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The Company operates a number of restaurants in U.S, which provides guests with a wide variety of delicious, home-style food, with the majority of locations serving food in a cafeteria-style manner.
Luby owns and franchises Fuddruckers, Lubby's Cafeteria, Koo Koo Roo Chicken (only 2 stores), and recently acquired Cheeseburger in Paradise. The earnings for Cheeseburger in Paradise have fallen short of expectations in the more recent quarter (Q2 of 2013). The restaurants are well-run and franchises are kept under a close watch for quality assurance. However, comp sales have decreased. This decrease is attributed to lower customer discretionary spending due to the economy as well as inflation. However, management says that they are leaning towards franchising more restaurants, which will deflect the costs of expansion. They are opening 5 more franchised Fuddruckers in the summer of 2013. Not only that, there is also plenty of opportunity for growth given that they are mostly concentrated in the south (Texas and CA) with the exception of Fuddruckers. If they are able to get their food costs under control, which they are in the process of doing, they will be much better positioned for greater earnings in the future along with more franchised stores. Another note is that many restaurants are currently being renovated, this may be able to further attract customers. A downside is that even if all such measures are implemented, Luby will still have trouble garnering increased income per store due to the prevailing economic conditions.
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