News

RAVE Restaurant Group suffers Q2 loss

RAVE Restaurant Group Inc, parent company of Pie Five Pizza Co. and Pizza Inn, reported that it suffered a loss during Q2 of 2015.

February 12, 2016

RAVE Restaurant Group Inc, parent company of Pie Five Pizza Co. and Pizza Inn, reported that it suffered a loss during Q2 of 2015. The company reported a net loss of $4.8 million and $5.4 million, respectively, compared to a loss of $0.4 million and $0.7 million for the comparable periods of the prior year.

"We entered several new Company-owned Pie Five markets in the past year, which allowed us to gain a foothold in several large metropolitan markets.  Sales in some of these areas have been slower to materialize than expected," said Randy Gier, CEO for Rave Restaurant Group Inc. "As a result, we elected to fully impair three Company stores that we identified as poor real estate selections and have further evolved our criteria for new unit development."

Second-quarter highlights:

• Total consolidated revenue increased 37.6 percent to $15.3 million compared to $11.1 million in the second quarter of fiscal 2016.
• Pie Five comparable store retail sales decreased 1.6 percent from the same period of the prior year.
• Pie Five system-wide retail sales increased 151 percent, and average weekly sales declined 9.9 percent, year over year.
• Pizza Inn domestic comparable store retail sales decreased 1.7 percent from the same period of the prior year, while total domestic retail sales decreased by 2.9 percent.
• Net loss of $4.8 million was $4.4 million greater than the same quarter of the prior year due to $4.5 million in total non-cash impairment and tax expenses.
• Adjusted EBITDA of $0.1 million was $0.1 million greater than the same quarter of the prior year.
• Company-owned restaurant operating cash flow decreased to $0.2 million from $0.3 million in the same period of the prior year.
• Addition of 14 Pie Five restaurants during the quarter brought the total Pie Five restaurants open at the end of the quarter to 82.

The increased losses were primarily the result of a $1.0 million-cash impairment expense attributable to three company-owned Pie Five restaurants and a $3.5 million valuation allowance against deferred tax assets, as well as increased pre-opening expenses, general and administrative expenses and franchise costs related to opening of company-owned Pie Five restaurants and the expansion of the Pie Five franchise system, Gier said.

"We are excited to be further expanding the geographic reach of Pie Five as we march towards the 100-restaurant mark," Gier said. "In the second quarter we opened our first franchised restaurants in Arkansas, Colorado, Delaware, and Kentucky, expanding our reach to 49 franchised restaurants and 33 Company-owned restaurants in 24 states."