June 3, 2020
Luby, the iconic but struggling Texas cafeteria chain known for its edible foods, is planning to sell the restaurant business and properties to pay shareholders dissatisfied with the Houston company̵7;s financial performance.
The real estate firm on Wednesday said it would continue selling its operations and assets, including real estate, and distribute proceeds from the sale to stockholders after paying off its debt and other assets. obligation. The company plans to keep some of its restaurants open during the sale process.
“We believe that continuing the sale process followed by distributions contemplated under a proceeds distribution plan will maximize value for our stockholders, while also maintaining the flexibility to pursue a sale of The company should be a compelling offer that delivers more value to make, “Luby’s Chief Executive Chris Pappas said in a statement. “This path also provides for the potential to place well-capitalized restaurant operations forward.”
RELATED: Luby’s board to consider ‘strategic alternatives,’ including possible sale
Luby’s decision to sell the company came after a nine-month review by a special board committee that has come up with a “strategic alternative” to maximize shareholder value, including a possible sale. The company, which has struggled to draw restaurants in recent years amid changing consumer tastes and growing competition from fast-casual restaurants, has faced a fierce proxy battle last year from one of its investors pushed for leadership changes amidst the remaining sales.
The coronavirus pandemonium, which forced the closure of several restaurants including Luby, confirmed the company’s financial troubles. Luby began reopening its restaurants last month, and currently operates 31 Luby’s Cafeterias and eight Fuddruckers hamburger restaurants, which operate about 75 percent of their pre-pandemic weekly sales, the company said.
The company on Wednesday reported a loss of $ 3.8 million during its second quarter ended March 11, up from revenues of $ 6.6 million during the same period last year. The chain reported second-quarter revenue of $ 68.6 million, down 7.8 percent from $ 74.4 million revenue a year ago. Both store sales were up 1.7 percent in the second quarter.
Luby, which has 118 corporate-owned restaurants across the country, closed one of Luby’s Cafeteria restaurants and five Fuddruckers hamburger restaurants in the second quarter. The company also manages 59 Fuddruckers restaurants nationwide, owned by franchises and not part of asset sales.
Photo: Melissa Phillip, Houston Chronicle / Staff Photographer