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Landry's Restaurants, Inc., the Owner of Several Hotels, Restaurants in Galveston, "Not the Same Company"
 Following Ike; Jobs of 3,000 Employees in Question
By Nancy Sarnoff, Houston ChronicleMcClatchy-Tribune Regional News

September 17, 2008 --Friday, they prepared for the worst.

Saturday, they watched and waited.

What they saw Sunday was not good.

"We're affected right now, huge," Landry's Restaurants chief Tilman Fertitta said after a hurricane assessment meeting with a dozen of his executives Tuesday.

"If you live in this area and play with fire, you're going to get burned."

He estimates the damage to his properties in Galveston and Kemah -- which make up nearly 25 percent of the company's overall business -- could come in at $50 million.

After spending the summer working on buying back his $1.3 billion company, Fertitta is now focused on insurance claims, employees and rebuilding, which he plans to do in typical Landry's fashion.

"Things will be bigger and better," he said.

Fertitta toured his properties Sunday and found that a few took severe beatings, including Landry's and the Flying Dutchman in Kemah and Fisherman's Wharf in Galveston.

The company has restaurants on Galveston's Seawall.

A separate business controlled by Fertitta owns the San Luis hotel, Hilton and IHOP restaurant there.

In Kemah, the company operates a boardwalk lined with restaurants, shops and a 96-foot-tall wooden roller coaster, which withstood only minimal damage, Fertitta said.

Fertitta said the jobs of 3,000 of his employees are now in question.

He'll attempt to put them back on the payroll by implementing a companywide hiring freeze where empty positions would be filled by those now out of work.

Landry's employs 5,800 in the region, 28,000 nationwide.

The company will also encourage employees of Houston-area restaurants that are up and running to cut back their number of shifts so those displaced can share the work.

He still hasn't determined if his insurance will cover all of his workers' wages during the downtime.

"We're trying to figure out what's covered and what's not," he said.

The company's windstorm and umbrella insurance will be tapped for repairs and rebuilding.

Landry's could incur significant out-of-pocket costs, as deductibles range from 1 to 5 percent of a property's value.

The company's Houston-area restaurants suffered minor damage, Fertitta said, and many have reopened.

While Landry's prepared by boarding up its restaurants, ultimately, Fertitta said, there was no way to get ready for what was coming.

He figures Galveston will take a direct hit from a hurricane every 20 years.

"You have to sit back and take your whipping," he said.

Still, Fertitta's convinced Galveston will emerge from its current devastation.

He hopes to have his properties up and running by spring break, but he'll stagger the reopenings.

Galveston and Kemah have become so saturated by Landry's restaurants, hotels and amusements that it makes sense to rebuild, said Chris Tripoli, president of A'La Carte Foodservice Consulting Group.

He compared Fertitta's company to the Brennan restaurant family, who suffered a similar fate in New Orleans during Katrina.

"There was so much heritage. They had to rebuild," he said.

As Landry's repairs, it faces yet another challenge.

Over the summer, Fertitta reached an agreement with his board to take his company private for about $415 million, pending shareholder approval.

According to the terms, Fertitta -- who owns 39 percent of the company -- would pay $21 a share.

Fertitta said he still wants to buy Landry's, but he wouldn't get specific on how recent events might affect the sale.

On Tuesday, Landry's stock closed at $13.52.

"This isn't the same company it was when I made the offer," he said.


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