The typical investor likely can’t identify the company behind the stock ticker RICK, but there’s a better chance they’ve been to a club or restaurant owned by the company, RCI Hospitality Holdings.
RCI owns 38 nightclubs across America in cities like Houston, Miami, Minneapolis and New York (including Rick’s Cabaret, hence the stock ticker). The properties are often classified as “adult entertainment,” but are more colloquially known as strip clubs—a term CEO Eric Langan doesn’t avoid. (He boasts that RCI is the only publicly-traded strip club company.)
But RCI’s new focus isn’t on its clubs. The company also owns Bombshells Restaurant & Bar, a casual-dining chain with scantily clad waitresses (think Hooters) and a military theme. Bombshells currently has just four locations, all in Texas: two in Houston (where RCI is headquartered), one in Dallas, and one in Austin, with three more opening this year in Houston.
Now RCI is about to embark on a major national expansion of Bombshells, using both company-owned stores and franchises. It plans to have 100 Bombshells open in the next 5 to 10 years, an effort that will involve 30% company-owned stores, and the rest opened by franchisees. It will require a quick pace of expansion.
Maybe that grand plan is why shares of the small-cap company are up 130% in the last 12 months. (The stock closed at around $17.70 on Friday.)
Langan says the time is perfect to expand Bombshells, in part thanks to the sunny business outlook of the Trump administration. Post-election, Langan has observed a bump for both RCI’s nightclubs and for Bombshells—for different reasons that both tie back to Trump’s election.
“With the uncertainty before the election, we were really seeing a decline in what I call VIP spend,” Langan says. “That’s VIP room rentals, high-dollar bottles of champagne and bottle service. That segment has now returned and was up 6.6% in the last quarter. So we’re starting to see that spend come back. We’ve seen a return of our VIP guests.”
As for Bombshells, Langan says, “Obviously optimism is way up right now, especially with small businesses, which is great for us. That’s a lot of our clientele, small-business owners.”
Bombshells competes with Hooters, Buffalo Wild Wings, and Twin Peaks, but Langan says it offers a better experience than any of those because of its versatility. “I think we cater to all demographics,” he says. “In the daytime, it’s people that work in the area. Then we get the typical guys that are going to come in, sit at the bar, flirt with the girls. Similar to Hooters. And then in the evening time, it’s people that live in the area, so we get a lot of families.”
The waitresses at Bombshells wear tops that have zippers, and the zippers tend to come up or go down depending on the time of day. But Langan says the appeal of Bombshells isn’t the salacious element. “People like to call us a ‘breastaurant,’ but I say, well, we’re a family breastaurant,” he says. “People want a social experience when they come out and eat. The old sit-down restaurant for casual dining has gotten boring. You have to have some excitement. That’s what I think we’ve added with the Bombshells wait staff, with our DJs that we bring in at night, and then of course all the sporting events. So you may come in to eat, and next thing you know, you’ve been there for 3 hours.”
Millennials especially, Langan says, are difficult for the restaurant industry to understand these days. Experiential restaurants like Bombshells can thrive because they offer more to see and do than a run-of-the-mill casual restaurant.
To be sure, there’s no guarantee the same formula that works for Bombshells in Houston can work on the East Coast. But Langan is confident there’s something about Bombshells that just works.
Daniel Roberts is a writer at Yahoo Finance, covering sports business and technology. Follow him on Twitter at @readDanwrite.
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