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Luby's posts 1Q loss, but sales rise

Costs from Fuddruckers acquisition weigh down bottom line

Luby's Inc. said sales rose at its cafeteria chain for the first quarter, but costs related to the acquisition of Fuddruckers led it to a net loss.

For the first quarter ended Nov. 17, Luby’s reported a net loss of $2.3 million, or 8 cents a share, compared with a loss of $3.7 million, or 13 cents a share, in the same quarter a year earlier. Revenue for the quarter rose to $75.3 million from $52.3 million a year ago.

The Houston-based company said same-store sales at its 96 Luby's Cafeterias rose 5.5 percent, compared with a decline of 13.3 percent in the same period last year. Luby’s noted “robust growth in customer traffic drove the uptick in same-store sales,” but it was offset by a 6-percent decline in average customer spending that resulted from lower menu prices and promotional items

Restaurant sales were $70.3 million, an increase of $21.3 million over the same quarter last year. Corporate Fuddruckers locations added about $19.2 million to restaurant sales, Luby’s said.

The company’s Culinary Contract Services division saw revenue rise 1.2 percent, to $3.3 million, in the first quarter. The company had contract services at 18 facilities as of Nov. 17, compared with 15 at the same time last year.

During the first quarter, Luby's said it focused on driving traffic at its flagship cafeteria brand and implementing improved operations procedures at Fuddruckers.

Those steps “resulted in lower restaurant operating margins in the short term and contributed to the loss from continuing operations in the first quarter,” Luby's said.

Chris Pappas, the company's president and chief executive, said same-store sales increases at Luby’s resulted from increased limited-time offers and Kids Meals priced at $2.99.

“During the first fiscal quarter,” Pappas said, “we added 17 locations serving our $4.99 All You Can Eat Breakfast on the weekends, ending the quarter with 65 locations, up from 48 at the end of our 2010 fiscal year.”

The company is working on integrating Fuddruckers into the system. Luby's acquired Fuddruckers in June for $61 million.

“One of our first steps was increasing the restaurant management staff,” Pappas said, “allowing them to focus their efforts on the enhanced operating systems we are in the process of rolling out. ... We also invested in repairs and maintenance, and upgrading equipment.”

Besides the 96 cafeterias, Luby’s has 56 corporate and 130 franchised Fuddruckers and three Koo Koo Roo locations.

Contact Ron Ruggless at [email protected].


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