News

Pizza Inn reports 2Q results

February 9, 2011

Pizza Inn Inc.’s revenue increased slightly in the second quarter of fiscal year 2011, ended Dec. 26, compared to the same period a year ago.

Company revenues finished at $21 million compared to $20.4 million for 2Q10.

Net income for the quarter was $0.5 million, or $0.06 per share, compared to $0.8 million, or $0.09 per share, for the same period in the prior fiscal year. The decline in net income is primarily attributable to $0.3 million of depreciation expense associated with the closure of a company store opened prior to the rollout of the new buffet prototype.

Highlights for the quarter include:

• Sales from company-owned restaurants increased 20 percent, or $0.2 million, in 2Q11 compared to the same quarter of the prior fiscal year, primarily due to the opening of a new buffet location in Lewisville, Texas in December, 2010 and the acquisition of a delivery carryout location from a franchisee in September, 2010. The new buffet restaurant was the third such company-owned location opened since September, 2009.
• Comparable domestic buffet restaurant sales decreased 2.2 percent for 2Q11 compared to the same quarter of the prior fiscal year.
• Chain-wide comparable domestic restaurant sales decreased 2.6 percent, compared to the same quarter of the prior fiscal year.
• The 0 percent First Year Royalty incentive program has resulted in seven buffet openings in the last six fiscal quarters, with an eighth buffet unit opened in the current quarter. Waived royalties under this incentive program were $58,000 for 2Q11 and $131,000 for the first six months of fiscal 2011. All of these new buffet units began or will begin paying royalties in fiscal year 2011 or 2012.

Subsequent to the quarter’s end, the company entered into an amendment to its Loan Agreement with Amegy Bank that increased the term loan facility to $2.56 million, providing additional growth capital for continued company-owned restaurant expansion. This provides reason for optimism for the company moving into the rest of FY11.

"We successfully opened our fifth company store in December, the second opening of this fiscal year, and secured additional financing to continue with our growth plans. This, combined with openings of eight new buffet restaurants in the last 18 months across the U.S. under our $0 First Year Royalty incentive program, continues to position us for future growth,” said Charlie Morrison, president and CEO of Pizza Inn Inc. “Although we continue to face difficult commodity markets and price competition in our category, we expect to see continued improvement in same store sales for the balance of this fiscal year."