Luby's Inc. said it swung to a profit in the third quarter from a year-ago loss because of improving sales, more catering business and reduced costs.
The Houston-based parent company to 96 cafeteria restaurants reported net income of $730,000, or 3 cents per share, for the May 5-ended third quarter. In last year's third quarter, Luby's posted a net loss of $1.1 million, or 4 cents per share.
Revenue for the latest quarter declined 5.3 percent to $57.2 million, which reflected lower restaurant sales but increased sales at its Culinary Contract Services division.
Same-store sales at Luby's cafeterias fell 4.8 percent in the third quarter, compared with a 6.3-percent decline in same-store sales for the year-ago quarter. The company noted that same-stores also had improved sequentially from the second quarter's same-store sales drop of 12.5 percent.
Luby's credited improving consumer confidence and positive response to limited-time offers for the chain’s increased guest traffic for the third quarter. It noted, however, that the improvement in traffic was offset by decreased spending as a result of lower menu prices and deals.
"We are cautiously optimistic that our customers are returning more often to our restaurants as customer traffic improves," said Chris Pappas, president and chief executive of Houston-based Luby's. "Our local market promotions are generating encouraging results. Our customers know we are listening to their needs and they are responding positively."
"Additionally, these promotions have allowed us to reduce our advertising and marketing expenses, relying instead on local initiatives," he added.
Revenue for Luby's Culinary Contract Services catering division rose 9.9 percent to $3.3 million for the third quarter, which reflected four additional accounts from a year ago.
Despite the improvement seen in the third quarter, Luby's remained cautious in its outlook for the full year and said it expected to book a net loss from continuing operations for 2010.
"For Luby’s to see any material improvements in its same-store sales, it will take improved employment levels and a substantial uptick in consumer confidence in its areas of operation," the company said.
Contact Molly Gise at [email protected].