Luby’s Inc.’s board has created a special committee of directors to look at strategic alternatives, the company said late Tuesday.
The Houston-based parent to the Luby’s Cafeteria chain and the fast-casual Fuddruckers burger brand said the special committee of six directors would identify, examine and consider all strategic options.
The board “has not made a decision to enter into any transaction at this time, and there are no assurances that the consideration of strategic alternatives will result in any transaction,” Luby’s said in a statement. “Luby's does not intend to comment on or disclose developments regarding the process unless it deems further disclosure appropriate or required.”
"The steps we are taking represent our commitment to maximizing value to our shareholders over the long term," said Gerald Bodzy, Luby’s board chair.
The new committee includes directors Bodzy, Twila Day, Joe McKinney, Gasper Mir, John Morlock and Randolph Read.
The formation of the special committee followed a January proxy fight in which Luby’s shareholders elected the company’s slate of nine board nominees and rejected four director candidates nominated by Bandera Partners LLC, a New York hedge fund that owned about 9.8 percent of Luby’s shares.
Chris Pappas, Luby’s president and CEO, said: “The formation of this special committee has the support of the entire board of directors and management, and we look forward to the results of their work."
Pappas said Luby’s had efforts underway to grow traffic and sales and reduce expenses. “We have already reduced our general and administrative expense by over 10% as we right-size the overhead needed to support our business operations, with additional plans to further reduce our cost structure in 2020," Pappas said in a statement.
The company continued to sell off company-owned Fuddruckers restaurants to franchise groups.
“This month, two Fuddruckers locations in Austin were transitioned to one of our franchise operators that has also signed a new development agreement to open additional restaurants in the future,” the company said in statement. Since April, the company has sold seven Fuddruckers restaurants to that franchise operator.
"In regard to our asset divestitures program that began in fiscal 2018, we have sold property generating $35.9 million in proceeds,” Pappas said. “In addition, over the last two fiscal years, we have closed 39 underperforming restaurants (10 Luby's cafeterias, 22 Fuddruckers and seven Cheeseburger in Paradise restaurants)."
Luby’s will release its fourth quarter and fiscal 2019 financial results on Nov. 11.
As of Sept. 10, Luby’s operated 121 restaurants, including 78 Luby's Cafeterias, 42 Fuddruckers, and one Cheeseburger in Paradise restaurant. The company franchised 103 Fuddruckers units and operated foodservice management at 32 sites consisting of healthcare, corporate dining locations and sports stadiums.
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