HOUSTON Luby’s Inc., operator of 127 namesake cafeterias, closed on a five-year credit agreement of up to $100 million to help fund restaurant development, investments in existing locations and expansion of its “culinary services” contract-feeding unit, the company said July 19.
The company said the facility might also be used for acquisitions. It did not provide details on any pending deals.
The agreement provides a $50 million revolving line of credit which the company has the option to increase, subject to the terms of the pact, up to an additional $50 million. It replaces Luby’s previous three-year credit agreement, which totaled up to $60 million.
Luby’s reported that the new credit agreement “permits the company to incur other debt in connection with acquisitions” and “has more favorable debt covenants.”
The company’s expansion plans call for the development of 45 to 50 new units over the next five years, it said, starting with a new prototype opening next month in Houston. Next year Luby’s said it planned to open between four and six new restaurants.
The 60-year-old cafeteria chain posted a same-store sales gain of 4.6 percent for its fiscal year ended August 2006 and improved its profitability after years of losses. In fiscal year 2007, however, Luby’s sales and profit have declined, which the company attributes largely to the stifling economic environment that many family- and casual-dining chains also have cited for reduced guest traffic.