Luby’s Inc. has closed 30 restaurants, both in its cafeteria and burger brands, over the past two years and remains dissatisfied with the company’s performance, the CEO said Monday.
Chris Pappas, president and CEO of Houston-based Luby’s, in an earnings call said that results for the fiscal year ended Aug. 29 were disappointing.
“We are not satisfied with our overall financial results for the year,” Pappas said. “While operationally there are several bright spots, the decline in profitability for the whole company is totally unacceptable.”
For the fourth quarter ended Aug. 29, Luby’s narrowed its loss to $1.9 million, or six cents a share, from $4.1 million, or 14 cents a share, in the same period a year ago. Sales were down 3.1 percent to $83.9 million from $86.6 million in the prior year quarter.
To stem losses, Luby’s announced an asset-sale program of $25 million in April and expanded it to $45 million in July, with the company selling 10 owned properties for $14.8 million in profit in the fiscal year.
The company also closed 21 underperforming company-owned restaurants in fiscal 2018 after closing nine in fiscal 2017. Luby’s said those restaurants had accounted for $21.6 million in restaurant sales in fiscal 2018 and $38.6 million in fiscal 2017.
In fiscal 2018, Luby’s closed four cafeterias, 11 Fuddruckers and six Cheeseburger in Paradise locations. The total number of Luby’s company-owned restaurants fell from 167 at the end of last fiscal year to 146 as of Aug. 29.
“To improve profitability, we must significantly improve traffic and sales,” Pappas said Monday, adding that each one-percentage-point improvement in cafeteria sales is worth about $1 million in store-level profit.
For the fourth quarter, Luby's Cafeteria’s same-store sales increased 3.9 percent, reflecting a 10.3 percent increase in average spend per guest that was partially offset by a 5.8 percent decline in guest traffic.
Fuddruckers Restaurants same-store sales slipped 3.9 percent in the fourth quarter, including an 8.3 percent decline in guest traffic and a 4.8 percent increase in average spend per guest. Luby’s six combination cafeteria-burger locations saw same-store sales decline 1.5 percent in the quarter. The remaining two Cheeseburger in Paradise units saw same-store sales fall 4.4 percent in the period.
Luby’s said it did see increased sales at its Culinary Contract division, which provides foodservice management at 28 health care, higher education, sport stadium and corporate-dining locations.
Pappas said the company also reduced corporate staff in the fourth quarter, but he did not identify what positions were eliminated.
In late October, Luby’s promoted Benjamin “Todd” Coutee to chief operating officer from his former post as senior vice president of operations for culinary contract services.
In addition to its owned restaurants, Luby’s franchises 105 Fuddruckers locations across the United States (including Puerto Rico), Canada, Mexico, Panama and Colombia. That number was down from 109 franchised locations at the end of third quarter on June 6.
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