Luby’s to co-brand cafeteria, FuddruckersLuby’s to co-brand cafeteria, Fuddruckers

Ron Ruggless

Luby’s Inc. plans to build its first combined cafeteria-Fuddruckers unit in Houston next year, the company’s chief executive Chris Pappas said Thursday.

The two brands will “be on one property, each with a separate dining room and kitchen facility but with many shared resources on the property,” Pappas said during a conference call with analysts after the Houston-based company released its fourth-quarter earnings.

Luby’s reported net income of $2.9 million, or 10 cents per share, for the fourth quarter ended Aug. 24, compared with $516,000, or 2 cents per share. Restaurant sales rose 37.2 percent to $105.3 million, reflecting the purchase of Fuddruckers and Koo Koo Roo brands in the fourth quarter last year, as well as an extra operating week in the latest quarter.

Sales at the 96 Luby’s Cafeterias alone, adjusted to exclude a 17th week this year, slipped 0.6 percent to $68.9 million. The 61 company-operated Fuddruckers and Koo Koo Roo units added $32.1 million to sales in the fourth quarter, the company said.

Same-store sales at the cafeteria units fell 0.6 percent in the fourth quarter, with a decline in customer traffic offset with a 1.7 percent increase in spending aided by some price increases. “We were going up against our toughest comparison for the fiscal year,” Pappas said, “as we had many limited-time offers running last year in the fourth quarter.”

The new Luby’s-Fuddruckers unit is slated to open in late 2012, Pappas explained. “This facility will have an additional 2,500 square feet. So it will end up at about 12,500 square feet in total.”

Pappas said the Fudd’s Express that was opened under Luby’s 4-year-old Culinary Contract Services division at Lone Star College-University Park in Houston has “become a tasty routine for many.”

In the fourth quarter, Luby’s said, revenue from Culinary Contract Services rose to $5.6 million compared to $4.2 million in the same quarter last year. Adjusting for the extra week in fiscal 2011, revenue grew about 25 percent to $5.3 million. The culinary service division operated 22 facilities as of Aug. 31, compared to 18 facilities at the same time last year.

The company is also testing its first Fuddrucker’s drive-thru in a converted food-to-go area at a Luby’s Cafeteria location. “We are monitoring initial results,” Pappas said.

The company has also signed a joint-venture agreement to expand Fuddrucker’s into Mexico, Pappas said. “Our first store in Mexico is expected to open in early 2012,” he added, and it will be in Villahermosa in the Mexican state of Tabasco. “We will use this as a possible blueprint to possibly expand to more locations in that market,” he said.

Scott Gray, senior vice present and chief financial officer, said the cafeteria sales benefited from local-marketing initiatives and the all-you-can-eat weekend breakfast buffets at 62 locations, which was up from 48 at end of fiscal 2010.

Luby’s has 94 Luby’s cafeterias, 57 Fuddruckers restaurants and four Koo Roo units. The company franchises 121 Fuddruckers restaurants in the United States, Puerto Rico and Canada.

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