The days are numbered for the Bugaboo Creek Steak House concept, now that RARE Hospitality
Bugaboo emerged as a mountain lodge-themed play at a time when the popular steakhouses were adding touches of regional pizzazz to attract the local carnivores. Lone Star Steakhouse
Those restaurants' initial success in the 1990s inspired IPOs from companies like Timber Lodge Steakhouse and Sagebrush, both of which ultimately faded into obscurity. The roadhouse theme has been duplicated successfully, and it still has legs in some executions. Beyond RARE's LongHorn and Lone Star, Texas Roadhouse
RARE knows that Bugaboo is a dead end at this point. That may make it a hard sell, and converting the troubled locations to its two bankable brands would be easier said than done.
Along with announcing its divestiture plan, RARE's initiatives include taking on debt to buy back shares and pick up the growth pace of its popular Capital Grille concept.
Perhaps the fairer approach, with LongHorn accounting for the vast majority of RARE's revenues, is to spin Capital Grille off entirely. There are already a few pure plays in this upscale niche of sirloin and molten chocolate cakes, like Smith & Wollensky
Does that indicate that it's a little stuffy and crowded at the top? Perhaps. However, the successful market debuts last year prove that there is an appetite at that level. So what are you waiting for, RARE? Why split into two, when dividing by three makes much more sense?
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Longtime Fool contributor Rick Munarriz enjoys a good roadhouse every now and then. He does not own shares in any of the companies mentioned in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.