Luby’s Inc., which continues to close units while its sales and traffic drop, has appointed a performance improvement firm known for working with troubled brands, the restaurant company announced Monday.
“The business of operating mature brands in a highly competitive environment is a hard one,” Luby’s President and CEO Chris Pappas said during a call with analysts. “We can return to profitability and ultimately grow.”
Texas-based Luby’s has closed 27 stores in the past year, Pappas said.
Luby’s currently operates 81 Luby’s, 54 Fuddruckers and one Cheeseburger in Paradise location. The company is also the franchisor for 102 Fuddruckers locations across the U.S. and several other countries. Luby’s also runs a contract services division, providing foodservice management at 33 healthcare facilities, corporate dining halls and stadiums.
The company is bringing on restructuring firm Alvarez & Marsal to examine how to improve performance.
Luby’s same-store sales declined 3.3% for the quarter ended March 13. The biggest losses came from Fuddruckers, with a 9.3% decrease in traffic and 5.3% drop in same-store sales. The company closed 14 Fuddruckers locations during the year and is working to convert company-owned locations to franchised stores.
Early this month, the company converted five company-owned Fuddruckers in San Antonio to franchise-run units.
The company’s continuing bright spot is its Culinary Contract Services division, where revenue grew $1.7 million to $7.5 million during the quarter.
Last year, Luby’s issued a “going concern warning,” noting that mounting debt might force the company out of business. The company now reports a net debt of $29.6 million, down from $35.8 million at the end of fiscal 2018.
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