Texas gaming mogul and restaurateur Tilman Fertitta told investors on a private call this week that the fear of traveling and going out to eat are hampering his casino and restaurants empire, with business down about 40% in its best-performing markets.
The chairman and chief executive ofLandry’s Inc., which owns Del Frisco’s steakhouses and Bubba Gump Shrimp eateries, said on the call that the company’s hundreds of restaurants are still suffering from closures and travel disruptions caused by the coronavirus.
In his home state of Texas, one of the worst oil crashes in history has further dampened demand for entertainment and dining. Sales at his restaurants in the state are down 40% to 45% compared to a year ago, though they have been recovering. Urban areas are doing even worse, with business down as much as 60%.
His frustration with the slow pace of the recovery was evident during the call, according to people who took part in it.
“This is all bullsh*t,” Fertitta, who also owns the Golden Nugget casino chain, told investors about first-quarter results, according to the people. “I don’t even know why I’m talking about these numbers.”
Food prices have impacted operations, with prime steaks costing double for some cuts because less cattle are being slaughtered this year. Prices are rising as much as $12 per steak, he said.
Fertitta declined to comment on his remarks made on the call.
The protests sparked by the death of George Floyd have forced locations that had reopened to close again, he said. The company lost as much as $4 million in sales from more than 80 locations due to protests or curfews.
To combat the losses, Landry’s is taking cost-cutting measures including making lease modifications and foregoing rent payments. The majority of landlords have agreed to abate and defer rent, some for almost three months, the people said. Fertitta has alsolaid off 40,000 workers across all his businesses.
Fertitta said the company was eligible for federal Paycheck Protection Program funds, but returned the loans because management didn’t believe it was appropriate to take the money.
The billionaire’s Golden Nugget casinos were forced to close in March. Since then, most of them have reopened but business in locations that rely on air travel and conferences, such as Las Vegas, has been slow, he said.
High-end gamblers have yet to return, room rates are still far from their pre-pandemic levels and occupancy rates remain low, hurting profitability, he said.
The company is current on all its interest payments, he added.
Golden Nugget Inc.’s first quarter revenue was around $215 million versus $251 million a year ago, the people said
Bonds issued by Golden Nugget Inc, the holding company’s on top of Fertitta’s restaurant and casino properties, are still trading at deeply discounted levels, after plunging to below 50 cents on the dollar in March. The company’s subordinated notes trade at 70 cents on the dollar, while more senior bonds trade around 82 cents, according to Trace pricing data.
Source: Read Full Article