10-Q

 UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549 

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 16, 2015

or

 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From to  

Commission file number: 001-08308 

Luby’s, Inc.

(Exact name of registrant as specified in its charter)

Delaware	74-1335253
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
13111 Northwest Freeway, Suite 600 Houston, Texas	77040
(Address of principal executive offices)	(Zip Code)

(713) 329-6800

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No   ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

As of January 20, 2016 there were 28,825,754 shares of the registrant’s common stock outstanding. 

1

Luby’s, Inc.

Form 10-Q

Quarter ended December 16, 2015

Table of Contents

	Page
Part I—Financial Information
Item 1 Financial Statements	3
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3 Quantitative and Qualitative Disclosures About Market Risk	37
Item 4 Controls and Procedures	37
Part II—Other Information
Item 1 Legal Proceedings	38
Item 1A Risk Factors	38
Item 6 Exhibits	38
Signatures	39

Additional Information

We file reports with the Securities and Exchange Commission (the “SEC”), including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. The public may read and copy any materials we file with the SEC at its Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. We are an electronic filer, and the SEC maintains an Internet site at http://www.sec.gov that contains the reports, proxy and information statements, and other information that we file electronically. Our website address is http://www.lubysinc.com. Please note that our website address is provided as an inactive textual reference only. We make available free of charge through our website our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. The information provided on our website is not part of this report, and is therefore not incorporated by reference unless such information is specifically referenced elsewhere in this report. 

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Part I—FINANCIAL INFORMATION

Item1. Financial Statements

Luby’s, Inc.

Consolidated Balance Sheets

(In thousands, except share data)

	December 16, 2015			August 26, 2015
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	1,581		$	1,501
Trade accounts and other receivables, net		4,949			5,175
Food and supply inventories		4,948			4,483
Prepaid expenses		2,881			3,402
Assets related to discontinued operations		3			10
Deferred income taxes		577			577
Total current assets		14,939			15,148
Property held for sale		3,058			4,536
Assets related to discontinued operations		3,672			3,671
Property and equipment, net		199,754			200,202
Intangible assets, net		22,089			22,570
Goodwill		1,643			1,643
Deferred income taxes		13,844			12,917
Other assets		3,613			3,571
Total assets	$	262,612		$	264,258
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	18,912		$	20,173
Liabilities related to discontinued operations		438			408
Accrued expenses and other liabilities		27,448			23,967
Total current liabilities		46,798			44,548
Credit facility debt		35,000			37,500
Liabilities related to discontinued operations		17			182
Other liabilities		7,429			7,369
Total liabilities		89,244			89,599
Commitments and Contingencies
SHAREHOLDERS’ EQUITY
Common stock, $0.32 par value; 100,000,000 shares authorized; shares issued were 29,325,754 and 29,134,603, respectively; shares outstanding were 28,825,754 and 28,634,603, respectively		9,384			9,323
Paid-in capital		29,465			29,006
Retained earnings		139,294			141,105
Less cost of treasury stock, 500,000 shares		(4,775	)		(4,775	)
Total shareholders’ equity		173,368			174,659
Total liabilities and shareholders’ equity	$	262,612		$	264,258

The accompanying notes are an integral part of these Consolidated Financial Statements.

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Luby’s, Inc.

Consolidated Statements of Operations (unaudited)

(In thousands, except per share data)

	Quarter Ended
	December 16, 2015			November 19, 2014
	(16 weeks)			(12 weeks)
SALES:
Restaurant sales	$	113,546		$	80,557
Culinary contract services		4,915			4,598
Franchise revenue		2,125			1,581
Vending revenue		158			125
TOTAL SALES		120,744			86,861
COSTS AND EXPENSES:
Cost of food		32,434			23,484
Payroll and related costs		39,424			28,686
Other operating expenses		18,421			14,219
Occupancy costs		6,642			4,942
Opening costs		397			925
Cost of culinary contract services		4,422			4,099
Cost of franchise operations		612			384
Depreciation and amortization		7,014			5,068
Selling, general and administrative expenses		13,243			9,151
Net (gain) loss on disposition of property and equipment		(279	)		290
Total costs and expenses		122,330			91,248
LOSS FROM OPERATIONS		(1,586	)		(4,387	)
Interest income		1			1
Interest expense		(696	)		(456	)
Other income (expense), net		(118	)		180
Loss before income taxes and discontinued operations		(2,399	)		(4,662	)
Benefit for income taxes		(660	)		(1,782	)
Loss from continuing operations		(1,739	)		(2,880	)
Loss from discontinued operations, net of income taxes		(72	)		(139	)
NET LOSS	$	(1,811	)	$	(3,019	)
Loss per share from continuing operations:
Basic	$	(0.06	)	$	(0.10	)
Assuming dilution	$	(0.06	)	$	(0.10	)
Loss per share from discontinued operations:
Basic	$	(0.00	)	$	(0.01	)
Assuming dilution	$	(0.00	)	$	(0.01	)
Net loss per share:
Basic	$	(0.06	)	$	(0.11	)
Assuming dilution	$	(0.06	)	$	(0.11	)
Weighted average shares outstanding:
Basic		29,133			28,890
Assuming dilution		29,133			28,890

The accompanying notes are an integral part of these Consolidated Financial Statements.

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Luby’s, Inc.

Consolidated Statement of Shareholders’ Equity (unaudited)

(In thousands)

	Common Stock															Total
	Issued				Treasury						Paid-In		Retained			Shareholders’
	Shares		Amount		Shares			Amount			Capital		Earnings			Equity
BALANCE AT AUGUST 26, 2015		29,135	$	9,323		(500	)	$	(4,775	)	$	29,006	$	141,105		$	174,659
Net loss		—		—		—			—			—		(1,811	)		(1,811	)
Share-based compensation expense		169		54		—			—			391		—			445
Common stock issued under employee benefit plans		22		7		—			—			68		—			75
BALANCE AT DECEMBER 16, 2015		29,326	$	9,384		(500	)	$	(4,775	)	$	29,465	$	139,294		$	173,368

The accompanying notes are an integral part of these Consolidated Financial Statements. 

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Luby’s, Inc.

Consolidated Statements of Cash Flows (unaudited)

(In thousands)

	Quarter Ended
	December 16, 2015			November 19, 2014
	(16 weeks)			(12 weeks)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(1,811	)	$	(3,019	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Net (gain) loss on disposition of property and equipment		(279	)		290
Depreciation and amortization		7,021			5,073
Amortization of debt issuance cost		148			36
Non-cash compensation expense		75			—
Share-based compensation expense		445			322
Other non-cash compensation expense		74			—
Deferred tax benefit		(927	)		(2,028	)
Cash provided by operating activities before changes in operating assets and liabilities		4,746			674
Changes in operating assets and liabilities:
Decrease (Increase) in trade accounts and other receivables		226			(690	)
Increase in food and supply inventories		(968	)		(1,998	)
Decrease in prepaid expenses and other assets		364			1,118
Increase (Decrease) in accounts payable, accrued expenses and other liabilities		1,975			(3,431	)
Net cash provided by (used in) operating activities		6,343			(4,327	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from disposal of assets and property held for sale		1,916			692
Decrease in notes receivable		17			—
Purchases of property and equipment		(5,729	)		(3,589	)
Net cash used in investing activities		(3,796	)		(2,897	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Credit facility borrowings		27,000			25,800
Credit facility repayments		(29,500	)		(19,500	)
Debt issuance costs		(42	)		(50	)
Proceeds received on the exercise of employee stock options		75			—
Net cash provided by (used in) financing activities		(2,467	)		6,250
Net increase (decrease) in cash and cash equivalents		80			(974	)
Cash and cash equivalents at beginning of period		1,501			2,788
Cash and cash equivalents at end of period	$	1,581		$	1,814
Cash paid for:
Income taxes	$	—		$	—
Interest		520			451

The accompanying notes are an integral part of these Consolidated Financial Statements.

6

Luby’s, Inc.

Notes to Consolidated Financial Statements (unaudited)

Note 1. Basis of Presentation

The accompanying unaudited Consolidated Financial Statements of Luby’s, Inc. (the “Company” or “Luby’s”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements that are prepared for the Company’s Annual Report on Form 10-K. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the quarter ended December 16, 2015 are not necessarily indicative of the results that may be expected for the fiscal year ending August 31, 2016.

The Consolidated Balance Sheet dated August 26, 2015, included in this Quarterly Report on Form 10-Q (this “Form 10-Q”), has been derived from the audited Consolidated Financial Statements as of that date. However, this Form 10-Q does not include all of the information and footnotes required by GAAP for an annual filing of complete financial statements. Therefore, these financial statements should be read in conjunction with the audited Consolidated Financial Statements and footnotes included in the Company’s Annual Report on Form 10-K for the fiscal year ended August 26, 2015.

Note 2. Accounting Periods

The Company’s fiscal year ends on the last Wednesday in August. Accordingly, each fiscal year normally consists of 13 four-week periods, or accounting periods, accounting for 364 days in the aggregate. However, every fifth or sixth year, we have a fiscal year that consists of 53 weeks, accounting for 371 days in the aggregate; fiscal year 2016 will be such a year. Each of the first three quarters of each fiscal year, prior to fiscal year 2016, consisted of three four-week periods, while the fourth quarter normally consisted of four four-week periods.

Beginning in fiscal 2016, we changed our fiscal quarter ending dates with the first fiscal quarter end extended by one accounting period and the fiscal fourth quarter being reduced by one accounting period. The purpose of this change is in part to minimize the Thanksgiving calendar shift by extending the first fiscal quarter until after Thanksgiving. With this change in fiscal quarter ending dates, our first quarter is 16 weeks, and the remaining three quarters will typically be 12 weeks in length. The fourth fiscal quarter will be 13 weeks in certain fiscal years to adjust for our standard 52 week, or 364 day, fiscal year compared to the 365 day calendar year. Fiscal 2016 is such a year where the fourth quarter will have 13 weeks, resulting in a 53 week fiscal year. Comparability between quarters may be affected by varying lengths of the quarters, as well as the seasonality associated with the restaurant business. 

Note 3. 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 Cafeterias, Fuddruckers and Cheeseburger in Paradise, with a non-core restaurant location operating under the brand name 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 179 at December 16, 2015 and 177 at August 26, 2015.

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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 and business and industry clients. 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 CCS 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 28 at December 16, 2015 and 23 at August 26, 2015.  

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 110 at December 16, 2015 and 106 at August 26, 2015.  

Licensee

In November 1997, a prior owner of the Fuddruckers – World’s Greatest Hamburgers ® brand granted to a licensee the exclusive right to use the Fuddruckers proprietary marks, trade dress and system to develop Fuddruckers restaurants in a territory consisting of certain countries in Africa, the Middle East and parts of Asia. As of January 2016, this licensee operated 35 restaurants that are licensed to use the Fuddruckers Proprietary Marks in Saudi Arabia, Egypt, Lebanon, United Arab Emirates, Qatar, Jordan, Bahrain, Kuwait, Morocco and Malaysia. The Company does not receive revenue or royalties from these restaurants.

8

The table below shows segment financial information. The table also lists total assets for each reportable segment. Corporate assets include cash and cash equivalents, property and equipment, assets related to discontinued operations, property held for sale, deferred tax assets and prepaid expenses.

	Quarter Ended
	December 16, 2015			November 19, 2014
	(16 weeks)			(12 weeks)
	(In thousands)
Sales:
Company-owned restaurants (1)	$	113,704		$	80,682
Culinary contract services		4,915			4,598
Franchise operations		2,125			1,581
Total		120,744			86,861
Segment level profit:
Company-owned restaurants	$	16,783		$	9,351
Culinary contract services		493			499
Franchise operations		1,513			1,197
Total		18,789			11,047
Depreciation and amortization:
Company-owned restaurants	$	5,809		$	4,384
Culinary contract services		37			69
Franchise operations		256			177
Corporate		912			438
Total		7,014			5,068
Capital expenditures:
Company-owned restaurants	$	5,494		$	3,169
Culinary contract services		—			—
Franchise operations		—			—
Corporate		235			420
Total		5,729			3,589
Loss before income taxes and discontinued operations:
Segment level profit	$	18,789		$	11,047
Opening costs		(397	)		(925	)
Depreciation and amortization		(7,014	)		(5,068	)
Selling, general and administrative expenses		(13,243	)		(9,151	)
Net gain (loss) on disposition of property and equipment		279			(290	)
Interest income		1			1
Interest expense		(696	)		(456	)
Other expense (income), net		(118	)		180
Loss before income taxes and discontinued operations	$	(2,399	)	$	(4,662	)

	December 16, 2015		August 26, 2015
Total assets:
Company-owned restaurants(2)	$	217,834	$	218,492
Culinary contract services		2,229		1,644
Franchise operations(3)		12,555		13,034
Corporate		29,994		31,088
Total	$	262,612	$	264,258

(1) Includes vending revenue of $158 thousand and $125 thousand for the quarters ended December 16, 2015 and November 19, 2014, respectively.

(2) Company-owned restaurants segment includes $10.4 million of Fuddruckers trade name, Cheeseburger in Paradise liquor licenses, and Jimmy Buffett intangibles.

(3) Franchise operations segment includes approximately $12.0 million in royalty intangibles.

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Note 4. Fair Value Measurements

GAAP establishes a framework for using fair value to measure assets and liabilities. Fair value measurements guidance applies whenever other statements require or permit asset or liabilities to be measured at fair value.

GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used to measure fair value. These tiers include:

● Level 1: Defined as observable inputs such as quoted prices in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

● Level 2: Defined as pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures.

● Level 3: Defined as pricing inputs that are unobservable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

Non-recurring fair value measurements related to impaired property and equipment consisted of the following:

			Fair Value Measurement Using
	Quarter Ended December 16, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Impairments
			(In thousands)
Continuing Operations
Property and equipment related to company-owned restaurants	$	5,282	$	—	$	—	$	5,282	$	—
Discontinued Operations
Property and equipment related to company-owned restaurants	$	103	$	—	$	—	$	103	$	—

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			Fair Value Measurement Using
	Quarter Ended November 19, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Impairments
			(In thousands)
Continuing Operations
Property and equipment related to company-owned restaurants	$	6,446	$	—	$	—	$	6,446	$	—
Discontinued Operations
Property and equipment related to company-owned restaurants	$	1,144	$	—	$	—	$	1,144	$	—

Note 5. Income Taxes 

No cash payments of estimated federal income taxes were made during the quarter ended December 16, 2015. 

Deferred tax assets and liabilities are recorded based on differences between the financial reporting basis and the tax basis of assets and liabilities using currently enacted rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are recognized to the extent future taxable income is expected to be sufficient to utilize those assets prior to their expiration.

Management believes that adequate provisions for income taxes have been reflected in the financial statements and is not aware of any significant exposure items that have not been reflected in the financial statements. Amounts considered probable of settlement within one year have been included in the accrued expenses and other liabilities in the accompanying Consolidated Balance Sheet.

Note 6. Property and Equipment, Intangible Assets and Goodwill

The costs, net of impairment, and accumulated depreciation of property and equipment at December 16, 2015 and August 26, 2015, together with the related estimated useful lives used in computing depreciation and amortization, were as follows:

	December 16, 2015			August 26, 2015			Estimated Useful Lives (years)
	(In thousands)
Land	$	63,339		$	63,298				—
Restaurant equipment and furnishings		89,587			85,679			3	to	15
Buildings		160,705			159,391			20	to	33
Leasehold and leasehold improvements		29,739			29,229		Lesser of lease term or estimated useful life
Office furniture and equipment		3,727			3,559			3	to	10
Construction in progress		972			810				—
		348,069			341,966
Less accumulated depreciation and amortization		(148,315	)		(141,764	)
Property and equipment, net	$	199,754		$	200,202
Intangible assets, net	$	22,089		$	22,570				21
Goodwill	$	1,643		$	1,643				—

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Intangible assets, net, consist of the Fuddruckers trade name and franchise agreements and will be amortized. The Company believes the Fuddruckers brand name has an expected accounting life of 21 years from the date of acquisition based on the expected use of its assets and the restaurant environment in which it is being used. The trade name represents a respected brand with customer loyalty and the Company intends to cultivate and protect the use of the trade name. The franchise agreements, after considering renewal periods, have an estimated accounting life of 21 years from the date of acquisition and will be amortized over this period of time.

Intangible assets, net, also includes the license agreement and trade name related to Cheeseburger in Paradise and the value of the acquired licenses and permits allowing the sales of beverages with alcohol. These assets have an expected accounting life of 15 years from the date of acquisition December 6, 2012.

The aggregate amortization expense related to intangible assets subject to amortization was $0.5 million for the quarter ended December 16, 2015 and $0.3 million for the quarter ended November 19, 2014. The aggregate amortization expense related to intangible assets subject to amortization is expected to be $1.4 million in each of the next five successive years.

The following table presents intangible assets as of December 16, 2015 and August 26, 2015:

	December 16, 2015							August 26, 2015
	(In thousands)							(In thousands)
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Intangible Assets Subject to Amortization:
Fuddruckers trade name and franchise agreements	$	29,607	$	(7,633	)	$	21,974	$	29,607	$	(7,166	)	$	22,441
Cheeseburger in Paradise trade name and license agreements	$	416	$	(301	)	$	115	$	416	$	(287	)	$	129
Intangible assets, net	$	30,023	$	(7,934	)	$	22,089	$	30,023	$	(7,453	)	$	22,570

The Company recorded, in fiscal 2010, an intangible asset for goodwill in the amount of approximately $0.2 million related to the acquisition of substantially all of the assets of Fuddruckers. The Company also recorded, in fiscal 2013, an intangible asset for goodwill in the amount of approximately $2.0 million related to the acquisition of Cheeseburger in Paradise. Goodwill is considered to have an indefinite useful life and is not amortized. Management performs its formal annual assessment as of the second quarter each fiscal year. The individual restaurant level is the level at which goodwill is assessed for impairment under ASC 350. In accordance with our understanding of ASC 350, we have allocated the goodwill value to each reporting unit in proportion to each location’s fair value at the date of acquisition. The result of these assessments were impairment of goodwill of $38 thousand and $0.5 million in fiscal years 2015 and 2014, respectively. The Company will formally perform additional assessments on an interim basis if an event occurs or circumstances exist that indicate that it is more likely than not that a goodwill impairment exists. As of January 20, 2016, of the 23 locations that were acquired, eight locations remain operating as Cheeseburger in Paradise restaurants, eight locations were closed and converted to Fuddruckers restaurants, two locations where the option to extend the lease was not exercised, two locations subleased to franchisees and three closed and held for future use.

Goodwill, net of accumulated impairments of approximately $0.6 million, was approximately $1.6 million as of December 16, 2016 and as of August 26, 2015, and relates to our Company-owned restaurants reportable segments.

Note 7. Impairment of Long-Lived Assets, Discontinued Operations and Property Held for Sale

Impairment of Long-Lived Assets and Store Closings

The Company periodically evaluates long-lived assets held for use and held for sale whenever events or changes in circumstances indicate that the carrying amount of those assets may not be recoverable. The Company analyzes historical cash flows of operating locations and compares results of poorer performing locations to more profitable locations. The Company also analyzes lease terms, condition of the assets and related need for capital expenditures or repairs, as well as construction activity and the economic and market conditions in the surrounding area.

12

For assets held for use, the Company estimates future cash flows using assumptions based on possible outcomes of the areas analyzed. If the undiscounted future cash flows are less than the carrying value of the location’s assets, the Company records an impairment loss based on an estimate of discounted cash flows. The estimates of future cash flows, based on reasonable and supportable assumptions and projections, require management’s subjective judgments. Assumptions and estimates used include operating results, changes in working capital, discount rate, growth rate, anticipated net proceeds from disposition of the property and, if applicable, lease terms. The span of time for which future cash flows are estimated is often lengthy, increasing the sensitivity to assumptions made. The time span could be 20 to 25 years for newer properties, but only 5 to 10 years for older properties. Depending on the assumptions and estimates used, the estimated future cash flows projected in the evaluation of long-lived assets can vary within a wide range of outcomes. The Company considers the likelihood of possible outcomes in determining the best estimate of future cash flows. The measurement for such an impairment loss is then based on the fair value of the asset as determined by discounted cash flows.

The Company recognized the following impairment charges to income from operations:

	Quarter Ended
	December 16, 2015			November 19, 2014
	(16 weeks)			(12 weeks)
	(In thousands, except per share data)
Provision for asset impairments	$	—		$	—
Net (gain) loss on disposition of property and equipment		(279	)		290
	$	(279	)	$	290
Effect on EPS:
Basic	$	0.01		$	(0.01	)
Assuming dilution	$	0.01		$	(0.01	)

There was no impairment charge for the quarters ended December 16, 2015 and November 19, 2014.  

The net gain for the quarter ended December 16, 2015 is primarily attributable to the sale of one property location.

The net loss for the quarter ended November 19, 2014 includes losses on the sale of equipment and other normal asset retirement activity.

Discontinued Operations 

On March 21, 2014, the Board of Directors of the Company approved a plan focused on improving cash flow from the acquired Cheeseburger in Paradise leasehold locations. On March 24, 2014, the Company announced a plan focused on improving cash flow from the acquired Cheeseburger in Paradise leasehold locations. This underperforming Cheeseburger in Paradise leasehold disposal plan called for five or more units to be closed by the end of fiscal 2014 and disposed of within 12 months. As of December 16, 2015, one location was reclassified to continuing operations and was reopened as a Fuddruckers restaurant. Three locations remain closed for disposal and classified as discontinued operations as of December 16, 2015.

As a result of the first quarter fiscal year 2010 adoption of the Company’s Cash Flow Improvement and Capital Redeployment Plan, the Company reclassified 24 Luby’s Cafeterias to discontinued operations. As of December 16, 2015, one location remains held for sale.

13

The following table sets forth the assets and liabilities for all discontinued operations:

	December 16, 2015		August 26, 2015
	(In thousands)
Prepaid expenses		3		10
Assets related to discontinued operations—current	$	3	$	10
Property and equipment		1,874		1,873
Other assets		1,798		1,798
Assets related to discontinued operations—non-current	$	3,672	$	3,671
Deferred income taxes	$	343	$	343
Accrued expenses and other liabilities		95		65
Liabilities related to discontinued operations—current	$	438	$	408
Other liabilities	$	17	$	182
Liabilities related to discontinued operations—non-current	$	17	$	182

As of December 16, 2015, under both closure plans, the Company had four properties classified as discontinued operations assets and the asset carrying value of the owned properties was $1.9 million and is included in assets related to discontinued operations. The asset carrying values of the ground leases were previously impaired to zero.

The Company is actively marketing all but one of these properties for sale. This property has been sublet to an existing franchisee. The Company’s results of discontinued operations will be affected by the disposal of properties related to discontinued operations to the extent proceeds from the sales exceed or are less than net book value.

The following table sets forth the sales and pretax losses reported from discontinued operations:

	Quarter Ended
	December 16, 2015			November 19, 2014
	(16 weeks)			(12 weeks)
	(In thousands, except discontinued locations)
Sales	$	—		$	—
Pretax loss		(118	)		(245	)
Income tax benefit from discontinued operations		46			106
Loss from discontinued operations	$	(72	)	$	(139	)
Discontinued locations closed during the period		—			—

14

The following table summarizes discontinued operations for the first quarters of fiscal 2016 and 2015:

	Quarter Ended
	December 16, 2015			November 19, 2014
	(16 weeks)			(12 weeks)
	(In thousands, except per share data)
Discontinued operating loss	$	(118	)	$	(245	)
Impairments		—			—
Net gains (losses)		—			—
Pretax loss	$	(118	)		(245	)
Income tax benefit from discontinued operations		46			106
Loss from discontinued operations	$	(72	)	$	(139	)
Effect on EPS from discontinued operations—basic	$	(0.00	)	$	(0.00	)

Impairment charges included above relate to properties closed and designated for immediate disposal. The assets of these individual operating units have been written down to their net realizable values. In turn, the related properties have either been sold or are being actively marketed for sale. Dispositions are expected to be completed within one to three years. Within discontinued operations, the Company also recorded the related fiscal year-to-date net operating results, employee terminations and carrying costs of the closed units.

Property Held for Sale

The Company periodically reviews long-lived assets against its plans to retain or ultimately dispose of properties. If the Company decides to dispose of a property, it will be moved to property held for sale and actively marketed. The Company analyzes market conditions each reporting period and records additional impairments due to declines in market values of like assets. The fair value of the property is determined by observable inputs such as appraisals and prices of comparable properties in active markets for assets like the Company’s. Gains are not recognized until the properties are sold.

Property held for sale includes unimproved land, closed restaurant properties and related equipment for locations not classified as discontinued operations. The specific assets are valued at the lower of net depreciable value or net realizable value.

At December 16, 2015, the Company had three owned properties recorded at approximately $3.1 million in property held for sale.

At August 26, 2015, the Company had four owned properties recorded at approximately $4.5 million in property held for sale.

The Company is actively marketing the locations currently classified as property held for sale

Note 8. Commitments and Contingencies

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements, except for operating leases. 

Pending Claims

From time to time, the Company is subject to various private lawsuits, administrative proceedings and claims that arise in the ordinary course of its business. A number of these lawsuits, proceedings and claims may exist at any given time. These matters typically involve claims from guests, employees and others related to issues common to the restaurant industry. The Company currently believes that the final disposition of these types of lawsuits, proceedings and claims will not have a material adverse effect on the Company’s financial position, results of operations or liquidity. It is possible, however, that the Company’s future results of operations for a particular fiscal quarter or fiscal year could be impacted by changes in circumstances relating to lawsuits, proceedings or claims.

15

Construction Activity

From time to time, the Company enters into non-cancelable contracts for the construction of its new restaurants. This construction activity exposes the Company to the risks inherent in new construction, including but not limited to rising material prices, labor shortages, delays in getting required permits and inspections, adverse weather conditions, and injuries sustained by workers and contract termination expenses. The Company had three non-cancelable contracts as of December 16, 2015.

Note 9. Related Parties

Affiliate Services

Christopher J. Pappas, the Company’s Chief Executive Officer, and Harris J. Pappas, director and former Chief Operating Officer of the Company, own two restaurant entities (the “Pappas entities”) that from time to time may provide services to the Company and its subsidiaries, as detailed in the Amended and Restated Master Sales Agreement effective November 8, 2013 among the Company and the Pappas entities.

Under the terms of the Amended and Restated Master Sales Agreement, the Pappas entities may provide specialized (customized) equipment fabrication and basic equipment maintenance, including stainless steel stoves, shelving, rolling carts, and chef tables. There were no costs incurred under the Amended and Restated Master Sales Agreement of custom-fabricated and refurbished equipment in the quarters ended December 16, 2015 and November 19, 2014. Services provided under this agreement are subject to review and approval by the Finance and Audit Committee of the Board of Directors of the Company (the “Board”).

Operating Leases

In the third quarter of fiscal 2004, Messrs. Pappas became partners in a limited partnership which purchased a retail strip center in Houston, Texas. Messrs. Pappas collectively own a 50% limited partnership interest and a 50% general partnership interest in the limited partnership. A third party company manages the center. One of the Company’s restaurants has rented approximately 7% of the space in that center since July 1969. No changes were made to the Company’s lease terms as a result of the transfer of ownership of the center to the new partnership.

On November 22, 2006, the Company executed a new lease agreement with respect to this shopping center. Effective upon the Company’s relocation and occupancy into the new space in July 2008, the new lease agreement provides for a primary term of approximately 12 years with two subsequent five-year options and gives the landlord an option to buy out the tenant on or after the calendar year 2015 by paying the then unamortized cost of improvements to the tenant. The Company is currently obligated to pay rent of $22.00 per square foot plus maintenance, taxes, and insurance during the remaining primary term of the lease. Thereafter, the lease provides for increases in rent at set intervals. The Company made payments of $103,000 and $68,000 in the quarters ended December 16, 2015 and November 19, 2014, respectively. The new lease agreement was approved by the Finance and Audit Committee.

In the third quarter of fiscal year 2014, on March 12, 2014, the Company executed a new lease agreement which one of the Company’s Houston Fuddruckers location was purchased from a prior landlord by Pappas Restaurants, Inc., a 100% undivided interest. No changes were made to our lease terms as a result of the transfer of ownership. The lease provides for a primary term of approximately six years with two subsequent five-year options. Pursuant to the new ground lease agreement, the Company is currently obligated to pay $27.56 per square foot plus maintenance, taxes, and insurance from March 12, 2014 until November 30, 2016. Thereafter, the new ground lease agreement provides for increases in rent at set intervals. The Company made payments of $40,000 and $27,000 in the quarters ended December 16, 2015 and November 19, 2014, respectively

16

	Quarter Ended
	December 16, 2015			November 19, 2014
	(16 weeks)			(12 weeks)
	(In thousands, except percentages)
AFFILIATED COSTS INCURRED:
General and administrative expenses—professional and other costs	$	—		$	—
Capital expenditures		—			—
Other operating expenses, occupancy costs and opening costs, including property leases		143			95
Total	$	143		$	95
RELATIVE TOTAL COMPANY COSTS:
Selling, general and administrative expenses	$	13,243		$	9,151
Capital expenditures		5,729			3,589
Other operating expenses, occupancy costs and opening costs		25,460			20,086
Total	$	44,432		$	32,826
AFFILIATED COSTS INCURRED AS A PERCENTAGE OF RELATIVE TOTAL COMPANY COSTS		0.32	%		0.29	%

Board of Directors

Christopher J. Pappas is a member of the Advisory Board of Amegy Bank, National Association, which is a lender and syndication agent under the Company’s 2013 Revolving Credit Facility.

Key Management Personnel

The Company entered into a new employment agreement with Christopher Pappas on January 24, 2014. The employment agreement was amended on December 1, 2014, to extend the termination date thereof to August 31, 2016, unless earlier terminated. Mr. Pappas continues to devote his primary time and business efforts to the Company while maintaining his role at Pappas Restaurants, Inc.

Peter Tropoli, a director of the Company and the Company’s Chief Operating Officer, and formerly the Company’s Senior Vice President, Administration, General Counsel and Secretary, is an attorney and stepson of Frank Markantonis, who is a director of the Company.

Paulette Gerukos, Vice President of Human Resources of the Company, is the sister-in-law of Harris J. Pappas, who is a director of the Company.

Note 10. Share-Based Compensation

We have two active share based stock plans, the Employee Stock Plan and the Nonemployee Director Stock Plan. Both plans authorize the granting of stock options, restricted stock and other types of awards consistent with the purpose of the plans.

Of the 1.1 million shares approved for issuance under the Nonemployee Director Stock Plan, 0.9 million options, restricted stock units and restricted stock awards were granted, and 0.1 million options were cancelled or expired and added back into the plan, since the plan’s inception. Approximately 0.3 million shares remain available for future issuance as of December 16, 2015. Compensation cost for share-based payment arrangements under the Nonemployee Director Stock Plan, recognized in selling, general and administrative expenses for the quarters ended December 16, 2015 and November 19, 2014 were approximately $197,000 and $167,000, respectively.

17

Of the 2.6 million shares approved for issuance under the Employee Stock Plan, 5.7 million options and restricted stock units were granted, and 3.4 million options and restricted stock units were cancelled or expired and added back into the plan, since the plan’s inception. Approximately 0.3 million shares remain available for future issuance as of December 16, 2015. Compensation cost for share-based payment arrangements under the Employee Stock Plan, recognized in selling, general and administrative expenses for the quarters ended December 16, 2015 and November 19, 2014, were approximately $455,000 and $154,000, respectively. Included in the fiscal quarter ended December 16, 2015 share based compensation cost is approximately $252,000, which represents accelerated share-based compensation expense as a result of the cancellation of 312,663 stock options.

In 2015, the Company approved a Total Shareholder Return, (TSR), Performance Based Incentive Plan which provides for a right to receive an unspecified number of shares of common stock under the Employee Stock Plan based on the total shareholder return ranking compared to a selection of peer companies over a three-year cycle. The award value varies from 0% to 200% of a base amount, as a result of the Company’s TSR performance in comparison to its peers over the measurement period. The number of shares at the end of the three-year period will be determined as the award value divided by the closing stock price on the last day of each fiscal year accordingly. Since the plan provides for an undeterminable number of shares, the plan is accounted for as a liability based plan. As of December 16, 2015, the estimated fair value of the performance shares liability at the end of fiscal 2017 and fiscal 2018, were $0.5 million for both years. The estimated liability has been determined based on a Monte Carlo simulation model. Based on this estimate, management accrues expense ratably over the three-year service periods. A valuation estimate of the future liability associated with each fiscal year's performance award plan will be performed periodically with adjustments made to the outstanding liability at each reporting period, as appropriate. As of December 16, 2015, the Company has recorded $74,000 in non-cash compensation expense in selling, general and administrative expenses related to its TSR Performance Based Incentive Plans.

Stock Options

Stock options granted under either the Employee Stock Plan or the Nonemployee Director Stock Plan have exercise prices equal to the market price of the Company’s common stock at the date of the grant.

Option awards under the Nonemployee Director Stock Plan generally vest 100% on the first anniversary of the grant date and expire ten years from the grant date. No options were granted under the Nonemployee Director Stock Plan in the quarter ended December 16, 2015. No options to purchase shares remain outstanding under this plan as of December 16, 2015.

Options granted under the Employee Stock Plan generally vest 50% on the first anniversary date of the grant date, 25% on the second anniversary of the grant date and 25% on the third anniversary of the grant date, with all options expiring ten years from the grant date. All options granted in fiscal quarter ended December 16, 2015 were granted under the Employee Stock Plan. Options to purchase 1,210,089 shares at option prices of $3.44 to $11.10 per share remain outstanding as of December 16, 2015.

A summary of the Company’s stock option activity for the quarter ended December 16, 2015 is presented in the following table:

	Shares Under Fixed Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
				(Per share)		(Years)		(In thousands)
Outstanding at August 26, 2015		1,288,099		$	4.76		6.5	$	350
Granted		279,944			4.89		—		—
Exercised		(19,750	)		3.44		—		—
Cancelled		(312,663	)		4.98		—		—
Forfeited/Expired		(25,541	)		4.34		—		—
Outstanding at December 16, 2015		1,210,089		$	4.76		7.3	$	138
Exercisable at December 16, 2015		415,951		$	4.93		3.5	$	138

18

The intrinsic value for stock options is defined as the difference between the current market value, or closing price on December 16, 2015, and the grant price on the measurement dates in the table above. 

Restricted Stock Units

Grants of restricted stock units consist of the Company’s common stock and generally vest after three years. All restricted stock units are cliff-vested. Restricted stock units are valued at the closing market price of the Company’s common stock at the date of grant.

A summary of the Company’s restricted stock unit activity during the quarter ended December 16, 2015 is presented in the following table:

	Restricted Stock Units			Weighted Average Fair Value		Weighted- Average Remaining Contractual Term
				(Per share)		(In years)
Unvested at August 26, 2015		409,417		$	5.98		1.6
Granted		166,619			4.89		—
Vested		(197,482	)		5.95		—
Forfeited		(4,202	)		5.95		—
Unvested at December 16, 2015		374,352		$	5.51		2.4

At December 16, 2015, there was approximately $2.5 million of total unrecognized compensation cost related to unvested restricted stock units that is expected to be recognized over a weighted-average period of 2.4 years.

Restricted Stock Awards

Under the Nonemployee Director Stock Plan, directors are granted restricted stock in lieu of cash payments, for all or a portion of their compensation as directors. The number of shares granted is valued at the closing market price of the Company’s stock at the date of the grant. Restricted stock awards vest when granted because they are granted in lieu of a cash payment. However, directors are restricted from selling their shares until after the third anniversary of the date of the grant. Directors may receive a 20% premium of additional restricted stock by opting to receive stock in lieu of cash. 

Note 11. Earnings Per Share

Basic net income per share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding and unvested restricted stock for the reporting period. Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. For the calculation of diluted net income per share, the basic weighted average number of shares is increased by the dilutive effect of stock options determined using the treasury stock method. Stock options excluded from the computation of net income per share for the quarter ended December 16, 2015 include approximately 1,050,089 shares with exercise prices exceeding market prices and approximately 88,000 shares whose inclusion would also be anti-dilutive. 

19

The components of basic and diluted net income per share are as follows:

	Quarter Ended
	December 16, 2015			November 19, 2014
	(16 weeks)			(12 weeks)
	(In thousands, expect per share data)
Numerator:
Loss from continuing operations	$	(1,739	)	$	(2,880	)
Loss from discontinued operations		(72	)		(139	)
Net loss	$	(1,811	)	$	(3,019	)
Denominator:
Denominator for basic earnings per share—weighted-average shares		29,133			28,890
Effect of potentially dilutive securities:
Employee and non-employee stock options		—			—
Denominator for earnings per share assuming dilution		29,133			28,890
Loss per share from continuing operations:
Basic	$	(0.06	)	$	(0.10	)
Assuming dilution	$	(0.06	)	$	(0.10	)
Loss per share from discontinued operations:
Basic	$	(0.00	)	$	(0.01	)
Assuming dilution	$	(0.00	)	$	(0.01	)
Net loss per share:
Basic	$	(0.06	)	$	(0.11	)
Assuming dilution	$	(0.06	)	$	(0.11	)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s discussion and analysis of financial condition and results of operations should be read in conjunction with the unaudited Consolidated Financial Statements and footnotes for the quarter ended December 16, 2015 included in Item 1 of Part I of this Quarterly Report on Form 10 (this “Form 10-Q”), and the audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended August 26, 2015.

The following presents an analysis of the results and financial condition of our continuing operations. Except where indicated otherwise, the results of discontinued operations are excluded from this discussion.

20

The following table sets forth selected operating data as a percentage of total revenues (unless otherwise noted) for the periods indicated. All information is derived from the accompanying consolidated statements of income.

Percentages may not add due to rounding.

	Quarter Ended
	December 16, 2015			November 19, 2014
	(16 weeks)			(12 weeks)
Restaurant sales		94.0	%		92.7	%
Culinary contract services		4.1	%		5.3	%
Franchise revenue		1.8	%		1.8	%
Vending revenue		0.1	%		0.1	%
TOTAL SALES		100.0	%		100.0	%
STORE COSTS AND EXPENSES:
(As a percentage of restaurant sales)
Cost of food		28.6	%		29.2	%
Payroll and related costs		34.7	%		35.6	%
Other operating expenses		16.2	%		17.7	%
Occupancy costs		5.8	%		6.1	%
Store level profit margin		14.8	%		11.6	%
COMPANY COSTS AND EXPENSES:
(As a percentage of total sales)
Opening costs		0.3	%		1.1	%
Depreciation and amortization		5.8	%		5.8	%
Selling, general and administrative expenses		11.0	%		10.5	%
Net (gain) loss on disposition of property and equipment		(0.2	)%		0.3	%
Culinary Contract Services Costs
(As a percentage of Culinary Contract Services sales)
Cost of culinary contract services		90.0	%		89.1	%
Culinary income		10.0	%		10.9	%
Franchise Operations Costs
(As a percentage of Franchise Operations)
Cost of franchise operations		28.8	%		24.3	%
Franchise income		71.2	%		75.7	%
(As a percentage of total sales)
LOSS FROM OPERATIONS		(1.3	)%		(5.1	)%
Interest income		0.0	%		0.0	%
Interest expense		0.6	%		(0.5	)%
Other income (expense), net		(0.1	)%		0.2	%
Loss before income taxes and discontinued operations		2.0	%		(5.4	)%
Benefit for income taxes		(0.5	)%		(2.1	)%
Loss from continuing operations		(1.4	)%		(3.3	)%
Loss from discontinued operations, net of income taxes		(0.1	)%		(0.2	)%
NET LOSS		(1.5	)%		(3.5	)%

21

Although store level profit, defined as restaurant sales less cost of food, payroll and related costs, other operating expenses and occupancy costs is a non-GAAP measure, we believe its presentation is useful because it explicitly shows the results of our most significant reportable segment.   The following table reconciles between store level profit, a non-GAAP, measure to loss from continuing operations, a GAAP measure:

	Quarter Ended
	December 16, 2015			November 19, 2014
	(16 weeks)			(12 weeks)
	(In Thousands)
Store level profit	$	16,783		$	9,351
Plus:
Sales from culinary contract services		4,915			4,598
Sales from franchise revenue		2,125			1,581
Less:
Opening costs		397			925
Cost of culinary contract services		4,422			4,099
Cost of franchise operations		612			384
Depreciation and amortization		7,014			5,068
Selling, general and administrative expenses		13,243			9,151
Net (gain) loss on disposition of property and equipment		(279	)		290
Interest income		(1	)		(1	)
Interest expense		696			456
Other income, net		118			(180	)
Benefit for income taxes		(660	)		(1,782	)
Loss from continuing operations	$	(1,739	)	$	(2,880	)

The following table shows our restaurant unit count as of August 26, 2015 and December 16, 2015.

Restaurant Counts:

	August 26, 2015		FY16 Q1 Openings		FY16 Q1 Closings		December 16, 2015
Luby’s Cafeterias		93		—		—		93
Fuddruckers Restaurants		75		2		—		77
Cheeseburger in Paradise		8		—		—		8
Other restaurants1		1		—		—		1
Total		177		2		—		179

⁽¹⁾ Other restaurants include one Bob Luby’s Seafood.

22

Overview

Luby’s, Inc. (“Luby’s” or “Company”) is a multi-branded company operating in the restaurant industry and in the contract food services industry. Our primary brands include Luby’s Cafeteria, Fuddruckers - World’s Greatest Hamburgers ^®, Luby’s Culinary Contract Services and Cheeseburger in Paradise.

Our Company’s vision is that our guests, employees and shareholders stay loyal to our restaurant brands and value them as a significant part of their lives. We want our company’s performance to make it a leader in our industry.

We are headquartered in Houston, Texas. Our corporate headquarters is located at 13111 Northwest Freeway, Suite 600, Houston, Texas 77040, and our telephone number at that address is (713) 329-6800. Our website is www.lubysinc.com. The information on our website is not, and shall not be deemed to be, a part of this Quarterly Report on Form 10-Q or incorporated by reference into any of our other filings with the SEC.

As of December 16, 2015, we owned and operated 179 restaurants, of which 93 are traditional cafeterias, 77 are gourmet hamburger restaurants, eight are casual dining restaurants and bars, and one primarily serves seafood. These establishments are located in close proximity to retail centers, business developments and residential areas mostly throughout the United States. Included in the 179 restaurants that we own and operate are 12 restaurants located at six property locations where we operate a side-by-side Luby’s Cafeteria and Fuddruckers on the same property. We refer to these locations as “Combo locations.”

As of December 16, 2015, we operated 28 Culinary Contract Services locations; 17 in the Houston, Texas area, three in Louisiana, two in Austin, Texas, and one in each of North Carolina, Florida, Georgia, Oklahoma, Missouri, and Massachusetts. Luby’s Culinary Contract Services provides food service management to healthcare, educational and corporate dining facilities.

As of December 16, 2015, we had 51 franchisees operating 110 Fuddruckers restaurants. Our largest five franchise owners own five to eleven restaurants each. Fifteen franchise owners each own two to four restaurants. The 31 remaining franchise owners each own one restaurant.

Accounting Periods

Our fiscal year ends on the last Wednesday in August. Accordingly, each fiscal year normally consists of 13 four-week periods, or accounting periods, accounting for 364 days in the aggregate. In fiscal year 2015, and prior, each of the first three quarters of each fiscal year consisted of three four-week periods, while the fourth quarter normally consisted of four four-week periods. Beginning in fiscal year 2016, the first quarter consisted of four four-week periods, while the last three quarters will normally consist of three four-week periods. However, fiscal year 2016 is a fiscal year consisting of 53 weeks, accounting for 371 days in the aggregate. As such, the fourth quarter of fiscal year 2016 will contain one five-week period, resulting in a 13-week fourth quarter, or 91 days in the aggregate. Comparability between quarters may be affected by the varying lengths of the quarters, as well as the seasonality associated with the restaurant business.

Same-Store Sales

The restaurant business is highly competitive with respect to food quality, concept, location, price, and service, all of which may have an effect on same-store sales. Our same-store sales calculation measures the relative performance of a certain group of restaurants. A restaurant’s sales results are included in the same-store sales calculation in the quarter after a store has been open for six consecutive fiscal quarters. Our Company-owned Fuddruckers restaurants were included in this measurement beginning with the third quarter fiscal 2012. The Cheeseburger in Paradise stores that were acquired in December 2012 were included in the same-store metric beginning the first quarter fiscal 2015. Stores that close on a permanent basis are removed from the group in the quarter when operations cease at the restaurant, but remain in the same-store group for previously reported quarters. Although management believes this approach leads to more effective year-over-year comparisons, neither the time frame nor the exact practice may be similar to those used by other restaurant companies. 

23

RESULTS OF OPERATIONS

Quarter Ended December 16, 2015 Compared to Quarter Ended November 19, 2014

Comparability between quarters is affected by the varying lengths of the quarters.  The quarter ended December 16, 2015 consisted of 16 weeks whereas the quarter ended November 19, 2014 consisted of 12 weeks.   For comparison to the 16-week quarter ended December 16, 2015, certain tables and comments, in this management discussion and analysis, also present a comparable 16-week period ended December 14, 2014.

Sales

	Quarter Ended		Quarter Ended		Comparable Period Ended		Q1FY2016 vs Comparable Period
($000s)	December 16, 2015		November 19, 2014		December 14, 2014		Increase/ (Decrease)
	(16 weeks)		(12 weeks)		(16 weeks)		(16 vs 16 weeks)
Restaurant sales	$	113,546	$	80,557	$	111,233		2.1	%
Culinary contract services		4,915		4,598		5,908		(16.8	)%
Franchise revenue		2,125		1,581		2,136		(0.5	)%
Vending revenue		158		125		161		(2.1	)%
Total sales	$	120,744	$	86,861	$	119,438		1.1	%

Total sales increased approximately $1.3 million, or 1.1%, in the quarter ended December 16, 2015 compared to the comparable 16-week period ended December 14, 2014, consisting primarily of a $2.3 million increase in restaurant sales, a $1.0 million decrease in Culinary Contract Services sales. The other components of total sales are franchise revenue and vending revenue, which decreased $11 thousand and $3 thousand, respectively, in the quarter ended December 16, 2015 compared to the 16-week period ended December 14, 2014.

The Company has three reportable segments: Company-owned restaurants, franchise operations, and culinary contract services.

Company-Owned Restaurants

Restaurant Sales

	Quarter Ended		Quarter Ended		Comparable Period Ended		Q1FY2016 vs Comparable Period
Restaurant Brand	December 16,		November 19,		December 14,		Increase/(Decrease)
($000s)	2015		2014		2014		$ Amount			% Change
	(16 weeks)		(12 weeks)		(16 weeks)		(16 vs 16 weeks)
Luby’s Cafeterias	$	70,905	$	50,548	$	71,111	$	(206	)		(0.3	)%
Fuddruckers		30,880		21,452		28,782		2,098			7.3	%
Combo locations		7,020		5,057		6,847		173			2.5	%
Cheeseburger in Paradise		4,741		3,500		4,493		248			5.5	%
Total Restaurant Sales	$	113,546	$	80,557	$	111,233	$	2,313			2.1	%

Restaurant sales increased approximately $2.3 million in the quarter ended December 16, 2015, compared to the comparable 16-week period ended December 14, 2014. Sales from stand-alone Fuddruckers locations increased by approximately $2.1 million to approximately $30.9 million, sales at Cheeseburger in Paradise restaurants increased by approximately $0.2 million to approximately $4.7 million, and sales at Combo locations increased approximately $0.2 million to approximately $7.0 million. These sales increases were offset by an approximate $0.2 million decrease in sales at our stand-alone Luby’s Cafeteria restaurants. The approximate $2.1 million sales increase at stand-alone Fuddruckers restaurants was the result of ten restaurant openings and a same-store sales increase of 1.3%, offset by the closure of five locations over the 12 months ended December 16, 2015. The 1.3% increase in same-store sales at stand-alone Fuddruckers restaurants resulted from a 4.5% increase in average spend per guest, offset by a 3.2% decline in guest traffic. The increase in sales at our Combo locations was due to the addition of our sixth Combo location, offset by a net decrease in sales at other Combo locations. All eight stores that we operate as Cheeseburger in Paradise are included in our same-store grouping and this group of restaurants realized a 5.5% increase in sales in the quarter ended December 16, 2015 compared to the comparable 16-week period ended December 14, 2014. The $0.2 million sales decrease at our stand-alone Luby’s Cafeterias was due to the closure of two Luby’s Cafeterias, offset by a 1.2% increase in Luby’s Cafeteria same-store sales. The 1.2% increase in Luby’s Cafeteria same-store sales was the result of a 0.8% increase in guest traffic and a 0.4% increase in average spend per guest.

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Cost of Food

	Quarter Ended			Quarter Ended			Comparable Period Ended			Q1FY2016 vs Comparable Period
($000s)	December 16, 2015			November 19, 2014			December 14, 2014			Increase/ (Decrease)
	(16 weeks)			(12 weeks)			(16 weeks)			(16 vs 16 weeks)
Cost of food	$	32,434		$	23,484		$	32,755			(1.0	)%
As a percent of restaurant sales		28.6	%		29.2	%		29.4	%		(0.8	)%

Cost of food decreased approximately $0.3 million, or 1.0%, in the quarter ended December 16, 2015 compared to the comparable 16-week period ended December 14, 2014 due primarily to decreases in food commodity costs, particularly with beef costs which were 19.0% lower at Fuddruckers where the core menu items include hamburgers. As a percentage of restaurant sales, cost of food decreased 0.8% to 28.6% in the quarter ended December 16, 2015 compared to the comparable 16-week period ended December 14, 2014. Food commodity prices for our basket of food commodity purchases decreased 1.0% at our Luby’s Cafeterias locations and 5.0% at our Fuddruckers restaurants.

Payroll and Related Costs

	Quarter Ended			Quarter Ended			Comparable Period Ended			Q1FY2016 vs Comparable Period
($000s)	December 16, 2015			November 19, 2014			December 14, 2014			Increase/ (Decrease)
	(16 weeks)			(12 weeks)			(16 weeks)			(16 vs 16 weeks)
Payroll and related costs	$	39,424		$	28,686		$	38,758			1.7	%
As a percent of restaurant sales		34.7	%		35.6	%		34.8	%		(0.1	)%

Payroll and related costs increased approximately $0.7 million in the quarter ended December 16, 2015 compared to the comparable 16-week period ended December 14, 2014, due primarily to increases in restaurant management costs. Increases in payroll costs is primarily related to our investments in training and leadership development as well as higher variable compensation on improved store level profitability. As a percentage of restaurant sales, payroll and related costs decreased 0.1%, to 34.7% in the quarter ended December 16, 2015 compared to 34.8% in the comparable 16-week period ended December 14, 2014 due to our ability to leverage payroll and related costs over higher sales volumes.

Other Operating Expenses

	Quarter Ended			Quarter Ended			Comparable Period Ended			Q1FY2016 vs Comparable Period
($000s)	December 16, 2015			November 19, 2014			December 14, 2014			Increase/ (Decrease)
	(16 weeks)			(12 weeks)			(16 weeks)			(16 vs 16 weeks)
Other operating expenses	$	18,421		$	14,219		$	18,988			(3.0	)%
As a percent of restaurant sales		16.2	%		17.7	%		17.1	%		(0.9	)%

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Other operating expenses primarily include restaurant-related expenses for utilities, repairs and maintenance, local store advertising, property and liability insurance losses above insurance deductibles, services and supplies. Other operating expenses decreased by approximately $0.6 million, or 3.0% in the quarter ended December 16, 2015 compared to the comparable 16-week period ended December 14, 2014, due primarily to (1) an approximate $0.6 million decrease in utilities expense; (2) an approximate $0.4 million decrease in repairs and maintenance, losses above insurance deductibles, and bad debt estimates for doubtful accounts; and (3) an approximate $0.1 million decrease in store-level marketing expense; offset by (4) a $0.5 million increase in restaurant supplies and services, including an increase of approximately $0.1 million related to higher credit card usage fees. As a percentage of restaurant sales, other operating expenses decreased 0.9%, to 16.2%, in the quarter ended December 16, 2015, compared to 17.1% for the 16-week period ended December 14, 2014.

Occupancy Costs

	Quarter Ended			Quarter Ended			Comparable Period Ended			Q1FY2016 vs Comparable Period
($000s)	December 16, 2015			November 19, 2014			December 14, 2014			Increase/ (Decrease)
	(16 weeks)			(12 weeks)			(16 weeks)			(16 vs 16 weeks)
Occupancy cost	$	6,642		$	4,942		$	6,677			(0.5	)%
As a percent of restaurant sales		5.8	%		6.1	%		6.0	%		(0.2	)%

Occupancy costs include property lease expense, property taxes, common area maintenance charges, and property insurance expense. Occupancy costs decreased approximately $35 thousand to approximately $6.6 million in the quarter ended December 16, 2015 compared to the 16-week period ended December 14, 2014. 

Franchise Operations

	Quarter Ended			Quarter Ended			Comparable Period Ended			Q1FY2016 vs Comparable Period
($000s)	December 16, 2015			November 19, 2014			December 14, 2014			Increase/ (Decrease)
	(16 weeks)			(12 weeks)			(16 weeks)			(16 vs 16 weeks)
Franchise revenue	$	2,125		$	1,581		$	2,136			(0.5	)%
Cost of franchise operations		612			384			539			13.5	%
Franchise profit	$	1,513		$	1,197		$	1,597			(7.5	)%
Franchise profit as percent of franchise revenue		71.2	%		75.7	%		74.8	%		(4.1	)%

We only offer franchises for the Fuddruckers brand. Franchises are sold in markets where expansion is deemed advantageous to the development of the Fuddruckers concept and system of restaurants. Franchise revenue includes (1) royalties paid to us as the franchisor for the Fuddruckers brand and (2) franchise fees paid to us when franchise units are opened for business or transferred to new owners. Franchise revenue decreased approximately $11 thousand in the quarter ended December 16, 2015 compared to the 16-week period ended December 14, 2014. The $11 thousand decrease in franchise revenue includes an approximate $76 thousand decrease in franchise royalties offset by an approximate $65 thousand increase in non-royalty related fee income.

Cost of Franchise Operations

Cost of franchise operations includes the direct costs associated with supporting franchisees with opening new Fuddruckers franchised restaurants and the corporate overhead expenses associated with generating franchise revenue.  These corporate expenses primarily include the salaries and benefits, travel and related expenses, and other expenses for employees whose primary job function involves supporting our franchise owners and the development of new franchise locations.   Cost of franchise operations increased approximately $0.1 million, or 13.5%, in the quarter ended December 19, 2015 compared to the comparable 16-week period ended December 14, 2014, primarily as a result of an increased number of franchise openings in the quarter ended December 16, 2015.  Franchisees opened three international locations (one in each of Italy, Colombia, and Mexico) and three domestic locations (one in each of Michigan, California, and Florida) in the quarter ended December 16, 2015.  Franchise profit, defined as Franchise revenue less Cost of franchise operations, decreased approximately $0.1 million in the quarter ended December 16, 2015 compared to the 16-week period ended December 14, 2014.  

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Culinary Contract Services

Culinary Contract Services is 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. We operated 28 Culinary Contract Services locations at the end of the quarter ended December 16, 2015 and 26 at the end of the quarter ended November 19, 2014. We focus on clients able to enter into agreements where all operating costs are reimbursed to us and we generally charge a fixed fee. These agreements typically present lower financial risk to the company.

Culinary Contract Services Revenue

	Quarter Ended			Quarter Ended			Comparable Period Ended			Q1FY2016 vs Comparable Period
($000s)	December 16, 2015			November 19, 2014			December 14, 2014			Increase/ (Decrease)
	(16 weeks)			(12 weeks)			(16 weeks)			(16 vs 16 weeks)
Culinary contract services sales	$	4,915		$	4,598		$	5,908			(16.8	)%
Cost of culinary contract services		4,422			4,099			5,302			(16.6	)%
Culinary contract profit	$	493		$	499		$	606			(18.6	)%
Culinary contract profit as percent of Culinary contract sales		10.0	%		10.9	%		10.3	%		(0.3	)%

Culinary Contract Services revenue decreased approximately $1.0 million, or 16.8%, in the quarter ended December 16, 2015 compared to the 16-week period ended December 14, 2014.  The decrease in Culinary Contract Services revenue was the result of higher sales volume locations ceasing operations over the past 12 months, replaced with locations that are smaller in nature and thus generate lower sales volumes.  

Cost of Culinary Contract Services includes the food, payroll and related costs, other direct operating expenses, and corporate overhead expenses associated with generating Culinary Contract Services sales. Cost of Culinary Contract Services decreased approximately $0.9 million, or 16.6%, in the quarter ended December 16, 2015 compared to the comparable 16-week period ended December 14, 2014, consistent with a decrease in Culinary Contract Services revenue. Culinary Contract Services profit margin, defined as Culinary Contract Services revenue less Cost of Culinary Contract Services, decreased to 10.0% in the quarter ended December 16, 2015 from 10.3% in the comparable 16-week period ended December 14, 2014.

 Company-wide Expenses

Opening Costs

Opening costs include labor, supplies, occupancy, and other costs necessary to support the restaurant through its opening period. Opening costs were approximately $0.4 million in the quarter ended December 16, 2015 compared to approximately $0.9 million in the quarter ended November 19, 2014. Both quarters included carrying costs of locations to be developed for future restaurant openings. The $0.4 million in opening costs in the quarter ended December 16, 2015 included the carrying costs for five locations where we previously operated Cheeseburger in Paradise restaurants. Two of these locations opened as Fuddruckers restaurants in the quarter ended December 16, 2015 and one opened after the end of the quarter ended December 16, 2015. The other two locations are slated for possible future restaurant openings. The $0.9 million in opening costs in the quarter ended November 19, 2014 included the opening costs for five Fuddruckers restaurants, two that opened in the quarter ended November 19, 2014, two that opened prior to the start of the quarter ended November 19, 2014, and one that opened after the end of the quarter ended November 19, 2014.

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Depreciation and Amortization Expense

	Quarter Ended			Quarter Ended			Comparable Period Ended			Q1FY2016 vs Comparable Period
($000s)	December 16, 2015			November 19, 2014			December 14, 2014			Increase/ (Decrease)
	(16 weeks)			(12 weeks)			(16 weeks)			(16 vs 16 weeks)
Depreciation and amortization	$	7,014		$	5,068		$	6,664			5.3	%
As a percent of total sales		5.8	%		5.8	%		5.6	%		0.2	%

Depreciation and amortization expense increased by approximately $0.4 million, or 5.3%, in the quarter ended December 16, 2015 compared to the comparable 16-week period ended December 14, 2014 due primarily to the addition of depreciation related to new capital expenditures for restaurant conversions and restaurant remodeling activity.

Selling, General and Administrative Expenses

	Quarter Ended			Quarter Ended			Comparable Period Ended			Q1FY2016 vs Comparable Period
($000s)	December 16, 2015			November 19, 2014			December 14, 2014			Increase/ (Decrease)
	(16 weeks)			(12 weeks)			(16 weeks)			(16 vs 16 weeks)
General and administrative expenses	$	11,455		$	8,480		$	11,215			2.1	%
Marketing and advertising expenses		1,788			671			1,047			70.8	%
Selling, general and administrative expenses	$	13,243		$	9,151		$	12,262			8.0	%
As percent of total sales		11.0	%		10.5	%		10.3	%		0.7	%

Selling, general and administrative expenses include corporate salaries and benefits-related costs, including restaurant area leaders, share-based compensation, marketing and advertising expense, professional fees, travel and recruiting expenses and other office expenses. Selling, general and administrative expenses increased approximately $1.0 million, or 8.0%, in the quarter ended December 16, 2015 compared to the comparable 16-week period ended December 14, 2014. Increases in selling, general and administrative expense are attributable to increased spending on marketing and advertising efforts. The increased spending in marketing and advertising is intended to motivate increased guest visits, increased frequency of visits, and increased overall brand awareness. This includes sponsorships and partnerships with sports teams that we believe enhance our visibility and appeal within our core markets. The increased marketing and advertising expense also reflects greater emphasis placed on these efforts earlier in our fiscal year. As a percentage of total revenue, selling, general and administrative expenses increased to 11.0% in the quarter ended December 16, 2015, compared to 10.3% in the comparable 16-week period ended December 14, 2014.

Provision for Asset Impairments

There was no impairment charge for the quarter ended December 16, 2015 and in the quarter ended November 19, 2014.

Net (Gain) Loss on Disposition of Property and Equipment

Gain on disposition of property and equipment was approximately $0.3 million in the quarter ended December 16, 2015 and primarily reflects the gain on the sale of one property that we had previously acquired for possible development. Loss on disposition of property and equipment was approximately $0.3 million in the quarter ended November 19, 2014 and included the sale of equipment and other normal asset retirement activity.

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Interest Income

Interest income was $1 thousand in the quarter ended December 16, 2015 in the quarter ended November 19, 2014.

Interest Expense

Interest expense was approximately $0.7 million in the quarter ended December 16, 2015 and in the comparable 16-week period ended December 14, 2014. Interest expense was approximately $0.5 million for the 12-week quarter ended November 19, 2014.

Other Income, Net

Other income, net, consisted primarily of the following components: net rental property income and expenses relating to property for which we are the landlord; prepaid sales tax discounts earned through our participation in state tax prepayment programs; and oil and gas royalty income. Other income, net, in the quarter ended December 16, 2015 decreased approximately $0.3 million compared to comparable 16-week period ended December 14, 2014 due primarily to lower net rental income and an increase in discounts related to a higher volume of sales of pre-paid gift cards. Other income, net also decreased approximately $0.3 million compared to the 12-week quarter ended November 19, 2014. 

Taxes

For the quarter ended December 16, 2015, the income taxes related to continuing operations resulted in a tax benefit of approximately $0.7 million compared to a tax benefit of $1.8 million for the quarter ended November 19, 2014. These tax benefits were due to the loss before taxes and discontinued operations in the quarter ended December 16, 2015 and in the quarter ended November 19, 2014.

Discontinued Operations

Loss from discontinued operations was approximately $0.1 million in the quarter ended December 16, 2015 and in the quarter ended November 19, 2014. Loss from discontinued operations of approximately $0.1 million in the quarter ended December 16, 2015 consisted of approximately $0.1 million in carrying costs associated with assets related to discontinued operations offset by a tax benefit of less than $0.1 million. The loss from discontinued operations of approximately $0.1 million in the quarter ended November 19, 2014 consisted of $0.2 million in carrying costs associated with assets related to discontinued operations offset by an approximate $0.1 million tax benefit. 

LIQUIDITY AND CAPITAL RESOURCES

Cash and Cash Equivalents

General. Our primary sources of short-term and long-term liquidity are cash flows from operations and our revolving credit facility. During the quarter ended December 16, 2015, cash provided by operating activities was approximately $6.3 million offset by cash used in investing activities of approximately $3.8 million and cash used in financing activities of approximately $2.4 million. Cash and cash equivalents increased approximately $0.1 million in the quarter ended December 16, 2015 compared to approximately $1.0 million decrease in the quarter ended November 19, 2014. We plan to continue the level of capital and repair and maintenance expenditures necessary to keep our restaurants attractive and operating efficiently.

Our cash requirements consist principally of:

• payments to reduce our debt;

• capital expenditures for construction, restaurant renovations and upgrades, information technology and culinary contract services development; and

• working capital primarily for our Company-owned restaurants and Culinary Contract Services agreements.

As is common in the restaurant industry, we maintain relatively low levels of accounts receivable and inventories, and our vendors grant trade credit for purchases such as food and supplies. However, higher levels of accounts receivable are typical for culinary contract services and franchises. We also continually invest in our business through the addition of new units and refurbishment of existing units, which are reflected as long-term assets. 

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The following table summarizes our cash flows from operating, investing and financing activities:

	Quarter Ended
	December 16, 2015			November 19, 2014
	(16 weeks)			(12 weeks)
	(In thousands)
Total cash provided by (used in):
Operating activities	$	6,343		$	(4,327	)
Investing activities		(3,796	)		(2,897	)
Financing activities		(2,467	)		6,250
Net increase (decrease) in cash and cash equivalents	$	80		$	(974	)

Operating Activities. Cash provided by operating activities was approximately $6.3 million in the quarter ended December 16, 2015, an approximate $10.7 million increase from the quarter ended November 19, 2014. The $10.7 million increase in cash is due to an approximate $4.1 million increase in cash provided by operations before changes in operating assets and liabilities plus an approximate $6.6 million increase in cash provided by changes in operating assets and liabilities for the quarter ended December 16, 2015.

Cash generated by operating activities before changes in operating assets and liabilities was approximately $4.7 million in the quarter ended December 16, 2015, a $4.1 million increase compared to the quarter ended November 19, 2014. The $4.1 million increase in cash provided by operating activities before changes in operating assets and liabilities was primarily due to increased store level profit from our Company-owned restaurants, partially due to four additional operating weeks in the first quarter fiscal 2016.

Changes in operating assets and liabilities was an approximate $1.6 million source of cash in the quarter ended December 16, 2015 and an approximate $5.0 million use of cash in the quarter ended November 19, 2014. The $6.6 million increase in the source of cash was due to differences in the change in asset and liability balances between the quarter ended December 16, 2015 and the quarter ended November 19, 2014. Increases in current asset accounts are a use of cash while decreases in current asset accounts are a source of cash. During the quarter ended December 16, 2015, the change in trade accounts and other receivables was an approximate $0.2 million source of cash which was $1.0 million greater than in the quarter ended November 19, 2014. The change in inventory during the quarter ended December 16, 2015 was an approximate $1.0 million use of cash which was a $1.0 million decrease from the quarter ended November 19, 2014. The change in prepaid expenses and other assets was an approximate $0.4 million source of cash during the quarter ended December 16, 2015, which was a $0.8 million decrease from the quarter ended November 19, 2014.

Increase in current liability accounts are a source of cash, while decreases in current liability accounts are a use of cash. During the quarter ended December 16, 2015, changes in the balances of accounts payable, accrued expenses and other liabilities was an approximate $2.0 million source of cash, compared to a use of cash of approximately $3.4 million during the quarter ended November 19, 2014.

Investing Activities. We generally reinvest available cash flows from operations to develop new restaurants, enhance existing restaurants and support Culinary Contract Services. Cash used by investing activities was approximately $3.8 million in the quarter ended December 16, 2015 and approximately $2.9 million in the quarter ended November 19, 2014. Capital expenditures were approximately $5.7 million in the quarter ended December 16, 2015, a $2.1 million increase compared to the quarter ended November 19, 2014. Proceeds from the disposal of assets were approximately $1.9 million in the quarter ended December 16, 2015 and approximately $0.7 million in the quarter ended November 19, 2014.

Financing Activities. Cash used in financing activities was approximately $2.5 million in the quarter ended December 16, 2015 compared to an approximate $6.3 million source of cash during the quarter ended November 19, 2014. Cash flows from financing activities was primarily the result of borrowings and repayments related to our revolving credit facility. During the quarter ended December 16, 2015, repayments exceeded borrowings by approximately $2.5 million. During the quarter ended November 19, 2014, borrowings exceeded repayments of the credit facility by approximately $6.3 million.

Status of Long-Term Investments and Liquidity

At December 16, 2015, we did not hold any long-term investments.

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Status of Trade Accounts and Other Receivables, Net

We monitor the aging of our receivables, including Fuddruckers franchising related receivables, and record provisions for uncollectable accounts, as appropriate. Credit terms of accounts receivable associated with our Culinary Contract Services business vary from 30 to 45 days based on contract terms.

Working Capital

Current assets decreased approximately $0.2 million in the quarter ended December 16, 2015 compared to an increase of approximately $0.6 million in the quarter ended November 19, 2014. In the quarter ended December 16, 2015, food and supply inventories and cash increased approximately $0.5 million and $0.1 million, respectively, partially offset by decreases in prepaid expenses and trade accounts and other receivables of approximately $0.5 million and $0.2 million, respectively. In the quarter ended November 19, 2014, food and supply inventory increased approximately $2.0 million and trade accounts and other receivables increased approximately $0.7 million; partially offset by decreases in prepaid expenses of approximately $1.1 million and cash of approximately $1.0 million. 

Current liabilities increased approximately $2.2 million in the quarter ended December 16, 2015 compared to a decrease of approximately $2.8 million in the quarter ended November 19, 2014. In the quarter ended December 16, 2015, unredeemed gift cards increased approximately $1.4 million, taxes other than income taxes increased approximately $0.9 million, salaries and incentives increased approximately $0.8 million and income taxes and other increased approximately $0.6 million; partially offset by decreases in accounts payable of approximately $1.3 million and accrued operating expenses of approximately $0.2 million. In the quarter ended November 19, 2014, unredeemed gift cards increased approximately $1.1 million, taxes other than income taxes increased approximately $0.8 million and income taxes and other increased approximately $0.3 million; partially offset by decreases in accounts payable of approximately $3.8 million, salaries and incentives of approximately $1.1 million and accrued operating expenses of approximately $0.1 million.

Capital Expenditures

Capital expenditures consist of purchases of real estate for future restaurant sites, Culinary Contract Services investments, new unit construction, purchases of new and replacement restaurant furniture and equipment, and ongoing remodeling programs. Capital expenditures for the quarter ended December 16, 2015 were approximately $5.7 million and related to recurring maintenance of our existing units, improvement of our culinary contract services business and the development of future restaurant sites. We expect to be able to fund all capital expenditures in fiscal 2016 using proceeds from the sale of assets, cash flows from operations and our available credit. We expect to spend approximately $20.0 to $22.0 million on capital expenditures in fiscal 2016.

DEBT

Revolving Credit Facility

In August 2013, we entered into a $70.0 million revolving credit facility with Wells Fargo Bank, National Association, as Administrative Agent, and Amegy Bank, National Association, as Syndication Agent. The following description summarizes the material terms of the revolving credit facility, as subsequently amended on March 21, 2014, November 7, 2014 and October 2, 2015, (the revolving credit facility is referred to as the “2013 Credit Facility”). The 2013 Credit Facility is governed by the credit agreement dated as of August 14, 2013 (the “2013 Credit Agreement”) among us, the lenders from time to time party thereto, Wells Fargo Bank, National Association, as Administrative Agent, and Amegy Bank, National Association, as Syndication Agent. The maturity date of the 2013 Credit Facility is September 1, 2017.

The 2013 Credit Facility also provides for the issuance of letters of credit in a maximum aggregate amount of $5.0 million outstanding as of August 14, 2013 and $15.0 million outstanding at any one time with prior written consent of the Administrative Agent and the Issuing Bank.

Pursuant to the October 2, 2015 amendment, the total aggregate amount of the lenders’ commitments was lowered to $60.0 million from $70.0 million. At December 16, 2015, after applying the Lease Adjusted Leverage Ratio Limitation, the available borrowing capacity was $23.1 million.

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The 2013 Credit Facility is guaranteed by all of our present subsidiaries and will be guaranteed by our future subsidiaries. In addition to the bank’s increased commitment under the 2013 Credit Agreement, it may be increased to a maximum commitment of $90.0 million.

At any time throughout the term of the 2013 Credit Facility, we have the option to elect one of two basis of interest rates. One interest rate option is the greater of (a) the Federal Funds Effective Rate plus 0.50%, or (b) prime plus, in either case, an applicable spread that ranges from 0.75% to 2.25% per annum. The other interest rate option is the London InterBank Offered Rate plus a spread that ranges from 2.50% to 4.00% per annum. The applicable spread under each option is dependent upon the ratio of our debt to EBITDA at the most recent determination date.

We are obligated to pay to the Administrative Agent for the account of each lender a quarterly commitment fee based on the average daily unused amount of the commitment of such lender, ranging from 0.30% to 0.40% per annum depending on the Total Leverage Ratio at the most recent determination date.

The proceeds of the 2013 Credit Facility are available for our general corporate purposes and general working capital purposes and capital expenditures.

Borrowings under the 2013 Credit Facility are subject to mandatory repayment with the proceeds of sales of certain of our real property, subject to certain exceptions.

The 2013 Credit Facility is secured by a perfected first priority lien on certain of our real property and all of the material personal property owned by us or any of our subsidiaries, other than certain excluded assets (as defined in the Credit Agreement). At December 16, 2015, the carrying value of the collateral securing the 2013 Credit Facility was $116.9 million.

The 2013 Credit Agreement, as amended, contains the following covenants among others:

● Debt Service Coverage Ratio of not less than (i) 1.10 to 1.00 at all times during the first, second and third fiscal quarters of the Borrower’s fiscal year 2015, (ii) 1.25 to 1.00 at all times during the fourth fiscal quarter of the Borrower’s fiscal year 2015, and (iii) 1.50 to 1.00 at all times thereafter,

● Lease Adjusted Leverage Ratio of not more than (i) 5.75 to 1.00 at all times during the first, second and third fiscal quarters of the Borrower’s fiscal year 2015, (ii) 5.50 to 1.00 at all times during the fourth fiscal quarter of the Borrower’s fiscal year 2015, (iii) 5.25 to 1.00 at all times during the first fiscal quarter of the Borrower’s fiscal year 2016, (iv) 5.00 to 1.00 at all times during the second fiscal quarter of the Borrower’s fiscal year 2016, and (v) 4.75 to 1.00 at all times thereafter,

● capital expenditures limited to $25.0 million per year, 

● restrictions on incurring liens on certain of our property and the property of our subsidiaries,

● restrictions on transactions with affiliates and materially changing our business,

● restrictions on making certain investments, loans, advances and guarantees,

● restrictions on selling assets outside the ordinary course of business,

● prohibitions on entering into sale and leaseback transactions, and

● restrictions on certain acquisitions of all or a substantial portion of the assets, property and/or equity interests of any person, including share repurchases and dividends.

At February 12, 2014, as the result of losses incurred from our recently acquired leaseholds operating as Cheeseburger in Paradise restaurants, we reported our second consecutive quarterly net profit below our required minimum net profit as defined in the 2013 Credit Agreement. As part of the March 21, 2014 amendment we received a waiver of non-compliance related to this minimum consecutive quarterly net profit debt covenant for the second quarter fiscal 2014. The November 2014 amendment revised the net profit, debt service, lease adjusted leverage ratio, borrowing rates, provided for a $25.0 million annual capital expenditure limit, and required liens to be perfected on all real property by January 31, 2015. As part of the October 2, 2015 amendment, the Net Profit – Two Consecutive Quarters covenant was removed.

We were in compliance with the covenants contained in the 2013 Credit Agreement as amended as of December 16, 2015.

The 2013 Credit Agreement also includes customary events of default. If a default occurs and is continuing, the lenders’ commitments under the 2013 Credit Facility may be immediately terminated and/or we may be required to repay all amounts outstanding under the 2013 Credit Facility.

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As of December 16, 2015, we had $35.0 million in outstanding loans and $1.3 million committed under letters of credit, which were issued as security for the payment of insurance obligations and $0.6 million in capital lease commitments.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Consolidated Financial Statements included in Item 1 of Part 1 of this Form 10-Q were prepared in conformity with GAAP. Preparation of the financial statements requires us to make judgments, estimates and assumptions that affect the amounts of assets and liabilities in the financial statements and revenues and expenses during the reporting periods. Due to the significant, subjective and complex judgments and estimates used when preparing our Consolidated Financial Statements, management regularly reviews these assumptions and estimates with the Finance and Audit Committee of our Board. Management believes the following are critical accounting policies used in the preparation of these financial statements. Actual results may differ from these estimates, including our estimates of future cash flows, which are subject to the current economic environment and changes in estimates. We had no changes in our critical accounting policies and estimates which were disclosed in our Annual Report on Form 10-K for the fiscal year ended August 26, 2015.   

NEW ACCOUNTING PRONOUNCEMENTS

In April 2014, the FASB issued ASU No 2014-08 Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360). The amendments in ASU 2014-08 change the criteria for reporting discontinued operations while enhancing disclosures in this area. It also addresses sources of confusion and inconsistent application related to financial reporting of discontinued operations guidance in GAAP. Under the new guidance, only disposals representing a strategic shift in operations should be presented as discontinued operations. Those strategic shifts should have a major effect on the organization’s operations and financial results. Examples include a disposal of a major geographic area, a major line of business, or a major equity method investment. In addition, the new guidance requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. The pronouncement is effective for fiscal years, and interim periods within those fiscal years, after December 15, 2014. The adoption of this pronouncement did not have a material impact on the Company’s Consolidated Financial Statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This update provides a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. This update is effective for annual and interim periods beginning after December 15, 2016, which will require us to adopt these provisions in the first quarter of fiscal 2018. Early application is not permitted. This update permits the use of either the retrospective or cumulative effect transition method. We are evaluating the effect this guidance will have on our consolidated financial statements and related disclosures. We are evaluating the impact on the Company’s consolidated financial statements and have not yet selected a transition method.

In August 2014, the FASB issued ASU No 2014-15. The amendments in ASU 2014-15 are intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. Under GAAP, financial statements are prepared under the presumption that the reporting organization will continue to operate as a going concern, except in limited circumstances. The going concern basis of accounting is critical to financial reporting because it establishes the fundamental basis for measuring and classifying assets and liabilities. Currently, GAAP lacks guidance about management’s responsibility to evaluate whether there is substantial doubt about the organization’s ability to continue as a going concern or to provide related footnote disclosures. This ASU provides guidance to an organization’s management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations today in the financial statement footnotes. The pronouncement is effective for fiscal years and interim periods within those fiscal years, after December 31, 2016. The adoption of this pronouncement is not expected to have a material impact on the Company’s financial statements.

33

INFLATION

It is generally our policy to maintain stable menu prices without regard to seasonal variations in food costs. Certain increases in costs of food, wages, supplies, transportation and services may require us to increase our menu prices from time to time. To the extent prevailing market conditions allow, we intend to adjust menu prices to maintain profit margins.

FORWARD-LOOKING STATEMENTS

This Form 10-Q contains statements that are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements contained in this Form 10-Q, other than statements of historical facts, are forward-looking statements for purposes of these provisions, including any statements regarding:

• future operating results,

• future capital expenditures and expected sources of funds for capital expenditures,

• future debt, including liquidity and the sources and availability of funds related to debt, and expected repayment of debt, as well as our ability to refinance the existing credit facility or enter into a new credit facility on a timely basis,

• expected sources of funds for working capital requirements,

• plans for our new prototype restaurants,

• plans for expansion of our business,

• scheduled openings of new units,

• closing existing units,

• future sales of assets and the gains or losses that may be recognized as a result of any such sales, and

• continued compliance with the terms of our 2013 Credit Facility, as amended.

34

In some cases, investors can identify these statements by forward-looking words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “outlook,” “may,” “should,” “will,” and “would” or similar words. Forward-looking statements are based on certain assumptions and analyses made by management in light of its experience and perception of historical trends, current conditions, expected future developments and other factors it beieves are relevant. Although management believes that its assumptions are reasonable based on information currently available, those assumptions are subject to significant risks and uncertainties, many of which are outside of its control. The following factors, as well as the factors set forth in Item 1A of our Annual Report on Form 10-K for the fiscal year ended August 26, 2015 and any other cautionary language in this Form 10-Q, provide examples of risks, uncertainties, and events that may cause our financial and operational results to differ materially from the expectations described in our forward-looking statements:

• general business and economic conditions,

• the impact of competition,

• our operating initiatives, changes in promotional, couponing and advertising strategies and the success of management’s business plans,

• fluctuations in the costs of commodities, including beef, poultry, seafood, dairy, cheese, oils and produce,

• ability to raise menu prices and customer acceptance of changes in menu items,

• increases in utility costs, including the costs of natural gas and other energy supplies,

• changes in the availability and cost of labor, including the ability to attract qualified managers and team members,

• the seasonality of the business,

• collectability of accounts receivable,

• changes in governmental regulations, including changes in minimum wages and health care benefit regulation,

• the effects of inflation and changes in our customers’ disposable income, spending trends and habits,

• the ability to realize property values,

• the availability and cost of credit,

• the ability to effectively integrate and improve the profitability of the acquired Cheeseburger in Paradise restaurants,

• effectiveness of the Cheeseburger in Paradise conversions to Fuddruckers restaurants,

• the effectiveness of our credit card controls and PCI compliance,

• weather conditions in the regions in which our restaurants operate,

• costs relating to legal proceedings,

• impact of adoption of new accounting standards,

• effects of actual or threatened future terrorist attacks in the United States,

• unfavorable publicity relating to operations, including publicity concerning food quality, illness or other health concerns or labor relations, and

• the continued service of key management personnel.

35

Each forward-looking statement speaks only as of the date of this Form 10-Q, and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Investors should be aware that the occurrence of the events described above and elsewhere in this Form 10-Q could have material adverse effect on our business, results of operations, cash flows and financial condition.  

36

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risk from changes in interest rates affecting our variable-rate debt. As of December 16, 2015, the total amount of debt subject to interest rate fluctuations outstanding under our 2013 Credit Facility was $35.0 million. Assuming an average debt balance of $35.0 million, a 1.0% increase in prevailing interest rates would increase our annual interest expense by $0.4 million.

We are not currently using interest rate swaps to manage interest risk on our variable-rate debt.

We have exposure to various foreign currency exchange rate fluctuations for revenues generated by our operations outside of the United States, which can adversely impact our net income and cash flows. Approximately 0.13% of our total revenues as of both fiscal quarters ended December 16, 2015 and November 19, 2014 were derived from sales to customers and royalties from franchisees outside the contiguous United States. All of this business is conducted in the local currency of the country in which the franchise operates. We do not enter into financial instruments to manage this foreign currency exchange risk.

Many ingredients in the products sold in our restaurants are commodities subject to unpredictable price fluctuations. We attempt to minimize price volatility by negotiating fixed price contracts for the supply of key ingredients and in some cases by passing increased commodity costs through to the customer by adjusting menu prices or menu offerings. Our ingredients are available from multiple suppliers so we are not dependent on a single vendor for our ingredients.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act), as of December 16, 2015. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of December 16, 2015, our disclosure controls and procedures were effective in providing reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Changes in Internal Control over Financial Reporting 

There were no changes in our internal control over financial reporting during the quarter ended December 16, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

37

Part II—OTHER INFORMATION

Item 1. Legal Proceedings

There have been no material changes to our legal proceedings as disclosed in “Legal Proceedings” in Item 3 of Part I of our Annual Report on Form 10-K for the fiscal year ended August 26, 2015.

Item 1A. Risk Factors

There have been no material changes during the quarter ended December 16, 2015 to the Risk Factors discussed in Item1A of Part I of our Annual Report on Form 10-K for the fiscal year ended August 26, 2015.

Item 6. Exhibits

10.1	Form of Luby’s, Inc. Incentive Stock Option granted under Luby’s Incentive Stock Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed November 16, 2015 (File No. 001-08308)).
10.2	Form of Luby’s, Inc. Incentive Stock Plan Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed November 16, 2015 (File No. 001-08308)).
31.1	Rule 13a-14(a)/15d-14(a) certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Rule 13a-14(a)/15d-14(a) certification of the Principal Financial and Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Section 1350 certification of the Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Section 1350 certification of the Principal Financial and Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Schema Document
101.CAL	XBRL Calculation Linkbase Document
101.DEF	XBRL Definition Linkbase Document
101.LAB	XBRL Label Linkbase Document
101.PRE	XBRL Presentation Linkbase Document

38

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	LUBY’S, INC. (Registrant)
Date: January 25, 2016	By:	/s/ Christopher J. Pappas
		Christopher J. Pappas
		President and Chief Executive Officer
		(Principal Executive Officer)
Date: January 25, 2016	By:	/s/ K. Scott Gray
		K. Scott Gray
		Senior Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer)

39

EXHIBIT INDEX

10.1	Form of Luby’s, Inc. Incentive Stock Option granted under Luby’s Incentive Stock Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed November 16, 2015 (File No. 001-08308)).
10.2	Form of Luby’s, Inc. Incentive Stock Plan Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed November 16, 2015 (File No. 001-08308)).
31.1	Rule 13a-14(a)/15d-14(a) certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Rule 13a-14(a)/15d-14(a) certification of the Principal Financial and Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Section 1350 certification of the Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Section 1350 certification of the Principal Financial and Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Schema Document
101.CAL	XBRL Calculation Linkbase Document
101.DEF	XBRL Definition Linkbase Document
101.LAB	XBRL Label Linkbase Document
101.PRE	XBRL Presentation Linkbase Document

40

EX-31.1

Exhibit 31.1

Certification

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Christopher J. Pappas, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Luby’s, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects, the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 25, 2016

By:	/s/ Christopher J. Pappas
	Christopher J. Pappas
	President and Chief Executive Officer (Principal Executive Officer)

A signed original of this written statement required by Section 302 of the Sarbanes-Oxley Act of 2002 has been provided to Luby’s, Inc. and will be retained by Luby’s, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-31.2

Exhibit 31.2

Certification

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, K. Scott Gray, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Luby’s, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects, the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 25, 2016

By:	/s/ K/ Scott Gray
	K. Scott Gray
	Senior Vice President and Chief Financial Officer
	(Principal Financial and Accounting Officer)

A signed original of this written statement required by Section 302 of the Sarbanes-Oxley Act of 2002 has been provided to Luby’s, Inc. and will be retained by Luby’s, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.1

Exhibit 32.1

Certification Pursuant to

18 U.S.C. Section 1350,

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Luby’s, Inc. (the “Registrant”) on Form 10-Q for the fiscal quarter ended December 16, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Christopher J. Pappas, President and Chief Executive Officer of the Registrant, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date: January 25, 2016	By:	/s/ Christopher J. Pappas
		Christopher J. Pappas
		President and Chief Executive Officer (Principal Executive Officer)

EX-32.2

Exhibit 32.2

Certification Pursuant to

18 U.S.C. Section 1350,

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Luby’s, Inc. (the “Registrant”) on Form 10-Q for the fiscal quarter ended December 16, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, K. Scott Gray, Senior Vice President and Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date: January 25, 2016	By:	/s/ K. Scott Gray
		K. Scott Gray
		Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

XML

Document And Entity Information - shares	4 Months Ended
	Dec. 16, 2015	Jan. 20, 2016
Entity Registrant Name	LUBYS INC
Entity Central Index Key	0000016099
Trading Symbol	lub
Current Fiscal Year End Date	--08-31
Entity Filer Category	Accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		28,825,754
Document Type	10-Q
Document Period End Date	Dec. 16, 2015
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Dec. 16, 2015	Aug. 26, 2015
Current Assets:
Cash and cash equivalents	$ 1,581	$ 1,501
Trade accounts and other receivables, net	4,949	5,175
Food and supply inventories	4,948	4,483
Prepaid expenses	2,881	3,402
Assets related to discontinued operations	3	10
Deferred income taxes	577	577
Total current assets	14,939	15,148
Property held for sale	3,058	4,536
Assets related to discontinued operations	3,672	3,671
Property, Plant and Equipment, Net	199,754	200,202
Intangible assets, net	22,089	22,570
Goodwill	1,643	1,643
Deferred income taxes	13,844	12,917
Other assets	3,613	3,571
Total assets	262,612	264,258
Current Liabilities:
Accounts payable	18,912	20,173
Liabilities related to discontinued operations	438	408
Accrued expenses and other liabilities	27,448	23,967
Total current liabilities	46,798	44,548
Credit facility debt	35,000	37,500
Liabilities related to discontinued operations	17	182
Other liabilities	7,429	7,369
Total liabilities	$ 89,244	$ 89,599
Commitments and Contingencies
SHAREHOLDERS’ EQUITY
Common stock, $0.32 par value; 100,000,000 shares authorized; shares issued were 29,325,754 and 29,134,603, respectively; shares outstanding were 28,825,754 and 28,634,603, respectively	$ 9,384	$ 9,323
Paid-in capital	29,465	29,006
Retained earnings	139,294	141,105
Less cost of treasury stock, 500,000 shares	(4,775)	(4,775)
Total shareholders’ equity	173,368	174,659
Total liabilities and shareholders’ equity	$ 262,612	$ 264,258

XML

Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares	Dec. 16, 2015	Aug. 26, 2015
Common stock, par value (in dollars per share)	$ 0.32	$ 0.32
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Common stock, shares issued (in shares)	29,325,754	29,134,603
Common stock, shares outstanding (in shares)	28,825,754	28,634,603
Treasury stock, shares (in shares)	500,000	500,000

XML

Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended	4 Months Ended
	Nov. 19, 2014	Dec. 16, 2015
SALES:
Restaurant sales	$ 80,557	$ 113,546
Culinary contract services	4,598	4,915
Franchise revenue	1,581	2,125
Vending Revenue	125	158
TOTAL SALES	86,861	120,744
COSTS AND EXPENSES:
Cost of food	23,484	32,434
Payroll and related costs	28,686	39,424
Other operating expenses	14,219	18,421
Occupancy costs	4,942	6,642
Opening costs	925	397
Cost of culinary contract services	4,099	4,422
Cost of franchise operations	384	612
Depreciation and amortization	5,068	7,014
Selling, general and administrative expenses	9,151	13,243
Net (gain) loss on disposition of property and equipment	290	(279)
Total costs and expenses	91,248	122,330
LOSS FROM OPERATIONS	(4,387)	(1,586)
Interest income	1	1
Interest expense	(456)	(696)
Other income (expense), net	180	(118)
Loss before income taxes and discontinued operations	(4,662)	(2,399)
Benefit for income taxes	(1,782)	(660)
Loss from continuing operations	(2,880)	(1,739)
Loss from discontinued operations, net of income taxes	(139)	(72)
NET LOSS	$ (3,019)	$ (1,811)
Loss per share from continuing operations:
Basic (in dollars per share)	$ (0.10)	$ (0.06)
Assuming dilution (in dollars per share)	(0.10)	(0.06)
Loss per share from discontinued operations:
Basic (in dollars per share)	(0.01)	0
Assuming dilution (in dollars per share)	(0.01)	0
Net loss per share:
Basic (in dollars per share)	(0.11)	(0.06)
Assuming dilution (in dollars per share)	$ (0.11)	$ (0.06)
Weighted average shares outstanding:
Basic (in shares)	28,890	29,133
Assuming dilution (in shares)	28,890	29,133

XML

Consolidated Statement of Shareholders' Equity (Unaudited) - 4 months ended Dec. 16, 2015 - USD ($) shares in Thousands, $ in Thousands	Common Stock [Member]	Treasury Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
Balance (in shares) at Aug. 26, 2015	29,135	(500)
Balance at Aug. 26, 2015	$ 9,323	$ (4,775)	$ 29,006	$ 141,105	$ 174,659
Net loss				$ (1,811)	(1,811)
Share-based compensation expense (in shares)	169
Share-based compensation expense	$ 54		$ 391		445
Common stock issued under employee benefit plans (in shares)	22
Common stock issued under employee benefit plans	$ 7		68		75
Balance (in shares) at Dec. 16, 2015	29,326	(500)
Balance at Dec. 16, 2015	$ 9,384	$ (4,775)	$ 29,465	$ 139,294	$ 173,368

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended	4 Months Ended
	Nov. 19, 2014	Dec. 16, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (3,019)	$ (1,811)
Adjustments to reconcile net loss to net cash provided by operating activities:
Net (gain) loss on disposition of property and equipment	290	(279)
Depreciation and amortization	5,073	7,021
Amortization of debt issuance cost	$ 36	148
Non-cash compensation expense		75
Share-based compensation expense	$ 322	445
Other non-cash compensation expense		74
Deferred tax benefit	$ (2,028)	(927)
Cash provided by operating activities before changes in operating assets and liabilities	674	4,746
Changes in operating assets and liabilities:
Decrease (Increase) in trade accounts and other receivables	(690)	226
Increase in food and supply inventories	(1,998)	(968)
Decrease in prepaid expenses and other assets	1,118	364
Increase (Decrease) in accounts payable, accrued expenses and other liabilities	(3,431)	1,975
Net cash provided by (used in) operating activities	(4,327)	6,343
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from disposal of assets and property held for sale	$ 692	1,916
Decrease in notes receivable		17
Purchases of property and equipment	$ (3,589)	(5,729)
Net cash used in investing activities	(2,897)	(3,796)
CASH FLOWS FROM FINANCING ACTIVITIES:
Credit facility borrowings	25,800	27,000
Credit facility repayments	(19,500)	(29,500)
Debt issuance costs	$ (50)	(42)
Proceeds received on the exercise of employee stock options		75
Net cash provided by (used in) financing activities	$ 6,250	(2,467)
Net increase (decrease) in cash and cash equivalents	(974)	80
Cash and cash equivalents at beginning of period	2,788	1,501
Cash and cash equivalents at end of period	$ 1,814	$ 1,581
Cash paid for:
Income taxes
Interest	$ 451	$ 520

XML

Note 1 - Basis of Presentation

4 Months Ended

Dec. 16, 2015

Notes to Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

Note 1. Basis of Presentation

The accompanying unaudited Consolidated Financial Statements of Luby’s, Inc. (the “Company” or “Luby’s”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements that are prepared for the Company’s Annual Report on Form 10-K. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the quarter ended December 16, 2015 are not necessarily indicative of the results that may be expected for the fiscal year ending August 31, 2016.

The Consolidated Balance Sheet dated August 26, 2015, included in this Quarterly Report on Form 10-Q (this “Form 10-Q”), has been derived from the audited Consolidated Financial Statements as of that date. However, this Form 10-Q does not include all of the information and footnotes required by GAAP for an annual filing of complete financial statements. Therefore, these financial statements should be read in conjunction with the audited Consolidated Financial Statements and footnotes included in the Company’s Annual Report on Form 10-K for the fiscal year ended August 26, 2015.

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Note 2 - Accounting Periods

4 Months Ended

Dec. 16, 2015

Notes to Financial Statements

Accounting Periods Disclosure [Text Block]

Note 2. Accounting Periods

The Company’s fiscal year ends on the last Wednesday in August. Accordingly, each fiscal year normally consists of 13 four-week periods, or accounting periods, accounting for 364 days in the aggregate. However, every fifth or sixth year, we have a fiscal year that consists of 53 weeks, accounting for 371 days in the aggregate; fiscal year 2016 will be such a year. Each of the first three quarters of each fiscal year, prior to fiscal year 2016, consisted of three four-week periods, while the fourth quarter normally consisted of four four-week periods.

Beginning in fiscal 2016, we changed our fiscal quarter ending dates with the first fiscal quarter end extended by one accounting period and the fiscal fourth quarter being reduced by one accounting period. The purpose of this change is in part to minimize the Thanksgiving calendar shift by extending the first fiscal quarter until after Thanksgiving. With this change in fiscal quarter ending dates, our first quarter is 16 weeks, and the remaining three quarters will typically be 12 weeks in length. The fourth fiscal quarter will be 13 weeks in certain fiscal years to adjust for our standard 52 week, or 364 day, fiscal year compared to the 365 day calendar year. Fiscal 2016 is such a year where the fourth quarter will have 13 weeks, resulting in a 53 week fiscal year. Comparability between quarters may be affected by varying lengths of the quarters, as well as the seasonality associated with the restaurant business. 

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Note 3 - Reportable Segments

4 Months Ended

Dec. 16, 2015

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

Note 3. 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 Cafeterias, Fuddruckers and Cheeseburger in Paradise, with a non-core restaurant location operating under the brand name 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 179 at December 16, 2015 and 177 at August 26, 2015.

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 and business and industry clients. 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 CCS 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 28 at December 16, 2015 and 23 at August 26, 2015.  

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 110 at December 16, 2015 and 106 at August 26, 2015.  

Licensee

In November 1997, a prior owner of the Fuddruckers – World’s Greatest Hamburgers ® brand granted to a licensee the exclusive right to use the Fuddruckers proprietary marks, trade dress and system to develop Fuddruckers restaurants in a territory consisting of certain countries in Africa, the Middle East and parts of Asia. As of January 2016, this licensee operated 35 restaurants that are licensed to use the Fuddruckers Proprietary Marks in Saudi Arabia, Egypt, Lebanon, United Arab Emirates, Qatar, Jordan, Bahrain, Kuwait, Morocco and Malaysia. The Company does not receive revenue or royalties from these restaurants.

The table below shows segment financial information. The table also lists total assets for each reportable segment. Corporate assets include cash and cash equivalents, property and equipment, assets related to discontinued operations, property held for sale, deferred tax assets and prepaid expenses.

	Quarter Ended
	December 16, 2015			November 19, 2014
	(1 6 weeks)			(12 weeks)
	(In thousands)
Sales:
Company-owned restaurants (1)	$	113,704		$	80,682
Culinary contract services		4,915			4,598
Franchise operations		2,125			1,581
Total		120,744			86,861
Segment level profit:
Company-owned restaurants	$	16,783		$	9,351
Culinary contract services		493			499
Franchise operations		1,513			1,197
Total		18,789			11,047
Depreciation and amortization:
Company-owned restaurants	$	5,809		$	4,384
Culinary contract services		37			69
Franchise operations		256			177
Corporate		912			438
Total		7,014			5,068
Capital expenditures:
Company-owned restaurants	$	5,494		$	3,169
Culinary contract services		—			—
Franchise operations		—			—
Corporate		235			420
Total		5,729			3,589
Loss before income taxes and discontinued operations:
Segment level profit	$	18,789		$	11,047
Opening costs		(397	)		(925	)
Depreciation and amortization		(7,014	)		(5,068	)
Selling, general and administrative expenses		(13,243	)		(9,151	)
Net gain (loss) on disposition of property and equipment		279			(290	)
Interest income		1			1
Interest expense		(696	)		(456	)
Other expense (income), net		(118	)		180
Loss before income taxes and discontinued operations	$	(2,399	)	$	(4,662	)

	December 16, 2015		August 2 6 , 201 5
Total assets:
Company-owned restaurants (2)	$	217,834	$	218,492
Culinary contract services		2,229		1,644
Franchise operations (3)		12,555		13,034
Corporate		29,994		31,088
Total	$	262,612	$	264,258

(1) Includes vending revenue of $158 thousand and $125 thousand for the quarters ended December 16, 2015 and November 19, 2014, respectively.

(2) C ompany-owned restaurants segment includes $10.4 million of Fuddruckers trade name, Cheeseburger in Paradise liquor licenses, and Jimmy Buffett intangibles.

(3) Franchise operations segment includes approximately $12.0 million in royalty intangibles.

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Note 4 - Fair Value Measurements

4 Months Ended

Dec. 16, 2015

Notes to Financial Statements

Fair Value Disclosures [Text Block]

Note 4. Fair Value Measurements

GAAP establishes a framework for using fair value to measure assets and liabilities. Fair value measurements guidance applies whenever other statements require or permit asset or liabilities to be measured at fair value.

GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used to measure fair value. These tiers include:

● Level 1: Defined as observable inputs such as quoted prices in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

● Level 2: Defined as pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures.

● Level 3: Defined as pricing inputs that are unobservable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

Non-recurring fair value measurements related to impaired property and equipment consisted of the following:

			Fair Value Measurement Using
	Quarter Ended December 16, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Impairments
			(In thousands)
Continuing Operations
Property and equipment related to company-owned restaurants	$	5,282	$	—	$	—	$	5,282	$	—
Discontinued Operations
Property and equipment related to company-owned restaurants	$	103	$	—	$	—	$	103	$	—

			Fair Value Measurement Using
	Quarter Ended November 19, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Impairments
			(In thousands)
Continuing Operations
Property and equipment related to company-owned restaurants	$	6,446	$	—	$	—	$	6,446	$	—
Discontinued Operations
Property and equipment related to company-owned restaurants	$	1,144	$	—	$	—	$	1,144	$	—

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Note 5 - Income Taxes

4 Months Ended

Dec. 16, 2015

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note 5. Income Taxes

 

No cash payments of estimated federal income taxes were made during the quarter ended December 16, 2015. 

Deferred tax assets and liabilities are recorded based on differences between the financial reporting basis and the tax basis of assets and liabilities using currently enacted rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are recognized to the extent future taxable income is expected to be sufficient to utilize those assets prior to their expiration.

Management believes that adequate provisions for income taxes have been reflected in the financial statements and is not aware of any significant exposure items that have not been reflected in the financial statements. Amounts considered probable of settlement within one year have been included in the accrued expenses and other liabilities in the accompanying Consolidated Balance Sheet.

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Note 6 - Property and Equipment, Intangible Assets and Goodwill

4 Months Ended

Dec. 16, 2015

Notes to Financial Statements

Property Equipment Intangible Assets and Goodwill Disclosure [Text Block]

Note 6. Property and Equipment, Intangible Assets and Goodwill

The costs, net of impairment, and accumulated depreciation of property and equipment at December 16, 2015 and August 26, 2015, together with the related estimated useful lives used in computing depreciation and amortization, were as follows:

	December 16, 2015			August 2 6 , 201 5			Estimated Useful Lives (years)
	(In thousands)
Land	$	63,339		$	63,298				—
Restaurant equipment and furnishings		89,587			85,679			3	to	15
Buildings		160,705			159,391			20	to	33
Leasehold and leasehold improvements		29,739			29,229		Lesser of lease term or estimated useful life
Office furniture and equipment		3,727			3,559			3	to	10
Construction in progress		972			810				—
		348,069			341,966
Less accumulated depreciation and amortization		(148,315	)		(141,764	)
Property and equipment, net	$	199,754		$	200,202
Intangible assets, net	$	22,089		$	22,570				21
Goodwill	$	1,643		$	1,643				—

Intangible assets, net, consist of the Fuddruckers trade name and franchise agreements and will be amortized. The Company believes the Fuddruckers brand name has an expected accounting life of 21 years from the date of acquisition based on the expected use of its assets and the restaurant environment in which it is being used. The trade name represents a respected brand with customer loyalty and the Company intends to cultivate and protect the use of the trade name. The franchise agreements, after considering renewal periods, have an estimated accounting life of 21 years from the date of acquisition and will be amortized over this period of time.

Intangible assets, net, also includes the license agreement and trade name related to Cheeseburger in Paradise and the value of the acquired licenses and permits allowing the sales of beverages with alcohol. These assets have an expected accounting life of 15 years from the date of acquisition December 6, 2012.

The aggregate amortization expense related to intangible assets subject to amortization was $0.5 million for the quarter ended December 16, 2015 and $0.3 million for the quarter ended November 19, 2014. The aggregate amortization expense related to intangible assets subject to amortization is expected to be $1.4 million in each of the next five successive years.

The following table presents intangible assets as of December 16, 2015 and August 26, 2015:

	December 16, 2015							August 26, 2015
	(In thousands)							(In thousands)
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Intangible Assets Subject to Amortization:
Fuddruckers trade name and franchise agreements	$	29,607	$	(7,633	)	$	21,974	$	29,607	$	(7,166	)	$	22,441
Cheeseburger in Paradise trade name and license agreements	$	416	$	(301	)	$	115	$	416	$	(287	)	$	129
Intangible assets, net	$	30,023	$	(7,934	)	$	22,089	$	30,023	$	(7,453	)	$	22,570

The Company recorded, in fiscal 2010, an intangible asset for goodwill in the amount of approximately $0.2 million related to the acquisition of substantially all of the assets of Fuddruckers. The Company also recorded, in fiscal 2013, an intangible asset for goodwill in the amount of approximately $2.0 million related to the acquisition of Cheeseburger in Paradise. Goodwill is considered to have an indefinite useful life and is not amortized. Management performs its formal annual assessment as of the second quarter each fiscal year. The individual restaurant level is the level at which goodwill is assessed for impairment under ASC 350. In accordance with our understanding of ASC 350, we have allocated the goodwill value to each reporting unit in proportion to each location’s fair value at the date of acquisition. The result of these assessments were impairment of goodwill of $38 thousand and $0.5 million in fiscal years 2015 and 2014, respectively. The Company will formally perform additional assessments on an interim basis if an event occurs or circumstances exist that indicate that it is more likely than not that a goodwill impairment exists. As of January 20, 2016, of the 23 locations that were acquired, eight locations remain operating as Cheeseburger in Paradise restaurants, eight locations were closed and converted to Fuddruckers restaurants, two locations where the option to extend the lease was not exercised, two locations subleased to franchisees and three closed and held for future use.

Goodwill, net of accumulated impairments of approximately $0.6 million, was approximately $1.6 million as of December 16, 2016 and as of August 26, 2015, and relates to our Company-owned restaurants reportable segments.

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Note 7 - Impairment of Long-Lived Assets, Discontinued Operations and Property Held for Sale

4 Months Ended

Dec. 16, 2015

Notes to Financial Statements

Impairment of Long Lived Assets Discontinued Operations and Property Held For Sale Disclosure [Text Block]

Note 7. Impairment of Long-Lived Assets, Discontinued Operations and Property Held for Sale

Impairment of Long-Lived Assets and Store Closings

The Company periodically evaluates long-lived assets held for use and held for sale whenever events or changes in circumstances indicate that the carrying amount of those assets may not be recoverable. The Company analyzes historical cash flows of operating locations and compares results of poorer performing locations to more profitable locations. The Company also analyzes lease terms, condition of the assets and related need for capital expenditures or repairs, as well as construction activity and the economic and market conditions in the surrounding area.

For assets held for use, the Company estimates future cash flows using assumptions based on possible outcomes of the areas analyzed. If the undiscounted future cash flows are less than the carrying value of the location’s assets, the Company records an impairment loss based on an estimate of discounted cash flows. The estimates of future cash flows, based on reasonable and supportable assumptions and projections, require management’s subjective judgments. Assumptions and estimates used include operating results, changes in working capital, discount rate, growth rate, anticipated net proceeds from disposition of the property and, if applicable, lease terms. The span of time for which future cash flows are estimated is often lengthy, increasing the sensitivity to assumptions made. The time span could be 20 to 25 years for newer properties, but only 5 to 10 years for older properties. Depending on the assumptions and estimates used, the estimated future cash flows projected in the evaluation of long-lived assets can vary within a wide range of outcomes. The Company considers the likelihood of possible outcomes in determining the best estimate of future cash flows. The measurement for such an impairment loss is then based on the fair value of the asset as determined by discounted cash flows.

The Company recognized the following impairment charges to income from operations:

	Quarter Ended
	December 16, 201 5			November 19 , 201 4
	(1 6 weeks)			(12 weeks)
	(In thousands, except per share data)
Provision for asset impairments	$	—		$	—
Net (gain) loss on disposition of property and equipment		(279	)		290
	$	(279	)	$	290
Effect on EPS:
Basic	$	0.01		$	(0.01	)
Assuming dilution	$	0.01		$	(0.01	)

There was no impairment charge for the quarters ended December 16, 2015 and November 19, 2014.  

The net gain for the quarter ended December 16, 2015 is primarily attributable to the sale of one property location.

The net loss for the quarter ended November 19, 2014 includes losses on the sale of equipment and other normal asset retirement activity.

Discontinued Operations 

On March 21, 2014, the Board of Directors of the Company approved a plan focused on improving cash flow from the acquired Cheeseburger in Paradise leasehold locations. On March 24, 2014, the Company announced a plan focused on improving cash flow from the acquired Cheeseburger in Paradise leasehold locations. This underperforming Cheeseburger in Paradise leasehold disposal plan called for five or more units to be closed by the end of fiscal 2014 and disposed of within 12 months. As of December 16, 2015, one location was reclassified to continuing operations and was reopened as a Fuddruckers restaurant. Three locations remain closed for disposal and classified as discontinued operations as of December 16, 2015.

As a result of the first quarter fiscal year 2010 adoption of the Company’s Cash Flow Improvement and Capital Redeployment Plan, the Company reclassified 24 Luby’s Cafeterias to discontinued operations. As of December 16, 2015, one location remains held for sale.

The following table sets forth the assets and liabilities for all discontinued operations:

	December 16, 2015		August 2 6 , 201 5
	(In thousands)
Prepaid expenses		3		10
Assets related to discontinued operations—current	$	3	$	10
Property and equipment		1,874		1,873
Other assets		1,798		1,798
Assets related to discontinued operations—non-current	$	3,672	$	3,671
Deferred income taxes	$	343	$	343
Accrued expenses and other liabilities		95		65
Liabilities related to discontinued operations—current	$	438	$	408
Other liabilities	$	17	$	182
Liabilities related to discontinued operations—non-current	$	17	$	182

As of December 16, 2015, under both closure plans, the Company had four properties classified as discontinued operations assets and the asset carrying value of the owned properties was $1.9 million and is included in assets related to discontinued operations. The asset carrying values of the ground leases were previously impaired to zero.

The Company is actively marketing all but one of these properties for sale. This property has been sublet to an existing franchisee. The Company’s results of discontinued operations will be affected by the disposal of properties related to discontinued operations to the extent proceeds from the sales exceed or are less than net book value.

The following table sets forth the sales and pretax losses reported from discontinued operations:

	Quarter Ended
	December 16 , 201 5			November 19 , 201 4
	( 1 6 weeks)			( 12 weeks)
	(In thousands, except discontinued locations)
Sales	$	—		$	—
Pretax loss		(118	)		(245	)
Income tax benefit from discontinued operations		46			106
Loss from discontinued operations	$	(72	)	$	(139	)
Discontinued locations closed during the period		—			—

The following table summarizes discontinued operations for the first quarters of fiscal 2016 and 2015:

	Quarter Ended
	December 16 , 201 5			November 19, 2014
	(1 6 weeks)			(12 weeks)
	(In thousands, except per share data)
Discontinued operating loss	$	(118	)	$	(245	)
Impairments		—			—
Net gains (losses)		—			—
Pretax loss	$	(118	)		(245	)
Income tax benefit from discontinued operations		46			106
Loss from discontinued operations	$	(72	)	$	(139	)
Effect on EPS from discontinued operations—basic	$	(0.00	)	$	(0.00	)

Impairment charges included above relate to properties closed and designated for immediate disposal. The assets of these individual operating units have been written down to their net realizable values. In turn, the related properties have either been sold or are being actively marketed for sale. Dispositions are expected to be completed within one to three years. Within discontinued operations, the Company also recorded the related fiscal year-to-date net operating results, employee terminations and carrying costs of the closed units.

Property Held for Sale

The Company periodically reviews long-lived assets against its plans to retain or ultimately dispose of properties. If the Company decides to dispose of a property, it will be moved to property held for sale and actively marketed. The Company analyzes market conditions each reporting period and records additional impairments due to declines in market values of like assets. The fair value of the property is determined by observable inputs such as appraisals and prices of comparable properties in active markets for assets like the Company’s. Gains are not recognized until the properties are sold.

Property held for sale includes unimproved land, closed restaurant properties and related equipment for locations not classified as discontinued operations. The specific assets are valued at the lower of net depreciable value or net realizable value.

At December 16, 2015, the Company had three owned properties recorded at approximately $3.1 million in property held for sale.

At August 26, 2015, the Company had four owned properties recorded at approximately $4.5 million in property held for sale.

The Company is actively marketing the locations currently classified as property held for sale

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Note 8 - Commitments and Contingencies

4 Months Ended

Dec. 16, 2015

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

Note 8. Commitments and Contingencies

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements, except for operating leases. 

Pending Claims

From time to time, the Company is subject to various private lawsuits, administrative proceedings and claims that arise in the ordinary course of its business. A number of these lawsuits, proceedings and claims may exist at any given time. These matters typically involve claims from guests, employees and others related to issues common to the restaurant industry. The Company currently believes that the final disposition of these types of lawsuits, proceedings and claims will not have a material adverse effect on the Company’s financial position, results of operations or liquidity. It is possible, however, that the Company’s future results of operations for a particular fiscal quarter or fiscal year could be impacted by changes in circumstances relating to lawsuits, proceedings or claims.

Construction Activity

From time to time, the Company enters into non-cancelable contracts for the construction of its new restaurants. This construction activity exposes the Company to the risks inherent in new construction, including but not limited to rising material prices, labor shortages, delays in getting required permits and inspections, adverse weather conditions, and injuries sustained by workers and contract termination expenses. The Company had three non-cancelable contracts as of December 16, 2015.

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Note 9 - Related Parties

4 Months Ended

Dec. 16, 2015

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

Note 9. Related Parties

Affiliate Services

Christopher J. Pappas, the Company’s Chief Executive Officer, and Harris J. Pappas, director and former Chief Operating Officer of the Company, own two restaurant entities (the “Pappas entities”) that from time to time may provide services to the Company and its subsidiaries, as detailed in the Amended and Restated Master Sales Agreement effective November 8, 2013 among the Company and the Pappas entities.

Under the terms of the Amended and Restated Master Sales Agreement, the Pappas entities may provide specialized (customized) equipment fabrication and basic equipment maintenance, including stainless steel stoves, shelving, rolling carts, and chef tables. There were no costs incurred under the Amended and Restated Master Sales Agreement of custom-fabricated and refurbished equipment in the quarters ended December 16, 2015 and November 19, 2014. Services provided under this agreement are subject to review and approval by the Finance and Audit Committee of the Board of Directors of the Company (the “Board”).

Operating Leases

In the third quarter of fiscal 2004, Messrs. Pappas became partners in a limited partnership which purchased a retail strip center in Houston, Texas. Messrs. Pappas collectively own a 50% limited partnership interest and a 50% general partnership interest in the limited partnership. A third party company manages the center. One of the Company’s restaurants has rented approximately 7% of the space in that center since July 1969. No changes were made to the Company’s lease terms as a result of the transfer of ownership of the center to the new partnership.

On November 22, 2006, the Company executed a new lease agreement with respect to this shopping center. Effective upon the Company’s relocation and occupancy into the new space in July 2008, the new lease agreement provides for a primary term of approximately 12 years with two subsequent five-year options and gives the landlord an option to buy out the tenant on or after the calendar year 2015 by paying the then unamortized cost of improvements to the tenant. The Company is currently obligated to pay rent of $22.00 per square foot plus maintenance, taxes, and insurance during the remaining primary term of the lease. Thereafter, the lease provides for increases in rent at set intervals. The Company made payments of $103,000 and $68,000 in the quarters ended December 16, 2015 and November 19, 2014, respectively. The new lease agreement was approved by the Finance and Audit Committee.

In the third quarter of fiscal year 2014, on March 12, 2014, the Company executed a new lease agreement which one of the Company’s Houston Fuddruckers location was purchased from a prior landlord by Pappas Restaurants, Inc., a 100% undivided interest. No changes were made to our lease terms as a result of the transfer of ownership. The lease provides for a primary term of approximately six years with two subsequent five-year options. Pursuant to the new ground lease agreement, the Company is currently obligated to pay $27.56 per square foot plus maintenance, taxes, and insurance from March 12, 2014 until November 30, 2016. Thereafter, the new ground lease agreement provides for increases in rent at set intervals. The Company made payments of $40,000 and $27,000 in the quarters ended December 16, 2015 and November 19, 2014, respectively

	Quarter Ended
	December 16, 2015			November 19, 2014
	(1 6 weeks)			(12 weeks)
	(In thousands, except percentages)
AFFILIATED COSTS INCURRED:
General and administrative expenses—professional and other costs	$	—		$	—
Capital expenditures		—			—
Other operating expenses, occupancy costs and opening costs, including property leases		143			95
Total	$	143		$	95
RELATIVE TOTAL COMPANY COSTS:
Selling, general and administrative expenses	$	13,243		$	9,151
Capital expenditures		5,729			3,589
Other operating expenses, occupancy costs and opening costs		25,460			20,086
Total	$	44,432		$	32,826
AFFILIATED COSTS INCURRED AS A PERCENTAGE OF RELATIVE TOTAL COMPANY COSTS		0.32	%		0.29	%

Board of Directors

Christopher J. Pappas is a member of the Advisory Board of Amegy Bank, National Association, which is a lender and syndication agent under the Company’s 2013 Revolving Credit Facility.

Key Management Personnel

The Company entered into a new employment agreement with Christopher Pappas on January 24, 2014. The employment agreement was amended on December 1, 2014, to extend the termination date thereof to August 31, 2016, unless earlier terminated. Mr. Pappas continues to devote his primary time and business efforts to the Company while maintaining his role at Pappas Restaurants, Inc.

Peter Tropoli, a director of the Company and the Company’s Chief Operating Officer, and formerly the Company’s Senior Vice President, Administration, General Counsel and Secretary, is an attorney and stepson of Frank Markantonis, who is a director of the Company.

Paulette Gerukos, Vice President of Human Resources of the Company, is the sister-in-law of Harris J. Pappas, who is a director of the Company.

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Note 10 - Share-based Compensation

4 Months Ended

Dec. 16, 2015

Notes to Financial Statements

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

Note 10. Share-Based Compensation

We have two active share based stock plans, the Employee Stock Plan and the Nonemployee Director Stock Plan. Both plans authorize the granting of stock options, restricted stock and other types of awards consistent with the purpose of the plans.

Of the 1.1 million shares approved for issuance under the Nonemployee Director Stock Plan, 0.9 million options, restricted stock units and restricted stock awards were granted, and 0.1 million options were cancelled or expired and added back into the plan, since the plan’s inception. Approximately 0.3 million shares remain available for future issuance as of December 16, 2015. Compensation cost for share-based payment arrangements under the Nonemployee Director Stock Plan, recognized in selling, general and administrative expenses for the quarters ended December 16, 2015 and November 19, 2014 were approximately $197,000 and $167,000, respectively.

Of the 2.6 million shares approved for issuance under the Employee Stock Plan, 5.7 million options and restricted stock units were granted, and 3.4 million options and restricted stock units were cancelled or expired and added back into the plan, since the plan’s inception. Approximately 0.3 million shares remain available for future issuance as of December 16, 2015. Compensation cost for share-based payment arrangements under the Employee Stock Plan, recognized in selling, general and administrative expenses for the quarters ended December 16, 2015 and November 19, 2014, were approximately $455,000 and $154,000, respectively. Included in the fiscal quarter ended December 16, 2015 share based compensation cost is approximately $252,000, which represents accelerated share-based compensation expense as a result of the cancellation of 312,663 stock options.

In 2015, the Company approved a Total Shareholder Return, (TSR), Performance Based Incentive Plan which provides for a right to receive an unspecified number of shares of common stock under the Employee Stock Plan based on the total shareholder return ranking compared to a selection of peer companies over a three-year cycle. The award value varies from 0% to 200% of a base amount, as a result of the Company’s TSR performance in comparison to its peers over the measurement period. The number of shares at the end of the three-year period will be determined as the award value divided by the closing stock price on the last day of each fiscal year accordingly. Since the plan provides for an undeterminable number of shares, the plan is accounted for as a liability based plan. As of December 16, 2015, the estimated fair value of the performance shares liability at the end of fiscal 2017 and fiscal 2018, were $0.5 million for both years. The estimated liability has been determined based on a Monte Carlo simulation model. Based on this estimate, management accrues expense ratably over the three-year service periods. A valuation estimate of the future liability associated with each fiscal year's performance award plan will be performed periodically with adjustments made to the outstanding liability at each reporting period, as appropriate. As of December 16, 2015, the Company has recorded $74,000 in non-cash compensation expense in selling, general and administrative expenses related to its TSR Performance Based Incentive Plans.

Stock Options

Stock options granted under either the Employee Stock Plan or the Nonemployee Director Stock Plan have exercise prices equal to the market price of the Company’s common stock at the date of the grant.

Option awards under the Nonemployee Director Stock Plan generally vest 100% on the first anniversary of the grant date and expire ten years from the grant date. No options were granted under the Nonemployee Director Stock Plan in the quarter ended December 16, 2015. No options to purchase shares remain outstanding under this plan as of December 16, 2015.

Options granted under the Employee Stock Plan generally vest 50% on the first anniversary date of the grant date, 25% on the second anniversary of the grant date and 25% on the third anniversary of the grant date, with all options expiring ten years from the grant date. All options granted in fiscal quarter ended December 16, 2015 were granted under the Employee Stock Plan. Options to purchase 1,210,089 shares at option prices of $3.44 to $11.10 per share remain outstanding as of December 16, 2015.

A summary of the Company’s stock option activity for the quarter ended December 16, 2015 is presented in the following table:

	Shares Under Fixed Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
				(Per share)		(Years)		(In thousands)
Outstanding at August 26, 2015		1,288,099		$	4.76		6.5	$	350
Granted		279,944			4.89		—		—
Exercised		(19,750	)		3.44		—		—
Cancelled		(312,663	)		4.98		—		—
Forfeited/Expired		(25,541	)		4.34		—		—
Outstanding at December 16, 2015		1,210,089		$	4.76		7.3	$	138
Exercisable at December 16, 2015		415,951		$	4.93		3.5	$	138

The intrinsic value for stock options is defined as the difference between the current market value, or closing price on December 16, 2015, and the grant price on the measurement dates in the table above. 

Restricted Stock Units

Grants of restricted stock units consist of the Company’s common stock and generally vest after three years. All restricted stock units are cliff-vested. Restricted stock units are valued at the closing market price of the Company’s common stock at the date of grant.

A summary of the Company’s restricted stock unit activity during the quarter ended December 16, 2015 is presented in the following table:

	Restricted Stock Units			Weighted Average Fair Value		Weighted- Average Remaining Contractual Term
				(Per share)		(In years)
Unvested at August 26, 2015		409,417		$	5.98		1.6
Granted		166,619			4.89		—
Vested		(197,482	)		5.95		—
Forfeited		(4,202	)		5.95		—
Unvested at December 16, 2015		374,352		$	5.51		2.4

At December 16, 2015, there was approximately $2.5 million of total unrecognized compensation cost related to unvested restricted stock units that is expected to be recognized over a weighted-average period of 2.4 years.

Restricted Stock Awards

Under the Nonemployee Director Stock Plan, directors are granted restricted stock in lieu of cash payments, for all or a portion of their compensation as directors. The number of shares granted is valued at the closing market price of the Company’s stock at the date of the grant. Restricted stock awards vest when granted because they are granted in lieu of a cash payment. However, directors are restricted from selling their shares until after the third anniversary of the date of the grant. Directors may receive a 20% premium of additional restricted stock by opting to receive stock in lieu of cash. 

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Note 11 - Earnings Per Share

4 Months Ended

Dec. 16, 2015

Notes to Financial Statements

Earnings Per Share [Text Block]

Note 11. Earnings Per Share

Basic net income per share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding and unvested restricted stock for the reporting period. Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. For the calculation of diluted net income per share, the basic weighted average number of shares is increased by the dilutive effect of stock options determined using the treasury stock method. Stock options excluded from the computation of net income per share for the quarter ended December 16, 2015 include approximately 1,050,089 shares with exercise prices exceeding market prices and approximately 88,000 shares whose inclusion would also be anti-dilutive. 

The components of basic and diluted net income per share are as follows:

	Quarter Ended
	December 16, 2015			November 19, 2014
	(1 6 weeks)			(12 weeks)
	(In thousands, expect per share data)
Numerator:
Loss from continuing operations	$	(1,739	)	$	(2,880	)
Loss from discontinued operations		(72	)		(139	)
Net loss	$	(1,811	)	$	(3,019	)
Denominator:
Denominator for basic earnings per share—weighted-average shares		29,133			28,890
Effect of potentially dilutive securities:
Employee and non-employee stock options		—			—
Denominator for earnings per share assuming dilution		29,133			28,890
Loss per share from continuing operations:
Basic	$	(0.06	)	$	(0.10	)
Assuming dilution	$	(0.06	)	$	(0.10	)
Loss per share from discontinued operations:
Basic	$	(0.00	)	$	(0.01	)
Assuming dilution	$	(0.00	)	$	(0.01	)
Net loss per share:
Basic	$	(0.06	)	$	(0.11	)
Assuming dilution	$	(0.06	)	$	(0.11	)

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Note 3 - Reportable Segments (Tables)

4 Months Ended

Dec. 16, 2015

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	Quarter Ended
	December 16, 2015			November 19, 2014
	(1 6 weeks)			(12 weeks)
	(In thousands)
Sales:
Company-owned restaurants (1)	$	113,704		$	80,682
Culinary contract services		4,915			4,598
Franchise operations		2,125			1,581
Total		120,744			86,861
Segment level profit:
Company-owned restaurants	$	16,783		$	9,351
Culinary contract services		493			499
Franchise operations		1,513			1,197
Total		18,789			11,047
Depreciation and amortization:
Company-owned restaurants	$	5,809		$	4,384
Culinary contract services		37			69
Franchise operations		256			177
Corporate		912			438
Total		7,014			5,068
Capital expenditures:
Company-owned restaurants	$	5,494		$	3,169
Culinary contract services		—			—
Franchise operations		—			—
Corporate		235			420
Total		5,729			3,589
Loss before income taxes and discontinued operations:
Segment level profit	$	18,789		$	11,047
Opening costs		(397	)		(925	)
Depreciation and amortization		(7,014	)		(5,068	)
Selling, general and administrative expenses		(13,243	)		(9,151	)
Net gain (loss) on disposition of property and equipment		279			(290	)
Interest income		1			1
Interest expense		(696	)		(456	)
Other expense (income), net		(118	)		180
Loss before income taxes and discontinued operations	$	(2,399	)	$	(4,662	)

Reconciliation of Assets from Segment to Consolidated [Table Text Block]

	December 16, 2015		August 2 6 , 201 5
Total assets:
Company-owned restaurants (2)	$	217,834	$	218,492
Culinary contract services		2,229		1,644
Franchise operations (3)		12,555		13,034
Corporate		29,994		31,088
Total	$	262,612	$	264,258

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Note 4 - Fair Value Measurements (Tables)

4 Months Ended

Dec. 16, 2015

Notes Tables

Fair Value Measurements, Nonrecurring [Table Text Block]

			Fair Value Measurement Using
	Quarter Ended December 16, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Impairments
			(In thousands)
Continuing Operations
Property and equipment related to company-owned restaurants	$	5,282	$	—	$	—	$	5,282	$	—
Discontinued Operations
Property and equipment related to company-owned restaurants	$	103	$	—	$	—	$	103	$	—

			Fair Value Measurement Using
	Quarter Ended November 19, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Impairments
			(In thousands)
Continuing Operations
Property and equipment related to company-owned restaurants	$	6,446	$	—	$	—	$	6,446	$	—
Discontinued Operations
Property and equipment related to company-owned restaurants	$	1,144	$	—	$	—	$	1,144	$	—

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Note 6 - Property and Equipment, Intangible Assets and Goodwill (Tables)

4 Months Ended

Dec. 16, 2015

Notes Tables

Property Equipment Intangible Assets and Goodwill Disclosure [Table Text Block]

	December 16, 2015			August 2 6 , 201 5			Estimated Useful Lives (years)
	(In thousands)
Land	$	63,339		$	63,298				—
Restaurant equipment and furnishings		89,587			85,679			3	to	15
Buildings		160,705			159,391			20	to	33
Leasehold and leasehold improvements		29,739			29,229		Lesser of lease term or estimated useful life
Office furniture and equipment		3,727			3,559			3	to	10
Construction in progress		972			810				—
		348,069			341,966
Less accumulated depreciation and amortization		(148,315	)		(141,764	)
Property and equipment, net	$	199,754		$	200,202
Intangible assets, net	$	22,089		$	22,570				21
Goodwill	$	1,643		$	1,643				—

Schedule of Intangible Assets and Goodwill [Table Text Block]

	December 16, 2015							August 26, 2015
	(In thousands)							(In thousands)
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Intangible Assets Subject to Amortization:
Fuddruckers trade name and franchise agreements	$	29,607	$	(7,633	)	$	21,974	$	29,607	$	(7,166	)	$	22,441
Cheeseburger in Paradise trade name and license agreements	$	416	$	(301	)	$	115	$	416	$	(287	)	$	129
Intangible assets, net	$	30,023	$	(7,934	)	$	22,089	$	30,023	$	(7,453	)	$	22,570

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Note 7 - Impairment of Long-Lived Assets, Discontinued Operations and Property Held for Sale (Tables)

4 Months Ended

Dec. 16, 2015

Notes Tables

Schedule of Restructuring and Asset Impairment Charges [Table Text Block]

	Quarter Ended
	December 16, 201 5			November 19 , 201 4
	(1 6 weeks)			(12 weeks)
	(In thousands, except per share data)
Provision for asset impairments	$	—		$	—
Net (gain) loss on disposition of property and equipment		(279	)		290
	$	(279	)	$	290
Effect on EPS:
Basic	$	0.01		$	(0.01	)
Assuming dilution	$	0.01		$	(0.01	)

Schedule of Assets and Liabilities of Discontinued Operations [Table Text Block]

	December 16, 2015		August 2 6 , 201 5
	(In thousands)
Prepaid expenses		3		10
Assets related to discontinued operations—current	$	3	$	10
Property and equipment		1,874		1,873
Other assets		1,798		1,798
Assets related to discontinued operations—non-current	$	3,672	$	3,671
Deferred income taxes	$	343	$	343
Accrued expenses and other liabilities		95		65
Liabilities related to discontinued operations—current	$	438	$	408
Other liabilities	$	17	$	182
Liabilities related to discontinued operations—non-current	$	17	$	182

Schedule of Discontinued Operations Income Statement [Table Text Block]

	Quarter Ended
	December 16 , 201 5			November 19 , 201 4
	( 1 6 weeks)			( 12 weeks)
	(In thousands, except discontinued locations)
Sales	$	—		$	—
Pretax loss		(118	)		(245	)
Income tax benefit from discontinued operations		46			106
Loss from discontinued operations	$	(72	)	$	(139	)
Discontinued locations closed during the period		—			—

Discontinued Operations [Table Text Block]

	Quarter Ended
	December 16 , 201 5			November 19, 2014
	(1 6 weeks)			(12 weeks)
	(In thousands, except per share data)
Discontinued operating loss	$	(118	)	$	(245	)
Impairments		—			—
Net gains (losses)		—			—
Pretax loss	$	(118	)		(245	)
Income tax benefit from discontinued operations		46			106
Loss from discontinued operations	$	(72	)	$	(139	)
Effect on EPS from discontinued operations—basic	$	(0.00	)	$	(0.00	)

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Note 9 - Related Parties (Tables)

4 Months Ended

Dec. 16, 2015

Notes Tables

Schedule of Related Party Transactions [Table Text Block]

	Quarter Ended
	December 16, 2015			November 19, 2014
	(1 6 weeks)			(12 weeks)
	(In thousands, except percentages)
AFFILIATED COSTS INCURRED:
General and administrative expenses—professional and other costs	$	—		$	—
Capital expenditures		—			—
Other operating expenses, occupancy costs and opening costs, including property leases		143			95
Total	$	143		$	95
RELATIVE TOTAL COMPANY COSTS:
Selling, general and administrative expenses	$	13,243		$	9,151
Capital expenditures		5,729			3,589
Other operating expenses, occupancy costs and opening costs		25,460			20,086
Total	$	44,432		$	32,826
AFFILIATED COSTS INCURRED AS A PERCENTAGE OF RELATIVE TOTAL COMPANY COSTS		0.32	%		0.29	%

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Note 10 - Share-based Compensation (Tables)

4 Months Ended

Dec. 16, 2015

Notes Tables

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

	Shares Under Fixed Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
				(Per share)		(Years)		(In thousands)
Outstanding at August 26, 2015		1,288,099		$	4.76		6.5	$	350
Granted		279,944			4.89		—		—
Exercised		(19,750	)		3.44		—		—
Cancelled		(312,663	)		4.98		—		—
Forfeited/Expired		(25,541	)		4.34		—		—
Outstanding at December 16, 2015		1,210,089		$	4.76		7.3	$	138
Exercisable at December 16, 2015		415,951		$	4.93		3.5	$	138

Schedule of Share-based Compensation, Restricted Stock Units Award Activity [Table Text Block]

	Restricted Stock Units			Weighted Average Fair Value		Weighted- Average Remaining Contractual Term
				(Per share)		(In years)
Unvested at August 26, 2015		409,417		$	5.98		1.6
Granted		166,619			4.89		—
Vested		(197,482	)		5.95		—
Forfeited		(4,202	)		5.95		—
Unvested at December 16, 2015		374,352		$	5.51		2.4

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Note 11 - Earnings Per Share (Tables)

4 Months Ended

Dec. 16, 2015

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Quarter Ended
	December 16, 2015			November 19, 2014
	(1 6 weeks)			(12 weeks)
	(In thousands, expect per share data)
Numerator:
Loss from continuing operations	$	(1,739	)	$	(2,880	)
Loss from discontinued operations		(72	)		(139	)
Net loss	$	(1,811	)	$	(3,019	)
Denominator:
Denominator for basic earnings per share—weighted-average shares		29,133			28,890
Effect of potentially dilutive securities:
Employee and non-employee stock options		—			—
Denominator for earnings per share assuming dilution		29,133			28,890
Loss per share from continuing operations:
Basic	$	(0.06	)	$	(0.10	)
Assuming dilution	$	(0.06	)	$	(0.10	)
Loss per share from discontinued operations:
Basic	$	(0.00	)	$	(0.01	)
Assuming dilution	$	(0.00	)	$	(0.01	)
Net loss per share:
Basic	$	(0.06	)	$	(0.11	)
Assuming dilution	$	(0.06	)	$	(0.11	)

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Note 3 - Reportable Segments (Details Textual) $ in Thousands	3 Months Ended	4 Months Ended
	Nov. 19, 2014 USD ($)	Dec. 16, 2015 USD ($)	Jan. 31, 2016	Aug. 26, 2015 USD ($)
Company Owned Restaurants [Member] | Fuddruckers Trade Name Cheeseburger in Paradise Liquor Licenses and Jimmy Buffet Intangibles [Member]
Finite-Lived Intangible Assets, Gross		$ 10,400
Company Owned Restaurants [Member]
Number of Reportable Segments		1
Number of Restaurants		179		177
Vending Revenue	$ 125	$ 158
Culinary Contract Services [Member]
Number of Contracts		28		23
Franchise [Member] | Royalty Intangibles [Member]
Finite-Lived Intangible Assets, Gross		$ 12,000
Franchise [Member]
Number of Restaurants		110		106
Franchise Term		20 years
Subsequent Event [Member] | Licensee [Member]
Number of Restaurants			35
Number of Reportable Segments		3
Vending Revenue	$ 125	$ 158
Finite-Lived Intangible Assets, Gross		$ 30,023		$ 30,023

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Note 3 - Segment Reporting Information (Details) - USD ($) $ in Thousands		3 Months Ended	4 Months Ended
		Nov. 19, 2014	Dec. 16, 2015
Operating Segments [Member] | Company Owned Restaurants [Member]
SALES:
Restaurant sales	[1]	$ 80,682	$ 113,704
Segment level profit:
Company-owned restaurants		9,351	16,783
Depreciation and amortization:
Depreciation and amortization		4,384	5,809
Capital expenditures:
Company-owned restaurants		3,169	5,494
Company-owned restaurants		9,351	16,783
Depreciation and amortization		(4,384)	(5,809)
Operating Segments [Member] | Culinary Contract Services [Member]
SALES:
Restaurant sales		4,598	4,915
Segment level profit:
Company-owned restaurants		499	493
Depreciation and amortization:
Depreciation and amortization		$ 69	$ 37
Capital expenditures:
Company-owned restaurants
Company-owned restaurants		$ 499	$ 493
Depreciation and amortization		(69)	(37)
Operating Segments [Member] | Franchise [Member]
SALES:
Restaurant sales		1,581	2,125
Segment level profit:
Company-owned restaurants		1,197	1,513
Depreciation and amortization:
Depreciation and amortization		$ 177	$ 256
Capital expenditures:
Company-owned restaurants
Company-owned restaurants		$ 1,197	$ 1,513
Depreciation and amortization		(177)	(256)
Operating Segments [Member]
SALES:
Restaurant sales		86,861	120,744
Segment level profit:
Company-owned restaurants		11,047	18,789
Depreciation and amortization:
Depreciation and amortization		5,068	7,014
Capital expenditures:
Company-owned restaurants		11,047	18,789
Opening costs		(925)	(397)
Depreciation and amortization		(5,068)	(7,014)
Selling, general and administrative expenses		(9,151)	(13,243)
Net gain (loss) on disposition of property and equipment		(290)	279
Interest income		1	1
Interest expense		(456)	(696)
Other expense (income), net		180	(118)
Loss before income taxes and discontinued operations		(4,662)	(2,399)
Corporate, Non-Segment [Member]
Depreciation and amortization:
Depreciation and amortization		438	912
Capital expenditures:
Company-owned restaurants		420	235
Depreciation and amortization		(438)	(912)
Restaurant sales		80,557	113,546
Company-owned restaurants		(4,387)	(1,586)
Depreciation and amortization		5,068	7,014
Company-owned restaurants		3,589	5,729
Company-owned restaurants		(4,387)	(1,586)
Opening costs		(925)	(397)
Depreciation and amortization		(5,068)	(7,014)
Selling, general and administrative expenses		(9,151)	(13,243)
Net gain (loss) on disposition of property and equipment		(290)	279
Interest income		1	1
Interest expense		(456)	(696)
Other expense (income), net		(180)	118
Loss before income taxes and discontinued operations		$ (4,662)	$ (2,399)

[1] Includes vending revenue of $158 thousand and $125 thousand for the quarters ended December 16, 2015 and November 19, 2014, respectively.

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Note 3 - Segment Assets (Details) - USD ($) $ in Thousands		Dec. 16, 2015	Aug. 26, 2015
Operating Segments [Member] | Company Owned Restaurants [Member]
Total assets:
Assets	[1]	$ 217,834	$ 218,492
Operating Segments [Member] | Culinary Contract Services [Member]
Total assets:
Assets		2,229	1,644
Operating Segments [Member] | Franchise [Member]
Total assets:
Assets	[2]	12,555	13,034
Corporate, Non-Segment [Member]
Total assets:
Assets		29,994	31,088
Assets		$ 262,612	$ 264,258

[1] Company-owned restaurants segment includes $10.4 million of Fuddruckers trade name, Cheeseburger in Paradise liquor licenses, and Jimmy Buffett intangibles.

[2] Franchise operations segment includes approximately $12.0 million in royalty intangibles.

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Note 4 - Non-recurring Fair Value Measurements Related to Impaired Property and Equipment (Details) - Company Owned Restaurants [Member] - USD ($) $ in Thousands	Dec. 16, 2015	Nov. 19, 2014
Continuing Operations [Member] | Fair Value, Inputs, Level 3 [Member]
Property and equipment related to company-owned restaurants	$ 5,282	$ 6,446
Continuing Operations [Member]
Property and equipment related to company-owned restaurants	5,282	6,446
Discontinued Operations [Member] | Fair Value, Inputs, Level 3 [Member]
Property and equipment related to company-owned restaurants	103
Discontinued Operations [Member]
Property and equipment related to company-owned restaurants	$ 103	$ 1,144

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Note 5 - Income Taxes (Details Textual)	4 Months Ended
	Dec. 16, 2015 USD ($)
Domestic Tax Authority [Member]
Income Taxes Paid, Net	$ 0

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Note 6 - Property and Equipment, Intangible Assets and Goodwill (Details Textual) $ in Thousands		3 Months Ended	4 Months Ended	12 Months Ended
	Jan. 20, 2016	Nov. 19, 2014 USD ($)	Dec. 16, 2015 USD ($)	Aug. 26, 2015 USD ($)	Aug. 27, 2014 USD ($)
Trade Names [Member]
Finite-Lived Intangible Asset, Useful Life			21 years
Franchise Rights [Member]
Finite-Lived Intangible Asset, Useful Life			21 years
Intangible Assets Related to Cheeseburger in Paradise [Member]
Finite-Lived Intangible Asset, Useful Life			15 years
Fuddruckers [Member]
Goodwill, Gross			$ 200
Cheeseburger in Paradise [Member]
Goodwill, Gross			2,000
Cheeseburger in Paradise [Member] | Subsequent Event [Member]
Number of Restaurants Acquired	23
Number of Restaurants	8
Number of Restaurants Closed for Conversion	8
Number of Restaurants Closed for Disposal	2
Number of Locations Subleased	2
Number of Restaurants Not Closed to be Converted	3
Cheeseburger in Paradise [Member]
Goodwill, Impairment Loss				$ 38	$ 500
Finite-Lived Intangible Assets, Amortization Expense, Remainder of Fiscal Year			1,400
Finite-Lived Intangible Assets, Amortization Expense, Year Two			1,400
Finite-Lived Intangible Assets, Amortization Expense, Year Three			1,400
Finite-Lived Intangible Assets, Amortization Expense, Year Four			1,400
Goodwill			1,643	1,643
Goodwill, Impaired, Accumulated Impairment Loss			600	$ 600
Amortization of Intangible Assets		$ 300	500
Finite-Lived Intangible Assets, Amortization Expense, Year Five			$ 1,400

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Note 6 - Property and Equipment (Details) - USD ($) $ in Thousands	4 Months Ended
	Dec. 16, 2015	Aug. 26, 2015
Land [Member]
Land	$ 63,339	$ 63,298
Restaurant Equipment and Furnishings [Member] | Minimum [Member]
Restaurant equipment and furnishings	3000 years
Restaurant Equipment and Furnishings [Member] | Maximum [Member]
Restaurant equipment and furnishings	15000 years
Restaurant Equipment and Furnishings [Member]
Land	$ 89,587	85,679
Building [Member] | Minimum [Member]
Restaurant equipment and furnishings	20 years
Building [Member] | Maximum [Member]
Restaurant equipment and furnishings	33 years
Building [Member]
Land	$ 160,705	159,391
Leaseholds and Leasehold Improvements [Member]
Land	$ 29,739	29,229
Leasehold and leasehold improvements	Lesser of lease term or estimated useful life
Furniture and Fixtures [Member] | Minimum [Member]
Restaurant equipment and furnishings	3 years
Furniture and Fixtures [Member] | Maximum [Member]
Restaurant equipment and furnishings	10 years
Furniture and Fixtures [Member]
Land	$ 3,727	3,559
Construction in Progress [Member]
Land	972	810
Land	$ 348,069	341,966
Restaurant equipment and furnishings	21 years
Less accumulated depreciation and amortization	$ (148,315)	(141,764)
Property, Plant and Equipment, Net	199,754	200,202
Intangible assets, net	22,089	22,570
Goodwill	$ 1,643	$ 1,643

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Note 6 - Intangible Assets (Details) - USD ($) $ in Thousands	Dec. 16, 2015	Aug. 26, 2015
Fuddruckers Trade Name and Franchise Agreement [Member]
Finite-Lived Intangible Assets, Gross	$ 29,607	$ 29,607
Accumulated Amortization	(7,633)	(7,166)
Net Carrying Amount	21,974	22,441
Cheeseburger in Paradise Trade Name and License Agreement [Member]
Finite-Lived Intangible Assets, Gross	416	416
Accumulated Amortization	(301)	(287)
Net Carrying Amount	115	129
Finite-Lived Intangible Assets, Gross	30,023	30,023
Accumulated Amortization	(7,934)	(7,453)
Net Carrying Amount	$ 22,089	$ 22,570

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Note 7 - Impairment of Long-Lived Assets, Discontinued Operations and Property Held for Sale (Details Textual)		3 Months Ended		4 Months Ended	12 Months Ended
	Mar. 24, 2014	Nov. 19, 2014 USD ($)	Nov. 18, 2009	Dec. 16, 2015 USD ($)	Aug. 26, 2015 USD ($)
Newer Properties [Member] | Minimum [Member]
Time Span For Future Cash Flow				20 years
Newer Properties [Member] | Maximum [Member]
Time Span For Future Cash Flow				25 years
Older Properties [Member] | Minimum [Member]
Time Span For Future Cash Flow				5 years
Older Properties [Member] | Maximum [Member]
Time Span For Future Cash Flow				10 years
Minimum [Member] | Cheeseburger in Paradise [Member] | Discontinued Operations [Member]
Number of Restaurants Closed for Disposal				3
Minimum [Member] | Cheeseburger in Paradise [Member]
Number of Restaurants Closed for Disposal	5
Minimum [Member]
Expected Disposal Period				1 year
Maximum [Member]
Expected Disposal Period				3 years
Cheeseburger in Paradise [Member]
Number of Restaurants Subject to Impairment				1
Discontinued Operations [Member] | Luby's Cafeteria [Member] | Held for Sale [Member]
Number of Restaurants			1
Discontinued Operations [Member] | Luby's Cafeteria [Member]
Disposal Group Including Discontinued Operation Assets of Disposal Group Number			24
Discontinued Operations [Member] | Company Owned Restaurants [Member]
Property, Plant and Equipment, Net				$ 1,900,000
Discontinued Operations [Member]
Number of Restaurants				4
Impairment of Leasehold				$ 0
Company Owned Restaurants [Member]
Number of Restaurants				179	177
Impairment of Long-Lived Assets Held-for-use		$ 0		$ 0
Disposal Group Including Discontinued Operation Assets of Disposal Group Number				3	4
Property, Plant and Equipment, Net				$ 199,754,000	$ 200,202,000
Disposal Group, Including Discontinued Operation, Property, Plant and Equipment, Current				$ 3,100,000	$ 4,500,000

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Note 7 - Impairment Charges to Income from Operations (Details) - USD ($) $ in Thousands	3 Months Ended	4 Months Ended
	Nov. 19, 2014	Dec. 16, 2015
Provision for asset impairments
Net (gain) loss on disposition of property and equipment	$ 290	$ (279)
Total	$ 290	$ (279)
Effect on EPS:
Basic (in dollars per share)	$ (0.01)	$ 0.01
Assuming dilution (in dollars per share)	$ (0.01)	$ 0.01

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Note 7 - Assets and Liabilities for All Discontinued Operations (Details) - USD ($) $ in Thousands	Dec. 16, 2015	Aug. 26, 2015
Discontinued Operations [Member]
Prepaid expenses	$ 3	$ 10
Assets related to discontinued operations—current	3	10
Property and equipment	1,874	1,873
Other assets	1,798	1,798
Assets related to discontinued operations—non-current	3,672	3,671
Deferred income taxes	343	343
Accrued expenses and other liabilities	95	65
Liabilities related to discontinued operations—current	438	408
Other liabilities	17	182
Liabilities related to discontinued operations—non-current	17	182
Assets related to discontinued operations—current	3	10
Assets related to discontinued operations—non-current	3,672	3,671
Liabilities related to discontinued operations—current	438	408
Liabilities related to discontinued operations—non-current	$ 17	$ 182

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Note 7 - Sales and Pretax Income (Losses) Reported for Discontinued Operations (Details) $ in Thousands	3 Months Ended	4 Months Ended
	Nov. 19, 2014 USD ($)	Dec. 16, 2015 USD ($)
Sales
Pretax loss	$ (245)	$ (118)
Income tax benefit from discontinued operations	106	46
Loss from discontinued operations, net of income taxes	$ (139)	$ (72)
Discontinued locations closed during the period	0	0

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Note 7 - Discontinued Operations (Details) - USD ($) $ in Thousands	3 Months Ended	4 Months Ended
	Nov. 19, 2014	Dec. 16, 2015
Discontinued operating loss	$ (245)	$ (118)
Impairments
Net gains (losses)
Pretax loss	$ (245)	$ (118)
Income tax benefit from discontinued operations	106	46
Loss from discontinued operations	$ (139)	$ (72)
Basic (in dollars per share)	$ (0.01)	$ 0

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Note 8 - Commitments and Contingencies (Details Textual)	Dec. 16, 2015
Number of Non-cancelable Contracts	3

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Note 9 - Related Parties (Details Textual)		3 Months Ended		4 Months Ended	12 Months Ended
	Nov. 22, 2006	Nov. 19, 2014 USD ($)	May. 07, 2014 $ / item	Dec. 16, 2015 USD ($)	Dec. 16, 2015 $ / ft²
New Lease Agreement [Member]
Lessee Leasing Arrangements, Operating Leases, Renewal Term			5 years
Limited Liability Company (LLC) or Limited Partnership (LP), Managing Member or General Partner, Ownership Interest			50.00%
Percent of Space Rented				7.00%
Lessee Leasing Arrangements, Operating Leases, Term of Contract			6 years
Option to Extend Lease Years			2
Lease Annual Rent Payments Per Square Foot | $ / item			27.56
Operating Leases, Rent Expense		$ 27,000		$ 40,000
Amended And Restated Master Sales Agreement [Member] | Pappas Entities [Member]
Related Party Transaction, Amounts of Transaction		0		0
Lease Agreement Executed in 2006 [Member]
Lessee Leasing Arrangements, Operating Leases, Renewal Term	5 years
Lessee Leasing Arrangements, Operating Leases, Term of Contract	12 years
Option to Extend Lease Years	2
Lease Annual Rent Payments Per Square Foot | $ / ft²					22
Operating Leases, Rent Expense		$ 68,000		$ 103,000
Pappas Entities [Member]
Number of Related Party Entities				2	2

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Note 9 - Affiliated Rents Paid for Restaurant Property Lease (Details) - USD ($) $ in Thousands	3 Months Ended	4 Months Ended
	Nov. 19, 2014	Dec. 16, 2015
Affiliated Cost Incurred [Member]
Capital expenditures
Other operating expenses, occupancy costs and opening costs, including property leases	$ 95	$ 143
Total	95	143
Relative Company Cost [Member]
Capital expenditures	3,589	5,729
Other operating expenses, occupancy costs and opening costs, including property leases	20,086	25,460
Total	32,826	44,432
Selling, general and administrative expenses	9,151	13,243
Selling, general and administrative expenses	$ 9,151	$ 13,243
AFFILIATED COSTS INCURRED AS A PERCENTAGE OF RELATIVE TOTAL COMPANY COSTS	0.29%	0.32%

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Note 10 - Share-based Compensation (Details Textual)	3 Months Ended	4 Months Ended	8 Months Ended	16 Months Ended
	Nov. 19, 2014 USD ($)	Dec. 16, 2015 USD ($) $ / shares shares	May. 06, 2015	Dec. 16, 2015 USD ($) shares	Aug. 26, 2015 shares
Non Employee Directors Stock Plan [Member] | Selling, General and Administrative Expenses [Member]
Allocated Share-based Compensation Expense | $	$ 167,000	$ 197,000
Non Employee Directors Stock Plan [Member] | Share-based Compensation Award, Tranche One [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage			100.00%
Non Employee Directors Stock Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross		0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number		0		0
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized		1,100,000		1,100,000
Share-based Compensation Arrangement by Share-based Payment Award, Shares Issued in Period		900,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period		100,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant		300,000		300,000
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period		10 years
Restricted Stock and Unit Awards Granted to Named Executive Officers Percentage		20.00%
Employee Stock Plan [Member] | Selling, General and Administrative Expenses [Member] | Accelerated Share-based Compensation [Member]
Allocated Share-based Compensation Expense | $		$ 252,000
Employee Stock Plan [Member] | Selling, General and Administrative Expenses [Member]
Allocated Share-based Compensation Expense | $	$ 154,000	$ 455,000
Employee Stock Plan [Member] | Share-based Compensation Award, Tranche One [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage		50.00%
Employee Stock Plan [Member] | Share-based Compensation Award, Tranche Two [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage		25.00%
Employee Stock Plan [Member] | Share-based Compensation Award, Tranche Three [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage		25.00%
Employee Stock Plan [Member] | Chief Executive Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period		10 years
Employee Stock Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number		1,210,089		1,210,089
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized		2,600,000		2,600,000
Share-based Compensation Arrangement by Share-based Payment Award, Shares Issued in Period				5,700,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period				3,400,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant		300,000		300,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Cancelled in Period		312,663
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Lower Range Limit | $ / shares		$ 3.44
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Upper Range Limit | $ / shares		$ 11.10
Selling, General and Administrative Expenses [Member] | Performance Shares [Member]
Allocated Share-based Compensation Expense | $		$ 74,000
Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period		3 years
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate, Minimum		0.00%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate, Maximum		200.00%
Deferred Compensation Share-based Arrangements, Liability, Current and Noncurrent | $		$ 500,000		$ 500,000
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period		3 years
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Share-based Awards Other than Options | $		$ 2,500,000		$ 2,500,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross		279,944
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number		1,210,089		1,210,089	1,288,099
Number of Stock Plans		2		2
Share-based Compensation Arrangement by Share-based Payment Award, Options, Cancelled in Period		312,663
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition		2 years 146 days

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Note 10 - Stock Option Activity (Details) - USD ($) $ in Thousands	4 Months Ended	12 Months Ended
	Dec. 16, 2015	Aug. 26, 2015
Outstanding at (in shares)	1,288,099
Outstanding at (in dollars per share)	$ 4.76
Outstanding at	7 years 109 days	6 years 182 days
Outstanding at	$ 350
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	279,944
Granted (in dollars per share)	$ 4.89
Exercised (in shares)	(19,750)
Exercised (in dollars per share)	$ 3.44
Cancelled (in shares)	(312,663)
Cancelled (in dollars per share)	$ 4.98
Forfeited/Expired (in shares)	(25,541)
Forfeited/Expired (in dollars per share)	$ 4.34
Outstanding at (in shares)	1,210,089	1,288,099
Outstanding at (in dollars per share)	$ 4.76	$ 4.76
Outstanding at	$ 138	$ 350
Exercisable at December 16, 2015 (in shares)	415,951
Exercisable at December 16, 2015 (in dollars per share)	$ 4.93
Exercisable at December 16, 2015	3 years 182 days
Exercisable at December 16, 2015	$ 138

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Note 10 - Restricted Stock Unit Activity (Details) - Restricted Stock Units (RSUs) [Member] - $ / shares	4 Months Ended	12 Months Ended
	Dec. 16, 2015	Aug. 26, 2015
Unvested at (in shares)	409,417
Unvested at (in dollars per share)	$ 5.98
Unvested at	2 years 146 days	1 year 219 days
Granted (in shares)	166,619
Granted (in dollars per share)	$ 4.89
Vested (in shares)	(197,482)
Vested (in dollars per share)	$ 5.95
Forfeited (in shares)	(4,202)
Forfeited (in dollars per share)	$ 5.95
Unvested at (in shares)	374,352	409,417
Unvested at (in dollars per share)	$ 5.51	$ 5.98

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Note 11 - Earnings Per Share (Details Textual)	4 Months Ended
	Dec. 16, 2015 shares
Employee Stock Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	1,050,089
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	88,000

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Note 11 - Components of Basic and Diluted Net Income per Share (Details) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended	4 Months Ended
	Nov. 19, 2014	Dec. 16, 2015
Numerator:
Loss from continuing operations	$ (2,880)	$ (1,739)
Loss from discontinued operations, net of income taxes	(139)	(72)
Net loss	$ (3,019)	$ (1,811)
Denominator:
Basic (in shares)	28,890	29,133
Effect of potentially dilutive securities:
Employee and non-employee stock options (in shares)
Assuming dilution (in shares)	28,890	29,133
Basic (in dollars per share)	$ (0.10)	$ (0.06)
Assuming dilution (in dollars per share)	(0.10)	(0.06)
Basic (in dollars per share)	(0.01)	0
Assuming dilution (in dollars per share)	(0.01)	0
Basic (in dollars per share)	(0.11)	(0.06)
Assuming dilution (in dollars per share)	$ (0.11)	$ (0.06)