Houston-based Luby’s Inc., the operator of 147 restaurants nationwide, including 84 Luby’s Cafeteria locations, provided an update September 14 to a previously announced asset sales program it hopes will reroute a significant downturn in recent months. The company said it completed the sale of eight corporate-run properties since May—one in June and seven in August. The deals generated total proceeds of $11.6 million for the company. Luby’s said the funds were used, in accordance with the company’s current amended credit facility agreement, to reduce the balance on its outstanding term loan and for “general business purposes.” Luby’s reduced its outstanding term loan balance to $19.5 million. Combined with an outstanding revolving credit line balance of $20 million, Luby’s total debt balance was $39.5 million as of fiscal year end on August 29.

This one sweep is far from the cure-all of Luby’s issues, though. More sales are coming, and Luby’s said it’s pursuing debt refinancing under a new credit facility.

READ MORE: Luby’s closing stores as traffic lags.

Also, Chris Pappas, president and CEO of Luby’s, agreed last month to reduce his fixed annual base salary to $1, effective August 1. According to a Securities and Exchange Commission filing in December, Pappas’ base salary was $484,008 for fiscal year 2017. He received no additional compensation in 2017. Pappas took home similar base pay in 2016 and 2015, but his total compensation came to $725,019, and $1.05 million, respectively, in those years.

“We are progressing on our asset sales program to sell company-owned properties and use the proceeds to pay down debt. Since this program began, we have sold eight properties for a total of $11.6 million, roughly 25 percent of the total value of the program,” he said.

Pappas added that Luby’s, founded in San Antonio in 1947 and led by the Pappas brothers since 2001, is “committed to actively pursuing these property sales and are currently in discussions to sell additional properties.”

“Through this program, and a continual focus on superior store-level execution for service, food, and facilities, ‘we believe we can enhance the company’s financial performance,” Pappas said. We believe positioning our company to have lower debt, improved same-store sales throughout our restaurant portfolio, and a lower overall cost structure will enhance our returns.”

In a July 16 conference call to recap Luby’s third quarter, Pappas credited rising costs, flattish-to-down sales, and a sustained debt balance for restricting the company’s overall performance. In April, Luby’s said it would sell 14 properties, including five that had already closed and nine that were not expected to generate an appropriate return to warrant their continued operation, according to CFO Scott Gray. Those assets were expected to total about $25 million in proceeds. Luby’s updated that goal to $45 million in July. As Pappas mentioned, Luby’s is about a quarter of the way there.

Luby’s owns many of its properties, which makes the selling of underperforming locations a desirable action for investors. In other terms, when it closes stores, Luby’s recovers the value of the property through a sales transaction, giving it an advantage over brands that lease locations. In addition, the company runs 61 Fuddruckers and two Cheeseburger in Paradise restaurants. It is also the franchisor for 105 Fuddruckers locations across North and Central America. A licensee directs 36 units with the exclusive right to use the Fuddruckers proprietary marks, trade dress, and system in certain Middle East countries. Luby’s, however, does not receive revenue or royalties from the Middle East stores.

A filing for the quarterly period ended June 6 spotlighted deep-seated issues in a note on “Management’s Assessment of Going Concern.” It said Luby’s sustained a net loss of about $14.6 million and about $31.7 million in the quarter and three quarters ended June 6. Whether or not Luby’s can correct this was a serious question for management.

“The company’s continuation as a going concern is dependent on its ability to generate sufficient cash flows from operations to meet its obligations and obtain alternative financing to refund and repay the current debt owed under it’s Credit Agreement,” the filing read. “The above conditions raise substantial doubt about the company’s ability to continue as a going concern.”

“The accompanying condensed financial statements have been prepared assuming that the company will continue as a going concern; however, the above condition raises substantial doubt about the company’s ability to do so,” it continued. “The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result should the company be unable to continue as a going concern.”

Luby’s said its banking group granted the company a waiver from its covenant measurements effective May 9 until August 10. “This waiver and consent was granted in order for us to have time to work towards an amendment, which will include certain milestones as we proceed with our asset sales plan and refinancing of our debt under a new credit facility,” Gray said in the July 16 call. Investment advisory firm Cowen is helping Luby’s in the effort.

The issues are widespread for Luby’s. Guest traffic dropped 6.6 percent, year-over-year, this past quarter. Fuddruckers’ traffic fell 9.6 percent. Same-store sales lifted 2.4 percent at Luby’s in Q3, year-over-year. They declined 5.8 percent at Fuddruckers, 3.3 percent at combo locations, and 11.7 percent at Cheeseburger in Paradise. The average spend per guest was up 9.7 percent at Luby’s and 4.2 percent at Fuddruckers.

“The overall current restaurant environment is oversaturated in markets and we have seen this cycle before,” Pappas said at the time. “Currently, we’re experiencing the restaurant industry going through a streamlining process with the closure of restaurants in many markets. We are certainly not immune to this as we’ve just mentioned and we’re going through the same process.

Gray added that Luby’s would need to improve traffic along with prices increases in a meaningful way to bolster results.

“As we streamline by closing underperforming locations, we will be able to concentrate all of our energies on rebuilding and elevating operations and guest experiences at the remaining stores for the future,” said chief operating officer Peter Tropoli in the call.

Luby’s noted that Hurricane Harvey affected more than 55 Luby’s and Fuddruckers locations in the Texas Gulf Coast in August 2017, impacting about 200 operating days in the aggregate. Two Fuddruckers in the Houston region closed on “a more than temporary basis” due to flooding, which required extensive reconstruction and renovation. Luby’s estimated it incurred more than $2 million in lost sales from the store closures in fiscal 2017. And during the three quarters ended June 6 2018, the company additionally incurred a $700,000 hit in direct costs for repairs and other costs related to the storm. It has open insurance claims related to the damage and losses and had, to that point, recovered about $1 million in insurance proceeds.

Gray said in the third-quarter call that Luby’s efforts should reduce its outstanding debut to nearly zero and the brand could start showing improving beginning in the second quarter of fiscal 2019.