Luby's posts 2Q loss on slow sales

HOUSTON Luby’s Inc., parent of the 96-unit cafeteria chain, swung to a loss in the second quarter from a year-ago profit as it struggled to drive traffic despite lower menu prices.

For the quarter ended Feb. 10, Luby's posted a net loss of $450,000 loss, or 2 cents a share, compared with a year-ago profit of $146,000, or 1 cent a share. Revenue declined 12.6 percent to $53.8 million.

Second-quarter same-stores dropped 12.5 percent, compared with a year ago. Luby's cited prices cuts and decreased traffic for the sales slide, but noted that it was an improvement from the first quarter, when same-store sales fell 13.3 percent.

Scott Gray, Luby’s chief financial officer, said average per-person spending, defined as sales divided by entrees sold, was down about 5.8 percent in the second quarter because of lower pricing and some change in menu mix.

Chris Pappas, Luby’s president and chief executive, said in an conference call Wednesday that sales trends are improving, though consumer spending remains tight.

“Although economic headwinds continue to hamper our sales, we continue to explore opportunities to attract more customers to our restaurants and more often,” Pappas said.

More recently, Luby’s is developing options to increase check averages, such as the offering at a Dallas store of six fried shrimp added to any meal for $1.99.

Lower food and labor costs helped Luby’s keep operating costs in line with the lower sales, the company said. “These costs reductions are clear indications that we are managing our costs and expenses,” Pappas said.

The company continues to build on its Culinary Contract Services division, which tallied about $3 million in sales for the second quarter, about the same as last year. That division just opened its first coffeehouse concept, What’s Brewing, in downtown Houston office building and is considering several other sites.

Luby’s said it expected any improvement in restaurant sales would lag the broader economic recovery and that it projected a net loss for 2010. The company posted a loss of 94 cents a share in fiscal 2009.

Contact Ron Ruggless at [email protected] [3].