- Luby's, Inc., has agreed to franchise 13 of its 24 currently company-owned Fuddruckers stores to Black Titan Holdings, which is an affiliate of foodservice entrepreneur Nicholas M. Perkins, according to a press release. Terms of the transactions were not disclosed.
- Black Titan Holdings will purchase the assets of the company at four units in Arizona, one unit in Kansas, one restaurant in Missouri, six stores in Texas and one in Virginia. Almost all employees at these locations will be offered positions. The transaction is expected to close within the next 90 days.
- The transaction is part of Luby's plan to sell its assets and liquidate and dissolve Luby's, Inc. The company expects to generate $92 million to $123 million from the sale of its assets.
Black Titan is now Fuddruckers' largest franchisee and will help keep the brand alive after Luby's began exploring strategic alternatives in September 2019. The impact of the pandemic appeared to seal the company's fate, pushing it toward closing 35 of its 72 restaurant locations and then exploring a sale of its assets.
The new franchisee will have some challenges ahead to grow the brand. During the company's fiscal year 2020 ending Aug. 26, Fuddruckers generated $32 million in sales, a 52% decline from the previous year, according to an SEC filing. While much of the decline was due to the closure of 36 restaurants, those that remained in operation declined in sales by $9.6 million with fewer operating days due to the pandemic.
While Luby's had 71 Fuddruckers franchises located mainly in the U.S. at the end of its fiscal 2020, its dissolution plan makes it unclear how it will manage these franchisees in the future. The company provides assistance in site selection, prototypical architectural plans, design and layout, training, marketing and other assistance, according to the SEC filing. It will have to maintain or sell its franchisor operations in order to ensure the future of the brand's consistency.