Having failed to either buy out or litigate the Dotty’s chain of slot parlors from the face of the earth, Station Casinos is going into the tavern business itself. This week it rolled out a new brand, Seventy Six. It’s considerably more upscale than Dotty’s and we’ll get to that in a minute. The first location is slated to be a the junction of Centennial and Lamb boulevards, at the very northern fringe of North Las Vegas, opening this fall. It’s just empty scrub at present, so Seventy Six will be by definition an upgrade. Two additional locations are planned for next year, including one just across the street from the former Aliante Station (a notorious white elephant). Station execs seem obsessed with that area, hence the Boyd Gaming grudge match that is coming.
Presumably the name of the taverns is a nod to the American Revolution. Were we back in 1776, the Fertitta Brothers would much more likely be monarchist Tories than Yankee Doodle rebels. But let that pass. The environs of Seventy Six are described as “cozy leather seating and an app-enabled state-of-the-art jukebox, allowing patrons to play their favorite tunes throughout their visit.” That and 24 HDTV sets, to say nothing of 15 bar-top video poker and slot machines.
Renderings of the interior all look pretty much the same: lots of wood and a very depressing, Scandinavian affect. It’s gonna be damned dark in there, that’s for sure. The bill of fare will be “ahi tuna nachos, fried chicken street corn tacos, sliced ribeye panini dip, creamy Poblano chicken pasta and a delicious cowboy burger and more.”
Sounds delicious. It also sounds a heckuva lot more like P.T.’s Pubs, owned by rival Golden Entertainment, than Dotty’s or even Ellis Island’s string of slot-equipped taverns. Did the Fertittas run this business plan past family member and Golden CEO Blake Sartini? We wouldn’t want to be present at the Fertitta/Sartini family Thanksgiving table after Seventy Six has opened. Relations are liable to get awfully frosty. It’s only logical and probably inevitable that Station would go after the sports-bar crowd, but it’s pretty cold.
If there’s an Achilles heel to the plan it’s that your Station loyalty points are no good at Seventy Six and vice versa. Instead, Station is introducing an unnamed “VIP player’s club,” specific to Seventy Six. This is the one aspect of this new venture that seems to need rethinking, that’s it. Seventy Six patrons aren’t likely to cotton to being second-class citizens in the Station empire. Besides, who needs another start-from-scratch loyalty program? (Fontainebleau, anyone?) C’mon, guys. You can do better.
Speaking of Golden, it ran out its 2Q24 earnings this week and the best that could be said for misconceived Atomic Golf, on which Sartini & Co. pinned so much hope, is that it’s got “momentum.” Jefferies Equity Research analyst David Katz looked upon the quarter and saw “weakness across the portfolio, driven by decreased visitation, less spend from lower-tiered players and increased labor costs.” While low leverage enables Golden to pursue a growth strategy, Katz failed to see a clear plan for doing so. He lowered his price target from $35 to $32 and put a “Hold” on GDEN stock. Why? He expected $173 million in revenue and Golden delivered $167 million. Cash flow saw a $2 million miss, too. Only the tavern business (now menaced by Station Casinos) performed reasonably, with the two Arizona Charlie’s casinos particularly blighted by low-end softness. Live by the grind joint, die by the grind joint.
At least Golden has renovations at Arizona Charlie’s Decatur to fall back upon as a partial excuse. Perhaps the one true bright spot were hotel bookings at The Strat, which saw 73% occupancy and best-ever 2Q revenue. Meanwhile, increased payroll costs were impinging negatively on Laughlin and Arizona Charlie’s Boulder. Taking a much sunnier view of the stock, Deutsche Bank analyst Carlo Santarelli kept a “Buy” rating on it, writing that Golden’s recovery was a matter of when, not if. Noting that reduced corporate expenses (Thrift, Horatio!) offset the cash-flow squishiness, Santarelli thought the earnings miss no big deal, “with labor cost increases, lower end consumer softness, and Las Vegas, in both the Strip and locals markets, having reached a plateau.” He also deemed Golden’s real estate portfolio insanely undervalued.
Santarelli blamed the Laughlin underperformance on Golden’s (shortsighted?) decision to curtail its entertainment calendar. Speaking of underperformance, that of the Las Vegas Golden Knights sapped the tavern division. And this: “The tavern segment experienced 3% Y/Y net revenue growth, though this was entirely fueled by the 6 new taverns, as same-store net revenue fell 2% Y/Y.” When you’re growing revenue strictly through expansion, not same-store business, there’s something wrong with your business model. Noting that July had been adverse “given both the calendar, vacation schedules, and the heat,” Santarelli lowered his estimates for 3Q24.
While noting “low-end malaise,” Truist Securities analyst Barry Jonas also stuck with a “Buy” rating (price target: $38/share, down from $40). “We still see some challenges in property ramps, as well as softness from the low-end consumer. Despite these challenges, we remain Buy-rated as we see GDEN well-positioned with undemanding valuation with a strong balance sheet,” Jonas wrote. He revealed that weekend occupancy at The Strat was a robust 97% (but midweek an anemic 64%), down 18% since Covid-19. Atomic Golf’s myopic lack of air conditioning was obliquely nodded at: “Atomic Golf opened at the end of March and stumbled out of the gate, thought mgmt sees a bright future for the attraction starting in the fall with cooler weather and more convention visitors.” The Las Vegas Grand Prix was bad for business last year, so Golden is ramping up a counter-plan this year “and noted a concerted effort between casino operators to provide an entertainment-heavy weekend beyond the race.” That’s good to hear.
Jottings: While Sands Nassau is one of the better-looking (pun intended) contenders for a New York City casino, it’s far from the promised land. But it got a big boost this week when the Nassau County Legislature approved its controversial lease. Regardless of whether the $4 billion casino gets built, the site is Sands’ until 2067 … Executives of Full House Resorts chose to take the glass-half-full view, emphasizing a big jump in revenue associated with the debut of Chamonix and ignoring widened losses. Said CEO Dan Lee, “It’s the normal maturation of a successful casino—and we’ve opened a number of them.” … Would-be casino developers in Brazil gained time to get their feet on the ground. The national Lege is contemplating a two-month delay in the big vote … Four years in the making, the permanent WarHorse Casino opened its doors last Tuesday. Predictably, prudes were out in force to say that the sky is falling, as they do every time a casino debuts … After a short-lived crash, gaming stocks returned to health. Station Casinos was the most robust but the manufacturing sector and reliable REITs also were well represented … Gaming regulations have been promulgated in Thailand and are open for public comment. They seem eminently reasonable in such salient demands as a $142 million license fee and a requirement for a diversified entertainment offering … What makes the Native Village of Eklutna notable? It plans to offer Alaska its first casino—or at least Class II electronic bingo. Expect the bluenoses to pile on with disapproval. The tortoise-and-hare fable has been 25 years in happening and isn’t over the finish line yet … Rush Street Interactive‘s CEO and CFO scored own-goals on their stock when they cashed out over $3 million worth of shares earlier this month. Wall Street got wind of the transactions and RSI shares tumbled 17%. Tsk, tsk.