By Janet Heller of the E.S.P. staff

 

If you’re feeling really crabby, you can even get crab fingers and crab balls (not to be confused with alter kucker gonads)...... but seriously, one of the hottest seafood concepts going is Joe’s Crab Shack, one of the four concept seafood restaurants headed by Tilman Fertitta, chairman of Landry’s Seafood Restaurants, Inc. The other three are Landry’s Seafood House, the slightly upscale Willie G’s and The Crab House. All have cashed in on being crabby.

 

When you work for a magazine like  E.S.P., which covers the full range of entertainment concepts offered in the retail real estate industry, you see a lot of ideas-- again and again.  So many projects are mere repeats of the same idea. Then along comes a fresh story like Tilman Fertitta’s.

 

(This not an endorsement of the service or food at Landry’s Seafood Restaurants.  As E.S.P. reported in its March 1999 issue in the feature article, “Why Theme Restaurants Fail,” good food is the key to any restaurant’s success. But Landry’s packaging, promotional material, and concepts are among the best to cross my desk.  PR firms take note: the company offers bright, usable pictures that highlight the best of what their restaurants have to offer and, to my editor’s delight, the pictures show people!)

 

Now back to the story.... Landry’s Seafood House and Willie G’s were two Houston-area restaurants that were originally owned by the Landry family. Tilman Fertitta, who hit it big as a real estate developer, invested in the restaurants in 1986. He bought out his partners in 1988 with plans of turning the more casual Landry’s into a chain.  Fertitta’s vision was to quietly build up the chain by scouting for faltering independents in great locations, buying them out, and turning them into a Landry’s operation. With ten units on line by August 1993, Fertitta took the company public, raised more than $60 million in two initial stock offerings, and hasn’t looked back. 

 

 

 

Fertitta hooked “the big one” and he is still reeling it in. As of March 1999, the company was operating 146 locations in 25 states. A recently proposed merger, now on hold, would have seen a marriage between Landry’s and Consolidated Restaurant Companies, Inc.  

 

The deal is in limbo due to factors the parties prefer to keep to themselves.  E.S.P. has been told, but cannot confirm, that unfavorable stock market reaction, disagreements over how stock would be distributed between the two companies, and issues of who would control the merged organization have seriously stalled merger negotiations.  However, if the merger went through the resulting operation would be impressive: the combined companies would have 291 restaurants with $550 million in annual sales. Such a deal would also offer Landry’s the chance to expand its concept base from seafood-only to include Mexican, Italian and American Grill cuisines.

 

Today Landry’s is considered the second largest and the fastest growing operator of casual seafood dining restaurants in the country.  For the year ending  December 31, 1998, revenues were $399.5 million-- up from $311.6 million for 1997. Although the revenue figures look good on paper, the company has been experiencing a slowing of growth. Terrible weather (particularly in the South) depressed sales throughout 1998 and increased expenses led to lower net earnings.

 

Fertitta is also the sole shareholder of  Fertitta Hospitality, LLC, a development, hotel and entertainment company that owns and operates The San Luis Resort and Conference Center, the Galveston Island Hilton, restaurants, specialty shops, and various other properties and projects. (Check out E.S.P.’s article on the Kemah Project, which will appear in an upcoming issue).  As if all of this activity was not a full plate for Fertitta, he was also a partner in the Houston Rockets for more than ten years and is currently an advisory director to the team.

 

Fertitta gives one reason for the chain’s success. “We try to serve the best seafood and give an entertainment value.”  Wherever the company opens up a new location, and whether it is  remodeling an existing restaurant or building from the ground up, Landry’s looks for locations that offer inherent atmosphere. Landry’s restaurants are on the water when possible, or park-side, or in a downtown historic district like New Orleans’ French Quarter or Dallas’ Market Square. We’ll take independents and convert them into $4-5-million restaurants,” Fertitta crows of Landry’s 1996 to 1997 successes.

 

Whether remodeling an existing restaurant
or building from the ground up, Landry’s looks for locations
that offer inherent atmosphere, on the water whenever possible

 

But industry insiders also point to the chain’s savvy diversification as another reason for its success and continued growth. The acquisition and development of four different identities and concepts for its four seafood restaurant chains has resulted in wide appeal that draws the dining public to Landry’s tables.

 

Landry’s Seafood Houses are nostalgic, traditional Gulf Coast seafood restaurants. Most have an old-time movie marquee on the front of a wood and brick exterior. Interiors are big, open dining areas with vintage signs and an energetic atmosphere, bringing  patrons back in time to a 1940-style Gulf Coast seafood house. The restaurants are all in unique locations that add to the experience of dining. The St. Louis location is in Union Train Station and in New Orleans, in the heart of the French Quarter. All locations offer generous helpings of gulf seafood, with menus featuring grilled, broiled, and fried snapper, crabs, lobster, trout, shrimp, salmon, catfish, and more. Any  choice can be topped with one of Landry’s signature sauces like mango-peppercorn or roasted red pepper. Landry’s also offers Angus beef, pasta, poultry and a full line of desserts.

 

Even with lower prices and increased expenditures, sales were up nearly 2 percent for the month of February 1999 at Joe’s Crab Shacks, perhaps Landry’s hottest property

 

The Crab House restaurants were acquired in 1996. The Crab House offers seafood in a casual, lively atmosphere. The menu features live Maine lobsters, a wide variety of fish, and crab specialties including Maryland steamed crabs, Alaskan snow and king crabs, and Pacific Dungeness crabs. Prime rib, pastas, a hot and cold salad bar round out the menu, along with a selection of desserts (key lime pie is the house specialty).   The casual decor consists of brightly colored fish hanging from the ceiling, and varnished knotty pine walls and floors combine to make the surroundings comfortable and lively.

 

Willie G’s restaurants opened in 1980 and established itself as one of the top upscale seafood restaurants in the country. Citrus-and-almond trout and blackened snapper Pontchartrain along with broiled, grilled or fried regional catches are among Willie G. specialties. Also offered are pecan-crusted chicken, torn-chicken pasta, and a selection of Angus steaks. Interiors are a mix of dark wood paneling and furnishings with brightly colored artworks and floor coverings.

 

Joe’s Crab Shack restaurants may come last, but they are anything but least. One of Landry’s most innovative concepts has become one of its hottest.  Landry’s acquired the first Joe’s Crab Shack in 1994 and has never looked back. The concept is a very simple one: build a tacky looking shack of a building and serve a bunch of different crabs, giving the guests mallets and newspaper-covered tables. This concept in any given location packs them in on any given night with a very energetic, lively, noisy atmosphere that is often described as “well-orchestrated chaos.” The restaurants are built to resemble old fishing camps and are decorated with “funky” signs, rambling decks, mismatched tile-top tables and picnic benches. But the atmosphere is anything but old-fashioned as the staff might, at any time, lead willing patrons in a wild rendition of the latest dance craze.

 

Not willing to rest on its laurels, Landry’s is constantly seeking ways to improve the chain. Even at the popular Joe’s Crab Shacks, the company recently expanded the menu, dropped prices and put a new marketing plan into operation. Even with lower prices and increased expenditures, sales were up nearly 2 percent for the month of February 1999. Although this profit picture is down from the growth enjoyed in prior years, stable profitability encourages the company to consider continued, though more modest, expansion of Joe’s Crab Shacks and Landry’s Seafood Houses.

 

Whether Landry’s expansion will include the merger with Consolidated Restaurants no one can say.  For now, the four seafood operations led Fertitta to comment at the end of the last fiscal year, “We are very excited about what is occurring with our company.” He doesn’t sound crabby, but....

 

For information contact:

Landry’s Seafood Restaurants, Inc., 1400 Post Oak Boulevard, Suite 1010, Houston, Texas 77056; Matt Dilick, Director of Real Estate, 713-850-1010; Fax 713-850-8194.