Christopher and Harris Pappas run the popular Pappas family restaurant chains of Pappasito's Cantina, Pappadeaux, Pappas Bar-B-Que and Pappas Bros. Steakhouse. Yesterday, Luby's announced Christopher Pappas is Luby's new president and CEO. Harris Pappas is the new Luby's COO. Stepping down as acting CEO, president and board chairman is David Davis, who will remain a board member.
In a statement from the company, Christopher Pappas says Luby's is a great franchise and they look forward to bringing their restaurant experience to Luby's. Company officials say it's premature to talk about how the Pappas brothers might position Luby's and what that might mean in terms of products, locations and expansion. The company owns 231 locations in 10 states, with the stronghold of Luby's cafeterias in Central Texas. The Austin-San Antonio corridor is home to 33 Luby's restaurants, including locations in Round Rock, New Braunfels and Georgetown.
"They've definitely got their work cut out for them," Cale Hahn, research director of the Weitzman Group in San Antonio, tells GlobeSt.com. "Obviously, taking Luby's back to a place of financial stability is going to be priority No. 1. I suspect a lot of their work right now is going to be putting out fires."
Trammell Crow is the exclusive broker representing Luby's seven Austin locations. Broker Kelly Shaw says that new prototypes, such as the drive-through Luby's that recently opened outside Sun City in Georgetown, have been well received. The restaurant is smaller, 8,000 sf instead of 10,000 sf and is more updated, with a wood fire and brick oven. "They wanted a fresher look," Shaw says. "They knew with so many two-income families, they needed a restaurant that had the convenience of a drive-through window. They were looking to hit a sector of the market that included those dual-income families."
On the other hand, Luby's has failed to make a seafood venture work. The Water Street Seafood Co., rolled out in Dallas, San Antonio and Austin, shut doors about the time the company stopped expansion plans nine months ago.
If nothing else, the Pappas brothers are likely to give Luby's, often perceived as the stodgy restaurant of grandparents, a bit of a flashier kick. Hahn is optimistic the Pappas brothers can make Luby's work. "The fact that they've invested tells me that they believe it is going to fly," Hahn says. "Based upon their track record, I think they can do it." Under the buy-in agreement, the Pappas brothers will be buying up to $10 in convertible subordinated notes that mature in 2011, under conditions agreeable by lenders of a $125-million credit facility.
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