Scott Mlyn | CNBC
Billionaire Tilman Fertitta told CNBC on Friday that his restaurant empire is losing an average of about $1 million per day in sales due to the coronavirus.
“Remember, that last million in sales is your most profitable sales. It’s just like any business,” said Fertitta, chairman and CEO of Landry’s, which owns and operates more than 600 restaurants across the world. “That’s where your heavy profit is.”
The average loss of $1 million per day comes from a base of sales around $12 million, Fertitta said on “Power Lunch.”
Fertitta, whose restaurant brands include Bubba Gump Shrimp Co. and Morton’s The Steakhouse, said the impact is most acutely felt in two areas: urban areas and popular tourist locations.
The decline in sales is likely linked to business conferences being canceled across the country, said Fertitta, whose vast entertainment business operation gives him strong insights into the pulse of consumers.
On the other hand, restaurant revenue in suburban locations has remained OK, Fertitta said. Regional casinos have been less impacted than ones in Las Vegas, according to Fertitta, who owns the Golden Nugget Casino and Hotel brand.
“The regional casinos are OK because you’re staying local, but then you get into Vegas — and Vegas is really starting to slip now,” said Fertitta, who also owns the NBA’s Houston Rockets.
Cases of the coronavirus continue to grow in the U.S., with at least 260 confirmed instances in the country, according to data from Johns Hopkins University. There are more than 101,000 confirmed cases across the world.
The fast-spreading disease has caused significant economic disruption, beginning in China, where COVID-19 originated, and since spreading around the world.
Fertitta said the coronavirus presents business managers with a challenge but said revenue declines of about 8% to 12% are manageable.
“You don’t want to go 20% off. When you get to 20% off in a same-store sales, no matter what business you’re in, that’s when you start getting into trouble,” Fertitta said.
Sales in China are still ‘bad’
Daily life in China is beginning to improve as new cases of the coronavirus begin to decline, Fertitta said.
However, he said his business in the country can still be summarized in one word: “bad.”
The Beijing location of Morton’s The Steakhouse was recently able to reopen, Fertitta said, but something happened for the first time in his roughly 40 years in the restaurant business.
“We opened a restaurant and the sales for the day were zero,” he said. “Everything is getting better, and I think it’s a good lesson for us to learn. We do hear from our people in China that things are getting better, but people are still not moving out freely like they did before.”