Landry's Restaurants, Inc. (LNY)

If you want to enjoy great food and play games with hospitality Landry’s is the place to be at. Landry's Restaurants, Inc. is a diversified restaurant hospitality and entertainment company engaged in the ownership and operation of full-service, casual dining restaurants. The company’s portfolio of brands consists of Rainforest Cafe, Saltgrass Steak House, Landry's Seafood House, The Crab House, Charley's Crab and The Chart House. The company offers concepts ranging from upscale steak and seafood restaurants to casual theme-based restaurants.

The company recently completed the sale of 120 Joe’s Crab Shack units for $192MM. The performance of Joe’s had been deteriorating over the last two years, with the recent two quarters being the worse of them. The concept posted a negative 8% same-store sales in third quarter of 2006 due to which the positive performance shown by the other concepts of the company was masked. The removal of Joe’s from Landry’s will ultimately help the company to refocus on the its other concepts, which are doing quite well. The other concepts posted a same-store sales growth of 3% in the recent quarter. The company has applied majority of its proceeds from the Joe’s sale in reducing its debt, which will improve the leverage position of the company and will help to increase free cash flows.

Landry’s is slowly transitioning itself from being only a restaurant company to an entertainment company with focus on restaurant, gaming and hospitality. In line with this approach the company has acquired the Golden Nugget casinos in Las Vegas, which is showing a steady growth and has given Landry a better competitive position in the market. Additionally, focused approach on only performing concepts will help the company reap benefits in the future and is expected to reward the shareholders with higher returns.