VIA FACSIMILE AND U.S. MAIL

Mail Stop 03-05



							March 28, 2005



Mr. Ernest Pekmezaris
Chief Financial Officer
Luby`s, Inc.
13111 Northwest Freeway, Suite 600
Houston, Texas 77040

Re:    	Luby`s Inc.
       	Form 10-K for the fiscal year ended August 25, 2004 and
related materials
	File No. 1-08308


Dear Mr. Pekmezaris:

      We have reviewed your filing and have the following
comments.
In view of your Form 8-K filed on March 18, 2005 stating you will
be
restating your previously filed Form 10-K for the fiscal year
ended
August 25, 2004 and your Form 10-Q for the quarterly period ended
November 17, 2004, please incorporate any such revisions as a
result
of our review in these filings.  If you disagree, we will consider
your explanation as to why our comment is inapplicable or a
revision
is unnecessary.  Please be as detailed as necessary in your
explanation.  In some of our comments, we may ask you to provide
us
with supplemental information so we may better understand your
disclosure.  After reviewing this information, we may or may not
raise additional comments.

	Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects.  We welcome
any questions you may have about our comments or on any other
aspect
of our review.  Feel free to call us at the telephone numbers
listed
at the end of this letter.


Form 10-K for the Fiscal Year Ended August 25, 2004

Item 7:  Management`s Discussion and Analysis of Financial
Condition
and Results of Operations

EBITDA

1. We note your presentation of the non-GAAP measure, EBITDA.  You
state that you present this measure because you believe it is
useful
as an operating performance measure.  Item 10(e) of Regulation S-K
prohibits excluding charges or liabilities that require cash
settlement or excluding items that are reasonably expected to
recur
within two years or had similar charges in the prior two years.
It
appears from your discussion that you use an Adjusted EBITDA
measure
as defined by your debt agreements.  In this regard, you can
present
such measure to the extent you provide a discussion indicating the
materiality of the covenant and agreement, the amount or limit
required for compliance with the covenant, and the actual or
reasonably likely effects of compliance or non-compliance with the
covenant on your financial condition, results of operations and
liquidity.  Please revise your presentation of EBITDA accordingly.
Refer to the guidance provided in our release titled "Frequently
Asked Questions Regarding Use of Non-GAAP Financial Measures",
specifically question 10.

Liquidity and Capital Resources

2. In lieu of the fact that you have currently identified 26
restaurants as held for sale, in accordance with your previously
announced business plan, please expand to discuss the anticipated
effect of the sales of these restaurants on your future results of
operations and liquidity.

Financial Statements

Consolidated Statements of Operations

3. Rule 5-03(b)(3) of Regulation S-X requires that any material
operating costs and expenses that are not captured under the
classification of costs and expenses applicable to sales and
revenues
be separately stated.  Please tell us supplementally why you
believe
it is appropriate to present on a combined basis occupancy costs
and
other operating expenses.  It appears that occupancy costs would
be
significant enough to be stated separately.  Also, consider
separately stating other costs included within other operating
expenses based upon their significance.  Please revise or advise.

4. Based upon your MD&A discussion, it appears that you have
included
gains on the sales of assets within "Other income, net" on your
Consolidated Statements of Operations.  Gains and losses
recognized
on the sale of long-lived assets that are not a component of an
entity should be included in income from continuing operations.
Please reclassify your gains and losses recognized on the sale of
long-lived assets, accordingly.  Refer to the guidance in
paragraph
45 of SFAS 144.

Consolidated Statements of Cash Flows

5. Revise to present purchases of short-term investments and
redemptions/proceeds from short-term investments separately within
investing activities or tell us why these investments qualify for
net
reporting under paragraph 13 of SFAS 95.  Refer to the guidance in
paragraph 18 of SFAS 95.

Notes to Consolidated Financial Statements

Note 1:  Nature of Operations and Significant Accounting Policies

- -Self-Insurance Accruals

6. We note from your disclosure in MD&A that you revised the
method
used to estimate your workers` compensation and employee injury
claims reserve.  It appears that the change in methodology of
developing these estimates resulted from the use of more
comparable
Texas nonsubscriber work injury loss history by your actuary.  We
further note from footnote 16 that you increased your accrual for
estimated workers` compensation and employee injury costs by $1
million in the fourth quarter of 2004.  Tell us supplementally and
disclose your policy for recognizing liabilities for workers`
compensation and employee injury claims prior to and subsequent to
adopting your new methodology.  Also, revise to clearly discuss in
your critical accounting policies section of MD&A the significant
assumptions and estimates used in your methodology to determine
your
liability for incurred claims, both reported and not yet reported.

- -Depreciation and Amortization

7. You state that leasehold improvements are amortized over the
related lease lives, which are in some cases shorter than the
estimated useful lives of the improvements.  This appears to imply
that you amortize the cost of leasehold improvements over the term
of
the lease, even in cases in which the lease term is longer than
the
estimated useful life of the improvement.  Leasehold improvements
should be amortized over the shorter of the lease term as defined
in
paragraph 5(f) of SFAS 13 or their estimated useful life. If you
amortize your leasehold improvements over the shorter of the
improvement`s estimated useful life and the term of the lease,
please
revise your policy to state this fact; otherwise, please tell us
supplementally how your current policy is in accordance with GAAP.
Refer to guidance in SFAS 13.

Note 6:  Debt

- -Subordinated Notes

8. We note that the terms of your convertible subordinated notes
which had been issued to your CEO, Christopher J. Pappas, and COO,
Harris J. Pappas, were amended in the fourth quarter of 2004.  The
amendment changed the related interest rate from LIBOR plus 2.0%
to
prime plus 5.0% or 4.0%, depending upon the amount of senior debt
outstanding.  You state that the modification of the notes
resulted
in the net effect of $125,000 financial benefit in the fourth
quarter
of fiscal 2004.  Tell us supplementally, in detail, how you
accounted
for the modification of the convertible subordinated notes under
GAAP.  We may have further comment based on your response.

9. In regards to the amended subordinated note agreements, tell us
supplementally why you reflected in your Statements of
Shareholders`
Equity a "net change in value of beneficial conversion feature on
the
convertible subordinated notes" of $6.9 million when you disclose
that the beneficial conversion feature was $8.2 million.  We note
that the beneficial conversion feature recorded on the original
issuance of the subordinated notes was $4.7 million. Also, tell us
and revise to disclose the convertible features of the notes,
specifically when the notes are convertible by the holder.  We may
have further comment based on your response.

Note 7:  Impairment of Long-Lived Assets and Store Closings
/Discontinued Operations

- -Reserve for Restaurant Closings

10. We note that for each of the last three fiscal years, you have
reversed certain liabilities, which were previously accrued for
based
upon a 2001 asset disposal plan, accounted for under EITF 94-3.
Please tell us and revise to disclose the line item in your
Statements of Operations to which these liabilities were reversed.
Confirm to us such costs were reversed through the same line item
in
the income statement used when those costs were originally
recorded.

Note 9:  Leases

11. We note that you disclose that most of your leases include
periodic escalation clauses, and that you record increases in rent
expense as they become applicable.  Paragraph 15 of SFAS 13
indicates
that recognition of rent expense should be on a straight-line
basis
unless another systematic and rational basis is more
representative
of the time pattern in which use benefit is derived.  You state
that
you do not believe the deviation from the straight-line method has
a
material effect on your results of operations and financial
position.
Tell us supplementally why management believes the variation from
the
straight-line method is not material, how often an analysis of the
effects of straight-line rent and your current method is performed
and the results of such analysis.  Refer to the guidance provided
in
FTB 85-3.  We may have further comment upon the receipt of your
response.

12. Tell us supplementally and revise to disclose how you account
for
contingent rentals.  Specifically, if you account for contingent
rental expense under the guidelines of EITF 98-9, which states
that a
lessee should recognize contingent rental expense (in annual
periods
as well as interim periods) prior to the achievement of the
specified
target that triggers the contingent rental expense, provided that
achievement of that target is considered probable.

13. As noted within the discussion of your debt refinancing in
note
6, you state that a portion of your new line of credit has been
reduced using the proceeds from a sale-leaseback property
transaction.  Please tell us and expand your disclosures to
discuss
the nature and terms of the transaction and how it was accounted
for
under SFAS 13 and 98 or tell us why you believe such disclosure in
not required.  Also tell us supplementally and disclose if there
was
any gain or loss realized from the sale-leaseback transaction.

14. We note from your disclosure in Item 2, Properties section of
your Form 10-K, that certain of your owned restaurant properties
contain excess building space, which is rented to unaffiliated
tenants.  Please tell us and expand your disclosures in your
significant accounting policies to discuss how you account for
this
rental income.  Also, tell us supplementally whether you have
recognized the income using the straight-line method, in
accordance
with paragraph 19(b) of SFAS 13. Revise to provide the required
disclosures in paragraph 23 (b) and (c) of SFAS 13 to the extent
such
rental income is significant.

Note 10:  Employee Benefit Plans and Agreements

15. Please expand your disclosure to include a discussion of your
Non-Employee Director Phantom Stock Plan.  As part of your
response
and your revised disclosures, explain in further detail the number
and significant terms of the awards made under your phantom stock
plan.  Refer to the disclosures requirements of paragraphs 47(c)
and
47(e) of SFAS 123.

- -All Stock Options

16. Please revise to provide a description of your Non-Employee
Director Stock Option Plan, the terms of the Plan and the number
of
stock options authorized for grant and outstanding shares under
the
Plan.



Note 13:  Related Parties

- -Operating Leases

17. We note you leased a Luby`s restaurant located in Dallas from
PHCG Investments until it was closed in 2003 under the terms of a
ground lease.  Further we note you entered into a lease
termination
agreement with a third party unaffiliated with the Pappas
entities.
Tell us supplementally and expand to disclose how you accounted
for
this transaction under GAAP that resulted in a gain to you of
$735,000 and where the gain is reflected in your Statements of
Operations for 2003.

Note 15:  Per Share Information

18. Please disclose the outstanding securities that could
potentially
dilute basic earnings per share in the future, but were not
included
in the computation of diluted earnings per share because to do so
would have been anti-dilutive for the periods presented.  Also,
tell
us if you considered the effect of the convertible shares
outstanding
under your Phantom Stock Plan in your dilutive earnings per share
calculation for income from continuing operations for fiscal year
2004.   Refer to the guidance provided in paragraph 40(c) of SFAS
128.

Note 16:  Quarterly Financial Information (unaudited)

19. We note in your quarterly financial information you present a
measure of gross profit which is not consistent with your income
statement presentation.  Please revise to include a note to your
quarterly data as to how such measure is calculated from your
income
statement or remove such measure from the footnote.

Form 10-Q for the Quarterly Period Ended November 17, 2004

20. Please address our comments on Form 10-K in your 2005 Form 10-
Q,
where applicable.

Results of Operations
- -Quarter ended November 17, 2004 compared to the quarter ended
November 19, 2003, page 19

21. We note from your MD&A that you wrote-off store equipment in
the
first quarter of 2005 and recorded such write-off within the non-
operating income on your Statements of Operations.  Please revise
to
include such impairment loss within income from continuing
operations
and provide the required disclosures outlined in paragraph 25 and
26
of SFAS 144.

      Please respond to these comments within 10 business days or
tell us when you will provide us with a response.  Please furnish
a
response letter that keys your responses to our comments and
indicates your intent to include the requested disclosures in
future
filings.  Detailed cover letters greatly facilitate our review.
Please file your cover letter on EDGAR.  Please understand that we
may have additional comments after reviewing your responses to our
comments.

	We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require.
Since the company and its management are in possession of all
facts
relating to a company`s disclosure, they are responsible for the
accuracy and adequacy of the disclosures they have made.

     	In connection with responding to our comments, please
provide, in writing, a statement from the company acknowledging
that

* the company is responsible for the adequacy and accuracy of the
disclosure in the filings;
* staff comments or changes to disclosure in response to staff
comments in the filings reviewed by the staff do not foreclose the
Commission from taking any action with respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.

     	In addition, please be advised that the Division of
Enforcement has access to all information you provide to the staff
of
the Division of Corporation Finance in our review of your filing
or
in response to our comments on your filing.

      You may contact Jeffrey Sears, Staff Accountant, at (202)
824-
5646, Michele Gohlke, Senior Staff Accountant, at (202) 942-7903
or
me at (202) 942-1936 if you have questions regarding these
comments
on the financial statements and related matters.

      Sincerely,



							Linda Cvrkel
							Branch Chief


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Mr. Ernest Pekmezaris
Luby's Inc.
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