Core Insights - Rave Restaurant Group, Inc. (RAVE) shares have increased by 20.6% since the release of Q1 fiscal 2026 results, significantly outperforming the S&P 500's 0.8% gain during the same period [1] - The company reported solid year-over-year growth in key financial metrics, with revenue rising 5.3% to $3.2 million and net income increasing 22.6% to $0.6 million [2] - Segment performance showed divergence, with Pizza Inn franchise revenue increasing by 9.4%, while Pie Five franchise revenues declined by 22.7% [3] Financial Performance - Revenue for RAVE increased by 5.3% to $3.2 million from $3.1 million a year earlier, driven by stronger supplier incentives and higher domestic royalties at Pizza Inn [2] - Net income rose by 22.6% to $0.6 million, and diluted earnings per share improved to $0.05 from $0.04 [2] - Operating income jumped 23.5% to $0.8 million, aided by a reduction in general and administrative expenses [2] Segment Analysis - Pizza Inn franchise revenue increased by 9.4%, supported by higher domestic royalties and system-wide retail sales, with comparable store retail sales up 8.1% year over year [3] - Pie Five franchise revenues declined by 22.7%, impacted by a lower unit count and softer comparable sales, with comparable store retail sales down 9.1% [3][4] Key Business Metrics - RAVE marked its 22nd consecutive profitable quarter, with Pizza Inn as the primary growth driver [4] - Total domestic retail sales for Pizza Inn increased by 10.2% year over year, while Pie Five saw an 18.7% decline [4] - Adjusted EBITDA rose to $0.8 million, reflecting a 15.3% increase from the prior year's $0.7 million [5] Management Commentary - CEO Brandon Solano highlighted the success of the Pizza Inn "I$8" promotion and plans for further expansion in January 2026 [6] - CFO Jay Rooney emphasized strong expense discipline and robust same-store performance at Pizza Inn as key contributors to earnings growth [7] Influencing Factors - Pizza Inn's performance benefited from strong promotional execution and resilient customer demand for value offerings, with supplier and distributor incentive revenue increasing by 6.9% to $1.3 million [8] - Pie Five faced challenges from reduced store counts and declining customer traffic, with comparable store retail sales falling to $2.4 million from $2.6 million [9] Cost Trends - General and administrative expenses decreased by 2.9%, while franchise expenses rose by 4.2% due to higher advertising costs [10] - Credit-loss provisions shifted to a $4,000 expense from a recovery the prior year, but the overall impact was immaterial [10] Future Guidance - RAVE did not provide specific financial guidance for future quarters but indicated expectations for moderate unit growth at Pizza Inn and modest declines at Pie Five [11] Other Developments - No acquisitions, divestitures, or restructuring actions were reported during the quarter, and there were no notable corporate changes [12]

Financial Performance - The Company reported net income of $0.6 million for Q1 2026, a 22.6% increase year-over-year[2] - Total revenue increased by $0.1 million to $3.2 million for Q1 2026, representing a 5.3% increase compared to the prior year[2] - Adjusted EBITDA rose by $0.1 million to $0.8 million for Q1 2026, marking a 15.3% increase from the same period last year[2] - Operating income increased by 23.5% year-over-year in Q1 2026, reflecting disciplined management of corporate expenses[4] - Net income for the three months ended September 28, 2025, increased to $645 million, up from $526 million in the same period last year, representing a growth of 22.6%[18] - Adjusted EBITDA rose to $830 million, compared to $720 million in the prior year, reflecting a year-over-year increase of 15.3%[18] - EBITDA for the quarter was reported at $802 million, an increase from $656 million, marking a growth of 22.2%[18] Sales Performance - Pizza Inn domestic comparable store retail sales increased by 8.1% in Q1 2026 compared to the same period of the prior year[2] - Pie Five domestic comparable store retail sales decreased by 9.1% in Q1 2026 compared to the same period of the prior year[2] Cash and Investments - Cash and short-term investments totaled $10.6 million as of September 28, 2025[2] - Total assets increased to $17.0 million as of September 28, 2025, compared to $16.6 million at the end of the previous quarter[14] Operational Developments - The Company opened one new buffet restaurant in North Texas during Q1 2026, with plans for multiple openings in Q2[4] - The Company plans to expand the I$8 promotion at Pizza Inn to more restaurants in January 2026[4] Expenses and Taxes - Interest income increased to $(91) million from $(82) million, indicating a rise in interest expenses[18] - Income taxes for the quarter were $206 million, up from $169 million, which is an increase of 21.9%[18] - Stock-based compensation expense decreased to $38 million from $73 million, showing a reduction of 48.9%[18] - Franchisee default and closed store revenue slightly increased to $(10) million from $(9) million, indicating a marginal rise in losses from franchisee operations[18] - Depreciation and amortization expenses remained relatively stable at $42 million compared to $43 million in the previous year[18]

Sales Performance - Total domestic retail sales for Pizza Inn increased by $2.6 million, or 10.2%, for the three months ended September 28, 2025, compared to the same period of the prior fiscal year [82]. - Comparable store retail sales for Pizza Inn increased by $2.0 million, or 8.1%, for the three months ended September 28, 2025, compared to the same period of the prior fiscal year [82]. - Total domestic retail sales for Pie Five decreased by $0.6 million, or 18.7%, for the three months ended September 28, 2025, compared to the same period of the prior fiscal year [85]. - Pizza Inn franchise revenues increased by $0.3 million to $3.0 million, representing a 9.4% increase driven by higher supplier and distributor incentives and domestic royalties due to increased system-wide sales [91]. - Pie Five franchise revenues decreased by $0.1 million to $0.2 million, a 22.2% decrease attributed to lower domestic royalties and supplier incentives from reduced system-wide sales due to unit closures [92]. Financial Performance - Adjusted EBITDA for the fiscal quarter ended September 28, 2025, increased by $0.1 million to $830,000, compared to $720,000 for the same period of the prior fiscal year [81]. - EBITDA for the fiscal quarter ended September 28, 2025, was $802,000, compared to $656,000 for the same period of the prior fiscal year [81]. - Total revenues for the three-month period ended September 28, 2025, were $3.2 million, a 5.3% increase from $3.1 million in the same period of the prior fiscal year [90]. - Basic net income per share increased by $0.01 to $0.05 per share, with net income of $0.6 million for the three months ended September 28, 2025, compared to $0.5 million in the prior year [101]. - Cash provided by operating activities was $0.6 million, an increase from $0.5 million in the same period last year, driven by increased net income [104]. - Total income tax expense increased to $206 thousand from $169 thousand, driven by higher federal taxes due to increased taxable income [99]. Operational Metrics - Average Buffet Units open increased from 78 to 79 during the three months ended September 28, 2025 [82]. - The total number of domestic Pizza Inn units remained stable at 96 during the three months ended September 28, 2025 [84]. - Total domestic Pie Five units remained stable at 17 during the three months ended September 28, 2025 [87]. - The number of international Pizza Inn units decreased by two units to 20 during the three months ended September 28, 2025 [84]. - The company anticipates a modest increase in both domestic and international Pizza Inn units in future periods [84]. Expenses and Cash Flow - Total general and administrative expenses remained stable at $1.4 million, with a 3.0% decrease driven by lower legal fees, offset by increased salaries [93]. - Cash used in investing activities was $2.1 million, up from $2.0 million in the prior year, primarily due to increased activity related to short-term investments [105]. - Interest income increased by $9 thousand to $91 thousand, primarily due to higher interest received on U.S. Treasury bills [96]. - The company believes that cash on hand combined with net cash provided by operations will be sufficient to fund operations for the next 12 months and beyond [107].

Core Insights - RAVE Restaurant Group, Inc. reported its financial results for the first quarter of fiscal 2026, marking the 22nd consecutive quarter of profitability [3][6]. Financial Performance - The company recorded a net income of $0.6 million for Q1 fiscal 2026, a 22.6% increase from the same period last year [6]. - Income before taxes rose by 22.4% to $0.9 million compared to the prior year [6]. - Total revenue increased by $0.1 million to $3.2 million, reflecting a 5.3% growth year-over-year [6]. - Adjusted EBITDA grew by $0.1 million to $0.8 million, a 15.3% increase from the previous year [6]. - Operating income increased by 23.5% year-over-year, indicating strong operational performance [4][6]. Sales Performance - Pizza Inn's domestic comparable store sales saw an impressive growth of 8.1% in Q1 fiscal 2026 compared to the same period last year [6]. - Conversely, Pie Five's domestic comparable store sales decreased by 9.1% in the same timeframe [6]. Strategic Initiatives - The company successfully implemented the I$8 promotion at Pizza Inn, which has driven traffic and maintained margins, with plans to expand this promotion further [4]. - One new buffet restaurant was opened in North Texas, with additional openings planned for the second quarter, aiming to increase the net buffet store count for the fifth consecutive year [4][6]. Balance Sheet Strength - Cash and short-term investments totaled over $10.5 million as of September 28, 2025, enhancing the company's financial stability [6].

Core Insights - Rave Restaurant Group, Inc. (RAVE) shares have decreased by 9.4% since the earnings report for the quarter ended June 29, 2025, contrasting with a 1% increase in the S&P 500 Index during the same period [1] - The company reported a fourth-quarter fiscal 2025 net income of $0.8 million, a 3.6% decline year over year, with total revenues falling 6% to $3.2 million [2] - For the full fiscal year, net income rose 9.3% to $2.7 million, while revenues decreased by 0.9% to $12 million [3] Financial Performance - RAVE's fourth-quarter diluted earnings per share (EPS) remained flat at $0.06, while adjusted EBITDA decreased by 7.3% to $1.1 million [2] - Annual adjusted EBITDA increased by 13.5% to $3.6 million in fiscal 2025, indicating operational strength despite challenging sales conditions [5] - Operating efficiency led to a 17.1% rise in annual pre-tax income to $3.6 million, reflecting improved profitability and expense control [4] Segment Performance - Pizza Inn's domestic comparable store sales grew by 6.3%, while Pie Five experienced a 7.2% decline in the fourth quarter [2] - For the full fiscal year, Pizza Inn comparable sales increased by 1.9%, whereas Pie Five sales contracted by 8.4% [3] Management Commentary - CEO Brandon Solano noted the success of the "$8 value promotion" at Pizza Inn, which resulted in a 30.6% sales lift and a 34.7% increase in traffic during the last eight weeks of the quarter [6] - CFO Jay Rooney attributed the 6.3% comparable store sales growth to cost discipline and strong performance at Pizza Inn [7] Growth Initiatives - RAVE did not provide formal financial guidance for fiscal 2026 but indicated optimism about growth through promotional expansion, domestic reimaging, and international openings [9] - The company opened new Pizza Inn locations in North Carolina and Oklahoma and launched its first unit in Egypt, highlighting its commitment to international growth [10]

[Executive Summary & Financial Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Financial%20Highlights) This section provides a comprehensive overview of RAVE Restaurant Group's financial performance for Q4 and the full fiscal year 2025, highlighting key revenue, income, and same-store sales metrics [Fourth Quarter Fiscal Year 2025 Highlights](index=1&type=section&id=Fourth%20Quarter%20Fiscal%20Year%202025%20Highlights) RAVE Restaurant Group reported Q4 FY2025 net income of $0.8 million, a 3.6% decrease, with total revenue down 6.0% to $3.2 million and adjusted EBITDA down 7.3% to $1.1 million Fourth Quarter Fiscal Year 2025 Financial Performance (vs. Prior Year): | Metric | Q4 FY2025 | Prior Year | Change (%) | | :-------------------------------- | :-------- | :-------- | :--------- | | Net Income | $0.8 million | $0.83 million | -3.6% | | Pre-tax Income | $1.2 million | $1.16 million | +3.8% | | Total Revenue | $3.2 million | $3.4 million | -6.0% | | Adjusted EBITDA | $1.1 million | $1.19 million | -7.3% | | Diluted Net Income Per Share | $0.06 | $0.06 | 0.0% | Fourth Quarter Fiscal Year 2025 Same-Store Retail Sales (13 Weeks vs. 13 Weeks): | Brand | Change (%) | | :-------- | :--------- | | Pizza Inn Domestic | +6.3% | | Pie Five Domestic | -7.2% | - Cash and cash equivalents totaled **$2.9 million**, with short-term investments at **$7.0 million** as of June 29, 2025[2](index=2&type=chunk) - At quarter-end, Pizza Inn had **96 domestic** and **22 international** locations, while Pie Five had **17 domestic** locations[2](index=2&type=chunk) [Annual Fiscal Year 2025 Highlights](index=2&type=section&id=Annual%20Fiscal%20Year%202025%20Highlights) For FY2025 (52 weeks), net income increased to $2.7 million, pre-tax income to $3.6 million, total revenue slightly decreased to $12.0 million, and adjusted EBITDA rose to $3.6 million Annual Fiscal Year 2025 Financial Performance (vs. Prior Year): | Metric | FY2025 | FY2024 | Change | | :-------------------------------- | :------- | :------- | :------- | | Net Income | $2.7 million | $2.5 million | +$0.2 million | | Pre-tax Income | $3.6 million | $3.1 million | +$0.5 million | | Total Revenue | $12.0 million | $12.1 million | -$0.1 million | | Adjusted EBITDA | $3.6 million | $3.2 million | +$0.4 million | | Diluted Net Income Per Share | $0.19 | $0.17 | +$0.02 | Annual Fiscal Year 2025 Same-Store Retail Sales (vs. Prior Year): | Brand | Change (%) | | :-------------------------------- | :--------- | | RAVE Domestic Total | +0.8% | | Pizza Inn Domestic | +1.9% | | Pie Five Domestic | -8.4% | - Pizza Inn buffet locations achieved net growth for the **fourth consecutive year**[3](index=3&type=chunk) - Cash flow from operations increased by **$0.6 million** to **$3.4 million**[3](index=3&type=chunk) - Cash and short-term investments increased by **$2.1 million** in FY2025, reaching **$9.9 million** as of June 29, 2025[3](index=3&type=chunk) [Management Commentary](index=3&type=section&id=Management%20Commentary) This section presents insights from the CEO and CFO on the company's operational achievements, financial management, and strategic growth initiatives for the fiscal year [CEO Remarks](index=3&type=section&id=CEO%20Remarks) CEO Brandon Solano highlighted 21 consecutive profitable quarters, noting the success of the $8 'I'm Eating at Pizza Inn' promotion and accelerated Pizza Inn brand growth through new openings and remodels - The company has achieved **21 consecutive profitable quarters**[4](index=4&type=chunk) - The '$8 I'm Eating at Pizza Inn' promotion drove **30.6% sales growth** and **34.7% traffic growth** during the last eight weeks of Q4[5](index=5&type=chunk) - Pizza Inn locations not participating in the $8 promotion still saw **over 5% same-store sales growth** with a summer salad bar promotion[5](index=5&type=chunk) - The Pizza Inn brand increased its buffet count for the **fourth consecutive year** and completed **11 remodels** with positive results[5](index=5&type=chunk) - The domestic new store pipeline includes **31 signed locations**, with **12 planned to open** in the current fiscal year (ending June 28, 2026), alongside new international openings in Egypt and Saudi Arabia[5](index=5&type=chunk) [CFO Remarks](index=3&type=section&id=CFO%20Remarks) CFO Jay Rooney noted effective expense management and Pizza Inn's 6.3% Q4 same-store sales growth contributed to over 17% annual pre-tax income increase for FY2025 - Effective expense management was maintained throughout fiscal year 2025[5](index=5&type=chunk) - Pizza Inn's **6.3% same-store sales growth** in Q4 contributed to an **over 17% increase** in annual pre-tax income compared to the prior 53-week fiscal year[5](index=5&type=chunk) [Company Overview](index=5&type=section&id=Company%20Overview) This section introduces RAVE Restaurant Group, Inc., detailing its business model, brand portfolio, and the distinct offerings of Pizza Inn and Pie Five [About RAVE Restaurant Group, Inc.](index=5&type=section&id=About%20RAVE%20Restaurant%20Group%2C%20Inc.) RAVE Restaurant Group, Inc., based in Dallas, operates Pizza Inn and Pie Five brands via franchising, licensing, and supply, with Pizza Inn known for its buffet and Pie Five for fast-casual personalized pizza - RAVE Restaurant Group operates Pie Five and Pizza Inn restaurants through **franchising, licensing, and supply** across domestic and international markets[11](index=11&type=chunk) - Founded in 1958, Pizza Inn is renowned for its buffet experience featuring **house-made dough, 100% whole-milk mozzarella, fresh ingredients, and signature sauces**[11](index=11&type=chunk) - Pie Five Pizza, launched in 2011, pioneered the fast-casual pizza concept, offering **customizable, gourmet ingredients and rapid service**[11](index=11&type=chunk) [Non-GAAP Financial Measures](index=3&type=section&id=Non-GAAP%20Financial%20Measures) This section defines non-GAAP financial metrics like EBITDA and Adjusted EBITDA, explaining their utility for performance assessment and providing a detailed reconciliation to GAAP net income [Definition and Use of Non-GAAP Measures](index=3&type=section&id=Definition%20and%20Use%20of%20Non-GAAP%20Measures) The company provides non-GAAP metrics like EBITDA and Adjusted EBITDA, which management deems useful for assessing operating performance and strategy, but emphasizes they are not GAAP substitutes - Non-GAAP financial measures, such as EBITDA and Adjusted EBITDA, are considered important supplemental metrics for evaluating operating performance and are useful for investors and management in assessing business strategy, planning, and budgeting[6](index=6&type=chunk)[7](index=7&type=chunk) - These non-GAAP measures should not be considered as a substitute for or superior to financial statements prepared in accordance with generally accepted accounting principles (GAAP)[6](index=6&type=chunk) - EBITDA is defined as earnings before interest, taxes, depreciation, and amortization[8](index=8&type=chunk) - Adjusted EBITDA further excludes stock-based compensation, severance, gain/loss on asset disposals, impairment and other lease charges, franchise defaults and store closing income/expense, and store closing and non-operating store costs from EBITDA[8](index=8&type=chunk) [Adjusted EBITDA Reconciliation](index=9&type=section&id=Adjusted%20EBITDA%20Reconciliation) This section provides a reconciliation of net income to EBITDA and Adjusted EBITDA for fiscal years 2025 and 2024, detailing adjustments made to derive non-GAAP figures Adjusted EBITDA Reconciliation (in thousands): | Metric | FY2025 (June 29) | FY2024 (June 30) | | :-------------------------------- | :--------------- | :--------------- | | Net Income | $2,702 | $2,473 | | Interest Income | (354) | (153) | | Income Tax Expense | 918 | 619 | | Depreciation and Amortization | 182 | 219 | | **EBITDA** | **$3,448** | **$3,158** | | Stock-based Compensation Expense | 136 | 149 | | Severance | 12 | 5 | | Franchise Defaults and Store Closing Income | (13) | (156) | | **Adjusted EBITDA** | **$3,583** | **$3,156** | [Consolidated Financial Statements](index=6&type=section&id=Consolidated%20Financial%20Statements) This section presents the company's complete financial position and performance through consolidated statements of income, balance sheets, and cash flows for recent fiscal periods [Consolidated Statements of Income](index=6&type=section&id=Consolidated%20Statements%20of%20Income) The consolidated statements of income show RAVE Restaurant Group's net income increased from $1,613 thousand in FY2023 to $2,702 thousand in FY2025, despite a slight decrease in total revenue Consolidated Statements of Income (in thousands, except per share amounts): | Metric | FY2025 (June 29) | FY2024 (June 30) | FY2023 (June 25) | | :-------------------------------- | :--------------- | :--------------- | :--------------- | | Revenue | $12,039 | $12,150 | $11,889 | | Cost of Sales and Expenses | 8,419 | 9,058 | 9,739 | | Pre-tax Income | 3,620 | 3,092 | 2,150 | | Income Tax Expense | 918 | 619 | 537 | | **Net Income** | **$2,702** | **$2,473** | **$1,613** | | Diluted Net Income Per Share | $0.19 | $0.17 | $0.10 | [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets indicate total assets increased from $15,819 thousand in FY2024 to $16,557 thousand in FY2025, driven by higher short-term investments, while total liabilities decreased Consolidated Balance Sheets (in thousands, except share amounts): | Metric | June 29, 2025 | June 30, 2024 | | :-------------------------------- | :-------------- | :-------------- | | **Assets** | | | | Cash and Cash Equivalents | $2,859 | $2,886 | | Short-term Investments | 7,024 | 4,945 | | Total Current Assets | 11,493 | 9,536 | | **Total Assets** | **$16,557** | **$15,819** | | **Liabilities and Stockholders' Equity** | | | | Total Current Liabilities | 1,740 | 2,019 | | Total Liabilities | 2,403 | 3,117 | | Total Stockholders' Equity | 14,154 | 12,702 | | **Total Liabilities and Stockholders' Equity** | **$16,557** | **$15,819** | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow increased to $3,395 thousand in FY2025, with net cash used in investing activities significantly improving to $2,036 thousand, and financing activities using $1,386 thousand for stock repurchases Consolidated Statements of Cash Flows (in thousands): | Metric | FY2025 (June 29) | FY2024 (June 30) | FY2023 (June 25) | | :-------------------------------- | :--------------- | :--------------- | :--------------- | | Cash Flow from Operating Activities | $3,395 | $2,845 | $2,841 | | Cash Flow Used in Investing Activities | (2,036) | (4,976) | (227) | | Cash Flow Used in Financing Activities | (1,386) | (311) | (5,009) | | Net Decrease in Cash and Cash Equivalents | (27) | (2,442) | (2,395) | | Cash and Cash Equivalents, End of Period | $2,859 | $2,886 | $5,328 | [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This section includes a cautionary note regarding forward-looking statements, emphasizing inherent risks, uncertainties, and the speculative nature of future projections [Note Regarding Forward-Looking Statements](index=4&type=section&id=Note%20Regarding%20Forward-Looking%20Statements) This section serves as a cautionary statement, indicating that non-historical information in the press release may constitute forward-looking statements subject to risks, uncertainties, and assumptions - Certain statements in this press release, excluding historical information, may be considered forward-looking statements protected by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995[9](index=9&type=chunk) - These forward-looking statements are based on current expectations and involve numerous risks, uncertainties, and assumptions, many of which are difficult to predict accurately and are beyond the company's control[9](index=9&type=chunk) - While assumptions underlying forward-looking statements are believed to be reasonable, any assumption could prove inaccurate, thus no assurance can be given regarding the accuracy of any forward-looking statement or the achievement of company goals and plans[9](index=9&type=chunk) [Other Information](index=5&type=section&id=Other%20Information) This section provides essential supplementary details, including contact information for investor relations [Contact Information](index=5&type=section&id=Contact%20Information) This section provides contact information for RAVE Restaurant Group, Inc. investor relations - Investor Relations Contact: RAVE Restaurant Group, Inc., Phone: **469-384-5000**[12](index=12&type=chunk)

PART I [ITEM 1. BUSINESS](index=2&type=section&id=ITEM%201.%20BUSINESS%2E) Rave Restaurant Group operates and franchises Pizza Inn and Pie Five pizza concepts, with 135 total units as of June 29, 2025 - Rave Restaurant Group, Inc. operates and franchises pizza concepts under **'Pizza Inn'** (Buffet, Delco, Express, Ghost Kitchens, PIE Kiosks) and **'Pie Five'** (fast-casual, ghost kitchens)[11](index=11&type=chunk) - The company facilitates food, equipment, and supply distribution to its domestic and international restaurant system through third-party agreements[11](index=11&type=chunk) [General Business Overview](index=2&type=section&id=General%20Business%20Overview) The company operates and franchises pizza restaurant concepts under the Pizza Inn and Pie Five brands, with various unit types - Rave Restaurant Group, Inc. operates and franchises pizza concepts under **'Pizza Inn'** (Buffet, Delco, Express, Ghost Kitchens, PIE Kiosks) and **'Pie Five'** (fast-casual, ghost kitchens)[11](index=11&type=chunk) Restaurant Unit Count (June 29, 2025) | Category | Count | | :-------------------------------- | :---- | | Total Franchised Pizza Inn | 117 | | Total Franchised Pie Five | 17 | | Total Licensed PIE Unit | 1 | | Domestic Franchised Pizza Inn | 95 | | International Franchised Pizza Inn | 22 | [Company History](index=2&type=section&id=Our%20History) Pizza Inn opened its first restaurant in 1958, expanded internationally in the late 1970s, and began trading on NASDAQ in 1993 - The first Pizza Inn opened in Dallas, Texas in **1958**, with the first franchise awarded in **1963** and international franchising beginning in the late **1970s**[13](index=13&type=chunk) - The company's stock began trading on NASDAQ in **1993** under the ticker symbol **'RAVE'**[13](index=13&type=chunk) - The first Pie Five restaurant opened in **2011**, and the PIE kiosk solution was launched in **2019**[13](index=13&type=chunk) [Restaurant Concepts](index=2&type=section&id=Our%20Concepts) The company operates and franchises restaurant concepts under two distinct brands: Pizza Inn and Pie Five - The company operates and franchises restaurant concepts under two distinct brands: **Pizza Inn** and **Pie Five**[14](index=14&type=chunk) [Pizza Inn Concept Details](index=2&type=section&id=Pizza%20Inn) Pizza Inn offers diverse unit types including Buffet, Delco, Express, Ghost Kitchens, and licensed PIE Kiosks - Pizza Inn offers Buffet, Delco (delivery/carryout), Express, and Ghost Kitchen Units, along with licensed PIE Kiosks[15](index=15&type=chunk) - Buffet and Delco Units feature hand-made dough and proprietary ingredients, while Express Units use pre-prepared crusts for lower investment and operating costs[15](index=15&type=chunk)[18](index=18&type=chunk) - Pizza Inn Ghost Kitchen Units operate within Pie Five restaurants, serving online customers through third-party delivery[20](index=20&type=chunk) [Pie Five Concept Details](index=3&type=section&id=Pie%20Five) Pie Five is a fast-casual pizza concept offering individualized pizzas with fresh toppings, typically located in high-traffic areas - Pie Five is a fast-casual pizza concept offering individualized pizzas with fresh toppings, baked in specially designed ovens[21](index=21&type=chunk) - Traditional Pie Five restaurants are typically **1,800-2,400 square feet**, located in high-traffic urban/suburban areas, and serve lunch and dinner[22](index=22&type=chunk) [Site Selection Process](index=3&type=section&id=Site%20Selection) The company considers site selection critical, involving demographic review and evaluation, often leveraging franchisee knowledge - The company considers site selection critical, involving trade area demographics review and evaluation, often relying on franchisee knowledge[23](index=23&type=chunk) [Development and Operations Strategy](index=3&type=section&id=Development%20and%20Operations%20Strategy) The company plans to expand Pizza Inn domestically and internationally, while opportunistically evaluating Pie Five unit development - The company plans to expand the Pizza Inn system domestically and internationally through new franchised restaurants, evaluating international development in fiscal 2026[24](index=24&type=chunk) - For Pie Five, the company will opportunistically evaluate franchised unit development, focusing on experienced, well-capitalized operators, and expects a modest decrease in units in future periods[27](index=27&type=chunk) [Domestic Franchise Operations](index=4&type=section&id=Domestic%20Franchise%20Operations) Franchise agreements require adherence to operating systems, payment of fees, marketing contributions, and ongoing royalties - Franchise agreements require adherence to operating systems, payment of franchise fees, marketing fund contributions, and continuing royalties[28](index=28&type=chunk)[29](index=29&type=chunk) - The company offers training programs focusing on food preparation, service, cost control, sanitation, safety, marketing, and personnel management[30](index=30&type=chunk) - Franchisees must comply with written policies and standards for menu, ingredients, decor, and operations, with ongoing support from franchise business consultants[31](index=31&type=chunk) [Domestic Kiosk License Operations](index=4&type=section&id=Domestic%20Kiosk%20License%20Operations) PIE Units are offered under five-year initial license periods without development fees, license fees, royalties, or advertising assessments - PIE Units are offered under five-year initial license periods with renewal options, without development fees, license fees, royalties, or advertising assessments[32](index=32&type=chunk) - Licensees must comply with Pizza Inn brand standards, and mandated product sourcing provisions result in supplier rebates for the company[32](index=32&type=chunk)[34](index=34&type=chunk) [International Franchise Operations](index=5&type=section&id=International%20Franchise%20Operations) The company offers master license rights for Pizza Inn internationally, with 22 international Pizza Inn restaurants as of June 29, 2025 - The company offers master license rights for Pizza Inn in foreign countries, with negotiated fees, development schedules, and ongoing royalties, but is not actively marketing Pie Five internationally[36](index=36&type=chunk) - As of June 29, 2025, there were **22 international Pizza Inn restaurants**, primarily in Saudi Arabia and the Middle East, with a few in Honduras and New Zealand[37](index=37&type=chunk) [Food and Supply Distribution](index=5&type=section&id=Food%20and%20Supply%20Distribution) Franchisees and licensees purchase food and supplies from authorized third-party distributors, benefiting from the company's vendor negotiations - Franchisees and licensees purchase food and supplies from authorized third-party distributors, benefiting from the company's direct vendor negotiations and volume purchasing[38](index=38&type=chunk) - Proprietary food products (e.g., cheese, pizza sauce, flour mixture) must be purchased from authorized distributors to ensure quality and consistency[38](index=38&type=chunk) - The company does not engage in commodity hedging but enters into pricing arrangements for up to a year in advance for certain high-volume products[40](index=40&type=chunk) [Marketing and Advertising](index=5&type=section&id=Marketing%20and%20Advertising) Franchisees contribute a percentage of sales to a marketing fund and conduct local marketing efforts with company support - Franchisees contribute a specified percentage of sales to a marketing fund for various advertising programs and materials, including print, digital, social media, and in-store promotions[42](index=42&type=chunk) - Franchisees are also required to conduct independent local marketing efforts, supported by company-provided materials[43](index=43&type=chunk) [Trademarks and Quality Control](index=6&type=section&id=Trademarks%20and%20Quality%20Control) The company owns various trademarks, including 'Pizza Inn' and 'Pie Five', which are essential for business protection - The company owns various trademarks, including **'Pizza Inn'** and **'Pie Five'**, registered with the USPTO and in several foreign countries, essential for business protection[44](index=44&type=chunk) [Government Regulation](index=6&type=section&id=Government%20Regulation) The company and its franchisees are subject to federal, state, and local laws affecting restaurant operations and franchise sales - The company and its franchisees are subject to federal, state, and local laws affecting restaurant operations, including licensing and regulation by health, safety, and alcoholic beverage authorities[45](index=45&type=chunk) - The company is subject to FTC regulations and state laws governing franchise offers and sales, requiring a franchise disclosure document for prospective franchisees[46](index=46&type=chunk) [Employees](index=6&type=section&id=Employees) As of June 29, 2025, the company had 24 full-time employees, none covered by collective bargaining agreements - As of June 29, 2025, the company had **24 full-time employees**, none of whom are covered by collective bargaining agreements[47](index=47&type=chunk) [Industry and Competition](index=6&type=section&id=Industry%20and%20Competition) The restaurant industry is intensely competitive across various factors, with numerous established competitors in the pizza segment - The restaurant industry is intensely competitive regarding price, service, location, and food quality, with many well-established competitors[48](index=48&type=chunk) - Primary competitors in the pizza segment include national and regional pizza chains, as well as frozen pizza products and fast-casual pizza concepts[48](index=48&type=chunk) - Competition for franchise sales is based on product quality, price, value, consumer acceptance, franchisor experience, and support[49](index=49&type=chunk) [ITEM 1A. RISK FACTORS](index=6&type=section&id=ITEM%201A.%20RISK%20FACTORS%2E) Risk factors disclosure is not required for a smaller reporting company - Risk factors disclosure is not required for a smaller reporting company[50](index=50&type=chunk) [ITEM 1B. UNRESOLVED STAFF COMMENTS](index=6&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS%2

Core Insights - RAVE Restaurant Group, Inc. reported financial results for the fourth quarter and fiscal year ended June 29, 2025, highlighting a mixed performance with a decrease in total revenue but an increase in net income for the fiscal year [1][4]. Fourth Quarter Highlights - The fourth quarter of fiscal 2025 had 13 weeks, compared to 14 weeks in the prior year, resulting in a net income of $0.8 million, a 3.6% decrease year-over-year [4]. - Income before taxes increased by 3.8% to $1.2 million for the fourth quarter [4]. - Total revenue decreased by $0.2 million to $3.2 million, reflecting a 6.0% decline [4]. - Adjusted EBITDA decreased by $0.1 million to $1.1 million, a 7.3% decrease [4]. - On a fully diluted basis, net income per share remained at $0.06, unchanged from the prior year [4]. - Pizza Inn domestic comparable store retail sales increased by 6.3%, while Pie Five domestic comparable store retail sales decreased by 7.2% [4]. Annual Highlights - For fiscal 2025, net income increased by $0.2 million to $2.7 million compared to $2.5 million in fiscal 2024 [4]. - Income before taxes rose by $0.5 million to $3.6 million in fiscal 2025 [4]. - Total revenue for fiscal 2025 was $12.0 million, a decrease of $0.1 million from fiscal 2024 [4]. - Adjusted EBITDA for fiscal 2025 was $3.6 million, an increase of $0.4 million from the prior year [4]. - RAVE's total domestic comparable store retail sales increased by 0.8% for the year [4]. Operational Insights - The company achieved its 21st consecutive quarter of profitability, indicating consistent operational success [5]. - A promotional campaign, "I ate at Pizza Inn," led to a 30.6% year-over-year sales lift and a 34.7% traffic lift in participating restaurants [6]. - The company opened new Pizza Inn buffets in North Carolina and Oklahoma and completed eleven reimages, with positive results [6]. - The domestic unit count for Pizza Inn finished at 96, with an international count of 22, while Pie Five had 17 domestic units [4][6]. Financial Position - Cash and cash equivalents were reported at $2.9 million, with short-term investments at $7.0 million as of June 29, 2025 [4]. - Cash provided by operating activities increased by $0.6 million to $3.4 million in fiscal 2025 [9]. - Total assets increased to $16.6 million, up from $15.8 million in the previous year [18].

Core Insights - RAVE Restaurant Group has been upgraded to an "Outperform" rating due to durable profitability, strengthened capital positioning, and effective operational initiatives [1][9] - The company has demonstrated consistent profitability with 20 consecutive quarters of positive net income, indicating increasing earnings resilience [1][2] Financial Performance - In Q3 fiscal 2025, net income rose 10.4% year over year to $0.72 million, while income before taxes increased 11.2% to $0.9 million [2] - Adjusted EBITDA climbed 13.2% to $0.9 million, despite total revenue remaining flat at $2.9 million, showcasing strong operational leverage [2] - Total operating expenses declined 4.4% year over year, reflecting effective cost control measures [5] Brand Performance - Pizza Inn, RAVE's flagship brand, experienced a 2.5% increase in domestic comparable store sales during Q3 fiscal 2025, supported by successful promotions and store reimaging efforts [3] - Pie Five faced challenges with a 5.6% decline in comparable store sales and a 28.2% drop in total domestic retail sales, but recent restructuring efforts are beginning to yield improvements [4] Cost Management - RAVE's franchise-focused structure has allowed for earnings expansion with minimal revenue growth, aided by an 8.3% year-to-date decline in franchise expenses [2] - General and administrative expenses rose 2.4% year over year, while franchise expenses fell 5.4%, indicating disciplined cost execution amid inflationary pressures [5] Revenue Composition - In Q3 fiscal 2025, supplier and distributor incentive revenues totaled $1.23 million, nearly equaling franchise royalty income of $1.16 million, highlighting a reliance on indirect income [6] - Franchise license fees declined 44.1% year over year, indicating weak new unit growth momentum [6] Structural Challenges - RAVE's small operating scale remains a constraint, with consolidated revenue flat at $2.9 million and only 117 domestic units across both brands [8] - Limited geographic footprint and low absolute revenue base restrict the company's ability to leverage broader economies of scale [8] Future Outlook - The upgrade to "Outperform" reflects confidence in RAVE's ability to sustain profitability and expand margins through capital efficiency and strategic execution [9] - Despite brand-level headwinds, particularly for Pie Five, the company is positioned as a niche small-cap outperformer in the franchised restaurant space [9]

Core Viewpoint - RAVE Restaurant Group, Inc. has demonstrated strong performance in its third-quarter fiscal 2025 results, with significant share price appreciation and profitability metrics, despite mixed sales trends across its brands [1][2][3]. Earnings and Revenue Overview - For the quarter ended March 30, 2025, RAVE reported net income of $0.72 million, a 10.4% increase from $0.65 million year-over-year [2] - Diluted earnings per share rose to $0.05 from $0.04 in the prior-year period [2] - Income before taxes increased by 11.2% year-over-year to $0.9 million, attributed to improved profitability initiatives [2] - Revenues remained flat at $2.9 million year-over-year, but adjusted EBITDA increased by 13.2% to $0.9 million due to cost control and operational improvements [2] Segment Performance - Pizza Inn's domestic comparable store sales increased by 2.5%, while Pie Five experienced a 5.6% decline in comparable domestic store sales, indicating mixed brand performance [3] Key Business Metrics - RAVE ended the quarter with 98 domestic and 20 international Pizza Inn units, along with 19 Pie Five locations [4] - The company repurchased 500,000 shares for $1.2 million, reflecting confidence in its valuation [4] - Cash and cash equivalents decreased to $0.7 million from $2.9 million as of December 29, 2024, while short-term investments rose to $7.9 million from $6 million [4] Balance Sheet and Cash Flow - RAVE maintains a debt-free balance sheet, with shareholders' equity slightly decreasing to $13.3 million from $13.8 million [5] - Cumulative net cash from operating activities for the nine-month period was $2.2 million, up from $1.3 million in the previous year [5] Operational Enhancements - Improvements at Pie Five's make-line led to significant throughput gains, reducing average wait times from 20 minutes to nine minutes [6] - Several Pie Five locations achieved record sales weeks following operational changes [6] Management Commentary - CEO Brandon Solano noted the third quarter marked the company's 20th consecutive quarter of profitability, driven by strategic initiatives and a new promotion at Pizza Inn [7] - The "I$8" promotion, offering $8 weekday buffet pricing, showed over 20% year-over-year sales growth in pilot stores and is set to expand [7] - The company is progressing with a reimaging program, projecting eight to ten store upgrades by fiscal year-end, with early results showing a 7.6% average sales lift [8] Financial Performance Insights - CFO Jay Rooney highlighted same-store sales records at 19 Pizza Inn and three Pie Five restaurants, the highest since at least 2018 [9] - Year-over-year pre-tax income increased by $96,000 for the quarter and $484,000 for the nine-month period [9] Factors Influencing Results - Despite unchanged overall revenue, efficiency gains and improved promotional effectiveness contributed to better earnings [11] - Cost containment in franchise and administrative expenses supported profitability, while Pie Five's sales decline reflects brand-specific challenges [11] Future Guidance - RAVE did not provide formal forward-looking guidance but expressed confidence in growth initiatives, including promotional pricing and operational enhancements [12] Other Developments - RAVE optimized its capital allocation strategy, with share repurchases indicating a focus on shareholder returns [13] - The company maintained a conservative balance sheet with minimal liabilities and healthy retained earnings [13]