HOUSTON Luby's Inc. said net income for the third quarter ended May 7 dropped 76 percent, to $949,000 or 3 cents per share, because of rising commodity costs and changes in consumer spending from rising gas prices. The operator of 123 namesake cafeterias posted a net profit of $3.9 million, or 14 cents for share, for the year-ago quarter. Revenue fell 2 percent to $74.6 million from $76.2 million, Luby’s said.
Same-store sales fell year-over-year by 3.3 percent.
Chris Pappas, Luby¹s chief executive and president, said, “The continued rise in gasoline prices is having an impact on how consumers eat out and at what frequency, as evidenced by the decline in the consumer confidence index.”
Luby’s said food costs slipped 1 percent in absolute terms, but absorbed a larger percentage of restaurant sales. Costs of oils and cheese rose in the quarter, but those increases were partially offset by lower produce prices, according to the Houston-based concern.
The company said its contract services sales increased to $1.8 million compared to $400,000 in the same quarter of last year. Luby's said it planned to add two to three new health care foodservice management contracts during 2008.
It also plans to replace one restaurant and add one in Houston in July, as well as to open two to three other restaurants by the end of the year.