Note 3 - Reportable Segments

12 Months Ended

Aug. 27, 2014

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

Note 3. Reportable Segments

The Company has three reportable segments: Company-owned restaurants, franchise operations and Culinary Contract Services.

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 are alike, and store level profit margin is 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 and other operating 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 California Bistro). Both Luby’s Cafeteria and Fuddruckers are casual dining, counter service 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 at the end of fiscal years 2014, 2013 and 2012 was 174, 180, and 154, respectively.

Culinary Contract Services

CCS operation, 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 had contracts with long-term acute care hospitals, acute care medical centers, ambulatory surgical centers, behavioral hospitals, business and industry clients, and higher education institutions. Culinary Contract Services 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 includes all food, payroll and related costs and Other operating expenses related to Culinary Contract Services sales.

The total number of Culinary Contract Services contracts at the end of fiscal 2014, 2013 and 2012 was 25, 21 and 18, respectively.

Franchising

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 standards evaluation reports.

The number of franchised restaurants was 110 at fiscal end 2014, 116 at fiscal end 2013, 125 at fiscal end 2012.

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.

	Years Ended
	August 27, 2014			August 28, 2013			August 29, 2012
	(In thousands)
Sales:
Company-owned restaurants	$	368,799		$	360,566		$	325,154
Culinary contract services		18,555			16,693			17,711
Franchising		7,027			6,937			7,232
Total	$	394,381		$	384,196		$	350,097
Segment level profit:
Company-owned restaurants	$	44,843		$	47,702		$	50,355
Culinary contract services		2,378			1,819			1,166
Franchising		7,027			6,937			7,232
Total	$	54,248		$	56,458		$	58,753
Depreciation and amortization:
Company-owned restaurants	$	17,357		$	16,417		$	15,990
Culinary contract services		409			440			471
Franchising		767			767			767
Corporate		1,529			752			666
Total	$	20,062		$	18,376		$	17,894
Total assets:
Company-owned restaurants	$	220,793		$	203,850		$	182,162
Culinary contract services		2,724			3,547			3,774
Franchising		13,906			14,674			15,352
Corporate		38,012			28,574			29,601
Total	$	275,435		$	250,645		$	230,889
Capital expenditures:
Company-owned restaurants	$	43,075		$	30,741		$	19,077
Culinary contract services		64			95			292
Franchising		—			—			—
Corporate		3,045			503			6,476
Total	$	46,184		$	31,339		$	25,845
Income (loss) before income taxes and discontinued operations:
Segment level profit	$	54,248		$	56,458		$	58,753
Opening costs		(2,164	)		(783	)		(395	)
Depreciation and amortization		(20,062	)		(18,376	)		(17,894	)
General and administrative expenses		(35,038	)		(32,217	)		(30,808	)
Provision for asset impairments, net		(2,498	)		(615	)		(451	)
Net gain (loss) on disposition of property and equipment		2,357			1,723			(278	)
Interest income		6			9			9
Interest expense		(1,247	)		(920	)		(942	)
Other income, net		1,125			1,043			1,058
Total	$	(3,273	)	$	6,322		$	9,052