Major Strip Club Acquisition

The market approved of the deal. The stock was up 15% today on the news. Pretty cheap at 5x 2019 EBITDA for the clubs. We'll learn more on the next conference call in August.

Interesting ... five clubs in Denver? That's a big chunk of the Denver market.

I'm long shares; not a huge position but it's a cash cow business and the CEO wants to keep rolling up clubs in this manner.

In general the corporate clubs aren't good for the customer. Deja Vu and Ricks aren't exactly loved around here.

IMO Ricks has a history of leaving club MOs and day-to-day management to their own devices. I remember a time Miami dancers at Scarlett’s were really nervous about their club being about to become more like Tootsies (RCI owned) after it was acquired but nope it stayed about the same.

Heck, just the existence of XTC San Antonio—a club about a 3 hour drive away from RCI hospitality headquarters—with all the liabilities that club is allowed to get away with, I think also shows a generally lax style.
One example:
https://www.expressnews.com/business/loc…

My observations from the two Miami purchases are similar to Nice's. There were concerns that Tootsies would change when RCI bought it, that never happened. There were concerns that Scarlett's would change, which so far haven't materialized either. They seem to somewhat hands off, I don't know if they acquire only clubs that are operating in a way they're comfortable with or just have structure that affords them a laissez faire attitude.

That's not to say either club is the same as it was years ago, but I think that's more market conditions than than corporate bureaucracy & rookie MBA's eager to regurgitate the lessons from their textbook ... err, I mean apply their unique blend of extensive experience and well researched theory. Which would be the typical problems from corp clubs.

I’m in agreement with both Dolfan and nice spice, RCI seems to acquire clubs that are profitable and well run and willing to pay a premium price for profitable venues, the way I see it is they have an experienced and we’ll seasoned management that has a knack for running a business and keeping up with the day to day things and adds value by centralizing operations and controlling cost.
I actually see it as a good thing that there is a corporate group in this fragmented industry, it provides an extra level of support and acts as a strong hedge against local government overreach

Gosh, I'm so old I remember Rick's Cabaret being one single club off Richmond Ave in Houston, Texas.

I don’t think Rick’s and XTC are beloved by TUSCL, but they were always a decent middle of the road option for me. I wouldn’t lump them in with Deja Vu.

Corporate management deja vu style is definitely a disaster. Oversimplifying a bit, I'd argue it's the key reason that SF has become one of the worst big cities for SCs, when arguably back in (say) 1998 it was easily one of the best. I haven't been to a Rick's but it sounds like they haven't corporate-ified as badly

The Olive Garden of strip clubs. Clean. Safe. Decent value. Nothing memorable.

9 of the 11 clubs were the old VCG Holdings clubs, which were basically already run by Rick's for 11 years since VCG Holdings was purchased by Rick's in 2010. It seems like now they bought out the guy who owned the actual buildings. Basically, nothing changes in terms of management. None of these clubs are anything special and that won't change. Like mark94 said, they are Olive Garden's. Alright but nothing great.