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Landry's Towering Achievement

The San Antonio Express, March 5, 2004 — by Greg Jefferson

The City Council unanimously handed control of San Antonio's landmark Tower of the Americas to Houston's Landry's Inc. on Thursday, shutting out calls to keep the contract in local hands. The decision ends Tower Foods' 35-year run in the tower's revolving restaurant and gives it to Landry's until 2019.

For Mayor Ed Garza and most council members, the decision turned on which company offered a better deal. "The decision here today is a business decision for the city of San Antonio," Garza said early in the three hours of discussion that preceded the vote. And Landry's proposal, he said, "far exceeded" Tower Foods' bid.

Landry's will begin revamping the tower as a dining and entertainment venue in September, when the 15-year contract kicks in. That means the entire structure will be closed to the public for nine to 12 months while the company does $9 million worth of upgrades, Landry's CEO Tilman Fertitta said. "It will cease to be what it is today," Fertitta said.

During the session, he described the tower — built for HemisFair '68 — as an asset that's been undersold for years. Fertitta also said he'd had his eye on the tower contract since 1988, when his company opened its first San Antonio restaurant. It currently operates seven here.

Landry's plans to install a ground-level multisensory theater; banquet and private dining rooms of the observation deck and a 1,500-square-foot gift shop. It also will recast the tower-top restaurant as "Eyes Over Texas at the Tower of the Americas," serving regional and continental dishes.

Even as they prepared to vote for Landry's, council members praised restaurateur Jim Hasslocher and his family for their community involvement and business success. Hasslocher is founder and CEO of Frontier Enterprises, which owns Tower Foods and operates the Jim's Restaurant chain. Hasslocher declined to comment after the council's decision. But in remarks to the council earlier, he pledged to work with Landry's "for a smooth transition" — if it beat Tower Foods for the contract.

The vote ended an intense behind-the-scenes battle. The lobbying campaigns by both companies featured scores of face-to-face meetings with council members, a flurry of letters and phone calls. Several local restaurant owners, employees and businessmen came to Tower Foods' defense. They warned that giving the contract to an out-of-town firm would mean scooping tower profits out of the San Antonio economy.

Councilman Julian Castro countered that localism "can't be the only factor" to consider. If the companies' proposals had been closer, said Councilman Enrique Barrera, the local operator would have carried more weight. Landry's proposed investment, $2 million higher than Tower Foods' proposal, is one of the factors that won over council members. Another was the company's guaranteed minimum return of $14.7 million to the city over 15 years.

Also, the chain operator's projected sales, $154 million over 15 years, eclipsed Tower Foods' estimate of $117 million. Patrick Richardson, Frontier's chief operating officer, noted that the company had taken a more conservative approach to its estimates than Landry's. He also blasted the bidding process, saying "we should be disappointed with how it's unfolded."

Landry's outscored Tower Foods in city staffers' evaluation overall. But it lagged in hiring local small businesses and disadvantaged businesses, prompting several council members to press Fertitta about Landry's plans for drawing on local contractors. "We're very flexible," Fertitta said. "I don't see that as a problem — it's a big city."

San Antonio firms, he said will carry out most of the tower work. But before it begins hiring contractors, the company has to nail down a final agreement with the city. The scope of that pact will be much bigger than Tower Foods' current contract. The agreement will hand over much of the city's responsibilities at the tower to Landry's, giving it more control over the facility's operation.

Hasslocher supported that move. Acknowledging that the tower has seen "a lot of problems," he said the city should get out of the tower's administration.