Luby’s announced Tuesday morning that it is temporarily closing 35 restaurants and furloughing more than half of its corporate office to limit the negative effects of the COVID-19 pandemic.
The 35 units include 29 Luby’s Cafeterias, five Fuddruckers and Cheeseburger in Paradise. Thirty-four Luby’s and three Fuddruckers are still operational through carryout, drive-thru and delivery with DoorDash, Favor Delivery, Grubhub, Uber Eats, and Waitr.
For the corporate staff that wasn’t furloughed, salaries will be temporarily cut by 50 percent. The pay reduction is indefinite and will be evaluated periodically. The company is also significantly reducing its advertising expenses.
Four days ago, Luby’s decided to temporarily close 25 Fuddruckers and 14 Luby’s to “comply with applicable governmental requirements and due to operating realities.”
“The number of operating restaurants is subject to change as we adjust operations in response to the pandemic and governmental requirements,” the company said in a statement. “At this time, neither the duration nor scope of the disruption can be predicted, therefore, the negative financial impact to our results cannot be reasonably estimated.”
The announcement comes a month after Luby’s CEO Chris Pappas showed dissatisfaction with Luby’s Q1, which included a net loss of $8.3 million compared to negative $7.5 million in the year prior. Revenue dropped 7.5 percent to $95.1 million. Increases in traffic and comp sales in the quarter were offset by increases in commodity and labor costs. The brand ended Q1 with 72 Luby’s and 34 Fuddruckers, down from 78 and 54 last year, respectively.
Craftworks Holdings, parent of Logan’s Roadhouse and Old Chicago Pizza, made a similar move Monday by furloughing most of its 18,000 employees and closing 261 restaurants after a bankruptcy sale fell through.
The National Restaurant Association said economic impacts from COVID-19 on the restaurant industry could reach at least $225 billion during the next three months, with 5 million to 7 million jobs lost.