Post

Sameer Achhra

@brodafrommroda
2 years ago ~1080 views
Equityresearchseries
#Internationalmoatedbusiness

(Disclaimer: This business may not fit in morality and value category if you look it through those lens. Hence please treat the post strictly from business’ point of view)

Company - RCI Hospitality Holdings Inc #rick

- Probably a business which may not exist in India at a scale and one which may not be LISTED on stock exchanges for a long time to come!

- With more than 60 Units, RCI Hospitality Holdings with its subsidiaries is The USA’s leading company in Adult Nightclubs and Sports bars/ restaurants. Its sports bar operate under the brand name “BOMBSHELLS”

- Its different Clubs go by different names like Rick’s Cabaret, Scarlett’s Cabaret, Vivid Cabaret, Club Onyx, XTC Cabaret, Bombshells, Tootsie’s Cabaret, Jaguars Club.

- Its owner , current president and CEO is Mr Eric Langan.

(Continued in Comments. Please see the entire thread as all main info is ahead.)


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Sameer Achhra

@brodafrommroda
2 years ago ~250 views
- What’s Special about the Business?
A High Gross profit Margin business at
86% Gross margins
Heavy barriers to entry as club licenses
In many cases are municipality wise,
Along with different alcohol permits,
Entertainment permits, timing permits
New licenses sometimes too!
Has compounded FREE CASH FLOW
PER SHARE at 16% CAGR between
2015-21

- It owns most of its Real estate. Compared to typical restaurants , restaurants have to pay 8%-14% as occupancy costs or cost of use of real estate to generate their cash flow but RCI ONLY INCURS 6.7% In comparison,

- Business Strategy - RCIs aim is to maximise Free Cash flow per share. It buys good, solid cash flowing clubs at 3-5x Adjusted EBITDA and structure deals in a way where its annual cash on cash return is atleast 25%-33%. It only buybacks its shares when FREE CASH FLOW YIELD IS MORE THAN 10%. Also purchases real estate at Market Value.

(Comtinued in comments)
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Sameer Achhra

@brodafrommroda
2 years ago ~100 views
A Moated business which only attracts High and cream set of clientiele! Pretty much worth studying and its concalls are insightful!

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