Dive Brief:

• Luby's, Inc. has entered into an agreement to sell its Luby's Cafeteria restaurant business to a newly formed affiliate of Calvin Gin in a transaction expected to be worth $28.7 million, according to a press release. The transaction is expected to close by the end of Luby's current fiscal year. 
• The purchase by the Calvin Gin affiliate, which will be renamed Luby’s Restaurants Corporation at the close of the deal, will include 32 existing Luby's restaurants, all of which are in Texas, and the ownership of the Luby's Cafeteria brand. Almost all employees will be offered an opportunity to stay at the those store locations.
• This is the next step in Luby's liquidation plan, which was approved by shareholders last year. The company agreed to sell its Fuddruckers franchise business last week for about $18.5 million to an affiliate of Nicholas Perkins. 

Dive Insight:

During the pandemic Luby's Cafeterias temporarily closed 29 units and furloughed half of Luby's corporate staff. Cost-cutting measures, which included trimming the menu down to only top-selling items, and a switch to takeout seemed to help the company during the summer of 2020, but it wasn't enough to save the company from liquidation. 

Luby's Cafeterias posted $137 million in sales during the company's fiscal year ending Aug. 26, 2020 — a 30% decline compared to its 2019 fiscal year ending Aug. 28, 2019, according to the company’s earnings report. 

The sale of Fuddruckers and Luby's Cafeteria are expected to generate a total of $47.2 million for Luby's, which is about half of its initial expected liquidation value of between $92 million and $123 million. The company still has a ways to go to complete its liquidation plan. The transaction doesn't include any real estate owned by Luby's, company-owned Fuddruckers or the company's Culinary Contract Service business.

Luby’s next plan is to sell its 25 real estate properties related to its cafeteria restaurant business to third parties, with whom Gin group will then receive leases to operate at. The Gin group is also assuming leases of seven properties that Luby's currently leases. The company has yet to announce a buyer for its Culinary Contract Service business.