Boyd Gaming Corp. is spending more than $100 million on upgrades and renovations to the company's Las Vegas and regional properties.
The casinos, however, aren't the focus.
Las Vegas-based Boyd plans to add 20 different restaurants to some of the company's 22 casinos spread over eight states this year. Boyd opened the California Noodle House at the downtown California Hotel in 2015 and Briggs Oyster Co. at the Suncoast. Alder & Birch Cocktails and Fine Dining opens at The Orleans in a few weeks.
The company put the business plan in place last year but views the restaurant rollout as a multi-year effort.
"When you look around at our portfolio, we hadn't done this a while," said Boyd Gaming CEO Keith Smith. "We needed to upgrade those amenities and make them more relevant."
Smith said Las Vegas locals and regional customers are spending more money on nongaming areas of a property. The Strip's trend — where some 65 percent of the overall customer spending takes place away from the casino — is becoming apparent in other markets.
In Las Vegas, the restaurant business is competitive. Smith said Boyd needed to retool its food and beverage offerings to give the company's customers a variety of newer choices.
Unlike the Strip, locals and regional casino customers are still gaming-centered. Smith said 80 percent of Boyd's quarterly revenue comes from the casino side. The restaurant renovations will "slightly" change the revenue stream, "but it's not going to materially change the direction."
Strip casinos see their customers "two or three times a year," he said. In the regional and locals market, Boyd might see a customer two or three times a week.
"Making sure the food and beverage product is relevant and high quality is extremely important," Smith said.
The investment community believes Boyd Gaming is moving in the right direction with the restaurant upgrades.
Sterne Agee-CRT gaming analyst David Bain recently upgraded his opinion of the company, telling investors the nongaming improvements will lead to a growth in cash flow. The company's Las Vegas market — which includes three downtown resorts, the Coast properties and Sam's Town — represents 30 percent of the company's cash flow.
Credit Suisse gaming analyst Joel Simkins said the strength of Boyd Gaming is the Las Vegas locals business.
"This market continues to trend in the right direction and our positive view moving forward is supported by gross gaming revenue data, a healthy Strip environment, construction growth and positive housing data," Simkins said. "With regard to downtown, Boyd continues to see solid trends driven by the core Hawaiian inbound customer and attractive price/value for other domestic consumers."
Smith said each of Boyd's properties was evaluated for different types of improvements.
The IP Biloxi in Mississippi is being left alone. The property was renovated after the company acquired the resort in 2011 for $278 million. The 40-year-old California Hotel, however, is undergoing a major remodel to its casino and public areas and will also receive two new restaurant concepts this year.
The Orleans — one of the company's top-performing resorts along with the IP, Borgata Atlantic City, and Blue Chip Casino in Indiana — has remodeled its 1,900 hotel rooms. Following Adler & Birch, Ondori Asian Kitchen will open in March and three more restaurants will be added this year. In total, Boyd is spending $30 million on The Orleans.
The company planning to change out two restaurants each at the Gold Coast and Sam's Town.
In Louisiana, Boyd opened the Rosewater Grill and Tavern at the Delta Downs Race Track Casino near Lake Charles, where the company is also spending $45 million to add a 167-room hotel and other amenities. The hotel expansion is separate from the restaurant program.
At the Evangeline Downs Race Track Casino, north of Lafayette, La., Boyd added a tavern named the Spotted Horse.
Smith said the concepts are unique to each property and were created by Boyd's development team.
"There is no plan to duplicate them in other properties," he said. "We're trying to accomplish specific things in each market."
There is also isn't a change in staffing since the restaurants are replacing existing locations.
Boyd also plans to manage and operate all its own restaurants except for one. At the Suncoast, the coffee shop will be replaced this year by a branch of Los Angeles-based Du-pars Restaurant & Bakery.
Maintaining existing customers, attracting new business and growing revenues are the three goals behind the program.
"The consumer has changed," Smith said. "It used to be all about the gaming. But now, if they come in to enjoy a meal, that's OK too. We think they will also enjoy the casino at some point."