Symbol (NYSE): LUB
52-Week Range: $11. 94-$4. 25
Price on November 28: $4. 94
Market Capitalization: $109. 3 million

As Texas institutions go, you don’t get much more basic than Luby’s cafeterias. They are ubiquitous, and they represent a common experience of food culture shared by millions of Texans. The horrifying mass murder at Luby’s in Killeen in 1991 was made doubly poignant by the fact that so many Texans were customers: It could have happened to anybody. But in spite of a healthy economy and the company’s status as a cultural icon, the 53-year-old Luby’s has fallen into a deep slump that may threaten the San Antonio-based cafeteria chain’s survival.

In September, slightly more than a month after Luby’s announced it was shuttering 15 of its 231 restaurants, its unpopular chief executive officer, Barry J. C. Parker, abruptly resigned. Under Parker, Luby’s share price had fallen nearly 75 percent, from a high of $21. 25 shortly after he took over three years ago to $5. 44 the day he resigned. In October, after reporting a fourth-quarter net loss of $8. 5 million and a 68 percent plunge in profitability, Luby’s suspended its quarterly dividend and announced the departure of chief financial officer Laura Bishop. The company soon faced a stockholders’ revolt. Fed up with the sagging share price and management’s unsuccessful attempt to boost profits, disgruntled shareholders organized over the Internet and filed a proxy solicitation with the Securities and Exchange Commission seeking to replace the company’s nominees to the board of directors.

Can Luby’s, which has fed generations of Texans and boasts a loyal but graying clientele, be saved? Stephen Spence, an analyst with the Southwest Securities Group in Dallas, is not optimistic. But he’s not writing the company off yet. “What they have to do is stop losing their customers,” he says. That’s easier said than done in today’s hot casual-dining market. Luby’s has tried various measures, including remodeling restaurants, discounted meal packages, and drive-through windows, to win back customers, without success. Despite efforts to update its dowdy image—it even dropped “Cafeteria” from its corporate logo—Luby’s appears stuck in the past.

What happens to Luby’s, of course, is part of a larger question: Are cafeterias destined for extinction? The answer, say analysts, is not necessarily. In fact, some of the more successful new concepts in casual dining, including Corner Bakery (owned by Texas-based chain restaurant giant Brinker International), Panera Bread, and La Madeleine French Bakery and Cafe, all feature cafeteria-style dining, albeit with contemporary menu selections and decor. To entice diners, Luby’s must preserve its strong brand and reputation for quality food while updating its restaurants. Key to its success will be stopping the defections of experienced restaurant managers that began under Parker when their compensation packages were cut. To placate store managers, in late October Luby’s promoted a sixteen-year company veteran and former restaurant manager. It launched a new compensation plan to increase the managers’ share of restaurant profits and offer bonuses for improved performance. Luby’s board also announced a new marketing effort, including ads and coupons, to attract customers. Meanwhile, the urgent search for a new CEO and other executives continues, and it is unlikely that a new CEO will be named until after the January 12 annual meeting. Until then, at least, these unappetizing shares are likely to trade at about the price of a LuAnn Platter.