Luby’s sells its cafeteria business for $ 28.7 million
- Luby’s, Inc. has reached an agreement to sell its restaurant business Luby’s Cafeteria to a new Calvin Gin subsidiary in a transaction valued at $ 28.7 million, according to a press release. The transaction is expected to be finalized by the end of Luby’s current fiscal year.
- The purchase by the Calvin Gin subsidiary, which will be renamed Luby’s Restaurants Corporation upon closing of the transaction, will include 32 existing Luby’s restaurants, all located in Texas, and branded as Luby’s Cafeteria. Almost all employees will be offered the option of staying in these stores.
- This is the next stop for Luby’s liquidation plan, which was approved by shareholders last year. The company agreed to sell his Fuddruckers franchise business last week for about $ 18.5 million at an affiliate of Nicholas Perkins.
During the pandemic, Luby’s cafeterias temporarily closed 29 units and put half of Luby’s staff on leave. Cost reduction measures, which included reducing the menu to only top-selling items, and a move to take-out appeared to help the business in the summer of 2020, but that wasn’t enough to save the business from the liquidation.
Luby’s Cafeterias achieved sales of $ 137 million in the company’s fiscal year ending August 26, 2020 – a decrease of 30% compared to its 2019 financial year ended August 28, 2019, according to the company’s results report.
The sale of Fuddruckers and Luby’s Cafeteria is expected to generate a total of $ 47.2 million for Luby’s, which is roughly half of its expected initial liquidation value between $ 92 million and $ 123 million. The company still has some way to go to complete its liquidation plan. The transaction does not include any real estate owned by Luby’s, Company-owned Fuddruckers, or the Company’s culinary contract service business.
Luby’s next plan is to sell its 25 real estate properties linked to its cafeteria-restaurant business to third parties, with whom the Gin group will then receive leases to operate. The Gin Group also takes over the leases of seven properties that Luby’s currently leases. The company has yet to announce a buyer for its culinary contracting services business.