Strip-club operator Rick's Cabaret International Inc. said Tuesday it will sharply curtail its Las Vegas operations and seek a buyer for the money-losing property.
Rick's Cabaret International, Inc. Takes Steps To End Las Vegas Club Losses By Curtailing Its Operation
LAS VEGAS - (April 12, 2011) – Rick's Cabaret International, Inc. [NASDAQ-GM:RICK] said today it has sharply reduced operations at its Las Vegas location in order to eliminate losses as it seeks a buyer for the property.
"We have done everything possible to make this location viable since its acquisition in 2008 and we now believe it is in our shareholders' best interests not to continue these efforts," said Eric Langan, President and CEO of Rick's Cabaret. "We do not believe the Las Vegas market itself will return to its former strength in the near future, and thus it is more logical for us to use our financial and management resources to focus on viable acquisitions and grow our other properties. While the curtailment of operations in Las Vegas will result in a top-line revenue decline for the company, the bottom line benefit will be immediate, and we will make use of potential future tax benefits."
Rick's is reported to have spent 16 million in cash plus 5 million in convertible bonds to buy the former Scores. It would be one thing if they weren't being able to keep up with the payments on the loans, but that money is a sunk cost. If they are finding that they need to severely curtail operations it means that they aren't out of the red on daily operations!
Nah, their problem is that they are a very large facility (high cost) not located in a really prime close to the strip location so they don't get the attention of the other clubs. It is going to be REAL hard to find a buyer, particularly if I understand right they don't own the land underneath the club.
If you could get the place for a song(which may be a possibility) one route to take would be to turn it into an ultra-high value club for locals and in-the-know visitors: $10 laps, $100 30 min. VIP, $4 beer and $6 well drinks only, a basic food menu of sandwiches and burgers, $5 anytime entrance.
Rick's would never cheapen their brand that way, but an independent or a stealth independent would not have to worry about that.
Every club in Vegas is trying to do the same thing: offering big buck indulgence to the big spender. So they are all going after the same client segment plus the casinos are too!
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LAS VEGAS - (April 12, 2011) – Rick's Cabaret International, Inc. [NASDAQ-GM:RICK] said today it has sharply reduced operations at its Las Vegas location in order to eliminate losses as it seeks a buyer for the property.
"We have done everything possible to make this location viable since its acquisition in 2008 and we now believe it is in our shareholders' best interests not to continue these efforts," said Eric Langan, President and CEO of Rick's Cabaret. "We do not believe the Las Vegas market itself will return to its former strength in the near future, and thus it is more logical for us to use our financial and management resources to focus on viable acquisitions and grow our other properties. While the curtailment of operations in Las Vegas will result in a top-line revenue decline for the company, the bottom line benefit will be immediate, and we will make use of potential future tax benefits."
http://www.ricksinvestor.com/290/pressre…
That WSJ link requires membership....so here is the free press release instead.
Rick's is reported to have spent 16 million in cash plus 5 million in convertible bonds to buy the former Scores. It would be one thing if they weren't being able to keep up with the payments on the loans, but that money is a sunk cost. If they are finding that they need to severely curtail operations it means that they aren't out of the red on daily operations!
3 christies, 4 spearmint rhinos, and 2 platinum plus clubs.
If you could get the place for a song(which may be a possibility) one route to take would be to turn it into an ultra-high value club for locals and in-the-know visitors: $10 laps, $100 30 min. VIP, $4 beer and $6 well drinks only, a basic food menu of sandwiches and burgers, $5 anytime entrance.
Rick's would never cheapen their brand that way, but an independent or a stealth independent would not have to worry about that.
Every club in Vegas is trying to do the same thing: offering big buck indulgence to the big spender. So they are all going after the same client segment plus the casinos are too!
What's the over/under on Rick's recovering 18% on what they spent acquiring the Vegas locale?