News

Pie Five Q3 comp sales plummet with pandemic onset

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June 29, 2020

Pie Five and Pizza Inn parent, Rave Restaurant Group, had a brutal third quarter ending March 29, according to a company press release. Pie Five domestic comp-store sales fell more than 21%, while comp sales at Pizza Inn dropped more than 7% compared with the previous year's third quarter. CEO Brandon Solano said the company has furloughed a large amount of staff and cut pay 20% for those who remain.

Of course, that was the period when the pandemic had first hit U.S. businesses, causing so many restaurant closures, but the numbers are indicative of some of the damage inflicted. Other Q3 2020 financial results for Rave Restaurant Group include:

• Total revenue down $0.4 million to $2.7 million from last year's quarter.
• Loss of $0.5 million this quarter versus a loss of $0.3 million last year's quarter.
• Net loss of $4.5 million this quarter versus net loss of $0.3 million last year's quarter.
• Q3 2020 adjusted EBITDA fell $0.2 million from the same period of the prior year.
• Pizza Inn domestic unit count finished at 152.
• Pizza Inn international unit count finished at 37.
• Pie Five domestic unit count finished at 43.

"During this unprecedented time for the restaurant industry, I'm extremely proud of how our franchisees and team members have responded," CEO Brandon Solano said in the release. "I've been inspired by our system's resilience and their tireless efforts to ensure that our restaurants remain a safe place to work and dine during the Coronavirus outbreak.

"Additionally, we have taken extensive measures to protect Rave's financial stability. We looked at all areas to reduce expenses, including furloughing two-thirds of our support staff and an across-the-board 20% pay reduction for all other employees and executive leadership late in the third quarter. I am grateful for our team's sacrifices and the continued support of our guests and communities."

The company's basic net loss increased 28 cents per share quarter-year over quarter-year to a loss of 30 cents per share for the three months ended March 29, 2020. That compares to a basic net loss of 2 cents per share for the same quarter last year over Q3 2018.

The company had a net loss of $4.5 million for the third quarter of fiscal 2020 and compared to a net loss of $0.3 million for the same period of the prior year. Revenues were $2.7 million for the three months ended March 29, 2020 compared to $3.1 million in the comparable period in the prior fiscal year. The decline in revenue was attributed to decreases in restaurant sales, franchise royalties and franchise license fees, partially offset by an increase in advertising funds.

During the third quarter, this year EBITDA was -$0.4 million or $0.3 million less than the same period of the prior year. Adjusted EBITDA of $0.0 million for the quarter was $0.2 million lower than the same period of the prior year.

The company said a significant decline in sales during March at Pizza Inn, related to COVID-19, came as a result of the buffet brand's business model, which has been tried significantly over the restrictions in dining in at restaurants. The company, however, launched a Contactless Buffet To-Go for carryout and delivery and expanded its online footprint along with negotiating favorable terms with third-party delivery services.

Lastly, it has introduced the Right Way Buffet, which allows buffet locations to open dining rooms while practicing enhanced health and safety measures.

The company said it was working to mitigate the pandemic's effects on Pie Five's dismal sales, including investments in a loyalty program, third-party delivery partnerships and digital capabilities.

The 61-year-old Rave Restaurant Group is based in Dallas and has more than 230 locations.