Luby’s has announced that it will sell most of its operations in two separate transactions. The company has been struggling for years and, in November 2020, it agreed to liquidate its assets and dissolve the company.
Prior to the decision to liquidate, the company had 61 Luby’s branded restaurants (mostly in Texas), 24 Fuddruckers restaurants that were owned and 71 that were franchised. However, a number of the Luby’s had closed due to the pandemic.
The company also operates culinary contract services that offered on-site food services for healthcare facilities, colleges and sports stadiums. It also made sales through retail grocery outlets.
32 of the Luby’s restaurants and the brand name will be sold to a newly-formed affiliate of Calvin Gin. Approximately 1,000 workers at those restaurants will be offered positions by the buyer. Mr. Gin is part of the family that established the Flying Food Group, the third largest airline catering company in North America. The business also provides food preparation services for Starbucks.
The buyer is not paying paying any cash for the business but assuming operating liabilities and giving Luby’s a loan note. Luby’s anticipates the total value to be $28.7 million. The real estate for 25 of the 32 locations is owned by Luby’s. This is not part of the transaction and will be auctioned off by the company separately.
The Fuddruckers franchise is being sold to Nicholas Perkins, a Washington, DC-based entrepreneur for an estimated $18.5 million. Again, the payment is in the form of assumed operating liabilities and a loan note. Mr. Perkins previously acquired most of the company-owned Fuddruckers restaurants.
Once these transactions are completed, Luby’s will be left with a handful of company-owned Fuddruckers, the culinary contract service business and the retail sales.
However the main value will be derived from the sale of real estate which comprise most of the liquidation net asset value of $117 million. The company currently has 63 properties in total. The share price is $3.85, giving it a market capitalization equal to its liquidation value.