How to Become Wealthy

Nine Truths That Can Set You on the Path to Financial Freedom

#1: Change the Way You Think About Money

The general population has a love / hate relationship with wealth. They resent those who have it, but spend their entire lives attempting to get it for themselves. The reason a vast majority of people never accumulate a substantial nest egg is because they don't understand the nature of money or how it works.

Cash, like a person, is a living thing. When you wake up in the morning and go to work, you are selling a product - yourself (or more specifically, your labor). When you realize that every morning your assets wake up and have the same potential to work as you do, you unlock a powerful key in your life. Each dollar you save is like an employee. Over the course of time, the goal is to make your employees work hard, and eventually, they will make enough money to hire more workers (cash). When you have become truly successful, you no longer have to sell your own labor, but can live off of the labor of your assets.

#2: Develop an Understanding of the Power of Small Amounts

The biggest mistake most people make is that they think they have to start with an entire Napoleon-like army. They suffer from the "not enough" mentality; namely that if they aren't making $1,000 or $5,000 investments at a time, they will never become rich. What these people don't realize is that entire armies are built one soldier at a time; so too is their financial arsenal.

A friend of mine once knew a woman who worked as a dishwasher and made her purses out of used liquid detergent bottles. This woman invested and saved everything she had despite it never being more than a few dollars at a time. Now, her portfolio is worth millions upon millions of dollars, all of which was built upon small investments. I am not suggesting you become this frugal, but the lesson is still a valuable one. Do not despise the day of small beginnings!

#3: With Each Dollar You Save, You Are Buying Yourself Freedom

When you put it in these terms, you see how spending $20 here and $40 there can make a huge difference in the long run. Since money has the ability to work in your place, the more of it you employ, the faster and larger it will grow. Along with more money comes more freedom - the freedom to stay home with your kids, the freedom to retire and travel around the world, or the freedom to quit your job. If you have any source of income, it is possible for you to start building wealth today. It may only be $5 or $10 at a time, but each of those investments is a stone in the foundation of your financial freedom.

#4: You Are Responsible for Where You Are in Your Life

Years ago, a friend told me she didn't want to invest in stocks because she "didn't want to wait ten years to be rich..." she would rather enjoy her money now. The folly with this school of thinking is that the odds are, you are going to be alive in ten years. The question is whether or not you will be better off when you arrive there. Where you are right now is the sum total of the decisions you have made in the past. Why not set the stage for your life in the future right now?

#5: Instead of Buying the Product... Buy the Stock!

Someone once asked me why they weren't wealthy. They always felt like they were putting money aside, yet never seemed to get any further ahead. The answer is simple. I told them to stop buying the products companies sell and start buying the company itself! A survey of America's affluent (those who make over $225,000 a year or own $3,000,000 in assets) revealed that 27-30% of all the income the wealthy earned went into investments and savings. That isn't a result of being rich, that is why they are rich. When the pain of getting out of the bondage of financial slavery is greater than the pain of changing your spending habits, you will become rich. Either change, or be content to live as you are.

#6: Study and Admire Success and Those Who Have Achieved It... Then Emulate It

A very wise investor once said to pick the traits you admire and dislike the most about your heroes, then do everything in your power to develop the traits you like and reject the ones you don't. Mold yourself into who you want to become. You'll find that by investing in yourself first, money will begin to flow into your life. Success and wealth beget success and wealth. You have to purchase your way into that cycle, and you do so by building your army one soldier at a time and putting your money to work for you.

#7: Realize that More Money is Not the Answer

More money is not going to solve your problem. Money is a magnifying glass; it will accelerate and bring to light your true habits. If you are not capable of handling a job paying $18,000 a year, the worst possible thing that could happen to you is for you to earn six figures. It would destroy you. I have met too many people earning $100,000 a year who are living from paycheck to paycheck and don't understand why it is happening. The problem isn't the size of their checkbook, it is the way in which they were taught to use money.

#8: Unless Your Parents Were Wealthy, Don't Do What They Did

The definition of insanity is doing the same thing over and over again and expecting a different result. If your parents were not living the life you want to live then don't do what they did! You must break away from the mentality of past generations if you want to have a different lifestyle than they had.

To achieve the financial freedom and success that your family may or may not have had, you have to do two things. First, make a firm commitment to get out of debt. To find out which debts should be paid off before you invest and those that are acceptable, read Pay Off Your Debt or Invest?. Second, make saving and investing the highest financial priority in your life; one technique is to pay yourself first.

Purchasing equity is vital to your financial success as an individual whether you are in need of cash income or desire long-term appreciation in stock value. Nowhere else can your money do as much for you as when you use it to invest in a business that has wonderful long-term prospects.

#9: Don't Worry

The miracle of life is that it doesn't matter so much where you are, it matters where you are going. Once you have made the choice to take control back of your life by building up your net worth, don't give a second thought to the "what ifs". Every moment that goes by, you are growing closer and closer to your ultimate goal - control and freedom.Every dollar that passes through your hands is a seed to your financial future. Rest assured, if you are diligent and responsible, financial prosperity is an inevitability. The day will come when you make your last payment on your car, your house, or whatever else it is you owe. Until then, enjoy the process.
©Mkimya Ent.

Dubai tallest building in the world

©Mkimya Ent.

Two Ways to Become Rich

In a free enterprise system, getting rich is everybody’s dream. Some want to become rich for the amenities and the trophies wealth offers: lavish houses, luxury cars, elegant yachts, expensive clothes, dining extravaganzas in the best restaurants in town, and traveling to exotic destinations. Others want to become rich for the financial freedom, the independence, and the security wealth provides: the freedom to spend more time with friends and family and to explore their full potential; the independence to work when they want as much they want, without a boss over their head; and the security, the peace of mind that comes with the creation of a safety net against the uncertainties life saves for them and their families down the road. A third group lusts to become rich for the power and fame wealth brings. A fourth group wants to become rich for the opportunities wealth offers to contribute to society, to indulge philanthropy and help the poor and the needy, to build things that will last beyond this life. But how can one make this dream come true? How can one become rich? What does it take?

In the old industrial economy, people became rich the “company-builder way,” by setting up large companies and having other people work for them. That’s how the “King of Steel” Andrew Carnegie amassed his wealth in the last quarter of the 19^th century. He built the largest steel company in the world and had scores of people working in his steel mills under the close supervision of legendary managers like Bill Jones and Henry Clay Frick who didn’t hesitate to use force to make sure that workers pursued Carnegie’s dream rather than their own. The “King of the Automobile,” Henry Ford (NYSE:F) followed a similar path. He, too, created a large corporation where thousands of people worked in his T-model assembly lines under the close supervision of scores of upper, middle, and lower-level managers within the “scientific management” model invented by his engineer Frederick Taylor; and so did the “King of Oil” John Rockefeller and his Standard Oil Corporation, employing legions of workers in drilling, pumping, refining, and shipping oil.

In the new post-industrial economy, people become rich the “business-builder way,” by building business rather than companies, by helping other people work for themselves, build their own business, become rich, and make them richer in the process. That’s how Silicon Valley scientists-entrepreneurs became rich. Frederick Terman, Robert N. Noyce, Gordon E. Moore, William Hewlett, and David Packard (NYSE:HPQ) amassed their fortunes by helping other high-tech scientists-entrepreneurs amass theirs. Venture capitalists like Ned Heizer, Jim Markkula, Bill Drapper, Eugen Kleimer, Tom Perkins, and Andy Bechtolsheim became wealthy by serving as financiers and mentors to high-tech start-up entrepreneurs. Andy Bechtolsheim helped Larry Page and Sergey Brin become rich by launching Google (NASDAQ:GOOG), a venture that turned him rich, too. In a few years, he saw his $100,000 turn into over billion dollars! Boston’s Route 128 business builders followed a similar path. Georges F. Doriot and the investors of the Boston-based American Research and Development Corporation (ARDC) became rich by making rich Ken H. Olsen, founder of high-tech start-up Digital Equipment Corporation (DEC). In a few years, ARDC’s $70,000 investment in Olsen’s DEC turned into $350 million. Microsoft (NYSE:MSFT) founder Bill Gates and Apple (NASDAQ:AAPL) founder Steve Jobs amassed their own fortunes by helping scores of engineers and marketers become entrepreneurs, who in turn helped other engineers and marketers become their own entrepreneurs, work at their own pace often in their own place, sharing the risks and the rewards with him. Ray Kroc became rich by creating a franchise organization—McDonald’s (NYSE:MCD), helping franchisees build their own business; making money for themselves and for Ray Kroc in the process. Multi-level marketers Richard DeVos and Jay Van Andel became rich by sharing their business experience and expertise with others and helping them build their own business network, others who in turn helped the next layer of people to build theirs, and so on.
©Mkimya Ent.

Oprah Winfrey’s Zero-to-Hero Story

To me it seems Oprah Winfrey is everywhere. On a recent flight I happened to pick up a random magazine and realized Oprah even publishes her own magazine.

There is absolutely no doubt about Oprah Winfrey’s fame, financial status, or impact on the world. My cynical side always associated her personal success with heavy marketing and excessive branding efforts, but whether or not I agree with every marketing tactic, it is impossible to dispute that she has achieved status as a role model to millions. She has taught any of us who were willing learn: “zero to hero” means that, regardless of where or how you begin in life, you can make a difference in the world.

From Zero…

It would be impossible to dispute the odds that were stacked against this young unknown African American child born in Mississippi in the 1950s. Although Oprah Winfrey came into people’s living rooms daily for two-and-a-half decades, she did not start out there. Her own history, and rise to world-renown influence, is quite a story.

Zero, or the starting point for Oprah Winfrey, refers to her youth and childhood as an abused young girl growing-up in the racially torn Deep South. Oprah was born into a series of circumstances which caused her to begin life with what some would categorize as indisputable disadvantages.

Despite the lack of funds that were available to her family living on their farm in Mississippi, despite the fact that Oprah was not protected from sexual abuse at the age of nine, and despite the fact that she may have been seen by some as “less than” for being born with dark skin in 1954, Oprah new that she was destined for greatness. She believed that she could have an impact on the world, and she was willing to work hard in order to do that.

The Journey…

Broadcasting and Communications took her from radio programs to small unknown television shows that seemed to be short on content structure. Oprah knew that she would need to design a format for herself that would keep the audience coming back. In the meantime, authenticity was the key.

Chicago called in the 1980s. Oprah was in her 30s, and ready for the change and challenge. Initially, she still struggled in attempting to find a format. Very quickly, however, Oprah discovered that competing with other “talk shows” that focused on exploitation rather than heart was not the way she wanted to win an audience.

In fact, one of the most powerful ways in which Oprah did choose to differentiate herself was to share some of the most painful and violating experiences that anyone could endure. She shared and recounted these experiences publicly, on an open platform. By doing this, not only did she endear herself to a loyal and growing audience, she developed a safety zone through which communication regarding previously taboo subjects could be vented and purged.

In effect, Oprah created a healing zone for millions of viewers and fans. People began to find themselves gravitating toward the Oprah show as a counseling session of sorts. Eventually, she introduced Dr. Phil as a means to provide an entirely credible and universally recognized authority who would take on the deeper problems of the masses, particularly as an outlet for those without available resources to enlist their own therapist.

Oprah, the Hero

These pivotal turning points began the monumental growth phase of Oprah’s journey forward. This growth phase saw the transition from her local Chicago-based show to a daily program with first National, and then International, reach and appeal. Oprah not only became a brand, and a household name; she became a phenomenon.

Key aspects of the Oprah Winfrey show and legacy, including the Angel Network and the Oprah Book Club, have become anchors of philanthropic movements and standard gauges for quality in literature. These, however, were not anchors that were implemented overnight. In fact, Oprah was in her mid-thirties as the show in Chicago presented itself in her life, and it took time to sprout wings. More than another decade would pass before the Angel Network came into being. Like Rome, after all, the Oprah Winfrey Empire was not built in a day. Neither were her school buildings in Africa.

Oprah has said repeatedly over the past twenty-five years that there are many key things to which she attributes her success. Of course, she has been willing to work hard. She builds teams of people who share her vision and goals, and these people understand how to implement these goals effectively. Also, she carefully monitors all of the finances and financial decisions related to each portion of her enterprises

Lessons We Can Learn From Oprah’s Journey

“I don’t think of myself as a poor deprived ghetto girl who made good. I think of myself as somebody who from an early age knew I was responsible for myself, and I had to make good.”

Among the many lessons to be gleaned from Oprah Winfrey’s profound success story, one relates to the prophetic vision of men like Martin Luther King, Jr.: the power of belief can subsequently create manifestations of greatness.
Oprah Winfrey, in her very heart and soul, knew the level to which she had the capacity to contribute to society. She saw her task positively, as an obligation as much as a possibility.

From among all of the notable accomplishments and accolades to date, what is consistent and over-arching is her effort to uplift people’s spirit. In the midst of the abundance of low-class reality programs that blatantly exploit negative and crass attention-seeking behavior, Oprah has created an entire network that intends to showcase people and events that can uplift and educate.

Whatever you think of Oprah, she has earned her way, step-by-step, and she continues to do things her way. If each of us can be as committed to a personal mission as she is, I believe our life will be well spent.

Live your dreams

©Mkimya Ent.

HOW CHINA IS INFLUENCING AFRICA’S DEVELOPMENT

Over the last 20 years, economic and political power has been shifting towards
emerging economies. A number of developing countries have become centres of strong
growth, raising their shares of global income significantly, which has made them major
players in regional and global affairs. Furthermore, flows of trade, aid and investment
between emerging and developing countries have all intensified.
The Perspectives on Global Development 2010 presents the evidence which documents
these changes, what we call ‘Shifting Wealth’. As the world emerges from the crisis, the
report clarifies this new global reality and what it means for development. Clearly, it implies
that development strategies need to be rethought in the new international environment. The
PGD 2010 suggests ways in which developing countries can best take advantage of the new
economic landscape and supports calls for global governance to be reformed, making it
more inclusive.
The  Perspectives on Global Development has been guided by and contributed to by
eminent scholars from developing and emerging countries, our Non-Residential Fellows. In
this paper, Dr. Martyn Davies, from the University of Pretoria, discusses how the global
financial crisis is accelerating China’s investment in Africa, a region that is becoming more
important to Chinese firms that are beginning to venture out into the global economy. In
particular, he poses three important questions: What contribution will China have on
industrialization efforts in Africa? Does China’s concessional finance model offer a new
mode of developmental finance for Africa’s extractive industries? And will China’s
investment in infrastructure on the continent assist regional integration of African
economies? Combined, these three questions provide an overview of the impact China will
have on the long term developmental prospects of Africa.
©Mkimya Ent.

What's The Long Term Vision For China's Increased Investment In Africa?

While anyone believing that China’s vision for investment in Africa is motivated solely by altruism as pure as the driven snow would be guilty of contemptible naivete, the notion that it’s a sinister, nakedly imperialistic drive purely for control of resources is equally misguided.

A good read on this topic is Deborah Brautigam’s The Dragon’s Gift: The Real Story of China in Africa. What she argues in essence is that China is replicating something that really worked to kick-start China’s own development in the 70s and 80s, with Japan playing the role in China that China now hopes to play in much of Africa.

In China, Japan did a great number of resource-for-infrastructure deals, where it built mines, roads, ore processing facilities, rail lines, shipping ports, and much more and took in exchange the mineral wealth that that infrastructure produced and helped to transport. China at the time simply couldn’t have paid for the infrastructure, and therefore had no real way to turn its resources — coal, copper, iron ore, even back then oil —into infrastructure or the money to pay for it. Aside from the infrastructure, which Japan simply transferred to China once the in-kind payment in resources had been made, China also got a whole lot of know-how. Technology transfer was always a part of these agreements.

Yes, China is also playing a geostrategic game to win the support of African (and Latin American) states, which it has, for a long time, courted as a check against perceived American and (once upon a time) Soviet hegemony. It plays checkbook diplomacy against the government in Taipei to try to win away those few remaining states that acknowledge Taiwan rather than mainland China as “China.” And it has certainly gotten in bed with rulers who most of the rest of the world rightly regards as kleptocrats and tyrants — Basheer, Mugabe, and more. And I think there’s much to the argument that all this largess is enabling the kind of corruption and kleptocracy that still plagues the continent.

But Brautigam points out that Chinese aid and investment in Africa is actually rather evenly spread among countries in Africa that don’t have Zambia’s copper or Angola’s oil. She details investment and aid in a large number of countries that have no obvious mineral or resource wealth that China would want to export. Chalk this up to  China’s efforts to gain “soft power,” however clumsy and ham-fisted many of those efforts have been. (They do seem to build a lot of stadiums, which by my lights shouldn’t necessarily be a priority in countries where 90 percent of the people are living on less than a dollar a day!)

There’s a misconception that all Chinese investment in Africa is driven by state-owned enterprises or the Chinese government itself. That isn’t actually the case. China’s overall strategy in Africa, and its actions on that continent on the ground, are not by any means all centrally directed. Private companies, state-owned enterprises, and individual entrepreneurs have their own agendas, sometimes in line with and sometimes at odds with what Beijing is trying to accomplish.

Actually, it’s often just a bunch of scrappy, entrepreneurial types typically from southern Chinese provinces like Zhejiang, Fujian, and Guangzhou who set out for Africa initially as small traders, but realize that there are other opportunities where their skills and capacity for hard work can turn into profits. I’ll remember what I can of a similar story told by Lindsey Hilsum inGranta back in 2005 in their Africa issue, where the author argues that the scrappy entrepreneurial guys from Fujian, Anhui, Zhejiang and what have you have done more for Africa than Bob Geldof, Tony Blair, and Bono put together.

A bunch of guys from the same hometown might notice, for instance, that in the particular sub-Saharan African country where they’ve come as workers, the capital is swarming with European and American NGO workers and UN types who come in for meetings (on AIDS, or malaria, or agricultural or water projects, or what have you) and they’re all being gouged by the one and only decent hotel in town. “Aha!” think the scrappy southern Chinese guys. “What if we built a cheap-and-chipper three-star type hotel at a third the room rate but with all the amenities? We’d be rich!” And so they build the thing. Then they need to improve the road, and ensure a steady power supply for the air conditioners, and make sure there’s Internet access and decent phone lines, and that the mobile network covers their place, and that the plumbing works. They mobilize their networks of contacts — road construction teams, guys who sell diesel generators, or better yet the people they know who are building the new power plant, their friends at Huawei or ZTE to get the telecoms situation in shape. And before you know it, they’ve been responsible for catalyzing a fair bit of infrastructure with very tangible benefits to all living in the vicinity.

There’s another book that argues Brautigam’s position perhaps even more forcefully. It’s called Dead Aid: Why Aid is Not Working and How there is a Better Way for Africa by Dambisa Moyo (a Zambian by birth), and though it’s focused mainly, as the title suggests, at the problems of aid, it also extols the virtues of the Chinese approach.

This question originally appeared on Quora. More questions on China:

• What are your thoughts on Chinese interests / presence in Africa?
• Why does China emphasize the Olympics so much?
• Is China a stable country?

©Mkimya Ent.

The World's Richest Restaurateur Has A Secret: It's Not About The Food

Tilman Fertitta has made a fortune buying up and revamping distressed restaurant and entertainment brands. Photo by Tim Pannel.

Tilman Fertitta is barely past the first of his many morning cups of coffee and the first ten minutes of our meeting when he decides, as is his wont, to take control. As soon as I break out my tape recorder, he picks it up and places it on top of a paper cup, within wrist-snapping distance, turning it off and on during our discussion as he deems fit. Having noticed poor lighting on another floor, he dispatches a passing employee to fix it. When I ask the 55-year-old to tell me about how he got started, he admonishes me in his thick Texas twang: “I’ve overread that story. I just hate to go that far back.” So we don’t, for now, because as Fertitta later tells me, laughing, “I do whatever the f–k I want.”

Most of the time Fertitta, the 100% owner of Landry’s, wants to gobble up hospitality businesses: specifically, poorly managed, out-of-date and distressed restaurants, hotels, casinos and boardwalks that he can buy on the cheap, often right out of bankruptcy court. Fertitta then cleans house. He fires top executives, closes failing locations, revamps existing ones and moves management to Landry’s headquarters in Houston, where he can keep an eye on everyone. “When we buy somebody, we cut the head off,” he says. “We keep the operators who are looking–I hate to use this term–they’re looking for a leader. We lead very well. And we immediately spend money on them and make them better. Everybody wants to be led.

“Except for me,” he adds. “I want to lead.”

We’re having coffee at Michael Patrick’s Brasserie, a 24-hour restaurant (named after his two eldest sons) housed inside the Golden Nugget Atlantic City, one of the latest turnarounds he’s leading. Throughout the weekend Fertitta, who is bunking on his 164-foot yacht, the appropriately named Boardwalk, will oversee the property’s grand reopening, featuring a value-oriented talent roster, including Whoopi Goldberg, the Cake Boss and the Real Housewives of New Jersey. It was a typical Fertitta deal: He bought the waterfront casino and hotel from bankrupt Trump Entertainment Resorts for $38 million in February 2011, less than one-tenth a recent offer and $282 million less than what Trump paid in 1985.

As gambling options pop up around it, the Atlantic City market remains troubled. But bettors would be foolish to wager against Fertitta, who knows how to get leisure dollars out of consumer pockets. Fertitta is the richest restaurateur in the world and its most active dealmaker. Using Landry’s as his vehicle, he has rolled up five public companies and countless smaller deals, and floated six larger equity offerings. His biggest deal was taking Landry’s private in October 2010 for $1.4 billion, including $700 million in debt. He now lords over a $2.5 billion (sales) company that encompasses 421 outlets–all but 10 are stand-alone restaurants–and 56 brands, with a heavy dose of tourist-driven sit-down spots like Chart House and Bubba Gump Shrimp.

Mediocre food, it turns out, pays. FORBES estimates that Fertitta, who also owns a Rolls-Royceand Bentley dealership, is worth $1.5 billion, and his fortune is growing as he continues to expand. “He is like a private equity investor, but he does it with his own money,” says Rich Handler, CEO of the investment bank Jefferies, who helped refinance Landry’s debt in 2007 and has become Fertitta’s close friend. “He took Landry’s private because the public markets weren’t going to allow him to invest in the properties as he saw fit. Now he has operated his way to exceptional cash flow that he continuously invests to improve and expand his properties.” In January Fertitta completed his first hostile takeover, buying 90-plus-location McCormick & Schmick’s for $131.6 million and quickly closing locations that were losing money. “I had never done a hostile before. I wanted to see what it was like,” he laughs. “It wasn’t painful for me. Was painful for them.”

While his blustery demeanor masks it, hospitality is in his blood. His grandfather Vic Fertitta ran Galveston’s legendary Balinese Room, a gambling house that in the 1940s hosted stars like Frank Sinatra, the Marx Brothers and Bob Hope. Fertitta’s father, also Vic, later owned a seafood restaurant in Galveston, where Fertitta peeled shrimp after school. That family history is still visible across the Landry’s empire. One steak house brand, Vic & Anthony’s, is named after Fertitta’s father and uncle. Cousins Lorenzo and Frank Fertitta operate Ultimate Fighting Championship and Station Casinos in Las Vegas.

But it was his youth spent on the Texas coast that perhaps had the biggest impact on Fertitta. As a teen he often worked as a lifeguard at a Galveston hotel, where he says he learned firsthand that people always flock to coasts. Today he owns and operates the Pleasure Pier where that hotel once sat. Almost half of his properties are in coastal cities; 80% of those are right on the water. Of his restaurants, 196 primarily serve seafood, under brands like Fish Tales and the Oceanaire, as well as Chart House and Bubba Gump Shrimp. “You can put the greatest seafood restaurant next to an average steak house in an urban area, and that steak house will do more business than the seafood place,” he says. “If you go to the water, you can put an average seafood place next to the greatest steak house, and people are going to eat seafood.”

Fertitta took his first big gamble at 23. Capitalizing on the vast wealth of the Texas oil boom he obtained a loan and built his first hotel, the 160-room Key Largo on the water in Galveston. He entered the restaurant business in 1980 when he joined up as a real estate specialist with Landry’s Seafood restaurant. Six years later he sold Key Largo and used that cash to acquire a majority interest in Landry’s and another restaurant, Willie G’s Steakhouse & Seafood. In 1988 he bought a hurricane-ravaged restaurant named Jimmie Walker’s on the boardwalk in Kemah, Tex., 20 miles from Houston. “It was a huge risk,” says Jim Gossen, an early partner.

Fertitta converted Jimmie Walker’s into a Landry’s Seafood, and it became the most popular restaurant on the boardwalk. He eventually bought up every restaurant on the 40-acre Kemah boardwalk and transformed it into an entertainment complex with a wooden roller coaster, a Ferris wheel, hotel, stores and plenty of Landry’s-owned restaurants. One Houston Press reporter would later pejoratively call Kemah “the Land of Landry’s,” for having turned what was once a quiet shrimping town into a glitzy, full-blown theme park.

Landry’s went public in 1993 and then went on a buying binge: Joe’s Crab Shack in 1994, Crab House in 1996, Rainforest Cafe in 2000, Chart House and Saltgrass Steakhouse in 2002. Fertitta was famously patient in waiting for the privilege to pay bottom dollar. He bid for casual restaurant chain Claim Jumper in 2005 but lost out to a group of private investors who paid $220 million for its 20 restaurants. Five years later he bought the then 38-restaurant chain out of bankruptcy for $48 million. He offered $125 million for Rainforest Cafe in 2000, but a large shareholder rejected the offer; the stock plunged, and Fertitta picked it up for $75 million seven months later. In his 2010 book, It’s a Jungle in There (Sterling Publishing, 2010), Rainforest Cafe founder Steven Schussler termed Fertitta “a brash, arrogant, bargain-basement, bottom-feeding acquisition nemesis.” And those are some of the tamer words that have been used to describe him: ruthless and, yes, controlling, among them. Even Fertitta admits he is a bit obsessive, involved in all aspects of his business from negotiating deals to approving fabric swatches and working with chefs to perfect dishes.

Above all, Fertitta preaches cost control. He’s boosted restaurant-level operating cash flow at every chain he’s recently acquired: Chart House’s margin has jumped from 15.5% to 23.3%, Claim Jumper’s is up 4.9% since being bought in December 2010. Combined Ebitda of his last ten acquisitions (not including the recently opened Golden Nugget Atlantic City) is approximately $350 million, up from $200 million, as margins improve by an average of 6.3%.

This discipline proved especially useful during the last recession. “We were getting leaner and leaner before the downturn happened,” says Rick Liem, Landry’s CFO for the past ten years. At the time the company reviewed more than 250 items looking for cost savings. Where there were hardwood tables, tablecloths disappeared. In restaurants where the carpets were shampooed every two weeks, the schedule changed to every three weeks. Lemon wedges disappeared from plates that didn’t need them, and in restaurants where fries were apportioned liberally, meaning more than 8 ounces, the piles came down to 7. The line items added up to millions in savings.

Rainforest Cafe was a textbook example: Efficiency-minded Fertitta was quick to make changes to the concept, altering signature dishes and even removing what had previously been a hallmark of the restaurants–live birds. The chain’s founder, Schussler, had insisted that the birds not be behind glass walls but in the open, to be used as conversation-starters about recycling and conservation. But between bird feed, care and the ceiling vacuum systems required to keep bird dander off the food, the birds were costing each unit as much as $150,000 a year. Fertitta ditched the birds. Whenever he saw Schussler, Fertitta was always quick to mention what a steal he had made on the Rainforest concept, which Schussler describes as “rubbing salt in the wound.”

Yet when Schussler came up with two new “eatertainment” concepts, Yak & Yeti and T-Rex Cafe (he describes the latter as “the most oversensory place on earth”), there was only one partner he could find to bankroll the $100 million price tag of the new projects–Fertitta. “Who else would let me put an animatronic dinosaur on top of a live shark tank in the middle of a restaurant?” Schussler asks.

So what’s next? Fertitta says the company is busy “digesting” all of its recent acquisitions and claims to be done buying up 40-unit restaurant chains. “As the economy improves, there aren’t as many opportunities,” he moans. Any future moves will be on a grander scale. So now he is closing on his latest acquisition, a casino in Biloxi, Miss. that he plans to reopen as his fourth Golden Nugget Casino.

One thing Fertitta won’t do: dump any of his dozens of brands. In all his years in the business he has sold only one: Joe’s Crab Shack for $192 million in 2006. “I buy things that are good properties that I’m going to have forever,” he says. “I just don’t have any intention to sell anything. I believe you acquire good assets and you keep them and operate them. Twenty years from now,” Fertitta insists, looking across the lobby of the Golden Nugget Atlantic City, “I’ll still be here.”
©Mkimya Ent.