The success of combined Luby’s Cafeteria-Fuddruckers locations has encouraged parent company Luby’s Inc. to continue adding the units to its portfolio, executives said.
The Houston-based operator, which owns the two brands, as well as Cheeseburger in Paradise, said the side-by-side cafeteria-burger format works well for Luby’s and Fuddruckers.
The first combined location opened 18 months ago in Houston, and was added to Luby’s same-store sales base in the third quarter ended May 7. The unit booked a 2.2-percent gain in same-store sales, said Chris Pappas, president and chief executive of Luby’s. Unit-level profit was 21.3 percent, Pappas said. The company currently has three combined locations.
“This location not only serves our dine-in customers at the Luby’s Cafeteria and Fuddruckers, but also serves breakfast and lunch at a nearby corporate office, and provides full catering for their business meetings and special events,” Pappas said during a call Friday with analysts.
Luby’s plans to add two more locations this year: one in Rockwall, Texas, outside Dallas, in July, and one in Webster, Texas, south of Houston, which is slated to open by the fall.
K. Scott Gray, Luby’s chief financial officer, said the combined units outperform sales at the standalone brands. He said the new combo multi-brand restaurants averaged $92,000 in weekly sales during the third quarter, compared with the weekly averages of $51,000 at core Luby’s and $32,000 at core Fuddruckers units.
Executives said Luby’s will also continue to convert existing Cheeseburger in Paradise locations to Fuddruckers restaurants. The company acquired 23 Cheeseburger in Paradise units in 2012 for $11 million.
So far, the company has converted two Cheeseburger in Paradise locations to the Fuddruckers brand, and a third conversion is scheduled to open later this month. A fourth conversion is planned for later this summer. At the end of the quarter, Luby’s had 15 Cheeseburger in Paradise units, and it plans to convert five more locations in the first half of 2015, Pappas said.
Peter Tripoli, Luby’s chief operating officer, said the company is working to remodel and improve operations at Fuddruckers to help stem sagging same-store sales, which fell 3.9 percent in the third quarter. Those include speed-of-service initiatives such as new kitchen display monitors and a new point-of-sale system.
The company has also rolled out new menu boards to the Fuddruckers chain and expanded its selection of premium toppings, which now include grilled pineapple, fried egg, chili, tortilla strips, fried onion rings, sliced avocado and green chiles. New menus also allow guests to make any item a combo for an additional $3.75.
Luby’s Inc. owns and operates 94 Luby's Cafeterias, 67 Fuddruckers, 15 Cheeseburger in Paradise full-service restaurants and bars and one Bob Luby's Seafood Grill. The company franchises 113 Fuddruckers locations across the United States (including Puerto Rico), Canada, Mexico, Italy and the Dominican Republic. In addition, the company’s culinary services division manages 26 healthcare, higher-education and corporate-dining locations.
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