You'd have to think these would be tough times for restaurant chains like Luby'sRestaurants
To be sure, Luby's operates largely at the lower price points traditionally associated with eaters more conscious of price than calorie count. But then, even McDonald's
Management insists that it's on the offensive, citing the addition of progressive new menu items for the health-minded -- think seafood, not all of it fried -- and combination meals for the value-conscious. Recent salad offerings will also be tied into a spring promotion. Cost improvements reported at the end of the first quarter are encouraging, though the company did lose money during that period.
As such, the main reason investors pulled the shares up more than 11% yesterday is probably the news that the company continues to fight against its debt load. Real estate sales and cash on hand funded nearly $9 million of debt pay-downs, and J.P. Morgan
Defensive strategies like these can keep interest expense down. When combined with an improved cost structure and a better balance of menu items and marketing, Luby's is making progress toward returning to the full-year net profitability it hasn't seen since the year ended August 2000. Investors seem to believe it can make it, as the shares have outperformed the S&P 500 over the last 12 months.
Fool contributor Dave Marino-Nachison doesn't own any of the companies in this story, though he has eaten at a Luby's. He can be reached via email.