News

Q1 sales up at Pie Five, down at Pizza Inn

Total revenue increased 28.6 percent to $14.5 million compared to $11.3 million in the first quarter of fiscal 2015.

November 13, 2015

RAVE Restaurant Group Inc., which owns Pie Five and Pizza Inn,  announced that revenue was up during its first quarter ended Sept. 27. It increased 28.6 percent to $14.5 million compared to $11.3 million in the first quarter of fiscal 2015. RAVE Restaurant Group Inc. operates on a fiscal year starting in July, not a calendar year.

Other Q1 highlights included:

• Pie Five comparable store retail sales increased 1.5 percent from the same period of the prior year.
• Pie Five system-wide total retail sales increased 163 percent, and average weekly sales declined 4 percent, year over year.
• Pizza Inn domestic comparable store retail sales decreased 1.1 percent from the same period of the prior year, while total domestic retail sales decreased by 4 percent.
• Net loss of $0.6 million was $0.3 million greater than the same quarter of the prior year primarily due to increased pre-opening expenses, as well as other costs to support the growth of the Pie Five platform.
• Adjusted EBITDA remained flat at $0.2 million compared to the same quarter of the prior year.
• Restaurant operating cash flow increased to $0.6 million from $0.4 million in the same period of the prior year.
• Net addition of 14 Pie Five restaurants during the quarter brought the total Pie Five restaurants open at the end of the quarter to 68.

The Company's net loss of $0.6 million in the first quarter was $0.3 million greater than the comparable period in the prior fiscal year primarily due to increased pre-opening expenses, as well as other costs to support the growth of the Pie Five platform. Adjusted EBITDA for the period remained flat at $0.2 million.

"Our overall performance was as expected for the quarter," said Randy Gier, CEO for RAVE Restaurant Group Inc. "We recently entered several new corporate store markets for Pie Five and incurred additional expenses related to that extension of our growth plan. In the meantime, our franchisees continue to build on their success by accelerating the expansion of Pie Five in dozens of markets across the country."

First quarter fiscal 2015 operating results

Total revenues for the first quarter of fiscal 2015 and the comparable prior year quarter were $14.5 million and $11.3 million, respectively, an increase of 28.6 percent year over year. Additional franchise development fees previously received from Pie Five franchisees have been deferred and will be recognized as future restaurants are opened. Pizza Inn domestic comparable store retail sales decreased 1.1 percent from the same period in the prior year.

For Pie Five, system-wide retail sales increased 163 percent for the first quarter of fiscal 2016 when compared to the same period in the prior year driven by a 171-percent increase in average units open, while system-wide average weekly sales decreased by 4 percent. The decrease in average weekly sales was due primarily to Company-owned stores opened in new large metropolitan markets where brand recognition has not yet been established. This impact was partially offset by higher-than-average volume openings in the Dallas/Fort Worth market and in franchised markets. Comparable store retail sales increased by 1.5 percent for the most recent fiscal quarter compared to the same period in the prior year.

"Pie Five comps in the first quarter decelerated towards the end of the period due to modest cannibalization caused by several new stores in the DFW market and a shift in the timing and scope of TV advertising as compared to the prior year period,"Gier said. "So far in the current quarter we have experienced slightly negative comps, in comparison to double-digit positive comps in the prior year, while continuing to maintain flat pricing on pizzas."

Development review

In the first quarter of fiscal 2015, 14 new Pie Five restaurants were opened, comprised of six Company-owned restaurants and eight franchised restaurants, bringing the fiscal quarter-end total unit count to 68 restaurants. In the first quarter, the Company signed four new franchise-development agreements for up to 88 additional Pie Five restaurants across six states. So far in the current quarter the company has signed one new franchise-development agreement for up to 10 Pie Five restaurants. The Company currently has franchise-restaurant development commitments totaling more than 450 Pie Five restaurants.

"We are very pleased that our pipeline for store openings and new franchisees continues to grow at a rapid pace," Gier said. "We expect to end the current quarter with at least 80 Pie Five restaurants operating and, based on currently executed leases and site development progress to date, we expect the Pie Five system to cross over the 100-restaurant mark late in our third fiscal quarter. Because our pipeline has a high mix of sites in ground-up developments the opening schedule is susceptible to variations in the timelines of real estate developers, especially around the holidays."

Dallas-based RAVE Restaurant Group owns, operates and franchises more than 300 Pie Five Pizza Co. and Pizza Inn restaurants domestically and internationally.