Inc. 2000 Management
Performance Common Stock Option Plan.


                                               ---------------------------------
                                               [insert name]

Stock Option Grant                    S-1




<PAGE>

                         RED ROBIN GOURMET BURGERS, INC.

              2000 MANAGEMENT PERFORMANCE COMMON STOCK OPTION PLAN

                          NOTICE OF EXERCISE OF OPTION
                          ----------------------------

     Pursuant to the terms of the stock option agreement, dated ____ __,
2000, between Red Robin Gourmet Burgers, Inc. and the undersigned optionee, the
optionee hereby exercises the option to purchase ______________ Common Shares.
The optionee hereby delivers the full option price with respect to the exercised
option, which is comprised of cash in the amount of $__________.

     Executed this ____day of _________, 200_.

                                            OPTIONEE

                                            ------------------------------------
                                            Signature

                                            ------------------------------------
                                            Print or Type Name

     Red Robin Gourmet Burgers, Inc. hereby acknowledges receipt of the
foregoing notice of exercise and payment of the option price this ___ day
of________________, 200__.

                                            Red Robin Gourmet Burgers, Inc.

                                            By:
                                               ---------------------------------

<PAGE>


              FORM OF STOCK OPTION AGREEMENT - PERFORMANCE VESTED

              2000 Management Performance Common Stock Option Plan

                                  [Insert Date]

[Insert Name]
[Insert Address]

Dear ___________________:

     Red Robin International, Inc. (the "Company") has designated you to be a
recipient of an option (the "Option") to purchase shares of Common Stock, $.001
par value, of the Company on the terms set forth in this letter and in the
Company's 2000 Management Performance Common Stock Option Plan (the "Plan").

     The Option is awarded pursuant to the Plan, which was effective on May 11,
2000. The Plan is administered by the Committee.

     Please refer to the Plan for certain conditions not set forth in this
letter. All provisions of this Option are subject to the terms of the Plan, and
the terms of the Plan are hereby incorporated into this letter by this
reference. Capitalized terms which are not defined herein shall have the
meanings given those terms in the Plan.

     A. Option. In consideration of your agreements contained in this letter and
        ------
subject to the vesting requirements set forth below, the Company hereby grants
you an Option to purchase from the Company [insert number of stock options
granted] Common Shares, at $2.00 per Common Share. The Option is a Non Statutory
Stock Option. The award of the Option is subject to the terms and conditions set
forth below.

     B. Terms of Option.
        ---------------

        (1) The Option will become exercisable when the vesting provisions
described below are met; provided, that except as provided in subparagraph
(2)(e) below, you must continue to be an employee of the Company at all times
through the appropriate vesting date in order for the Option to become vested.

        (2) The Option will become vested, without duplication, as to the number
of Common Shares indicated below, if and when the following conditions are
satisfied:

            (a) EBITDA Test: (i) In the event cumulative earnings of the Company
                -----------
     before interest, taxes, depreciation and amortization ("EBITDA") from
     January 1, 2000 through the end of any fiscal year ending on or before
     December 31, 2003, equals at least $114,994,000 but is less than
     $124,993,000, the Option, to the extent not theretofore


<PAGE>

[Insert Name]
[Insert Date]
Page 2

     vested or expired, will, as of the last day of the fiscal year of the
     Company in which such event occurs or such earlier date within such fiscal
     year as the Board shall determine, become vested as to such number of
     Common Shares determined by multiplying [insert 20% of options granted]
     Common Shares by a fraction, the numerator of which is the lesser of (A)
     the amount by which EBITDA for such period exceeds $114,994,000 and (B)
     $9,999,000, and the denominator of which is $9,999,000.

          (ii) In the event cumulative EBITDA from January 1, 2000 through the
     end of any fiscal year ending on or before December 31, 2003 equals at
     least $124,993,000 but is less than $132,493,000, the Option, to the extent
     not theretofore vested or expired, will, as of the last day of the fiscal
     year of Holdings in which such event occurs or such earlier date within
     such fiscal year as the Board shall determine, become vested as to [insert
     20% of options granted] Common Shares plus such additional number of Common
     Shares, if any, determined by multiplying [insert 30% of options granted]
     Common Shares by the fraction, the numerator of which is the lesser of (A)
     the amount by which EBITDA for such period exceeds $124,993,000 and (B)
     $7,500,000, and the denominator of which is $7,500,000.

          (iii) In the event cumulative EBITDA from January 1, 2000 through the
     end of any fiscal year ending on or before December 31, 2003 equals at
     least $132,493,000 but is less than $139,993,000, the Option, to the extent
     not theretofore vested or expired, will, as of the last day of the fiscal
     year of Holdings in which such event occurs or such earlier date within
     such fiscal year as the Board shall determine, become vested as to [insert
     50% of options granted] Common Shares plus such additional number of Common
     Shares, if any, determined by multiplying [insert 50% of options granted]
     Common Shares by the fraction, the numerator of which is the lesser of (A)
     the amount by which EBITDA for such period exceeds $132,493,000 and (B)
     $7,500,000, and the denominator of which is $7,500,000.

          (iv) In the event cumulative EBITDA from January 1, 2000 through the
     end of any fiscal year ending on or before December 31, 2003 equals at
     least $139,993,000, the Option, to the extent not theretofore vested or
     expired, will, as of the last day of the fiscal year of Holdings in which
     such event occurs or such earlier date within such fiscal year as the Board
     shall determine, become vested as to [insert number of options granted]
     Common Shares.

          (v) The determination of EBITDA shall be made in accordance with
     generally accepted accounting principles in effect in the United States
     ("GAAP") and shall exclude net gains on the disposal of assets and other
     non-operating income items, but shall include net losses on the disposal of
     assets (other than with respect to the restaurants identified in Schedule I
     hereto) and other non-operating expense items; provided that reported
     EBITDA shall be adjusted by excluding therefrom (x) the amount of the
     non-cash charges to earnings required under GAAP, if any, for the accretion
     of the value of the options issued pursuant to the Plan that were deducted
     in calculating EBITDA for such period and (y) management fees paid to
     Quad-C Management, Inc. that were deducted in calculating EBITDA for each
     period, and subtracting therefrom an annual

<PAGE>

[Insert Name]
[Insert Date]
Page 3


     amount determined in good faith by the Board to account for the cost of
     additional capital for major acquisitions and/or capital expenditures in
     excess of the capital expenditures provided for in Exhibit A based on the
     following formula: (A) 25% per annum of the aggregate additional equity
     capital issuance or contributions (including Common Shares, preferred stock
     or any securities convertible into Common Shares, calculated on an
     as-converted basis) to the Company to fund such capital expenditures and/or
     acquisitions plus (B) an amount per annum representing annual principal and
                  ----
     interest payments under additional indebtedness for borrowed money or
     capitalized lease obligations incurred to fund such capital expenditures
     and/or acquisitions (or assumed in connection with such acquisitions), such
     annual charges to be calculated assuming (1) straight line amortization
     from the date of incurrence or assumption of such additional indebtedness
     for a period of 120 months and (2) interest calculated quarterly at a
     spread of 350 basis points over 30 day LIBOR on the principal amount of
     such additional indebtedness at the beginning of each quarter (provided
     that such annual charges shall be accrued through the date that EBITDA is
     actually calculated as of, in the event that such calculation is done as of
     a date after the end of the applicable fiscal year).

          (b) IRR Test: (i) In the event that on or after December 31, 2001, and
              --------
     on or before December 31, 2006 as a result of (x) a sale of all the Common
     Shares, capital stock or assets of the Company (a "Company Transfer") or
     (y) the first public offering under which Common Shares of the Company are
     sold to the public (an "Initial Public Offering") (each of clause (x) and
     (y) shall also be referred to as a "Liquidity Event"), the pretax internal
     rate of return (calculated on an annual cash-in, cash-out basis) ("IRR")
     realized by RR Investors, LLC ("Investors") over the term of its investment
     in the Company through the date of closing of the Liquidity Event, and
     after giving effect to the dilution that would be caused by the exercise of
     all Options vested (either theretofore or by operation of the provisions of
     this paragraph (b)) under the Plan and, in the event of an Initial Public
     Offering, valuing the Common Sharers held by Investors immediately before
     the Initial Public Offering at the Initial Public Offering price, is at
     least: (A) if the applicable Liquidity Event occurs prior to December 31,
     2003, 40%, but is less than 45%; (B) if the applicable Liquidity Event
     occurs on or after December 31, 2003 but prior to December 31, 2004, 34%
     but is less than 37%; or (C) if the applicable Liquidity Event occurs on or
     after December 31, 2004, 30% but is less than 32%; then the Option, to the
     extent not theretofore vested or expired, will, as of the date of closing
     of such Liquidity Event, become vested as to such number of Common Shares,
     if any, determined by multiplying [insert 20% of options granted] by a
     fraction, the numerator of which is the amount by which the IRR for such
     periods exceeds 40%, 34%, or 30% (depending upon, as set forth in clauses
     (A), (B) or (C) of this subparagraph (b)(i), in which year the Liquidity
     Event occurs) and the denominator of which is: (x) 5%, if the Liquidity
     Event occurred prior to December 31, 2003; (y) 3%, if the Liquidity Event
     occurred on or after December 31, 2003 but prior to December 31, 2004; or
     (z) 2%, if the Liquidity Event occurred on or after December 31, 2004.

          (ii) In the event that on or after December 31, 2001, and on or before
     December 31, 2006, as a result of a Liquidity Event, the IRR realized by
     Investors over

<PAGE>

[Insert Name]
[Insert Date]
Page 4




     the term of the investment through the date of closing of such Liquidity
     Event, and after giving effect to the dilution that would be caused by the
     exercise of all Options vested (either theretofore or by operation of the
     provisions of this paragraph (b)) under the Plan and, in the event of an
     Initial Public Offering, valuing the Common Shares held by Investors
     immediately before the Initial Public Offering at the Initial Public
     Offering price, is at least: (A) if the applicable Liquidity Event occurs
     prior to December 31, 2002, 45%, but is less than 55%; (B) if the
     applicable Liquidity Event occurs on or after December 31, 2002, but prior
     to December 31, 2003, 45% but is less than 50%; (C) if the applicable
     Liquidity Event occurs on or after December 31, 2003, but prior to December
     31, 2004, 37% but is less than 40%; or (D) if the applicable Liquidity
     Event occurs on or after December 31, 2004, 32% but is less than 35%; then
     the Option, to the extent not theretofore vested or expired, will, as of
     the date of closing of such Liquidity Event, become vested as to [insert
     20% of options granted] Common Shares plus such additional number of Common
     Shares, if any, determined by multiplying [insert 30% of options granted]
     by a fraction, the numerator of which is the amount by which the IRR for
     such periods exceeds 45%, 45%, 37% or 32%, as applicable (depending upon,
     as set forth in clauses (A), (B), (C) or (D) of this subparagraph (b)(ii),
     in which year the Liquidity Event occurs), and the denominator of which is:
     (w) 10%, if the Liquidity Event occurred prior to December 31, 2002; (x) 5,
     if the Liquidity Event occurred on or after December 31, 2002 but prior to
     December 31, 2003; (y) 3%, if the Liquidity Event occurred on or after
     December 31, 2003, but prior to December 31, 2004; or (z) 3%, if the
     Liquidity Event occurred on or after December 31, 2004.

          (iii) In the event that on or after December 31, 2001, and on or
     before December 31, 2006, as a result of a Liquidity Event, the IRR
     realized by Investors over the term of the investment through the date of
     closing of such Liquidity Event, and after giving effect to the dilution
     that would be caused by the exercise of all Options vested (either
     theretofore or by operation of the provisions of this paragraph (b)) under
     the Plan and, in the event of an Initial Public Offering, valuing the
     Common Shares held by Investors immediately before the Initial Public
     Offering at the Initial Public Offering price, is at least: (A) if the
     applicable Liquidity Event occurs prior to December 31, 2002, 55%, but is
     less than 65%; (B) if the applicable Liquidity Event occurs on or after
     December 31, 2002, but prior to December 31, 2003, 50% but is less than
     55%; (C) if the applicable Liquidity Event occurs on or after December 31,
     2003, but prior to December 31, 2004, 40% but is less than 45%; or (D) if
     the applicable Liquidity Event occurs on or after December 31, 2004, 35%
     but is less than 40%; then the Option, to the extent not theretofore vested
     or expired, will, as of the date of closing of such Liquidity Event, become
     vested as to [insert 50% of options granted] Common Shares plus such
     additional number of Common Shares, if any, determined by multiplying
     [insert 50% of options granted] by a fraction, the numerator of which is
     the amount by which the IRR for such periods exceeds 55%, 50%, 40% or 35%,
     as applicable (depending upon, as set forth in clauses (A), (B), (C) or (D)
     of this subparagraph (b)(ii), in which year the Liquidity Event occurs),
     and the denominator of which is: (w) 10%, if the Liquidity Event occurred
     prior to December 31, 2002; (x) 5, if the Liquidity Event occurred on or
     after December 31, 2002 but prior to December 31, 2003; (y) 5%, if the
     Liquidity Event

<PAGE>

[Insert Name]
[Insert Date]
Page 5

     occurred on or after December 31, 2003, but prior to December 31, 2004; or
     (z) 5%, if the Liquidity Event occurred on or after December 31, 2004.

          (iv) In the event that on or after December 31, 2001, and on or before
     December 31, 2006, as a result of a Liquidity Event, the IRR realized by
     Investors over the term of the investment through the date of closing of
     such Liquidity Event, and after giving effect to the dilution that would be
     caused by the exercise of all Options vested (either theretofore or by
     operation of the provisions of this paragraph (b)) under the Plan and, in
     the event of an Initial Public Offering, valuing the Common Shares held by
     Investors immediately before the Initial Public Offering at the Initial
     Public Offering price, is at least: (A) if the applicable Liquidity Event
     occurs prior to December 31, 2002, 65%; (B) if the applicable Liquidity
     Event occurs on or after December 31, 2002, but prior to December 31, 2003,
     55%; (C) if the applicable Liquidity Event occurs on or after December 31,
     2003, but prior to December 31, 2004, 45%; or (D) if the applicable
     Liquidity Event occurs on or after December 31, 2004, 40%; then the Option,
     to the extent not theretofore vested or expired, will, as of the date of
     closing of such Liquidity Event, become vested as to [insert number of
     options granted] Common Shares.

          (v) In the event that Options become vested under paragraph (b) of
     this Section B(2) as the result of an Initial Public Offering, such vesting
     will be deemed conditional pending the continuation of your employment with
     the Company until the earlier of (A) two years after the date of such
     Initial Public Offering and (B) December 31, 2004.

          (c) Combined EBITDA & IRR Test. In the event that either (A) (1)
              --------------------------
     partial vesting of Options occurs on or before December 31, 2003 as the
     result of Section B(2)(a) (the EBITDA Test) and (2) a Liquidity Event
     occurs on or before December 31, 2006 in which the IRR realized by
     Investors satisfies the criterion set forth clause (i), (ii), (iii) or (iv)
     of the Section B(2)(b) or (B) (1) a partial vesting occurs on or before
     December 31, 2003 as a result of clause (i), (ii), (iii) or (iv) of Section
     B(2)(b) (the "IRR Test") solely by reason of the Initial Public Offering
     and (2) on or before December 31, 2003 the cumulative EBITDA of the Company
     would have resulted in the Option vesting as to a greater number of Common
     Shares, then the Option will vest as to such additional number of Common
     Shares; provided the maximum number of Common Shares as to which the Option
     can vest under all provisions of the letter is [insert number of options
     granted].

          (c) The Board shall have complete discretion to determine whether the
     provisions of paragraphs (a), (b) or (c) of this Section B(2) have been
     satisfied.

          (d) If your employment with the Company is terminated for any reason
     other than death or Disability, including by reason of retirement,
     voluntary termination or involuntary termination by the Company with or
     without "Cause" (as defined below), prior to December 31, 2008, the
     unvested portion of the Option will expire as of the date of such
     termination of employment. If your employment with the Company and its
     subsidiaries is terminated by reason of your death or Disability after
     December 31, 2006

<PAGE>

[Insert Name]
[Insert Date]
Page 6

     and prior to December 31, 2008, the unvested portion of the Option will
     expire. If your employment with the Company and its subsidiaries is
     terminated by reason of your death or Disability on or prior to December
     31, 2006, a percentage of the Option will be deemed to have "conditionally
     vested" depending on the date of termination of your employment as follows:
<TABLE>
<CAPTION>
                                                                    Percentage of Option
               Termination of Employment                            Conditionally Vested
               -------------------------                            --------------------
     <S>                                                            <C>
     Prior to December 31, 2001                                               0%
     On or after December 31, 2001 and before December 31, 2002              25%
     On or after December 31, 2002 and before December 31, 2003              50%
     On or after December 31, 2003 and before December 31, 2004              75%
     On or after December 31, 2004                                          100%
</TABLE>

The remaining portion of the Option will expire as of the date of termination of
employment. Final vesting of the "conditionally vested" Option will be dependent
upon satisfaction of the applicable provisions of paragraph (a), (b) or (c) of
this Section B(2), so that the applicable portion of the "conditionally vested"
Option may not be exercised unless the provisions of paragraph (a), (b) or (c),
as the case may be, of this Section B(2) are satisfied, and if such conditions
are not satisfied the "conditionally vested" Option will expire on December 31,
2006. Such "conditionally vested" Option will not be subject to the first
proviso in the first sentence of Section B(1).

     (e) On April 15, 2007, provided that you are an employee of the Company or
its subsidiaries on such date, to the extent not theretofore vested or expired,
the Option will vest.

     (3) Subject to the limitations set forth in this letter and in the Plan,
after the Option becomes vested, you may exercise the vested portion of the
Option, in whole or in part, at any time until: the earlier of (i) the effective
time of termination of your employment with the Company for "Cause" (as defined
below) or by you for any reason; (ii) the later of (x) one year after
termination of your employment with the Company by the Company other than for
Cause (and other than by reason of death, Disability or retirement at, or after,
age 65) and (y) 30 days following the occurrence of a Liquidity Event (provided,
that if you are subject to a "lock-up agreement" pursuant to such Liquidity
Event, 30 days following the expiration of such agreement); (iii) a Company
Transfer; or (iv) December 31, 2009.

     (4) You may exercise all or any portion of the Option by giving written
notice of the exercise to the Company, stating the number of Common Shares that
you are purchasing and transmitting cash or check (subject to collection) in the
amount of the full purchase price. Attached is a Notice of Exercise form to be
used to give the Company written notice of the exercise of your Option.

     (5) This Option is not transferable by you except by will or by the laws of
descent and distribution or to a Related Transferee, and the Option may be
exercised during your

<PAGE>

[Insert Name]
[Insert Date]
Page 7

lifetime only by you or your Related Transferees to whom the Option has been
transferred. All agreements made by you in this letter shall be binding on your
heirs and descendants.

     (6) For purposes of this letter and the Plan, "Cause" shall mean with
respect to the termination by the Company of an employee of the Company or a
Subsidiary of the Company: (i) continual deliberate neglect by the employee in
the performance of his material duties; (ii) failure by the employee to devote
substantially all of his working time to the business of the Company and its
Subsidiaries; (iii) the employee's engaging willfully in misconduct in
connection with the performance of any of his duties, including, without
limitation, the misappropriation of funds or securing or attempting to secure
personally any profit in connection with any transaction entered into on behalf
of the Company or its Subsidiaries; (iv) the employee's willful failure to
follow the lawful directives of the Board or Chief Executive Officer of the
Company in any material respect, or violation, in a material respect, of any
code or standard of behavior generally applicable to employees of the Company or
its Subsidiaries; (v) the employee's breach of the provisions of any
non-competition, non-interference, non-disclosure, confidentiality or other
similar agreement executed by the employee with the Company or any of its
Subsidiaries or other active disloyalty to the Company or any of its
Subsidiaries (including, without limitation, aiding a competitor or unauthorized
disclosure of confidential information); or (vi) the employee's engaging in
conduct which is reasonably likely to result in material injury to the
reputation of the Company or any of its Subsidiaries, including, without
limitation, commission of a felony, fraud, embezzlement or other crime involving
moral turpitude; provided that with respect to the events set forth in clauses
(i), (ii), (iii) and (iv), the employee shall have been given written notice of
the act, omission or event constituting Cause and shall not have cured such act,
omission or event within 30 days after the giving of such notice.

     C. Other Conditions.
        ----------------

     (1) As provided in the Plan, appropriate adjustments shall be made in the
number and kind of Common Shares for which the Option may be exercised and the
Option price should there be a change in the capital structure of the Company,
and the Board shall take appropriate actions in good faith with respect to the
Option in the event of a significant corporate transaction.

     (2) By signing this letter, you agree to make arrangements satisfactory to
the Company to comply with any income and payroll tax withholding requirements
that may apply upon the exercise of the Option.

     (3) By signing this letter, you agree to hold all of the Common Shares
acquired pursuant to the exercise of the Option for investment purposes and not
with a view to resale or distribution to the public, unless and until such time
as the Common Shares so acquired shall have been registered under applicable
state and federal securities laws or an exemption from such registration is
available. By signing this letter, you hereby agree to execute such documents as
the Company may require with respect to applicable state and federal securities
laws, and you agree to any restrictions on the resale of the Common Shares that
may pertain.


<PAGE>

[Insert Name]
[Insert Date]
Page 8



     (4) By signing this letter, neither you nor any other person shall become
the beneficial owner of the Common Shares subject to the Option, nor have any
rights to distributions or other rights as a shareholder with respect to any
such Common Shares, until you have exercised the Option in accordance with the
provisions hereof and of the Plan.

     D. Notice. Written notice is deemed to have been given to the Company and
        ------
the Board if delivered personally or mailed first class, postage prepaid, to the
President of the Company at the principal business address of the Company or at
such other address or to the attention of such other person as the recipient
shall have specified by prior written notice to you. Written notice is deemed to
have been given to you if delivered personally or mailed first class, postage
prepaid, to you at the address set forth above.

     E. Inconsistency with Plan. Notwithstanding any provision herein to the
        -----------------------
contrary, the Option provides you with no greater rights or claims than are
specifically provided for under the Plan. If and to the extent that any
provision herein is inconsistent with the Plan, the Plan shall govern.

     F. Severability. If any of the provisions of this letter should be deemed
        ------------
unenforceable, the remaining provisions shall remain in full force and effect.

     G. Modification. This letter may not be modified or amended, nor may any
        ------------
provision hereof be waived, in any way except in writing signed by the parties
hereto.

     F. Agreement. In consideration of the grant of the Option, you hereby agree
        ---------
that you will comply with such other conditions as the Board may impose on the
exercise of the Option and will perform such duties as may be assigned to you
from time to time by the Board or by the executive officers of the Company;
provided that the provisions of this sentence shall not be interpreted as
affecting any right that the Company may have to terminate your employment at
any time.

     This Agreement shall be governed by the laws of the State of Colorado.

                  [Remainder of page intentionally left blank]

<PAGE>

              FORM OF STOCK OPTION AGREEMENT - PERFORMANCE VESTED
              2000 Management Performance Common Stock Option Plan

     If you agree to the foregoing terms and conditions, please execute the
attached copy of this letter and return it to the President of the Company.

                                                Sincerely,

                                                RED ROBIN INTERNATIONAL, INC.

                                                By:
                                                   -----------------------------

     I hereby accept the foregoing Option according to the terms set forth in
this letter and in the Red Robin International, Inc. 2000 Management Performance
Common Stock Option Plan.


                                                   -----------------------------
                                                   [Insert Name]

Stock Option Grant                    S-1


<PAGE>

                          RED ROBIN INTERNATIONAL, INC.

              2000 MANAGEMENT PERFORMANCE COMMON STOCK OPTION PLAN

                          NOTICE OF EXERCISE OF OPTION
                          ----------------------------

     Pursuant to the terms of the stock option agreement, dated ____ __, 2000,
between Red Robin International, Inc. and the undersigned optionee, the optionee
hereby exercises the option to purchase ______________ Common Shares. The
optionee hereby delivers the full option price with respect to the exercised
option, which is comprised of cash in the amount of $__________.

     Executed this ____day of _________, 200_.

                                                   OPTIONEE

                                                   -----------------------------
                                                   Signature

                                                   -----------------------------
                                                   Print or Type Name

     Red Robin International, Inc. hereby acknowledges receipt of the foregoing
notice of exercise and payment of the option price this ___ day of 200__.

                                                   Red Robin International, Inc.

                                                   By:
                                                      --------------------------

<PAGE>

                                                                      Schedule I

                         Restaurants That May Be Closed
                         ------------------------------

             115 N. Nellis Boulevard
             Las Vegas, Nevada

             294 N. El Camino Real
             Encinitas, California

             12697 Beach Boulevard
             Stanton, Virginia

             12865 El Camino Real
             San Diego, California