TEXAS BUSINESS - August 1996
Tilman J. Fertitta - Running a fishy business
...continued from Published News
Tilman J. Fertitta is bullish on seafood. And with the NASDAQ numbers to prove it, he doesn't have to be modest. "We've hit every quarter we've been public. The key is just knowing the game, and part of the game is, you've got to hit the numbers on Wall Street, every time," says Fertitta.
Fertitta's company operates Landry's Seafood Houses, Willie G's, Joe's Crab Shacks, and the recently acquired Crab Houses. The company now owns more than 50 restaurants in 20 states.
The company is traded on NASDAQ as LDRY. As of June 16, the company had $21 million in outstanding shares and $600 million in market capitalization. After an initial public offering in August 1993, when stock sold for $12 per share, it's now at $50 before the 2-for-1 stock split, an increase of 300%. The average stock price is $25. Analysts estimate the company will earn $210 million in sales this year and $14 million in net income, with 80 units in 26 states. Fertitta says Landry's has raised $250 million in equity offerings in 2 1⁄2 years.
Fertitta's dealings with big clams began a few years after the first Landry's opened in Katy in 1980. He and some partners had invested in that restaurant as well as Willie G's, a popular Galveston seafood restaurant. Fertitta says he and his partners divided on some issues in 1988, and he bought them out.
Fertitta cut his teeth on running a restaurant when he helped out at his dad's Galveston seafood house. But he sharpened his business acumen as a real estate developer. "I believe in running the company using business principles, and not running it like a restaurant business," he says. "I don't get behind the curve in food and atmosphere trends. Most restaurants don't change over the years, and that's a mistake."
Landry's Seafood House restaurants - second as a seafood chain only to Red Lobster's chain of restaurants - offer "something for everybody," Fertitta says. Joe's Crab Shacks are like their motto: "Seafood with an attitude." And the Crab House, the third-largest seafood chain in the country, meets the needs of each of those markets, he says.
How does Fertitta oversee so many kitchens nationwide? "I delegate everything but don't assume anything," he says. He considers being called a micro-manager a compliment. Among his other ingredients for success, "Number one, don't get behind the curve. We preach in our restaurant that there are no spare customers. You change something before you even need to. And you hire very good people, who have the same culture as you, so you're all moving in the same direction. That's why you have success."
But Fertitta isn't content only to slave over a hot restaurant deal. He has entered the hotel and resort industry with a vengeance. After selling some of his personal stock in Landry's, he bought the San Luis Hotel and Conference Center in Galveston and spent $12 million renovating it this year before its June grand opening. H says he is proud of the complex's new elegance, inspired by hotels on the West Coast.
"It's one of the most beautiful hotels in the country," Fertitta says. "And it has one of the best conference centers in the country. We cater to tourism, but also to your high-dollar companies. Before, the hotel was attractive, but now it's the premier hotel and resort complex in Texas."
But with all those restaurants to mind, why did he buy the hotel complex and pour so much of his own money into its redesign? "I'm from Galveston, so I want to see the city grow and be developed. But the hotel is a hobby to me," he says. "I know that sounds strange, but that's what I've go to do to relax on Saturdays. I don't collect cars or art, and Landry's is what I do in the week, so this is my hobby."
But Fertitta has other ways of relaxing. He's an avid sports fan. He recently sold his ownership interest in the Houston Rockets basketball team, and he's already shopping to bring an NFL franchise back to Houston.
Fertitta wants the restaurant companies to be at $1 billion by 1998, but money isn't all that drives him. "I'll never retire, because I like accomplishment," he says. And he likes dealing with power brokers. Recently, he was seated next to President Clinton at a fund-raising dinner in Houston. "You know, running a restaurant business, I've met a bunch of stars. But having dinner next to the President," he says chuckling, "even I took a deep breath at that."