It looks like the end has arrived for Luby’s, the beloved Texas-based cafeteria chain.
Luby’s Inc. said Tuesday that it plans to liquidate its businesses and distribute the proceeds to its existing investors.
The Houston-based company had said in June that it was looking to sell its restaurants and assets.
Assets to be included in the proposed sale include Luby’s Cafeterias, Fuddruckers, real estate and the company’s culinary contract services business, it said. The company projects that it would receive between $92 million and $123 million in proceeds from its liquidation operations.
Luby’s said it values its property and equipment at $104 million. It had long-term debt of $57.3 million and obligations on operating leases of $22.7 million.
"We believe that moving forward with a plan of liquidation will maximize value for our stockholders, while also preserving the flexibility to pursue a sale of the company should a compelling offer that delivers superior value be made. The plan also continues to provide for the potential to place the restaurant operations with well-capitalized owners moving forward," Luby’s president and CEO Christopher Pappas, said in a written statement.
While the timing of the liquidation, which still requires approval from shareholders, remains uncertain, the bulk of it is likely to happen by year’s end, David Littwitz, a Houston restaurant broker and consultant, told the Houston Chronicle.
"Once you’ve announced," he said, "you want to strike while the iron’s hot. The prime locations will start to be moved quickly."
Buyers will likely want to tear the buildings down rather than undergo a costly renovation, he said, and so Luby’s is likely to see a lot of lowball offers.
Matt Epple, executive vice president at commercial real estate firm Weitzman, said the company’s Austin sites will likely attract plenty of attention from developers.
"They’ve always had great real estate," he said. "A lot of their locations are along major thoroughfares, and there is generally always a tenant for a property on a major thoroughfare."
As of the beginning of the year, there were four Luby’s locations in Austin, at East Anderson Lane, North MoPac Boulevard (Loop 1), Brodie Lane and Slaughter Lane. There are three Fuddruckers in the area: one on Slaughter Lane, as well as restaurants in Round Rock and Cedar Park.
Epple said he could see a redevelopment similar to what Endeavor did with a former Luby’s site at Interstate 35 and East Oltorf Street. That property now includes a Whataburger and a Chipotle.
"I-35 and Oltorf is a great example of what is like to happen at the other locations," he said. "A constant in real estate has always been that good locations are always in demand because of the convenience and visibility they afford tenants."
Founded in 1947 in San Antonio by Bob Luby, the chain of cafeterias for many Texans is synonymous with Sunday lunch and family meals and known for its LuAnn platter. For fans, dishes like golden fried fish and creamy macaroni and cheese are nostalgic staples. Even popular culture pays tribute to Luby’s sometimes; the character of LuAnne Platter on Mike Judge’s animated comedy "King of the Hill" was named after a portion size available at the cafeteria.
Luby’s currently sells some of its most iconic dishes in frozen food aisles at H-E-B stores: macaroni and cheese and fried fish.
Additional material from the Houston Chronicle and American-Statesman staff writer Eric Webb.