Luby’s, in the midst of long-running turnaround effort, formed a new “board special committee,” the company announced this week. The goal being to establish a strategic review process to “identify, examine, and consider a range of strategic alterative available to the company with the objective of maximizing shareholder value.”

Luby’s operated 121 restaurants as of September 10 (78 Luby’s Cafeterias, 42 Fuddruckers, and one Cheeseburger in Paradise) and is also the franchisor for 103 Fuddruckers units across the U.S., Canada, Mexico, Colombia, and Panama.


Where did the comeback for Luby’s start?

The company said its board has not made a decision to enter into any transaction at this time, and there is no guarantee the strategic review process will result in a deal. It could also lead to a merger or refinancing, as these processes often do.

Luby’s new committee includes Gerald Bodzy, Twila Day, Joe McKinney, Gasper Mir, John

Morlock, and Randolph Read. It’s co-chaired by Bodzy and Read.

“The formation of this special committee has the support of the entire board of directors and management, and we look forward to the results of their work,” Luby’s president and CEO Chris Pappas said in a statement

Luby’s also provided some updates into ongoing comeback initiatives. The multi-concept operator has slugged through declining traffic, sales, and unit count over the past two years. Heading into the fourth quarter, Luby’s trimmed its year-to-date footprint by 16 restaurants—four Luby’s, 11 Fuddruckers, and one Cheeseburger in Paradise, to bring the respective store counts to 80, 49, and one.

Here’s a look at how the brands have retracted:


  • June 5, 2019: 80
  • August 29, 2018: 84
  • June 6, 2018: 86
  • August 30, 2017: 88
  • June 7, 2017: 89
  • August 31, 2016: 91
  • June 1, 2016: 92
  • August 26, 2015: 93


  • June 5, 2019: 49
  • August 29, 2018: 60
  • June 6, 2018: 67
  • August 30, 2017: 71
  • June 7, 2017: 72
  • August 31, 2016: 75
  • June 1, 2016: 77
  • August 26, 2015: 75

Cheeseburger in Paradise

  • June 5, 2019: 1
  • August 29, 2018: 2
  • June 6, 2018: 7
  • August 30, 2017: 8
  • June 7, 2017: 8
  • August 31, 2016: 8
  • June 1, 2016: 8
  • August 26, 2015: 8

Since the third quarter of 2018, the company shuttered 13 Fuddruckers (and refranchised five others), six Luby’s, and six Cheeseburger in Paradise units. Luby’s acquired Fuddruckers for about $61 million in cash in 2010. At the time, there were 60 stores and three Koo-Koo-Roo locations. Fuddruckers filed for chapter 11 bankruptcy protection on April 21, 2010. Luby’s purchased substantially all of Fuddruckers assets out of the auction.

In the past two fiscal years, Luby’s closed 39 underperforming restaurants (10 Luby’s, 22 Fuddruckers, and seven Cheeseburger in Paradises).

Pappas said Luby’s is “laser-focused on improving the operational and financial performance

of the company and are confident in our team’s ability to continue to make significant progress on our turnaround plans.”

“Our efforts are well underway to grow guest traffic and sales, as well as to establish an appropriate cost structure across the business,” he added.

Luby’s reduced its general and administrative expense by more than 10 percent during its turnaround so far, Pappas said, as the company right-sizes the overhead needed to support operations, with further plans to lower cost structure in 2020.

During Q3, capital expenditures decreased to $1.1 million compared to $3.7 million in the same period last year.

Additionally, Luby’s continues to refranchise Fuddruckers locations. In September, two units in Austin, Texas, were transitioned to franchisee ownership, an operator who also signed a new development agreement to open additional restaurants.

Since April, Luby’s refranchised seven Fuddruckers and expects to engage more operators in markets outside its Houston home base.

Earlier in fiscal 2019, Luby’s entered into a new five-year accredit agreement “to improve our financial liquidity and to aid our efforts to decrease costs and improve sales results,” Pappas said.

Luby’s $45 million asset divestitures program, which began in fiscal 2018, has led to the sale of property generating $35.9 million in proceeds. “We have also been very active in making significant enhancements to our leadership team during fiscal year 2019 with the appointment of Todd Coutee as chief operating officer earlier in the year and most recently through the hiring of a new vice president of marketing and a new vice president of information technology,” Pappas said. “These critical senior management leaders are highly qualified and extremely talented industry veterans.”

David Greenberg assumed the role of VP of marketing in mid-July. His prior stops include Bob Evans, Jack in the Box, Wendy’s, TGI Fridays, and Burger King. John Holzem was named VP of information technology. He most recently worked at Sysco Corporation as VP of business technology.

In Q3, Luby’s blended same-store sales declined 4 percent and loss from continuing operations was $5.3 million compared to a loss of $14.1 million in the prior-year period.

Along with cutting loss, the company’s store-level profit as a percent of restaurant sales was 10.2 percent, up 170 basis points, year-over-year, from 8.5 percent. The company’s revenue declined 13 percent to $74.8 million.

In Q3, Luby’s decreased its food costs as a percent of restaurant sales thanks to a return to “classic favorites’ with favorable figures. Store level profit, defined as restaurant sales plus vending revenue less cost of food, payroll and related costs, other operating expenses, and occupancy costs, was $6.7 million, or 10.2 percent of restaurant sales, compared to $6.6 million, or 8.5 percent of restaurant sales, in Q3 2018.

On a brand-by-brand basis, the same-store sales picture was challenged, which has been the case all year.


  • Q3 2019: –3.1 percent
  • Q2 2019: –2.2 percent
  • Q1 2019: –3 percent
  • Year to date: –2.8 percent


  • Q3 2019: –6.1 percent
  • Q2 2019: –5.3 percent
  • Q1 2019: –11.2 percent
  • Year to date: –8 percent

Cheeseburger in Paradise

  • Q3 2019: ­–4.4 percent
  • Q2 2019: –3.1 percent
  • Q1 2019: –0.6 percent
  • Year to date: –2.6 percent

Combo stores (Luby’s side-by-side with Fuddruckers at one property)

  • Q3 2019: ­–4.8 percent
  • Q2 2019: –7.1 percent
  • Q1 2019: –11.1 percent
  • Year to date: –8.1 percent

But while top-line restaurant sales were down $12.2 million year-over-year, store-level profit from the restaurants increased by $100,000 to $6.7 million in Q3.

In terms of total sales, Luby’s figures decreased $4 million (8 percent down from Q3 2018). That included a 1.2 percent fall in guest traffic and a 2 percent decrease in average spend per guest.

Fuddruckers’ company-run sales declined $5.43 million (25.7 percent drop, year-over-year) thanks to the closures and 6.1 percent same-store sales hit. The comps comprised of an 8.7 percent slide in traffic partially offset by a 2.8 percent increase in check.

Fast Food, Finance, Story, Fuddruckers, Luby's