Pie Five and Pizza Inn parent, Rave Restaurant Group said this week that its revenues dropped for both this fiscal year and the company's final quarter that ended June 25. Despite the gloomy news, however, CEO Scott Crane believes mobile ordering and delivery can deliver the brand to more profitable territory.
Total fourth quarter consolidated revenue dropped 14.2 percent to $13.3 million, compared to $15.5 million in the fourth quarter of fiscal 2016, a news release said. For the year, there was also a net loss of $12.5 million. But CEO Scott Crane believes the company's focus on mobile ordering and delivery will turn those downward trends around.
"Pie Five has been challenged by a rapidly evolving consumer landscape that is confronting much of the restaurant industry," Crane said in the release. "We've been encouraged by the continued franchise interest, new restaurant openings and consumer support for our new initiatives.
"Just last month, we introduced a new Pie Five prototype in Plano, Texas. The next-generation design also offers wine by the bottle and glass and craft beer on tap. Our new restaurant prototype provides another opportunity for our brand to grow."
The company's consumer research showed that guests would frequent Pie Five more often if delivery and online ordering were options.
"We began rolling out delivery earlier this year and approximately 30 percent of Pie Five locations now offer the service,” Crane said. "We plan to deliver from 100 percent of our locations by mid-year 2018."
These additions, Crane said, show the company's dedication to implementing a better growth strategy.
"Our leadership team has moved swiftly to address sales declines and improve profitability in all areas of our business," he said. "We've made excellent progress in cleaning up the balance sheet and making adjustments in under-performing markets. We also recently completed a $5 million rights offering that strengthens our shareholder equity."
The company's net loss of $1.1 million in the fourth quarter was $1.2 million less than the comparable period in the prior fiscal year however, primarily due to closure of under-performing company restaurants, decreased impairment of long-lived assets and other lease charges, and decreased loss on sale of assets, Crane said.
Similarly, net loss of $12.5 million was $3.6 million greater than prior year primarily due to $5.9 million of impairment charges and lease termination expenses. Adjusted EBITDA decreased by $2.6 million over prior year to negative $2.7 million.
Pie Five comparable store retail sales decreased 16.2 percent from the same period of the prior year. Pie Five system-wide total retail sales decreased 9.5 percent, and average weekly sales decreased 7.3 percent, year over year.
Pizza Inn domestic comparable store retail sales increased 0.2 percent from the same period of the prior year, while total domestic franchise retail sales decreased by 0.3 percent.
Net loss of $1.1 million was $1.2 million less than the same quarter of the prior year primarily due to closure of under-performing company restaurants, decreased impairment of long-lived assets and other lease charges, and decreased loss on sale of assets. Adjusted EBITDA was negative $0.5 million compared to negative $0.4 million in the same quarter of the prior year.
In fiscal 2017, total consolidated revenue dropped 4.7 percent from the previous year for the restaurant group, to $57.1 million. Other financials from the past fiscal year include:
- Pie Five comparable store retail sales decreased 16 percent from the prior year.
- Pie Five system-wide total retail sales increased 7.2 percent, and average weekly sales decreased 13.5 percent, year over year.
- Pizza Inn domestic comparable store retail sales increased 0.1 percent from the prior year, while total domestic retail sales decreased by 0.2 percent.
- Net loss of $12.5 million was $3.6 million greater than prior year primarily due to $5.9 million of impairment charges and lease termination expenses.
- Adjusted EBITDA decreased by $2.6 million over prior year to negative $2.7 million.
- Net decrease of four Pie Five restaurants during the year bringing the total Pie Five restaurants open at the end of the fiscal year to 84.
- Pie Five signed seven development agreements with commitments to build up to 27 restaurants in six states in addition to non-traditional outlets.
In the fourth quarter of fiscal 2017, a net of five Pie Five franchise restaurants were added while company restaurants decreased by seven, bringing the fiscal year-end total unit count to 84 Pie Five restaurants in 19 states. So far in the current first fiscal quarter, the company opened one restaurant while franchisees have opened two new restaurants and the company signed two franchise development agreements in DFW and Pakistan for up to 57 additional Pie Five
"Pie Five just announced a franchise development deal for at least 40 international locations," Crane said. "Our new international partners have already built a very successful global and domestic restaurant organization. We are also actively pursuing other international deals."
Pizza Inn opened eight restaurants during the year while closing nine restaurants domestically and none internationally, ending the fiscal year at 221 total Pizza Inn company-owned and franchised restaurants worldwide.
"Pizza Inn is seeing double-digit growth overseas," said Crane. "We've been buoyed by the renewed energy for Pizza Inn both internationally and domestically."
Companies: Pie Five Pizza Co.