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Luby’s slips deeper into the red

The diversified restaurant company posted a net loss for its Q1 despite rises in traffic and sales.
Photograph: Shutterstock

Luby’s Inc. posted a net loss of $8.3 million for the first quarter ended Dec. 18 despite a rise in same-store sales and traffic for its namesake cafeterias and Fuddruckers fast-casual restaurants.

Transaction counts at Luby’s cafeterias increased 2%, for a sales comp gain of 1.7%, while traffic at Fuddruckers grew 2.7%, for a comp of 0.1%, according to company CEO Chris Pappas. 

Sales at a lone Luby’s-Fuddruckers combo unit jumped 6.6%, while same-store sales for the company’s remaining Cheeseburger in Paradise full-service restaurant slipped 1%.

The company posed a net loss for the year-ago first quarter of $7.5 million.

The benefits of sales and traffic gains at the company’s two largest business lines were largely offset by a spike in labor and food costs, Pappas told financial analysts. He noted that the upswing in food expenses was particularly sharp, with an increase of 1.2%.

He also mentioned a $700,000 increase in marketing expenditures for the quarter.  

Pappas did not provide an update during Luby’s quarterly call with analysts about the company’s efforts to find a buyer or a strategic alternative that would bolster a return on stockholders’ investment.  

Total sales for each of the company’s three streetside brands (Luby’s also operates a contract management division) fell during Q1. The company noted that it started the period with 32 fewer restaurants in operation from a year ago. 

Most of that reduction has come within Fuddruckers, which ended Q1 with 34 units, compared with 54 in Q1 of fiscal 2019. 

Revenues slid 7.5%, to $95.1 million.

Pappas ticked through the various steps Luby’s has taken to revive its restaurant businesses. Among those efforts, he said, have been recruitment of new VPs of information technology and marketing and a change of COO. 

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