EXCLUSIVE: Looking For A Recession- And Inflation-Resistant Investment? Try Strip Clubs And Sports Bars

Zinger Key Points
  • "Business is very, very good and we're continuing to run record revenues quarter after quarter," RCI Hospitality President and CEO Eric Langan said.
  • In times of uncertainty, the company tailors its business to the masses.
EXCLUSIVE: Looking For A Recession- And Inflation-Resistant Investment? Try Strip Clubs And Sports Bars

RCI Hospitality Holdings Inc RICK continues to grow and expand in the adult entertainment, restaurant and bar industry. 

"Business is very, very good and we're continuing to run record revenues quarter after quarter," RCI Hospitality President and CEO Eric Langan said Wednesday on "Benzinga Live."

Even amid the ongoing uncertainty in markets surrounding rising inflation and geopolitical tensions, Langan is confident about the prospects of the company moving forward.

"We're not recession-proof, but we're recession-resistant," he said. "What we do is we have to shift gears."

Shifting Gears: When the economy is thriving, the company often generates a lot of its revenue from a few customers who spend large amounts at RCI establishments, but in times of uncertainty, the company tailors its business to the masses, Langan said: "You just have to shift from quality of customer to quantity of customer."

RCI is also a beneficiary of increased alcohol sales during recessions. Langan noted that alcohol represents about 45% of the company's total revenues.

RCI also possesses pricing power in terms of its food menus, which makes the company relatively inflation-resistant as well. 

"You go in and order a lobster at a nice big restaurant and it always says market price. I'd say our whole menu is market price right now," Langan said. "We just keep our prices within a range that keeps our margins safe."

RCI's net margins are around 18% to 22% in its restaurants. At the club level, the company is closer to 40% margins, he said. 

Langan went on to talk about new locations, acquisition opportunities, regulations and more.

See the full interview here:

RICK Price Action: RCI Hospitality shares have traded between $55.33 and $94.33 over a 52-week period.

The stock closed down 0.41% at $62.82 on Wednesday, according to data from Benzinga Pro.

Photo: pasevichbogdan from Pixabay.

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