Luby's, Inc.
2211 Northeast Loop 410
P.O. Box 33069
San Antonio, Texas 78265-3069
210/654-9000
www.lubys.com

For additional information contact: Adam Carter, Communications Director, 832-435-3084

SAN ANTONIO, TX - November 5, 2004 - Luby's, Inc. (NYSE: LUB) today announced the results of operations for the fourth quarter and fiscal year ended August 25, 2004.  

"The end of the fourth quarter marks the end of an important year for Luby's," said Chris Pappas, Luby's President and CEO.  "We've refinanced our bank debt.  We've improved our offerings in the restaurants and launched a major marketing campaign, resulting in increases in same-store sales.  And we've continued our efforts to implement initiatives at the restaurant level that strengthen operations, improving the experience for our customers every time they walk in the door."  

For the fourth quarter of 2004, same-store sales increased from $92.5 million in the prior year to $96.0 million in the current year, an increase of 3.8%.  All of the Company's sales in the fourth quarter were classified as same-store sales.  Prime costs of food and labor were 55.2% of sales, compared to 54.5% in the prior year.  An increase in food cost drove the increase in prime costs, with food cost increasing from 25.9% of sales in the fourth quarter of 2003 to 27.0% of sales in the recent quarter.  This increase was due to a general increase in the food commodity market, especially beef and dairy.  Labor cost offset this increase slightly, with labor cost as a percent of sales decreasing from 28.6% to 28.2%.  Income from operations was higher at $3.0 million compared to $2.7 million in the fourth quarter of 2003.  The Company posted its second consecutive quarterly profit during the fourth quarter of 2004, with net income of $2.7 million, or 12 cents a share.  This compares to a net loss of $1.6 million, or a loss of seven cents a share, in the fourth quarter of 2003.

For fiscal 2004, total Company sales were $308.8 million, up 1.6%, or $4.8 million, from $304.0 million in fiscal 2003.  Of the increase, $6.6 million related to a 2.2% increase in same-store sales.  The use of combination meals and new menu items helped drive up same-store sales, especially in the second half of the year.  This increase was offset by a decrease in sales of $1.8 million related to five stores closed prior to the adoption of the 2003 business plan, which therefore were not reclassified into discontinued operations. 

"We are pleased that we continue to make improvements over last year's results," said Pappas.  "Even with our recent successes, we continue to focus on efforts to grow Luby's sales and strengthen our operations.  Without the focus and attention of our managers and employees at our restaurants, none of this would have been possible."

"Our customers are the best barometer of how well we are operating our business.  In 2004, customers told us they liked seeing new menu items like our Blackened Tilapia and Grilled Chicken Breast entrees.  We've listened and will continue to add new items on a regular basis, like our Chipotle Chicken combo launched this fall, which is quickly developing into a new Luby's favorite.  We invite everyone in to try these new items soon," Pappas continued.

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For the fiscal year, the Company's prime costs (food and labor) decreased as a percent of sales from 56.0% of sales in fiscal 2003 to 54.6% in fiscal 2004.  The cost of food, as a percent of sales, decreased from 27.2% last year to 26.9% this year. This decrease was complemented by a decrease in labor cost as a percent of sales, from 28.8% last year to 27.7% this year.  The Company was able to decrease food cost as a percent of sales on a yearly basis even in the face of increasing food commodity costs during the fourth quarter, especially in the beef and dairy markets, with the use of monthly food budgeting tools at the store level.  The cost of labor as a percent of sales decreased year-over-year, despite an increase in workers' compensation cost estimates, due to the Company's continued efforts to manage labor resources at each location.

Occupancy and other expenses increased $3.3 million over the prior year.  This increase was due to a number of factors, including the launch of a full-year advertising campaign and higher insurance costs as a result of higher cost of coverage and related premiums.  Depreciation and amortization decreased $588,000 due to fewer depreciable properties resulting from impairments and property sales.

General and administrative expenses decreased $3.6 million from fiscal 2003 to fiscal 2004, from $23.3 million to $19.7 million.  The decrease related to a number of factors.   These factors included lower professional and consulting fees associated with a fixed-asset cost-segregation study and consulting fees related to the debt refinancing, both of which occurred in the prior year.

Due to the current-year accrual of voluntary severance costs in relation to the relocation of the corporate offices from San Antonio, Texas, to Houston, Texas, voluntary severance costs were $860,000 in fiscal 2004.

The Company recognized two charges to its earnings during the fiscal year as a result of store closures.  The first charge of approximately $727,000 - shown as a provision for asset impairments and restaurant closings - impacted the Company's income (loss) from operations.  This provision includes write-downs of properties not included in the business plan, offset by gains on the sale of properties not included in the business plan.

  The second charge of approximately $8.3 million - shown as discontinued operations - included noncash impairment charges of approximately $6.2 million whereby applicable restaurants included in the business plan were closed during the fiscal year and written down to their net realizable value.  Additional charges within discontinued operations included operating losses from those closed locations, allocated bank-debt interest expense, and termination costs associated with the implementation of the business plan to date, including lease settlements and carrying costs of closed stores.  For the prior year, the Company reported a provision for asset impairments and restaurant closings of $2.1 million and discontinued operations of $32.2 million.

For the year, the Company reported income from continuing operations of approximately $1.9 million, compared to the prior year when the Company posted a loss of $848,000. From a net income (loss) standpoint, the Company posted a net loss of approximately $6.4 million, compared to a loss of $33.1 million last year.

Luby's provides its customers with delicious, home-style food, value pricing, and outstanding customer service at its 136 restaurants in Dallas, Houston, San Antonio, the Rio Grande Valley, and other locations throughout Texas and other states.  Luby's stock is traded on the New York Stock Exchange (symbol LUB).  For more information about Luby's, visit the Company's web site at www.lubys.com.

The Company will hold its quarterly conference call with financial analysts to discuss fiscal 2004 year-end results on Thursday, November 11, at 11:00 a.m. (Central Time).  Interested investors are invited to listen to the call by dialing 800-758-6974.  A replay will be available following the call through November 18, 2004.  The replay number is 800-642-1687, Conference I.D. number 1816445.

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CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)

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CONSOLIDATED BALANCE SHEETS
(In thousands)

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