Houston-based Luby’s Inc., which also owns Fuddruckers, which boasts the "world's greatest hamburgers," announced plans to liquidate and dissolve the company’s "businesses, operations, and real estate" and institute an "orderly wind-down of any remaining operations," the company announced in a press release on Tuesday.
The liquidation plan, which still has to be approved by stockholders, would convert all of its remaining assets into cash and distribute the net proceeds to the stockholders.
In the statement released Tuesday, Luby's President and CEO Christopher J. Pappas said the company is "preserving the flexibility to pursue a sale of the Company should a compelling offer that delivers superior value be made."
Which means if another company offers to buy them out, they could sell instead of liquidating.
The Wall Street Journal reported the company’s board agreed to the liquidation plan after sales at Luby’s restaurants dropped because of government-mandated closures related to the pandemic. According to the company's most recent quarterly financial report, there were 76 Luby's Cafeteria locations and 31 Fuddrucker's Restaurants as of June 3. While Luby's locations are all in Texas, Fuddruckers' restaurants are not only in Texas but across the United States, as well as Canada, Mexico and Panama.
In January 2019, Luby’s announced the company planned to offload most of the company-owned Fuddruckers locations to franchisees in an attempt to improve the struggling core cafeteria business and pay down debt, the Associated Press reported.
Company officials on Tuesday estimated liquidation distributions to stockholders will be somewhere between $92-$123 million — or between $3-$4 per share.
Luby’s, founded in San Antonio in 1947, has struggled to attract diners in recent years amid changing tastes and the growing popularity of fast-casual restaurants that appeal to younger patrons. But the company is certainly not alone. In the past year, TGI Friday's, Denny's, IHOP, Ruby Tuesday and Pizza Hut have had to permanently shutter many restaurants due to slumping sales.