In 2010, Tilman Fertitta bought the remaining shares of Landry’s Inc. that he didn’t already own, taking the Houston-based restaurant operator private.
A decade later, the “Billion-Dollar Buyer” is thinking about making a comeback. Fertitta told CNBC this week that he might take some of his vast empire of restaurants and casinos public.
His reason? Acquisitions.
“You can do such bigger deals and there’s so much more opportunity when you have a stock book,” Fertitta said on CNBC’s “Power Lunch” program. “We’ve tried to do some acquisitions in the last six months and have gotten beat out of every one of them by a public company because they can pay a larger multiple. So it’s something that I’m definitely looking at.”
Only one restaurant company—Topgolf—was acquired by a public company over the past six months, at least that we know of. But it’s notable that Fertitta views a potential IPO as a means to an end.
Fertitta has built his restaurant company, famously becoming the wealthiest restaurateur in the country, with a combination of acquisitions and ruthlessness. He took over ownership of Landry’s in 1988 and took the company public five years later, making a series of acquisitions in the aftermath.
He has specialized in particular at buying restaurant concepts when their value is lowest—during the previous recession he made numerous deals, for companies like Claim Jumper, McCormick & Schmick’s, Morton’s and Bubba Gump Shrimp Co.
Fertitta is also controversial given his tendency to dramatically cut costs while consolidating operations in Houston. Del Frisco’s Restaurant Group, desperate to avoid a Fertitta buyout, decided that it needed to get so large the operator couldn’t swallow it up, buying Barteca Restaurant Group with a heavy amount of debt.
It didn’t work—the company was ultimately sold to L Catterton, which kept the Barteca concepts Bartaco and Barcelona Wine Bar and sold Del Frisco’s concepts to … Fertitta.
His 2010 buyout of Landry’s was also controversial. Shareholders had sued the company after he made one offer in 2008 and then lowered it as the stock price declined.
Fertitta said he is listening to bankers who’ve said “some very intriguing things” that could lead him to go public. The public markets would also give Fertitta more ammunition with which he can make deals—such as stock-based transactions. He could also use the public markets to raise funds.
The restaurant industry has been short of initial public offerings of late. Kura Sushi USA has been the only initial public offering of a specific restaurant chain since 2015, though there are at least two special purpose acquisition companies, or SPACs, that have gone public and are targeting restaurant chains. SPACs are public shell companies that take money from public investors and use it to make an acquisition, thus taking it public.
Fertitta himself is involved in a number of SPACs, one of which is taking his Golden Nugget Online Gaming company public.
A potentially public Landry’s may not necessarily be the hottest IPO on the planet—the company’s holdings have a mixed track record. System sales at McCormick & Schmick’s declined 15.6% last year, according to Restaurant Business sister company Technomic. Rainforest Café declined 10%, as did Claim Jumper, to name a few.
Still, Fertitta is clearly looking to buy. “There’s going to be great opportunity coming out of this pandemic, just like it was coming out of the 90s in Texas and 2000 and then the 2008 recession,” he told CNBC. “We’ve done well in those times.”
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