Landry's Restaurants (NYSE:LNY) looks to be changing the menu items of its corporate holdings. Last week, the company decided to explore "strategic alternatives" and enhancements for two of its restaurant chains and the Golden Nugget, which it purchased in September 2005. Does this signal that it's heading toward an OSIRestaurant Partners (NYSE:OSI)-type debacle of struggling sales, or is there smoother sailing ahead?

OSI's moderately priced flagship Outback Steakhouse chain has been stuck down under for a while because of flagging sales, while Carrabba's Italian Grill has also started to struggle, as witnessed by challenging second-quarter results last week. Meanwhile, the company's younger and more upscale concepts appear to be doing fine, reporting positive same-store sales growth.

Landry's appears to be experiencing similar difficulties. Management said it would miss second-quarter earnings numbers, and it's considering alternatives for its casual-dining concepts, including possibly jettisoning Joe's Crab Shack entirely and realigning the Saltgrass Steak House restaurants. Management would like to start focusing on the higher-end concepts, which include Landry's Seafood House, Rainforest Cafe, and Chart House. In addition, it's also looking to learn the casino business to create synergies with the Golden Nugget, which appears to be performing well right now.

The market clearly liked Landry's news, sending the shares up almost 8% to $28.29 recently, though they are still more than 20% below their 52-week highs. However, credit-ratings agencies Standard & Poor's and Moody's placed Landry's debt on review and are considering downgrading it. Joe's and Saltgrass generate strong cash flow; indeed, Joe's accounts for almost half of total restaurant sales. But Landry's has a fair amount of debt on its balance sheet (debt is more than 60% of total capital), so any major snafu could lead to potential liquidity issues.

A number of analysts are suggesting the Landry's restaurant assets and the Golden Nugget chain could be worth considerably more than they are being valued at relative to the stock's current price. Management also alluded to this fact in its press release about looking into strategic alternatives.

Right now, the casual-dining space is tough. Beside Outback and Joe's, Yum! Brands (NYSE:YUM) also recently announced that its Pizza Hut brand is posting weaker results amid rising gas prices and increasing interest rates. And Rank Group (LSE:RNK) is considering ridding itself of the venerable, music-themed Hard Rock restaurants.

One has to wonder whether now is the best time to consider selling such chains, because results are clearly depressed. Private-equity investors have an interest in acquiring businesses that generate strong cash flow, be it pet retailer Petco (NASDAQ:PETC) or the largest domestic hospital operator, HCA (NYSE:HCA). Time will tell whether they consider the casual-dining space worthy of investment consideration as well, and whether Landry's might benefit from any interest.

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Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. The Fool has an ironclad disclosure policy. Feel free to email him with feedback or to discuss any companies mentioned further.