HOUSTON, TEXAS—Luby’s, Inc. has announced it will pursue the sale of its operating divisions and assets, including all of its real estate assets. Namely, the restaurant company plans to explore several potential transactions, including selling its operating divisions: Luby’s Cafeteria, Fuddruckers, and Culinary Contract Services, as well as its real estate. It may also sell the company in its entirety.
The company plans to use the net proceeds to satisfy its debt and other obligations with remaining funds to be distributed to Luby’s stockholders. During the sale process, some of the company’s restaurants will remain open.
This decision followed a comprehensive review led by a special committee, which reviewed a range of strategic alternatives available to the company.
No definitive time frame has been set for the sale, which would require stockholder approval. “This path also provides for the potential to place the restaurant operations with well-capitalized owners moving forward, CEO Christopher J. Pappas says in prepared remarks.
The company has retained Duff & Phelps Securities, LLC to assist it with the sale of Luby’s Cafeteria and Culinary Contract Services and has retained Brookwood Associates LLC to assist it with the sale of Fuddruckers.
The shutdown of the past two months has, in general, severely affected the casual dining sector and pricing has dropped dramatically, according to The Boulder Group.
For the first quarter, cap rates in the dining sector have increased 27 basis points year over year and these properties began pricing at a 44-basis point discount to the overall net lease retail market.