SWOT Analysis and Recommendation for Luby's Cafeteria
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Luby's was founded in 1911 in Springfield, Missouri and currently (at the time Case 22 was published in 1999) has 223 locations in 11 states throughout the Midwestern, Southern and Southwestern US. Luby's is a publicly traded company on the New York Stock Exchange with no single organization owning more than 5.7 percent of its stock. Barry Parker, who is the company's president/CEO, is dealing with a falling stock price and profit margins that have been considerably shrinking over the past few years. The following S.W.O.T. analysis will try to pinpoint Luby's strategic issues or problems they are facing as well assist in providing alternative solutions and a final recommendation in handling these issues.
Luby's has…show more content… Venturing into other geographical locations can be done one of two ways. The first would be to buy another restaurant and convert into a Luby's. This would take a chance on a possible "lemon" location; however, it would also possibly decrease competition at the same time. The other choice would be to build or lease where another restaurant does not exist and take the chance that the location can outperform its surrounding competition. If capital expenditures are an issue for Luby's, they could take into consideration lowering dividends to free up cash. This will, however, place more of a strain on Luby's stock performance, which can have positive effects, on profit margins, if the strategy for the capital projects, increases margins. If capital expenditures are not an issue, then Luby's should look into diversifying along the supply chain. By vertical integration, Luby's can possibly lower their costs and achieve insight on new menu ideas for R&D.
I would recommend that Luby's use a systematic approach in solving their lowering margin issues. The first step would be to centralize purchasing for restaurant locations after they have identified which supply items would benefit from this. This is not exclusive to a cost savings standpoint. The alternative choices for centralized purchasing should not be noticeably inferior or sacrifice quality. After