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ROCKY MOUNTAIN NEWS - March 23, 2003

Making waves on a new shore

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HOUSTON – Every time the father of four took his kids to Joe’s Crab Shack, the little ones were bored.

The dad grew tired of hearing how they’d rather be at McDonald’s, where there was a playground.

“Then I realized there are a lot of me’s out there, parents with young kids,” he said. “I realized everybody’s in the same ballgame.”

Unlike all the other “me’s,” though, this one had the power to do something about it. Tilman Fertitta is president and chief executive office of Houston-based Landry’s Restaurants Inc., the company that owns the chain.

Soon, Joe’s Crab Shacks began adding play areas.

“People think I’m this restaurant guy. I’m not this restaurant guy – I’m an opportunist,” said Fertitta, who owns 4.6 million shares, or 16.6 percent of the company, worth almost $77.7 million. “I’m a vision person.”

And he’s got a clear vision for his company’s latest Denver acquisition.

Fertitta’s company spent $13.6 million early this month to acquire the assets of Ocean Journey. Landry’s plans to turn the place into an aquarium and entertainment and eatery complex similar to a project it opened in downtown Houston’s theater district last month.

Forget lunch meetings

The 45-year-old Fertitta grew up on Galveston Island and started learning the restaurant business at an early age, working at his dad’s seafood eatery.

He attended high school in Houston and college at the University of Houston. While at the university, he started his own sales and marketing firm, which he continued to operate while also running a construction and development company.

The skills he learned in those early years come into play now, he said.

“Most people can either operate or develop,” Fertitta said. “We’re special because we can do both.”

Doing both takes time, especially for Fertitta, who oversees most of the details on his projects. He puts in 12-hour days and is usually at his office until 9 p.m. The office is in an eight-story high-rise the company spent $13 million to build two years ago. It’s next door to a Jaguar dealership Fertitta also owns.

“I never do lunch; it’s a waste of time,” he said, adding that he declines lunch meetings, preferring instead to gather at the round table in his office and get down to business.

Landry’s doesn’t have a chief operating office, so all the vice presidents report directly to Fertitta.

Weekends are a chance for him to get out and visit his restaurants and attractions, often with his four children in tow, he said.

Sunday nights with the kids are sacred, even if it means bringing them all along as he visits his latest project.

Friends, business acquaintances and employees say Fertitta’s ability to see what people are going to want next, combined with his never-ending attention to detail, make the restaurant entrepreneur a force to be reckoned with.

Waiting to pay

Downtown Aquarium in Houston was packed on a recent sunny Sunday afternoon. About 4 p.m., the line of people waiting for valets to bring their ears around was almost as long as the ticket queue that wound down the front sidewalk.

Visitors, mostly families, waited in front of the waterfall façade for their turn to pay the $7.50-per-person admission.

Once inside, ticket holders were free to stroll through the themed rooms, beginning with the Bayou and including the Gulf of Mexico and the Rain Forest.

The tour is educational as well as aesthetically pleasing, as all the colors of the tropical palette meet the eye.

Once the learning tour is over, what’s left is strictly fun, with the exception of the first half of the Shark Voyage Train Ride. The train heads into a tank where swimming sharks surround the rider, separated only by glass.

A recorded voice shares information about the animals and points out different varieties.

The second half of the ride, though, turns practically Disney-esque. Tourists familiar with attractions at Disney’s giant theme parks will immediately see the similarity, including the surprise that comes at ride’s end.

“That’s what you have to do to keep people coming back – mix education with fun,” Fertitta said.

Rides, midway games, eating and drinking at the facility’s two restaurants and one bar – all that costs extra. But the additional costs didn’t deter visitors from checking everything out.

Many who strolled through the exhibits or walked the midway carried pagers that would eventually let them know that their multiple-hour wait for a dining table was over.

The aquarium restaurant is an unusual mix of upscale dining and family entertainment. Diners feast on fish while facing a glass-fronted aquarium. The extensive wine list goes up to $500 a bottle, in a restaurant where waiters carrying full trays dodge little ones yearning to press their faces against the glass tank.

Yet somehow it works. People wait hours for a table.

From shack to concept

Fertitta’s growing restaurant empire started with one Landry’s location in Katy, Texas, in 1980. When he bought out partners Billy and Floyd Landry six years later, the company had expanded to include one Willie G’s location.

Today, Landry’s boasts 280 locations, under several names, including Joe’s Crab Shack, Rainforest Cafe and Chart House.

“The original Joe’s Crab Shack was literally a shack with picnic tables that sold oysters and crabs that you ate at tables on the shores of Galveston Bay,” said Mary Beth Jenkins, president of the Laramie Co. in Denver.

In the 1980s, Jenkins worked commercial real estate in Houston for Wulfe & Co. She met Fertitta when he and his partners came to her with an idea for a Mexican eatery in a downtown mall her company was representing.

“The first time you meet him, you realize you’re in the presence of a creative genius,” she said.

But even geniuses have lessons to learn. In 1998, the company tried to expand by building new locations, constructing 50 new Joe’s Crab Shacks.

Landry’s reported a new loss that year for the first time since going public in 1993, as the costs of running so many new restaurants exceeded the sales they were bringing in, and some of the new locations weren’t doing well.

Since then, the company has switched to a growth-through-acquisition mode, picking up three chains last year alone.

“All these companies had bad leadership,” he said. “They all had management problems at the top.”

Once acquired, Landry’s has the flexibility to close unprofitable locations or convert them to one of the other concepts.

In face, Landry’s acquired the Chart House chain last year and is considering converting several to Joe’s Crab Shacks, including the restaurants in Aspen and Steamboat Springs, Fertitta said.

Boardwalk to aquarium

Jenkins’ firm worked with Fertitta again, on developing the 40-acre Kemah Boardwalk. The attraction that now draws more than 2.5 million visitors a year to the area was little more than rusting shacks along the Clear Creek Channel leading to Galveston Bay.

First, Landry’s developed the restaurants – today, the attraction boasts a Landry’s, a Joe’s Crab Shack, a Cadillac Bar and several other of the company’s concepts. Eventually, Fertitta added his first aquarium restaurant – a concept he repeated at Houston’s Downtown Aquarium and plans to duplicate at Ocean Journey.

Kemah also boasts an amusement area, with a 65-foot Ferris wheel, carousel, train ride and midway games, also attractions at the Houston facility.

Finally, Landry’s added a boutique hotel and retail shop. Most of the shops are owned and run by the company, said Kemah Boardwalk General Manager Tim Anderson.

Downtown Aquarium, the Houston project, was more of a collaborative effort.

About four years ago, the city put out a request for proposals to redevelop the site that formerly housed the fire department, said Jordy Tollett, president and CEO of the Greater Houston Convention and Visitors Bureau.

Landry’s beat out a proposal for a retail and residential complex, largely because the city had similar projects under way, but it lacked a family-oriented attraction, Tollett said.

“In doing our research on Landry’s, and especially on Tilman, everyone said if he said he could do it, it was like money in the bank,” Tollett said.

“He said he would start on a certain day and he started. He said he would finish on a certain day and he finished.”

Landry’s spent $35 million of its own money to build the complex on land the city still owns. In addition to bringing in sales taxes, Landry’s 40-year lease calls for annual rent payments of $150,000, as well as a percentage of sales once the aquarium’s revenue reaches $21 million, Tollett said.

“The city is a beneficiary of all this revenue, with no risk,” he said.

The city’s children also benefit. For two hours before the aquarium’s 10 a.m. opening, according to the agreement with the city, the facility allows free tours for Houston’s schoolchildren, Tollett said.

The tours include the aquarium, not the amusements or eateries, and the purpose is twofold.

The children get a chance to learn about the various types of sea life swimming in the 500,000 gallons of water. They also get a chance to drool over the Ferris wheel, carousel and games.

The idea is that the students will go home with visions of fun still in their minds and persuade their parents to take them back to spend money, Tollett said.

Always ‘in the works’

Children feature prominently in Fertitta’s life.

Sunday nights with his own daughter and three sons are sacrosanct, said one Houston friend.

“Our charity has a fund-raiser, and for the last five years we’ve had it on a Sunday night,” said Laura Rowe, director of Houston Children’s Charity.

“He does not leave his family on Sunday nights, so he has missed it for five years.

Rowe calls Fertitta, one of six founding members of the 7-year-old charity, “one of the kindest people I know.”

She also says that, in addition to his public work on the charity, he gives quietly whenever there are children in need that the group can’t afford to help.

“Probably nobody knows, besides his wife and mom and dad, how deep his charitable acts go and how much of an impact they've made on so many children in our city,” Rowe said.

Fertitta also seems to be a boss whose detail-oriented style attracts and keeps employees.

Jeff Cantwell, now Landry’s senior vice president of development, started out as a waiter in one of the company’s restaurants.

It wasn’t his original plan to work his way up in the company, he said. It just happened.

“I do remember I had graduated college and I was waiting tables. I remember talking to Tilman, and he said the company was growing and would be opening up three to four restaurants a year and going public at some point.”

Cantwell laughs as he recalls the goals that turned out to be quite modest compared with reality.

The employees who make it in his company are the ones who come to understand Fertitta’s way, the CEO said.

“Most people who work with me and succeed develop my eye”, Fertitta said. “When 95 percent of everything is right, I look for the 5 percent that’s wrong.”

In addition to expanding the company to 280 restaurants and building its flagship aquarium and boardwalk, the company recently opened a Galveston Rainforest Cafe complete with a train ride.

“Tilman has come back and worked wonders for the city,” said Galveston Mayor Roger “Bo” Quiroga.

This month, in fact, the City Council voted to sell Landry’s a 30-year-old hotel, on which the company plans to spend $30 million to $40 million refurbishing, Quiroga said.

He’s also building a baseball-themed downtown hotel near Houston’s ballpark and a steak house named after his grandfather and father, Vic and Anthony.

“I’ve always had big plans. Always.” Fertitta said

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