Franchising

Q4 revenues down nearly 40% at Pie Five, Pizza Inn

October 1, 2020

Rave Restaurant Group Inc., parent company of Pizza Inn and Pie Five, reported nearly 40% drops in revenue for both brands during the fourth quarter and fiscal year, which ended June 28.

"The COVID-19 pandemic has presented unprecedented challenges to both of our brands, but as our recovery efforts progress, it is encouraging to see our focus on safety, convenience, quality and value resonating with our customers," Rave CEO Brandon Solano said in a company press release. "I continue to be inspired by the coordinated response from our franchisees and restaurant support team to drive traffic and incremental sales through new channels and operations."

Fourth quarter highlights:

• Pizza Inn domestic comparable store retail sales decreased 39%.
• Pie Five comparable store retail sales decreased 37.9%.
• Total revenue decreased by $1.5 million to $1.6 million.
• Income before taxes was $32,000 for the fourth quarter of fiscal 2020 compared to a loss before taxes of $1.1 million for the same period of the prior year.
• Net income of $31,000 for the fourth quarter of fiscal 2020 compared to net loss of $0.8 million.
• On a fully diluted basis, net income increased $0.05 per share to $0.00 per share for the fourth quarter of fiscal 2020 compared to net loss of $0.05 per share for the same period of the prior year.
• Cash and cash equivalents increased $1.4 million during the fourth quarter of fiscal 2020 to $3 million on June 28.

Fiscal 2020 contained 52 weeks compared to 53 weeks in fiscal 2019.

• Rave total domestic comparable store retail sales decreased 10.5%.
• Pizza Inn domestic comparable store retail sales decreased 8.8%, while total domestic retail sales decreased 13.7%.
• Pie Five comparable store retail sales decreased 15.7% compared to the same period of the prior year, while total systemwide retail sales decreased 37.4%.
• Total consolidated revenue decreased 18.6% in fiscal 2020 to $10.0 million.
• Net loss of $0.28 per share in fiscal 2020 compared to net loss of $0.05 per share in the prior year.

"At Pizza Inn, we are focusing on safely reopening dining rooms by launching the Right-Way Buffet and relying on third-party home delivery to add new revenue streams," Solano said. "It's our top priority to ensure our guests feel safe inside our dining room and our New Right-Way Buffet is our way of giving them the same buffet experience with enhanced safety measures."

He said guest feedback has been positive, with customers communicating their appreciation for the buffet option.

"For guests who feel more comfortable enjoying Pizza Inn at home, our Contactless Buffet To-Go is still available for carryout and delivery," Solano said. "In addition, 40% of our system is utilizing third-party home delivery and we anticipate this number to continue to increase."

Most Pie Five locations are also utilizing third-party delivery, and the chain is leveraging its Circle of Crust loyalty app as a traffic driver.

"In addition, we are also working on exciting new menu enhancements that should be in test later this year and focusing efforts on operational efficiency and positive guest experience," Solano said.

Clint Fendley, VP of finance, said the chain's income before paying taxes of $32,000 reflected its efforts to control costs in the face of the reduced revenue caused by COVID-19.

"For all of fiscal 2020, the $0.2 million loss before taxes was a $0.6 million improvement over fiscal 2019 largely as the result of reduced impairment costs," he said. "Net loss of $4.2 million for the full 2020 fiscal year was primarily the result of income tax expense of $4.1 million attributable to a valuation allowance on our deferred tax assets taken in the third quarter. We believe that the budgetary measures we have taken during the last several months and our financial performance during this unprecedented pandemic bode well for the future of the company."

Pizza Inn has nearly 200 units, and Pie Five has 42.