Houston billionaire Tilman Fertitta, owner of the Landry’s restaurant group, the Golden Nugget casino chain, and the Houston Rockets, has weathered a number of storms, literal and figurative, over his forty-year career: Black Monday, 9/11, the Great Recession, Hurricane Harvey. But the restaurateur’s businesses may not outlast COVID-19. He says he has indefinitely closed 200 of his 550 locations around the world and converted the rest to takeout and delivery. On March 24, Bloomberg News reported that he has also furloughed around 70 percent of his employees—40,000 total. Most salaried workers who were furloughed received two weeks of severance pay; hourly workers had their hours either sharply reduced or cut to zero. (About two-thirds of Fertitta’s employees are hourly and the rest are salaried.)
Although Fertitta’s remaining restaurants are still open for takeout and delivery, he says they’re generating only about 5 percent of their typical business, and companywide revenue is down $10 million a day from its typical $10 to $12 million. On Tuesday, Moody’s Investors Service downgraded Golden Nugget’s credit rating because of the loss of revenue, and warned that further ratings cuts could follow. Unless his restaurants and casinos can start reopening in the next few months, Fertitta told Texas Monthly on March 24, his hospitality empire may not survive through the end of the year—and neither would the United States, he predicted.
[This interview has been edited for length and clarity.]
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Texas Monthly: How long can your companies survive this pandemic at this rate?
Tilman Fertitta: Until the end of the year. I don’t think anyone can survive past the end of the year, can they?
TM: Can you take me through your thinking on how you’re trying to weather this?
TF: Well, we’ve reduced all the hours for our hourly employees. We’ve furloughed thousands of managers, all with two weeks’ pay. We’re doing whatever we have to do. The feedback from employees has been unbelievable. A lot of them have seen me weather ’87, 2001, 2008. We’ve always survived. People know we’re in a fight for our lives right now. I haven’t had one negative comment to me.
TM: I heard a lot of the managers who are still working are on half pay. Is that right?
TF: Absolutely. And thrilled to do it. If not, you have to lay them off or furlough them.
TM: How has converting your restaurants to takeout and delivery been working out?
TF: It doesn’t work at all. You can’t take a store that’s built to do $50,000 a day in revenue and now it’s going to do $2,000. The line isn’t set up that way. It wasn’t made to operate with just five employees. It’s a disaster. Well, it’s not a disaster—takeout and delivery are keeping some managers and some hourlies on the payroll. But I don’t like dark restaurants, okay? Only bad things happen when something goes dark. I want to keep them going and be able to help pay any part of the payroll that I can.
TM: What about employees—do you have a rough number of how many have been furloughed?
TF: Probably 40,000. You have to understand, this is a big company. Marriott and MGM have furloughed tens of thousands of employees. I can keep everyone employed, that’s easy. But then we would just fold up in 45 to 50 days. My employees want me to save the company. I can tell you honestly, people will work in this office for no pay. They want to save the company. Do people want a job for four months or do they want a job for four weeks?
TM: Is this an existential crisis for your company?
TF: For the country! If I survive, the country survives. I can tell you this, I’ll survive this before the country does. Okay? I’ll out-survive the country. Just like I out-survived the banks in 1987, okay? The country will fold before I do. If the country is shut down come October or November, it’ll be anarchy in the streets. Do you not agree with that?
TM: Expand on that—what do you mean?
TF: If nobody’s back to work and everything is shut down six months from now, how do you think we’ll be operating as a people? As a society?
TM: It would be like the Great Depression. Bread lines.
TF: I’ve already got a great depression! I’m feeding my two thousand Houston employees out of one of my closed restaurants. All free. It’s not a bread line, but it’s something I’m doing for my employees. It’s tough out there for people, so the least I can do is feed them.
TM: A lot of people are looking at you and saying, this guy is worth $4 billion, whatever it is now. He’s got mansions and yachts and jets. Why can’t he afford to keep everyone on the payroll?
TF: You know the answer to that. It’s kind of insulting, okay? Do you think I wouldn’t go sell that stuff right now if I could?
TM: I don’t know. That’s why I’m asking.
TF: First off, I have $2 billion in equity in the Rockets that I can’t touch, because you can only borrow so much on a basketball team. Do you think there’s a buyer for jets or yachts right now? Absolutely not. Do you think there’s a buyer for a mansion right now? There’s nobody that’s not being affected.
TM: I hadn’t thought about that. You’re right.
TF: If you go find me a buyer for my yachts and my mansions and my jets, I’ll sell them tomorrow. Two billion dollars of my net worth is in the Rockets, 1.5 to 2 billion is in Landry’s and the Golden Nugget. And then I have a billion in other assets, from stocks to real estate to homes to everything else. But you can’t go spend that right now. Why are Marriott and all these companies laying all these people off? Because you pay yesterday’s bills with today’s money. The government said, “Y’all are shut down today.” And everything I own was shut down, coast to coast, in a seven-day period. No warning, no chance to start pulling back or anything.
Do you think it’s better to furlough people for a few weeks, hopefully, or for us to be out of business in two months? One thing I make is good business decisions. You have to save the ship to save everybody. Everybody is feeling pain right now, and I’m feeling more than anybody. Do I have food? Yeah. But that’s why I’m feeding all of my [Houston] employees.
TM: From writing a Texas Monthly profile of you back in 2017, I know you borrowed a lot of money and issued a lot of corporate bonds to buy the Rockets. Does that make it harder for you to weather this kind of pandemic?
TF: Nope. This is real simple math—just pay attention. My company does $750 million in EBITDA [earnings before interest, taxes, depreciation, and amortization]. I’ve already killed $200 million in capital expenditures, and I don’t have to pay down any debt. So I have a lot of room.
TM: So you’ve got a much longer runway than most people.
TF: Right. That’s why I can last so long. But I don’t know how long I can last, okay? I couldn’t last if I kept my $1.5 billion annual payroll. I wouldn’t last more than a couple of months. In the Great Recession, we furloughed very few people, because we were down 10 or 15 percent, and you let attrition take care of that. This is a matter of survival. Now, paying all my severance will cost nearly $100 million through April. When you don’t have $10 million, $12 million a day coming in, you run out of money quickly. And my biggest expense is my payroll.
TM: I’m told you’ve been speaking to Larry Kudlow, the director of the National Economic Council, and to Governor Greg Abbott and other leaders. What do you tell them?
TF: I say they’ve got to get the virus over with, and quick. Health is more important than anything, but you also have to find a way to do whatever we have to do to open this country up in as short a time as possible. If the shutdown is over in three months, my companies will be back 100 percent. But a lot of other companies won’t be. We made a decision at this company, just like a lot of other smart companies did, to save it. Or nobody’s going to have a job. You know how excited I would be if Trump said on April 12, “Everybody go back to work”? That this thing had hit the cliff and was on its way down?
TM: What if he did that prematurely, though, and a lot of people were still sick?
TF: You know what, I don’t have to make that decision. I have a lot of other decisions to make. The experts are gonna make that decision, not me. They’re going to tell me when I can open.
TM: What do you think of the relief package currently being debated in Congress?
TF: I don’t understand it, and neither does anybody else. It changes every twenty minutes. I told my people to stop bringing it to me until it gets a little further along.
TM: What would you like to see in it?
TF: I don’t know. I really haven’t counted on the government. I’m not one of the largest companies in America and I’m not one of the smallest. When it’s all over with, you can write an article [saying] that I survived and I didn’t get any help from the government.