| Rick's Cabaret International, Inc. operates upscale gentlemen's clubs, nightclubs, bars and restaurants in the U.S. and has a licensing program in Latin America.
Founded in 1983, Rick's Cabaret pioneered in the creation of elegant gentlemen's clubs featuring beautiful topless dancers and high quality restaurant service. Rick's Cabaret went public in 1995 and is listed on The NASDAQ Global Market under the symbol RICK. The Company has built powerful brand name awareness for its upscale environment and enjoyable adult entertainment. Many performers from Rick's have become Penthouse Pets and Playboy Playmates. Anna Nicole Smith, met her oil billionaire husband while dancing at Rick's Cabaret in Houston.
CEO Eric Langan joined Rick's Cabaret in 1998 and has led the Company since 1999. He has steadily expanded operations, growing revenues and profit. Mr. Langan has positioned the Company at the top of the gentlemen's club sector by creating a pleasurable ambiance and a relaxed, conscientious approach to customer service patterned after the "concierge model" made famous by top Las Vegas casinos. The Company has been featured in profiles in The Wall Street Journal, MarketWatch, Corporate Board Member, Smart Money, Forbes, USA Today, The New York Daily News and other publications. Time Out New York magazine included the Rick's Cabaret-NYC Steakhouse in its TONY 100 list of fine Manhattan dining establishments and it is also included in the Zagat's New York Nightlife publication.
Mr. Langan believes the gentleman's club business is in a consolidation phase much like that of the casino industry in the 1990s. His vision is that Rick's Cabaret will become the most important player in the adult club industry with top venues in all major markets, and he is directing a strategy of buying profitable, high-end clubs in major markets that are accretive to earnings. Examples of this program are the $25 million purchase of Tootsie's Cabaret in Miami, for which the Company projects FY 2008 revenues of $23 million and EBITDA of $11.5 million; and a definitive agreement to buy Scores-Las Vegas in a transaction that it believes will add 29 cents per share to annual earnings.
The principal business lines of Rick’Äôs Cabaret are:
- Nightclub Entertainment: The principal brands are Rick's Cabaret (high-end clubs in New York City, Philadelphia, Minneapolis, Houston, San Antonio, Ft. Worth, Austin); Club Onyx (upscale nightclubs in Houston and Charlotte catering to African-American gentlemen); XTC Cabaret (non-alcohol clubs in several Texas cities); Tootsie's Cabaret (popular Miami adult nightclub). Licensed clubs are scheduled open in Buenos Aries in 2008. The Company also owns an upscale club in Dallas that will open in May 2008 and has signed letters of intent for to buy other clubs. It licenses Rick's Cabaret in New Orleans.
- Internet Activities: Under the flagship www.NaughtyBids.com, the Company owns and operates adult auction sites. Rick's owns www.CouplesTouch.com, an adult entertainment subscription website serving people in the "swingers" lifestyle.
- Media Division: In April 2008 the Company purchased ED Publications, Inc., the leading trade magazine serving the multi-billion dollar adult nightclubs industry. The Company now owns three industry trade publications, two industry trade shows and more than 25 industry-related websites.
Forward looking Statements:
This document may contain forward-looking statements that involve a number of risks and uncertainties. Important factors that could cause the Company’Äôs actual results to differ materially from those indicated in this document include the risks and uncertainties related to actual results could differ materially from those projected in the forward-looking statements as a result of many factors, including but not limited to the risks associated with operating an adult business, the business climates where the Company operates, the success or lack thereof in launching and building the Company’Äôs businesses, and numerous other factors such as laws governing the operation of adult entertainment businesses, competitive factors, dependence on key personnel and the ability to manage operations and the ability to raise the funds necessary for its acquisition program. Rick's has no obligation to update or revise the forward-looking statements to reflect the occurrence of future events or circumstances. Details of the Company’Äôs recent activities are to be found in the Company’Äôs most recent filings with the SEC, all of which are available on the Company’Äôs website, www.ricks.com.
Business Strategy and Management of Rick's Cabaret Nightclubs
The following areas distinguish Rick's:
- Female Entertainment. The Company maintains high standards for personal appearance and the conduct of entertainers and wait staff. Applicants are engaged based on such factors of physical beauty, dancing ability, demeanor and attitude, dress, personality and communication skills. Most performers are independent contractors who pay a facilities use fee to perform and are paid by customers.
- Management. Staff is recruited from both inside and outside the gentlemen's club industry and all undergo a thorough training program. Regional managers supervise local general managers, who are backed up by staffs that place a high premium on customer service. The Company has sophisticated, custom-designed internal procedures and cash management controls based on the casino industry model. These systems are designed to ensure the integrity of operational and accounting records. Club managers are isolated from cash and credit card transactions are strictly monitored. Charges made by customers as payment for food, drink and entertainment must be approved, in writing, by a manager before services are rendered. Real-time accounting control and inventory mechanisms are in place at all clubs.
- Compliance Policies. All business is carried on in conformity with local, state and federal laws. In particular, we maintain a No Tolerance Policy regarding illicit sex or drug use on or around the premises. Strict codes of appearance and conduct are maintained for performers.
- Food and Drink. Along with a first class bar, the Company maintains a fine restaurant at most locations. Wait staff is carefully recruited, screened, trained and, in some states, certified. Each club maintains stocks of premium wine, liquor and beer in order to ensure that the customer perceives and obtains good value.
- Atmosphere. Decor and furnishings create the feeling of an upscale restaurant or private club. The sound system is designed to provide quality sound at levels where conversations can still take place.
- VIP Rooms. In keeping with an emphasis on serving the upper-end of the business market, each Rick's Cabaret and Club Onyx features a VIP area open to individuals who are invited or who purchase memberships. In some clubs, VIP suites provide a higher level of service, luxury and privacy.
- Advertising and Promotion. We use local radio, cable television, newspapers, magazines, hotel and entertainment publications, billboards, taxicabs and a variety of direct marketing and promotional tools to keep the Rick's Cabaret name before the target consumer. The Company also maintains an active public relations program to gain exposure through stories in the media and on the Internet.
- Real Estate. The Company operates clubs that are favorably situated from the standpoint of local zoning and regulatory issues. Rick's either owns the real estate used by its clubs, or has long-term leases for the properties.
Eric Langan, 40, is President and CEO of Rick's Cabaret International, Inc. Mr. Langan acquired a controlling interest in Rick''s in 1999 and became CEO of the Company following its merger with his own publicly traded adult entertainment company, Taurus, Inc. Under his direction Rick's has expanded its operations to multiple states and is leading a consolidation of the gentlemen's club industry.
Mr. Langan has worked in the adult industry for nearly 20 years. He bought his first club with $40,000 he earned from the sale of his baseball card collection. Since then he has been an owner or manager of gentlemen's clubs and related activities. He is a member of the Board of Directors of Adult Club Executives (ACE), the major trade organization for his industry, and is considered an expert in the adult sector.
Eric Langan spent his childhood in Peoria, Illinois, where his father was a police officer. The family subsequently moved to the Dallas area. Eric began his own entrepreneurial career at age 13 and by the age of 16 he owned his own profitable advertising media company, distributing promotional flyers after school and during the summer.
Mr. Langan believes the future of Rick's Cabaret lies in careful expansion into viable markets and in finding new entertainment niches that are ahead of the entertainment curve. An example is the success of the Club Onyx concept, the first upscale gentlemen's clubs to cater to the African-American professional. It has attracted an enthusiastic clientele of businessmen, pro athletes, musicians and community leaders. Since 2005 Mr. Langan has directed the acquisitions of clubs in Manhattan, Charlotte, Miami, Philadelphia and several Texas cities. He believes that the gentlemen's club industry is in a consolidation phase similar to that experienced by the casino industry in the 1990s.
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