Luby’s puts itself and all its pieces up for sale

The cafeteria operator said it would entertain an offer for the whole company, but left open the possibility of piecemeal sales.
Photo courtesy of Luby's Kitchen

Luby’s said it intends to sell its assets and distribute the proceeds to shareholders after paying off debt.

The company left open the possibility of being acquired in its entirety but specified that it would sell its holdings piecemeal if need be. That could include separate sales of its namesake cafeteria chain, the Fuddruckers fast-casual burger chain and a contract management company called Culinary Contract Services. It also intends to sell its real estate.

Luby’s said its board will draft a timeframe for the sales, with an orderly winddown of operations to follow. The plan is subject to approval by shareholders first.

A special committee appointed by Luby’s board recommended a sale as a way of unlocking more of the company’s value for shareholders, the company said.

"We believe that proceeding with this sale process followed by distributions contemplated under a proceeds distribution plan will maximize value for our stockholders, while also preserving the flexibility to pursue a sale of the Company should a compelling offer that delivers superior value be made,” Luby’s CEO Chris Pappas said in a statement. “This path also provides for the potential to place the restaurant operations with well-capitalized owners moving forward."

The company has been struggling for a long period that extends to before the coronavirus pandemic. Softening sales had led to the steady closings of stores, including all but one unit of a third restaurant chain, Cheeseburger in Paradise. Thirty restaurants across the brands were closed as of last July. It started exploring "strategic alternatives" in September.

The pandemic worsened the situation, and management noted in announcing the sale that the board's special committee took the challenges of the COVID-19 crisis into effect. In late March, the company decided to close 35 of the 72 restaurants that were open at the start of the pandemic. 

The company's main brand remained Luby's, a cafeteria concept.

At that time, its holdings included 29 Luby’s units, five Fuddruckers and the lone Cheeseburger in Paradise casual restaurant.

Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.


Exclusive Content


Restaurants have a hot opportunity to improve their reputation as employers

Reality Check: New mandates for protecting workers from dangerous on-the-job heat are about to be dropped on restaurants and other employers. The industry could greatly help its labor plight by acting first.


Some McDonald's customers are doubling up on the discounts

The Bottom Line: In some markets, customers can get the fast-food chain's $5 value meal for $4. The situation illustrates a key rule in the restaurant business: Customers are savvy and will find loopholes.


Ignore the Red Lobster problem. Sale-leasebacks are not all that bad

The decade-old sale-leaseback at the seafood chain has raised questions about the practice. But experts say it remains a legitimate financing option for operators when done correctly.


More from our partners