So, if we can get the licenses issued in the next three months, you know, we’ll be good to go. I just don’t know where they’re at because they just don’t tell you anything, right. They tell you if they need something and they tell you when they’re going to come visit you and those types of things. But they really don’t give you any real feedback on where they’re at in the process or when they think the process will be completed.
Adam Wyden: You talked about senior management changes at Bombshells. I mean, have you — you know, has senior leadership, the head of Bombshells, are they still there? And I guess, you know, your strip club, sorry, on the nightclubs side, you sort of have a unique, you know, management program in that, you know, the nightclubs are managed by RCI Management Company and they’ve been with you for a long time. And, you know, many of the managers sort of participate in the tip pool. It’s sort of more of an entrepreneurial culture. I mean, have you considered bringing in someone from like a Twin Peaks or a [No Host Locos] or, you know, another business and perhaps structuring a program where, you know, someone who knows what good looks like, you know, sort of has a revenue share, a profit share or some sort of thing.
So, you know, they go up and down with the business. I mean, you know, I don’t know, but it seems like it’s worked really well on the nightclubs side, you know, sort of the entrepreneurial culture and sort of the way, you know, you sort of manage those. I mean, have you thought about sort of doing something similar on Bombshells? Where you sort of, you know, get on Ed or get someone that, you know, sort of, you know, has real sort of financial interest in the success of the business, you know, and sort of bringing someone over from a business that has, you know, sort of executed. I mean, because I don’t think it’s that hard. I mean, I think, if you look at like some of the other businesses on the restaurant side, I mean, obviously they’ve seen some weakness, but, you know, they’re still sort of holding margin and whatnot, which means that means it’s great opportunity.
It doesn’t mean, unlike on the nightclubs side, where your peers are sort of down 30%, you’re sort of, you know, eons beyond them. It feels like your peers aren’t that down on the restaurant side. So, it feels like, you know, there’s opportunity with the proper management. I mean, have you sort of sorted through that and, you know, is there anything you can sort of, you know, discuss on that front? I mean, because that might make it easier to sell it, or maybe you decide you don’t want to sell it if your — you know, you get someone that really can sort of do a 20% margin day in, day out.
Eric Langan: I mean, we are currently, you know, testing all of our options and working through this process. I mean, we basically started the process in December. We made a few changes. We were not happy with those changes at the end of that quarter. We have made additional changes. When the results came in, in January, as we started seeing the Bombshells results, we started making more changes. It was — we were affected in Texas by weather, freeze days, and then two weeks of rain and flooding. So, there’s some — you know, there’re some issues on, you know, are the changes we made in early January working or not? We will know that over the next couple of weeks as we go through Super Bowl Sunday. I will tell you that Ed is helping out with Bombshells right now, as I am myself being involved in monitoring stores, you know, dailies, hourlies sales, and making phone calls and visiting sites and doing the things that we need to do to make sure the changes that we are — that we’ve made are working and that we’re seeing immediate results.
I think that part of the problem was the current management team that we had in place in October through December just did not understand the sense of urgency. I think they have definitely got the sense of urgency well under at this time, and they understand that this is not a — we’re going to wait till March to see results or we’re going to wait till May to get results. No, we are going to see results this week and to see results next week, and we’re going to see the results the week after that, and if the results aren’t going in the direction that we want, we were going to make more changes, you know, until we get the formula correct. I think the concept is a great concept. The food is great. I think we’ve lacked in a couple of places. We’ve lacked in service and customer service, and I think we’ve lacked in — the focus of the current team has been strictly on the restaurant and not on the bar sales.
And, of course, the bar sales are the highest profit margins. And that really showed in this last quarter, where I think the eye was taken off the ball on a few things. You know, we’ve asked and told them to make certain changes to the music formats, to the DJs, some of those changes were not made that we asked for. Those are now being monitored on a daily basis. And, you know, I’d say the easiest way is I’m not being nice about it anymore. I’m not giving — there is no time, sense of urgency is today, not tomorrow, not next week, but today. And if they can’t get the sense of urgency figured out relatively quickly, like today, then tomorrow, they’ll be — I will be making additional changes until I get the formula right. I’ve done this many times.
I used to be the turnaround, that’s why — my start of this business was buying clubs that were — that needed to be turned around or businesses that need to be turned around and going in and fixing them and putting the right people in place. And that’s exactly what I’m doing with Bombshells now.
Mark Moran: Fantastic. Thank you so much for the questions, Adam. We are going to call up one last question [indiscernible]. Please take away.
Unidentified Analyst: Hello? Can you all hear me?
Mark Moran: We can hear you.
Unidentified Analyst: Yes. Cool. Well, thanks for having me on, Eric, Mark, Bradley, big time supporter, long-time fan of Rick’s and RCI. But I have a question for you, Eric. In two years, what does that ideal quarter look like for you?
Eric Langan: Oh, in the next two years, I mean, I want to continue, you know, to grow our free cash flow at a 10% to 15% rate. I want to see the casinos open. I think we need to — within the next two years, I’d like to see us take another major acquisition in, of, you know, 10,15, 20 clubs in a single stroke, so that we are buying out another, what I call a major player in the industry, like we did with the Birch Management acquisition, like we did with the acquisition of BCGH. And, of course, we did our first large one in 2012 when we bought out the Jaguars chain. So I’d like to see us take down another major chain in the next two years. I would like to see the casinos — you know, we’ll have results of operations from the casinos, so we’ll know if we can take the entertainment/casino model to other markets, whether that’s Iowa, Indiana, Mississippi, you know what other small states, what I call regional casino states, and even, maybe even small regional casinos outside of Las Vegas in the state of Nevada, but not in Vegas itself.
So, we’ll have that, and then, you know, obviously, I’d like to see, you know, whether the Bombshells change is going to be able to grow into a great, large franchisable chain or whether we’re going to, you know, look at having private equity take that out from us and take our efforts and energies and put them someplace else. That’s kind of where I see us at in two years.
Unidentified Analyst: Yes. Thank you. I really love that.
Mark Moran: Fantastic. Thank you so much for that question. And thank you, Eric and Bradley. On behalf of Eric and Bradley, the company and our subsidiaries, thank you and good night. As always, please visit one of our clubs or restaurants, say hi to Bridget at the door, and have a great evening. Until next time.
