Note 4 - Reportable Segments

6 Months Ended

Feb. 12, 2014

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

Note 4. Reportable Segments

The Company has three reportable segments: Company-owned restaurants, franchise operations and Culinary Contract Services (“CCS”).

Company-owned restaurants

Company-owned restaurants consists of several brands which are aggregated into one reportable segment because the nature of the products and services, the production processes, the customers, the methods used to distribute the products and services, the nature of the regulatory environment and store level profit margin are similar. The chief operating decision maker analyzes Company-owned restaurants at store level profit which is revenue less cost of food, payroll and related costs, other operating expenses and occupancy costs. The primary brands are Luby’s Cafeteria, Fuddruckers and Cheeseburger in Paradise, with a couple of non-core restaurant locations under other brand names (i.e., Koo Koo Roo Chicken Bistro and Bob Luby’s Seafood). All company-owned restaurants are casual dining restaurants. Each restaurant is an operating segment because operating results and cash flow can be determined for each restaurant.

The total number of Company-owned restaurants was 181 at February 12, 2014 and 180 at August 28, 2013.

Culinary Contract Services

CCS, branded as Luby’s Culinary Contract Services, consists of a business line servicing healthcare, higher education and corporate dining clients. The healthcare accounts are full service and typically include in-room delivery, catering, vending, coffee service and retail dining. CCS has contracts with long-term acute care hospitals, acute care medical centers, ambulatory surgical centers, behavioral hospitals, business and industry clients, and higher education institutions. CCS has the unique ability to deliver quality services that include facility design and procurement as well as nutrition and branded food services to our clients. The costs of culinary contract services on the Consolidated Statements of Operations include all food, payroll and related costs and other operating expenses related to CCS sales.

The total number of CCS contracts was 22 at February 12, 2014 and 21 at August 28, 2013.

Franchise Operations

We offer franchises for only the Fuddruckers brand. Franchises are sold in markets where expansion is deemed advantageous to the development of the Fuddruckers concept and system of restaurants. Initial franchise agreements have a term of 20 years. Franchise agreements typically grant franchisees an exclusive territorial license to operate a single restaurant within a specified area, usually a four-mile radius surrounding the franchised restaurant.

Franchisees bear all direct costs involved in the development, construction and operation of their restaurants. In exchange for a franchise fee, the Company provides franchise assistance in the following areas: site selection, prototypical architectural plans, interior and exterior design and layout, training, marketing and sales techniques, assistance by a Fuddruckers “opening team” at the time a franchised restaurant opens, and operations and accounting guidelines set forth in various policies and procedures manuals.

All franchisees are required to operate their restaurants in accordance with Fuddruckers standards and specifications, including controls over menu items, food quality and preparation. The Company requires the successful completion of its training program by a minimum of three managers for each franchised restaurant. In addition, franchised restaurants are evaluated regularly by the Company for compliance with franchise agreements, including standards and specifications through the use of periodic, unannounced, on-site inspections and standard evaluation reports.

The number of franchised restaurants was 114 at February 12, 2014 and 116 at August 28, 2013.

The table below shows financial information as required by ASC 280 for segment reporting. ASC 280 requires depreciation and amortization be disclosed for each reportable segment, even if not used by the chief operating decision maker. The table also lists total assets for each reportable segment. Corporate assets include cash and cash equivalents, tax refunds receivable, property and equipment, assets related to discontinued operations, property held for sale, deferred tax assets, prepaid expenses, intangible assets and goodwill.

	Quarter Ended						Two Quarters Ended
	February 12, 2014			February 13, 2013			February 12, 2014			February 13, 2013
	(12 weeks)			(12 weeks)			(24 weeks)			(24 weeks)
	(In thousands)
Sales:
Company-owned restaurants(1)	$	84,022		$	81,804		$	165,079		$	155,895
Culinary contract services		3,979			3,667			8,249			7,508
Franchising		1,545			1,540			3,060			3,062
Total		89,546			87,011			176,388			166,465
Segment level profit:
Company-owned restaurants	$	9,378		$	10,152		$	18,436		$	20,009
Culinary contract services		483			325			1,080			700
Franchising		1,545			1,540			3,060			3,061
Total		11,406			12,017			22,576			23,770
Depreciation and amortization:
Company-owned restaurants	$	4,054		$	3,853		$	7,817		$	7,528
Culinary contract services		91			106			184			214
Franchising		177			177			354			354
Corporate		177			176			488			334
Total		4,499			4,312			8,843			8,430
Capital expenditures:
Company-owned restaurants	$	9,447		$	6,402		$	18,505		$	11,222
Culinary contract services		—			40			—			41
Franchising		—			—			—			—
Corporate		428			119			577			172
Total	$	9,875		$	6,561		$	19,082		$	11,435
Income (loss) before income taxes and discontinued operations:
Segment level profit	$	11,406		$	12,017		$	22,576		$	23,770
Opening costs		(682	)		(261	)		(1,031	)		(467	)
Depreciation and amortization		(4,499	)		(4,312	)		(8,843	)		(8,430	)
General and administrative expenses		(8,117	)		(7,652	)		(16,184	)		(15,072	)
Provision for asset impairments, net		(1,640	)		—			(1,850	)		(90	)
Net gain (loss) on disposition of property and equipment		(16	)		1,321			(67	)		1,563
Interest income		1			2			3			4
Interest expense		(292	)		(214	)		(545	)		(389	)
Other income, net		260			207			556			451
Total	$	(3,579	)	$	1,109		$	(5,385	)	$	1,341

(1) Includes vending revenue of $115 and $119 thousand for the quarters ended February 12, 2014 and February 13, 2013, respectively and $227 and $241 thousand for the two quarters ended February 12, 2014 and February 13, 2013, respectively. 

	February 12, 2014		August 28, 2013
Total assets:
Company-owned restaurants	$	211,698	$	204,123
Culinary contract services		3,293		3,550
Franchising		13,939		14,674
Corporate		30,992		28,298
Total	$	259,922	$	250,645