The financial picture for struggling Luby’s Inc. remains grim, and the restaurant company says it is stepping up marketing efforts to drive traffic to its brands.
“We know we have a lot of work to do,” Chris Pappas, Luby’s president and CEO, said during a call with analysts Monday to announce the company’s unaudited earnings for the quarter ended Dec. 19.
Luby’s same-store sales for the quarter dropped 5.5% overall, with a massive 12.9% decline in overall restaurant revenue.
The one bright spot is the company’s culinary contract services division, which saw revenue growth of 37% year over year.
The Texas-based company, which operates 82 Luby’s restaurants, 57 Fuddruckers units and one Cheeseburger in Paradise restaurant, lost $7.5 million in the first quarter. The company is also the franchisor for 103 global Fuddruckers locations.
Its Fuddruckers brand posted a comps decline of 11.2% with a 17.1% drop-off in guest traffic for Q1; Luby’s same-store sales fell 3% for the period with a 10.5% traffic shortfall.
Last month, the company refinanced $60 million in debt and is working to sell off property to add to its cash on hand. In recent months, it has shuttered underperforming stores and laid off corporate staff. In September, management issued a “going concern warning,” expressing fears it might not be able to stay in business due to mounting debt.
Luby’s will work on raising awareness of the brands through marketing efforts on billboards and through TV and digital channels, executives said.
“We’re going to work on connecting the brand back to Texans,” Todd Coutee, Luby’s chief operating officer, said during the conference call. “We’re going to talk about our food being Texas comfort food.”
Last week, Luby’s shareholders elected all nine board members put forth by the company, rather than supporting the slate of candidates pushed by activist investor Bandera Partners.
The New York City-based investment firm, which owns 9.8% of Luby’s stock, had argued that the poor-performing company needs widespread reform.