Shipshape at Landry's
Multiple themed concepts keep this Houston company on a steady course.
By: Patricia Hochwarth
Everything about Houston-based Landry's Restaurants is as big as the lone-star state it calls home: big concepts, big promotions, big sales, big growth-all navigated by a big-living showman of a CEO. Just trying to keep up with the company's aggressive acquisitions and development plans makes one's head spin, from flashy "eatertainment" projects like the Downtown Aquarium in Houston-replete with a 90-foot ferris wheel and kiddie train that chugs through a tunnel filled with sharks-to a hotel division with 1,000 rooms under ownership or development.
Just last year, the public company-which owns and operates such high-profile, high-entertainment concepts as Rainforest Café, Aquarium and Joe's Crab Shack-reached the billion-dollar mark in sales, ranking it 28 th on Technomic's list of Top 100 chains. With 300 units open by the end of June 2004, Landry's ranks second among casual dining operators specializing in seafood, just behind Darden's Red Lobster chain.
Revenues for the six months ended June 30 totaled $593.3 million, compared to $549.5 million a year ago. Net earnings for the six months were $33.2 million, compared to $25 million last year. A $10,000 investment in Landry's in 1993 would have been worth approximately $42,867 by year-end 2003.
Heady figures for a company that started in 1980 as a single seaside restaurant in Katy, TX.
The captain of this ship, 47-year-old Tilman Fertitta, is credited with steering a multiconcept foodservice company through the turbulent waters of the last few years, snapping up valuable waterfront sites and preferring to acquire existing companies rather than start up new concepts. He owns more than 21 percent of Landry's. Called the Donald Trump of the restaurant industry , Fertitta has amassed his fortune through a combination of savvy deals and brash risks.
Fertitta bought Landry's in 1986, after stints as a vitamin salesman, video arcade operator and finally, owner of a construction and development company that built residential housing, restaurants and hotels. The company went public in 1993, with Fertitta as sole owner. Since then, Landry's has grown in large part by buying mismanaged and undervalued restaurants.
Fertitta has his critics, namely for some of the flashier projects ( Texas preservationists have condemned the Landry's hugely commercial entertainment complexes, grousing that they destroy small-town character) but he brushes off the derision. " Hey, we just added a phase to the Boardwalk (Houston) because it is doing so well, " he counters. " We'll top 1.2 billion this year, " boasts Fertitta, with his characteristic bravura. "Everything's going great. We blew out the numbers the first quarter, and we had a big second quarter. All the acquisitions have been integrated, and we're doing extremely well."
It looks like smooth sailing at Landry's for now. "Joe's (Crab Shack) is doing well, as is the Saltgrass (Steak House) concept," says Fertitta. " We're renovating all the Chart Houses and putting in new menus. Our Rainforest (Café) continues to have great numbers. Everything is on the right track, so we're just enjoying the ride."
The only sluggish performer in the group, if it can even be called sluggish, is the company's Crab House concept. "It's just sitting there and it's got flat comps, but it's an older concept and we're ready to start redoing some of them, " says Fertitta. "And yet they still average almost $4 million. We feel that as we renovate them, they'll do well."
This year, Landry's plans to roll out 20 more stores among the Saltgrass Steak House, Joe's Crab Shack, Aquarium and Rainforest brands. It will also develop more of its signature group of upscale, independent-style restaurants. Included in recent launches are mostly Houston-based restaurants, including a steakhouse called Vic and Anthony's, the Italian-flavored Grotto's and La Griglia.
Fertitta brushes off questions about the challenges of operating an independent restaurant versus a chain: A "restaurant is a restaurant, food is food, a waiter is a waiter. You just take it to a little higher standard; that's the only difference."
Franchising is not an option, insists Fertitta, except for some international joint ventures and licensing agreements. " We like to control everything ourselves, he says.
Merchandising everything from t-shirts to drink mugs is a significant source of revenue. Walk into a Joe's Crab Shack and you run smack into a gauntlet of stuff. "We'll do $50 million in retail this year," Fertitta projects.
The culture is intense at Landry's, where this reporter was surprised to find Fertitta's assistant still at her desk at close to 9 p.m. on a recent weeknight. "Sure, we are all here," says Fertitta, when questioned about the late hour. "We're just a different kind of company. You either love it or you don't."
Apparently, many employees fall into the former camp. Fertitta proudly points to the staff loyalty at Landry's. " I have basically no turnover in my senior management. On the unit level we have the best statistics for general manager turnover and for operations managers-GMs and above-we basically have no turnover." Why?
Compensation and credibility with our employees. We tell them something's going to happen and it happens. And they think you'll take them to the promised land."
Any new concepts on the boards? "No, we have enough concepts for now," says Fertitta. "Sure, we're always kicking acquisitions around. We're optimistic. If a great opportunity comes along, we'll do it. If not, we'll keep plugging along."
Life is good at Landry's. So where does the company go from here? "Just keep building and maybe we'll make a few bucks along the way," Fertitta says.