As Chairman, CEO, and sole shareholder of Landry’s, Inc., Tilman Fertitta oversees more than 500 properties and over 50 leading restaurant, hotel, and entertainment brands, ranging from high-end properties like Mastro’s and Morton’s The Steakhouse, to such mainstream destinations as Rainforest Cafe, Bubba Gump Shrimp Co., Saltgrass Steak House, and five Golden Nugget Casinos. With an annual supply spend of $2 billion, his buying power is second to none.
Now, Tilman Fertitta is personally scouting the country for the most innovative new products America’s entrepreneurs have to offer – everything from food and drink for his restaurants and casinos, to furniture and lighting for his hotels – as part of “Billion Dollar Buyer”, currently airing Tuesdays at 10PM ET/PT on CNBC. In each hour-long episode, Fertitta spends time with two small businesses, samples their goods, gets to know their owners, and assesses their compatibility with Landry’s, Inc. He’ll point out flaws in their product and operations, share his expertise, and push for improvements. In the end, he’ll decide whether to place a transformative purchase order with one of the companies, both, or neither.
In 2016, Fertitta added the BR Guest Hospitality Restaurants to his portfolio. These include some of New York City’s most prestigious brands including Dos Caminos, Strip House, Bill’s Bar and Burger, and Atlantic Grill. Total Food Service sat down with Fertitta to discuss his origins in foodservice and hospitality and where he plans on going next.
Can you share how you got into the food service industry?
My dad owned a seafood restaurant in Galveston and when I was 12 years old I remember peeling shrimp in the kitchen. After a while, that became old and I started telling my father things he could do to make the restaurant better. We even reviewed the profit and loss statement to understand the profitability of the restaurant. Years later, after I made some money in other businesses, when I was in my early twenties, I jumped at the opportunity to invest in a couple of Houston area restaurants in the mid-80s named Willie G’s and Landry’s. Due to a dispute between the partners, I ended up buying everybody out in the late 80s and the rest is history.
What was your motivation/inspiration to focus on the culinary world?
My mother is an unbelievable cook and many of her dishes are in a number of our restaurants today. She more than anybody was my culinary inspiration. Nevertheless, I pride myself in being a good businessman and my primary motivation for being in the restaurant business is that I saw it as a great business opportunity. Unlike a lot of businesses, in the restaurant and hospitality business, you receive your money every day and you don’t have to wait on getting paid. I am happy not to be in the receivables business.
Let’s talk about Landry’s, first off what would you say are the foundations of Landry’s as a company?
Location, location, location is part of the secret to our success. In addition, our systems and controls are as good as anyone’s in the restaurant business. Also, I have good people that have been with me for a very long time. They understand how I think and know how important it is to spread our culture. No deferred maintenance is allowed at any of our facilities. Yet, the secret is change, change, change. Just because you are successful today, doesn’t mean you can rest on your laurels. If you don’t continually change with the times, update your menus, culinary offerings and presentations or your facilities, you will be passed by.
What has Landry’s done differently to create so much success?
Everyone understands my motto, “there are no spare customers.” Our expectation is that 95% of what everybody does is right and my people know to look for the 5% that is wrong. We are not a lifestyle company. People here at Landry’s work. If you were to come to our office at 7 PM on a Friday night, if it wasn’t dark outside, you would think that it was only 2 PM in the afternoon. We do weekly inventories at every restaurant, as well as weekly financial statements. Based on labor reports available to me, I can tell you on the same day whether a restaurant had too much labor or not enough based on their volume of sales.
What was the motivation for the purchase of BR Guest Hospitality?
BRG owns and operates great restaurants in A+ locations. The restaurants are perfect, and the guest experience is tremendous. We saw that we didn’t need to do anything operationally and could leverage our corporate support to increase profitability. While we already had 5 other very successful restaurants in Manhattan, it now makes us the largest full service restaurant operator in the city.
We are rapidly growing our Saltgrass Steakhouse concept which has been touted in Consumer Reports as the best casual dining steakhouse brand in America. We are also opportunistically growing other brands based on finding A+ locations, such as Mastro’s, Morton’s and Bubba Gump. While we own all of our brands domestically, we do license some of our brands internationally.
Diversify the holdings?
My company Fertitta Entertainment has significant holdings. I own 5 Golden Nugget Casinos, numerous hotels, aquariums, amusement parks and more. Today I am building a $300 million plus 40 story hotel/office/retail project in Houston.
Landry’s already had a lot of properties in NYC, was the BR Guest purchase designed to create a bigger dent in the NYC culinary scene?
I have a home here and have been spending a lot more time in NYC because of my TV show Billion Dollar Buyer. So when the opportunity presented itself, it made sense to increase my business holdings here. It gives me a little something extra to do when I am in town.
What has the response been like for the purchase?
The employees love it. They are excited to be a part of a restaurant company. We haven’t made any changes operationally, so we haven’t received any push back from customers. It is business as usual.
What about from the restaurants themselves?
The restaurants are great. Food and execution is at a high level. Our plan is to continue to operate and make the guests happy. We will put a little more emphasis on maintenance and repairs and will redesign the front entrance for Blue Fin and Dos Caminos on Times Square to take better advantage of the location. We will also spend capital dollars to refresh and update the restaurants.
What potential do the BR Guest brands have in other market places and your casinos?
We see ourselves expanding Bill’s Bar and Burger of Manhattan and Dos Caminos. My real estate department is right now looking for a couple of Houston area Bill’s locations. Also, we are looking at places in a number of our Golden Nuggets for either or both concepts.
What makes the NYC restaurant marketplace unique?
It is Manhattan, the finance and tourist capital of the world. The density of people is like no place anywhere in the world. I guess as Frank Sinatra says, “if you can make it there, you can make it anywhere.”
Steve Hanson had/has a very unique management style. What are the lessons learned from what he was able to build?
Steve is one of the great restaurant operators out there. He built a great company, and we are glad it was for sale and had the opportunity to buy it. The prices of New York real estate are out pacing restaurant operators’ abilities to operate profitable restaurants. Long term leases are a must.
Where did the idea for “Billion Dollar Buyer” come from?
Both the production company, Endemol Shine and CNBC wanted to do a show with me for a long time and had various ideas, none of which made any sense from a reality TV perspective. They asked to come to Houston for some inspiration. I asked my general counsel to give them a tour of our offices and greater Houston area businesses. While on the tour, he showed them all the various products that we are buying and commented how we had businesses throughout the country that could serve as a great backdrop for a show. From that tour, the idea was born. The idea was refined to feature two small businesses each episode that could be meaningfully transformed with purchase orders from me.
What are the goals for the show?
I just want to help good people succeed, while at the same time providing the most innovative products to my customers in order to change, change, change with the times. I also want to teach, not just the small businesses appearing on the show, but the people watching, things that they can do in their own lives to be more successful. Naturally, I would like for people to enjoy the show and have great ratings.
In the deals you’ve completed and as you’ve done the TV show, what are the common characteristics of successful entrepreneurship?
You can’t be afraid of taking risks or failure. You do have to learn from your mistakes. Successful entrepreneurs understand rejection, but still continue to have faith and belief in themselves and are willing to work harder than anyone else. They understand their businesses better than anyone else. That means that they know their numbers.
What are you going to do differently that Barry Sternlicht couldn’t?
Barry is truly one of the world’s outstanding businessmen, but isn’t a restaurateur. He owned a fund that bought BRG as a restaurant vehicle for his hotels. For whatever reason, it didn’t work out, but it had nothing to do with Barry. Operating restaurants is what we do.
Are you in the real estate business or the people business?
We are in the restaurant, people, real estate, development, construction, casino, retail, hotel, purchasing, insurance, legal, technology, night club, entertainment, amusement, marine, and transportation business, although I am sure I left out a number of businesses. You cannot be successful today without committed employees. They will always remain the backbone of our businesses.
What role does food & beverage play in your casino ventures?
We drive customer traffic to our casinos with our restaurant concepts. Our food and beverage offerings in our casinos are by far the best in the industry. We provide well-known brands to our guests at a reasonable price value relationship. Before we got into the casino business, I used to say that we don’t have slot machines in our restaurants and that every penny of revenue and expense matters. This helped us become better operators. Because of our restaurants, today, unlike anyone else in the gaming business, we can reward the loyalty of our casino guests, not just while they are on property, but when they leave our casinos, they can use their comp points at any of our restaurants nationwide.
What does the future look like for Landry’s?
Rest assured, we will change, change, change with the times. Millennials are our customers of today and in the future and we need to be on top of our game to understand the changing trends in the industry. We will be constantly remodeling our stores to keep them fresh and relevant. We will continue to grow the concepts that provide us with the best economic returns and look for locations that will be good for the next 25 years. We will innovate where and when it makes the most sense. At the end of the day, it is all about pleasing customers, and as long as we continue to do that, we will be around for a long time to come. It is almost this simple, hot food hot, cold food cold!