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REAL FOOD REALfor people 2012 Annual Repor t QUITE SIMPLY THE WORLD’S GREATEST BURGER Fuddruckers holds true to its original mission: inspiring guests to build their own World’s Greatest Burger Experience by delivering quality and in-your-face freshness. Fuddruckers is known for its lively atmosphere, 100% fresh, never frozen, all American grilled-to-order beef, scratch- baked buns and market-fresh produce. Fuddruckers generated $91.5 million in revenue from company- operated restaurants last year. EVERY DAY OUR BRANDS— OUR BRAND FAMILY LUBY’S CAFETERIAS, LUBY’S CULINARY SERVICES AND FUDDRUCKERS— DELIVER AUTHENTIC DINING EXPERIENCES TO OUR CUSTOMERS. DELIVERING DELICIOUSNESS TO FOLKS FAR FROM HOME Luby’s Culinary Services was launched to redefi ne the contract food service industry. To be the best, not necessarily the biggest, is the daily mantra across this brand. By serving 18 corporate, hospital and higher education locations, Luby’s Culinary Services generated $17.7 million in revenue last year. COMFORT FOOD TO SATISFY APPETITES AND BUDGETS Luby’s Cafeterias was founded in 1947 in San Antonio, Texas, with a mission to be the most innovative and successful cafeteria company in America. By serving customers convenient, great-tasting, home-style meals at an excellent value in a friendly environment, Luby’s generated $228.6 million in revenue last year. LETTER TO OUR SHAREHOLDERS Ourbrand is a promise HIGHER QUALITY AND UNIQUE OFFERINGS AT A BETTER VALUE. WE DELIVERED ON THE PROMISE OF OUR BRAND THROUGHOUT FISCAL 2012, AND THE RESULT WAS A SOLID YEAR FOR OUR COMPANY. Two years past the acquisition and integration of Fuddruckers, we are in the midst of a new growth phase. We managed gains in sales and profi tability at our Luby’s Cafeteria and Fuddruckers brands, and we grew our development pipeline for new Luby’s and Fuddruckers units in 2012. We currently operate 93 cafeteria-style restaurants, 62 Fuddruckers restaurants+, 18 Luby’s Culinary Services locations++ and three non-core restaurants. We are also the franchisor for 121 franchised Fuddruckers restaurants. OUR NEWEST ADDITIONS— A SIDE-BY-SIDE LUBY’S AND FUDDRUCKERS—OPENED IN AUGUST 2012. + Includes two restaurants opened subsequent to fi ling our fi scal 2012 Form 10-K ++Includes one location opened subsequent to fi ling our fi scal 2012 Form 10-K In fi scal year 2012 we generated revenue of $350.1 million, Cash fl ows from operations and the sales of closed restaurants up from $348.7 million in the prior year. Restaurant sales enabled us to reduce our debt balance by $8.5 million to decreased from $325.4 million to $324.5 million. Excluding the $13.0 million—an approximate 75% reduction since we acquired impact of an extra week in fi scal year 2011, restaurant sales grew the Fuddruckers brand in 2010. We have a balance sheet with $5.3 million. During fi scal year 2012, Luby’s Cafeteria contributed limited leverage at less than one times EBITDA, as defi ned in $228.6 million and Fuddruckers and Koo Koo Roo Chicken Bistros Note 11 of our Form 10-K, and ample credit available for funding contributed $95.9 million in restaurant sales. Cafeteria same-store capital plans and potential acquisitions. sales for the year rose 2.1% and Fuddruckers same-store sales increased 4.6%. Store level profi t margin in our company-owned In August 2012, our newest development came online—a Luby’s restaurant segment expanded to 15.4% in fi scal 2012, an increase Cafeteria and a Fuddruckers opening simultaneously, side-by-side. of 270 basis points from fi scal year 2011, due to higher sales and While they share a common wall, each has its own entrance, kitchen, improvements in each of our main cost categories of food, payroll décor, marketing plan and customer base, so we consider the single and other operating expenses. We continue to progress towards a development two separate restaurants. We are optimistic about this target store level profi t range of 17% to 19%. multi-unit development and are evaluating the results. We generated operating cash fl ow of $29.3 million in fi scal year 2012—an increase from $16.5 million in fi scal year 2011 and $9.3 million in fi scal year 2010. We continue to eff ectively redeploy this cash fl ow to enhance long-term shareholder value by way of: new restaurant construction; remodeling and improving our existing group of restaurants; purchasing land and property for future development; reinvesting in our infrastructure and reducing our debt balance. THE PROMISE OF consistency CLASSIC COMFORT FOOD MADE FROM SCRATCH EVERY DAY AT LUBY’S, WE PROVIDE OUR CUSTOMERS WITH CLASSIC HOME-STYLE MADE-FROM-SCRATCH QUALITY FOOD—WE CALL IT “REAL FOOD FOR REAL PEOPLE.” OFFERED AT VALUE PRICING VIA A CAFETERIA DELIVERY MODEL, GUESTS RECEIVE THEIR MEALS FACE-TO-FACE, JUST AS IF FAMILY OR FRIENDS WERE SERVING. TEXAS, SOUTHERN AND “DOWN HOME” COMFORT FOOD ARE REFLECTED IN THE 18-22 ENTRÉES AND 16-18 SIDE ITEMS AND SALADS AVAILABLE DAILY, INCLUDING SIGNATURE ITEMS LIKE OUR FAMOUS “SQUARE FISH” (FRIED HADDOCK), CHICKEN FRIED STEAK, MACARONI AND CHEESE AND BEEF LIVER AND ONIONS. WE ALSO OFFER HEALTHY ENTRÉES, FRESH VEGETABLES AND SALADS. In fi scal year 2012, we generated 2.1% same-store sales growth Moving forward, our strategic focus items include: across our 94 Luby’s restaurant locations. Implementing catering Repositioning Luby’s menu, including: classic core menu, initiatives, raising our per-person average by managing the menu regional localization of individual unit menus, premium items, mix, reducing the quantity of limited-time off ers and the excellent daily manager specials to drive value messaging and the results of a single cafeteria rebuilt prior to fi scal year 2012 all Livin’ Smart health and wellness campaign; contributed to our growth. Our average unit cafeteria sales volume Traffi c and sales-building strategies including catering and was $2.4 million, with average EBITDAR of 19.6%. Our fi ve most limited-time off ers as needed; recently developed prototype cafeterias generate sales volumes of $3 million to over $4 million, with EBITDAR of more than 20%. Refreshing our units’ décor and facilities to be more relevant to today’s consumer base; and We are confi dent that, in the right locations with updated Developing new units. facilities, the cafeteria concept will be well received and will provide a good return on invested capital. A sixth prototype Luby’s Cafeteria, opened August, 2012 in Pearland, Texas, exemplifi es the appeal of our brand. We plan to break ground on one to two new Luby’s Cafeterias in the upcoming fi scal year. THE PROMISE OF diversity REEDEFIININGG THE CONTRACT FOFOODD SERERVICE INDN USSTRRY LUBY’S CULINARY SERVICES INTEGRATES LUBY’S TRADITION OF TASTY AND HEALTHY MENUS WITH CUSTOMIZED SOLUTIONS CRAFTED TO MEET THE SPECIFIC NEEDS OF OUR PARTNERS ACROSS HOSPITALS, CORPORATE AND HIGHER EDUCATION FOOD SERVICE OPERATIONS. THROUGH LUBY’S CULINARY SERVICES, WE PROVIDE A HIGHER QUALITY PRODUCT, FRESH AND APPETIZING, TO INSTITUTIONAL CLIENTS. Through Luby’s Culinary Services, we compete in the institutional and contract food service sector, providing food service operations under contract for healthcare institutions, universities and offi ce buildings. Our services typically range from in-hospital-room delivery to retail dining, full-service catering, coff ee-shop style service and even vending. We tailor each to the specifi c needs of our customers. We currently operate 18 culinary contract service locations. In fi scal 2012, we generated $17.7 million in revenue from this segment. THE PROMISE OF transparency VISIS BLBLY BBEETTTTEERR BEEEEFF, BUNUNS ANAND PPRROODDUCE.E TTHHE WWOORLRLDD’S GGRREEAATESTS BUURRGGEERR. FUDDRUCKERS IS FUN, SPORTY AND ALL-AMERICAN. WE ARE NATIONALLY KNOWN FOR OUR PREMIUM QUALITY BURGERS WITH 100% FRESH, NEVER FROZEN, PREMIUM, ALL-AMERICAN BEEF. WE MAKE OUR BUNS FROM SCRATCH IN OUR IN-HOUSE BAKERIES AND COOK TO ORDER. OUR MARKET-FRESH TOPPINGS BAR DISTINGUISHES OUR EXPERIENCE FROM THAT OF OUR COMPETITORS, ALLOWING GUESTS TO CUSTOMIZE THEIR FLAVOR PROFILES WITH A VARIETY OF PRODUCE AND CONDIMENTS. WE COOK IT. YOU TOP IT. OFFERING BURGERS, SALADS, SHAKES AND CHICKEN SANDWICHES, THIS FAST-CASUAL CONCEPT APPEALS TO A WIDE CROSS SECTION OF CUSTOMERS, INCLUDING FAMILIES. Our repositioning of Fuddruckers as a leader in the fast-casual, With an emphasis toward a smaller footprint and premium, relevant better-burger segment gained momentum as the year progressed. menu items, our strategic focus items include the following: Fuddruckers annual system-wide sales for fi scal year 2012 exceeded Continued repositioning of Fuddruckers’ menu and renewed $275 million. Our 121 franchised units and 62 company units focus on core items such as specialty burgers, premium salads, located throughout North America achieved average unit volumes chicken sandwiches, hand-breaded onion rings and Coca-Cola of more than $1.5 million with average EBITDAR of 23.4%. Both freestyle® beverage drinks; franchise and company-operated same-store sales were up over Developing reliable and fl exible prototypes, and a strategic plan 2% in fi scal 2012.We generated 4.6% same-store sales increases and pipeline for company and franchised new-unit development at our company-operated Fuddruckers through a combination of with strong unit economics; menu repositioning, local market outreach, upgrading the décor of selected restaurants and equipping restaurant management and Reinforcing or building tangible practices and a culture to enhance sales development at company and franchise units; crews to perform at the highest levels of operational excellence and customer service. Improving our purchasing and distribution infrastructure; Fuddruckers is a pioneer in the segment and continues to score Refreshing our units’ décor and facilities to be more relevant to well in national surveys, including: one of the best tasting burgers as today’s consumer base; and ranked by Consumer Reports; third in Nation’s Restaurant News’ Enhancing speed of service and uniform operational metrics list of Limited Service Hamburger Restaurants and third in a recent and standards.