Promotional activity helped Luby’s Cafeterias increase traffic in the fourth quarter ended Aug. 26, parent company Luby’s Inc. said.
The 91-unit, Houston-based cafeteria brand reported a 3.6-percent increase in traffic during the quarter, but same-store sales were flat compared with the same period last year.
“Guest traffic was offset by similar decreases in average spend per guest, as promotional activity and discounting were greater than the same period in the prior fiscal year,” Luby’s said in a fourth-quarter earnings release.
Chris Pappas, Luby’s president and CEO, said in a Wednesday conference call with analysts that the company’s restaurants, which also include the Fuddruckers and Cheeseburger in Paradise brands, faced a “tough market.”
“Clearly, there are number of economic events and indicators that are putting pressure on consumer confidence in this current environment,” Pappas said during the call. “The market is very competitive in the choices to eat out.”
Luby’s said Fuddruckers’ same-store sales declined 0.8 percent in the fourth quarter, including a 2.5-percent decline in traffic that was offset by a 1.7-percent increase in average spend per guest.
The company’s eight Cheeseburger in Paradise units saw same-store sales decrease 3.7 percent in the quarter, and the five combo cafeteria-Fuddruckers locations booked a 0.3-percent decline in same-store sales.
For the fourth quarter, Luby’s reported a loss of $7.8 million, or 27 cents per share, compared with income of $100,000 in the same quarter last year. This year’s quarter included special charges. Restaurant sales in the fourth quarter declined to $91.8 million, from $115.4 million the previous year.
Part of the decline in sales came from the closure of one Luby’s Cafeteria and two Fuddruckers units in the fourth quarter, the company said.
For the fiscal year, the company said it opened three Fuddruckers locations, including two converted from the Cheeseburger in Paradise brand.
The company spent $18.3 million on capital improvements in fiscal 2016, which Pappas said was part of working on the appearance of the company’s restaurant facilities.
“We recognize the importance of renovating our legacy restaurants to remain relevant and appealing to keep our loyal guests coming back and to convert occasional guests into loyal fans,” Pappas said during the call.
Luby's Inc. operates 174 restaurants nationwide, including 91 cafeterias, 74 Fuddruckers, eight Cheeseburger in Paradise units and one Bob Luby's Seafood Grill. The company also franchises 111 Fuddruckers restaurants domestically and abroad, and licenses the name at 35 other locations. In addition, Luby’s Culinary Contract Services manages foodservice at 23 healthcare, higher education and corporate dining locations.