Photo: Melissa Phillip, Houston Chronicle / Staff photographer
Luby’s, Texas’s iconic but struggling cafeteria chain known for its comfort food, plans to sell its restaurant operations and assets to pay shareholders long dissatisfied with Houston’s financial performance.
The restaurant chain said on Wednesday that it would immediately continue selling its businesses and assets, including its real estate, and distribute the proceeds to shareholders after paying off debt and other obligations. The company plans to keep some of its restaurants open during the sales process.
“We believe that the continuation of this sales process followed by the distributions envisaged as part of a product distribution plan will maximize the value for our shareholders, while preserving the flexibility to continue selling the company if a convincing offer that offers superior value is made, “Luby’s CEO Chris Pappas said in a statement. “This route also offers the possibility of placing restoration operations with well-capitalized owners to move forward.”
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Luby’s decision to sell the company comes after a nine-month review by a special committee of the board charged with proposing “strategic alternatives” to maximize shareholder value, including a possible sale. The company, which has struggled to attract diners in recent years amid changing consumer tastes and growing competition from fast-paced casual restaurants, faced a controversial proxy fight last year. ‘one of his investors who pushed for leadership changes amidst late sales.
The coronavirus pandemic, which has forced the closure of many restaurants, including Luby’s, has exacerbated the company’s financial difficulties. Luby’s started to reopen its restaurants last month and currently operates 31 Luby Cafeterias and eight Fuddruckers hamburger restaurants, which operate at around 75% of their weekly pre-pandemic sales, the company said.
The company announced Wednesday a loss of $ 3.8 million in its second quarter ended March 11, down from a profit of $ 6.6 million in the same period last year. The chain reported second quarter revenue of $ 68.6 million, down 7.8% from revenue of $ 74.4 million a year ago. Same store sales increased 1.7% in the second quarter.
Luby’s, which has 118 company-owned restaurants nationwide, closed a Luby Cafeteria restaurant and five Fuddrucker hamburger restaurants in the second quarter. The company also oversees 59 Fuddrucker restaurants nationwide, which are owned by franchisees and not part of asset sales.