April 19, 2007 was a red-letter loyalty day. I got to stand with my fellow Luby’s board members and close the trading session at the New York Stock Exchange. Luby’s, Inc. (LUB) celebrated 25 years as a public traded company, with a closing stock price of $10.13 for the day. This year, Luby’s also celebrated its 60th anniversary as an established “Texas Restaurant Institution” having opened the first Luby’s in San Antonio, TX in 1947. But five short years ago, it was a different story. Massive debt from zealous over-building, declining sales, sliding food quality, tired cooking and dining facilities and an aging customer base were just a few of the problems that had derailed the stock to a share price as low as 99 cents.
What drove Luby’s turnaround? A talented crew led by Houston restaurant legends, Chris and Harris Pappas, who have a brilliant eye for ‘first-things-first’. From the addition of healthy-eating menu items and a new menu board system to better communicate with guests, to short-batch cooking for improved food quality, to aggressive team-building and family-friendly marketing – the stores’ people, product and processes were aggressively over-hauled to serve today’s casual dining customer.
Amidst our four year turnaround, I learned plenty of loyalty lessons. The biggest? Patience pays. As a board director, I experienced first-hand the torment of knowing “all the right things were in place” but seeing no major shifts in customer counts, same-store-sales and bottom line revenue improvement. Here’s what I learned: There’s a tipping point to a turnaround and waiting for it requires faith and patience. And when our tipping point arrived, it didn’t disappoint. Week-after-week, quarter-after-quarter, revenue numbers got stronger and stronger. Luby’s was back!
Loyalty Lesson: “Rome wasn’t built in a day” and the best executed loyalty plans don’t always produce immediate results. Keep the faith. Be patient. Do the right things. Your rewards will come.