Tilman Fertitta, founder and chairman of Landry’s, closed his long-sought-after $1.4 billion deal to acquire the company on Wednesday, and is opening up on his plans for the casual-dining and gaming giant.
It took Fertitta about two years, in fits and starts, to take Landry's Restaurants Inc. private at $24.50 a share, to create Landry's Inc. He owned about 55 percent of the public company, but he said he is looking forward to proceeding as 100-percent owner.
Landry’s owns and operates more than 25 restaurant brands with about 150 units total, including such large holdings as Chart House, Landry’s Seafood, Rainforest Café and Saltgrass Steak House, as well as aquariums, entertainment venues and the Golden Nugget hotels and casinos in Las Vegas and Laughlin, Nev. Earlier this year, Landry’s acquired the 12-unit Oceanaire concept and in the past few weeks made a bankruptcy-court bid for Claim Jumper Restaurants.
Fertitta spoke with Nation’s Restaurant News about Landry’s new status as a private company, as well as future plans for the company.
Now that Landry’s is private, any changes?
We’re a big a company. Things will stay the same on a day-to-day basis. There’s no big change. There is no plan to sell any assets. If anything, we’re just looking for assets right now and trying to be very opportunistic. Through the years, we’ve built a lot and bought a lot. … It’s just business as usual.
What interests you about the Claim Jumper chain?
We like the Claim Jumper asset. We feel like it was one of the hottest brands in America just a few short years ago. We think it’s a good opportunity … We’re kicking tires there and have an interest.
You acquired Oceanaire earlier this year. What are the strengths of that concept?
They had some great locations. It just needed to be modernized a little bit. It was more of a ‘30s-style-tradition seafood house … They operated on “this is the way we do it and we don’t change.” Well, if you don’t change in this industry, you are going to get run over. One of the things Landry’s has always done is change, change, change. We usually change before it needs to be changed because of the fact that it’s a different industry today than it was 25 or 30 years ago.
What are some of those changes?
The presentation of the food. The big, huge helpings of food are out. Plate presentation has so much to do with it. Décor is very, very important today. People don’t just look at a restaurant as a place to just go get something to eat. It’s part of your entertainment. You go there to have a good time, and you don’t go and sit there for 45 minutes. People try to make it an experience.
You were early in getting scenic and distinctive locations. How has that helped Landry’s?
Even in this tough economy, we always did well. That’s one of the scary things about Claim Jumper. Claim Jumper is not in unique locations, and I think that’s one of the reasons it hasn’t done well besides some operational issues.
You have locations coast-to-coast. Are you noticing regional differences in how people are dealing with post-recession economic recovery?
Of course California and Florida are struggling more so than other parts [of the nation], but when they come back they will come back strong. Texas has been better than most. It had its dip too, but it seems to be recovering. The consumer is definitely out spending money again, but you have to remember that if a company had negative comps of negative 15 and negative 15 two years in a row, you had better have some sort of positive comps or you’re going to be out of business.
With Las Vegas suffering traffic declines, how is your Golden Nugget investment?
It’s going to turn out well. We’re fighting like everybody else now. It’s doing very well, but it does have a bunch of debt. People like the Golden Nugget. It’s probably running about the highest occupancy in Vegas right now. We’re in the 90-plus [percentage] occupancy. … The problem is that CityCenter and MGM basically are giving rooms away for free. It’s hard on us.
At one time, you were considering spinning off Saltgrass Steak House. Any plans there?
It’s something we would look to in the future. We think it’s a great asset to grow. There are no immediate plans, but it’s something we continue to look at. It’s hung in there pretty well. It has positive comps now. … It’s something that we would consider taking out public in the next few years.
How is Rainforest Café doing?
It has done extremely well. It’s the best acquisition I’ve ever done. Rainforest is still producing over $50 million in unit-level EBITDA. … We continue to change the food and keep it fresh.
What is the consumer looking for five years down the road?
You have all these chef-driven restaurants that are popping in new areas of towns. It will be interesting to see if all of those stick. I don’t know if they will. They are a little more expensive.
Do you think the large chain restaurant has a good future?
A lot of these great chains came out of the early ‘90s: Landry’s, Cheesecake [Factory], Outback, P.F. Chang’s. There really hasn’t been an explosion of anything in the last 15 years. … We all were able to expand when the restaurant industry really boomed in the early ‘90s, and people really started eating out.
What advice would you give to someone considering a private or public company now?
You need to grow, but you can’t grow at such a pace that you start having secondary locations. And that is what everybody seems to do. You can’t grow too fast. We grew too fast with Joe’s Crab Shack [which Landry’s sold off three years ago]. We opened up 40 stores in one year. If you look at the performance of those 40 stores, it was the worst year of any openings. You can’t get caught up in the public market and be a slave to it. You have to grow at a pace that works.
What are the advantages of going private?
Growing at the way we want and at our pace. One of the things that people didn’t like about Landry’s is that we would invest in real estate and buy properties. That made your short-term return on investment not as good. But at the same time, when times were tough, Landry’s could borrow money when other people couldn’t in the financial crisis, because the company had hard assets behind it. It’s being able to take the long-term horizon-look.
What part of the business do you still find the most interesting and challenging for yourself personally?
The art of the deal. Just doing the deal and building something new.
Contact Ron Ruggless at [email protected].
