Luby’s plans to amp up Fuddruckers refranchisingLuby’s plans to amp up Fuddruckers refranchising

Luby’s Inc. will be accelerating plans to refranchise company-owned Fuddruckers units in all but its home Houston market, company officials said Monday in releasing first-quarter earnings.

The board and management of the Houston-based parent to the Luby’s Cafeteria and the Fuddruckers burger brands survived a proxy fight in an annual shareholder vote on Friday, and Chris Pappas, Luby’s CEO and president, said the election meant the company’s turnaround would continue.

“The reality is that our restaurants have adapted to a great number of changes over the decade,” Pappas said in an investor call Monday, “and this leadership team has a successful track record of steering the company through previous difficult periods in the restaurant industry.”

Pappas said the company was working on its turnaround after reporting a “tough” first quarter.

For the first quarter ended Dec. 19, Luby’s net loss widened to $7.5 million, or 25 cents a share, from a loss of $5.5 million, or 19 cents a share, in the same period last year. Sales were down 9.3 percent to $102.9 million from $113.5 million in the same period last year.

Same-store sales were down 5.5 percent for its brands and down 3 percent at the Luby’s cafeteria concept, he said.

“We continued to navigate through a challenging, competitive environment during the first quarter and experienced pressure on the top line,” Pappas said. A bright spot, he added, was that Luby’s culinary contract services division saw a sales increase of $2.6 million, to $9.5 million in the quarter.

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Todd Coulee, Luby’s chief operating officer, said the company would be looking to refranchise some of its 57 owned Fuddruckers units. The company closed three of those in the quarter. 

“Fuddruckers remains a strong brand,” Coulee added. “We plan to refranchise many of our company-owned Fuddruckers as we transition to a primarily franchised model while retaining company-owned store in our core market of Houston.”

Pappas added that the company was taking steps to improve its financial flexibility. Closures and asset sales in the past year has generated $26.8 million, he said, and that’s about 65 percent of the company’s $45 million target.

As of Dec. 19, Luby’s operated 140 restaurants, including 82 Cafeterias, 57 Fuddruckers one Cheeseburger in Paradise restaurants. The company also franchised 103 Fuddruckers domestically and abroad. Its contract services division managed 30 sites in healthcare, corporate dining and sports stadiums.

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