Shares of Rave Restaurant Group, Inc. (RAVE) have lost 9.4% since the company reported earnings for the quarter ended June 29, 2025. This compares unfavorably with the S&P 500 Index’s 1% growth during the same period. Over the past month, RAVE’s shares have declined 2.4% against a 3.6% rise in the broader index.Rave Restaurant’s Earnings SnapshotRAVE posted fourth-quarter fiscal 2025 net income of $0.8 million, down 3.6% year over year, while diluted earnings per share (EPS) remained flat at $0.06. Total re ...

[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]

Financial Performance - The company reported net income of $0.7 million for Q3 2025, a 10.4% increase year-over-year[2]. - Total revenue remained flat at $3.0 million for Q3 2025 compared to the same period last year[2]. - Adjusted EBITDA increased by $0.1 million to $1.0 million, reflecting a 13.2% year-over-year growth[2]. - Net income for the nine months ended March 30, 2025, increased to $1,855 million, up from $1,593 million for the same period in 2024, representing a growth of 16.4%[16]. - Adjusted EBITDA for the nine months ended March 30, 2025, reached $2,480 million, compared to $1,964 million for the same period in 2024, reflecting a 26.2% increase[18]. - Cash provided by operating activities for the nine months ended March 30, 2025, was $2,168 million, significantly higher than $1,331 million for the same period in 2024, marking a 63.0% increase[16]. Sales Performance - Pizza Inn domestic comparable store retail sales rose by 2.5%, while Pie Five's comparable store sales decreased by 5.6% in Q3 2025[2]. - The average sales lift for reimaged stores was 7.6%, with an average return on investment of 56%[4]. - The new $8 promotion at Pizza Inn led to over 20% year-over-year sales increases in tested locations[4]. - Nineteen Pizza Inn and three Pie Five restaurants achieved their highest sales weeks since at least 2018[4]. Shareholder Actions - The company repurchased 500,000 shares of common stock for $1.2 million during the quarter[2]. - Stock-based compensation expense increased to $178 million for the nine months ended March 30, 2025, compared to $127 million in the same period of 2024, a rise of 40.2%[16]. Cash Flow and Investments - Cash and cash equivalents were reported at $0.7 million, while short-term investments totaled $8.0 million as of March 30, 2025[2]. - Cash used in investing activities totaled $2,933 million for the nine months ended March 30, 2025, compared to only $30 million in the same period of 2024[16]. - The company reported a net decrease in cash and cash equivalents of $2,152 million, down from an increase of $990 million in the prior year[16]. - The cash and cash equivalents at the end of the period were $734 million, down from $6,318 million at the end of the previous year[16]. Tax and Deferred Income - The company paid $98 million in income taxes for the nine months ended March 30, 2025, compared to $4 million in the same period of 2024[16]. - Deferred income tax increased to $459 million for the nine months ended March 30, 2025, compared to $247 million in the same period of 2024, indicating a rise of 85.4%[16]. Profitability - The company has completed 20 consecutive quarters of profitability[3].

Sales Performance - Total domestic retail sales for Pizza Inn increased by $0.6 million, or 2.3%, for the three months ended March 30, 2025 compared to the same period of the prior year [86]. - Comparable store retail sales for Pizza Inn increased by $0.6 million, or 2.5%, for the three-month period ended March 30, 2025 compared to the same period of the prior fiscal year [86]. - Total domestic retail sales for Pie Five decreased by $1.1 million, or 29.1%, for the three months ended March 30, 2025 compared to the same period of the prior year [91]. - Pie Five total domestic retail sales decreased by $1.1 million, or 28.2%, for the three months ended March 30, 2025 compared to the same period of the prior year [92]. - Comparable store retail sales for Pie Five decreased by $0.2 million, or 5.6%, for the three months ended March 30, 2025 compared to the same period of the prior fiscal year [92]. Unit Count Changes - The number of domestic Pizza Inn units decreased by four during the three months ended March 30, 2025, with a total of 98 units at the end of the period [90]. - International Pizza Inn units decreased by seven during the three months ended March 30, 2025, resulting in a total of 20 units [90]. - The total number of Pie Five units decreased from 24 to 19 during the three months ended March 30, 2025 [91]. - Average units open for Pie Five decreased from 24 to 19 for the three months ended March 30, 2025, contributing to the decline in sales [92]. - There was a net decrease of one unit in the total domestic Pie Five unit count during the three and nine months ended March 30, 2025 [94]. Financial Performance - Adjusted EBITDA for the fiscal quarter ended March 30, 2025 increased by $0.1 million compared to the same period of the prior fiscal year, reaching $953,000 [84]. - Year-to-date Adjusted EBITDA increased by $0.5 million compared to the same period of the prior fiscal year, totaling $2.48 million [84]. - Total revenues for the nine months ended March 30, 2025 were $8.9 million, a slight increase from $8.8 million in the prior fiscal year [99]. - Pizza Inn franchise revenues increased by $0.2 million to $2.7 million for the three months ended March 30, 2025, a 6.5% increase driven by supplier incentives [100]. - Pie Five franchise revenues decreased by $0.1 million to $0.3 million for the three months ended March 30, 2025, representing a 32.6% decrease due to lower domestic royalties [101]. Expenses and Income - General and administrative expenses for the three months ended March 30, 2025 remained stable at $1.3 million, with a 2.4% increase driven by salary increases [102]. - Total franchise expenses decreased by $0.2 million to $2.6 million for the nine months ended March 30, 2025, reflecting an 8.3% decrease due to lower salaries related to franchise operations [103]. - Total income tax expense increased to $228 thousand for the three months ended March 30, 2025, compared to $200 thousand for the same period in the prior fiscal year, driven by higher taxable income [107]. - Basic net income per share increased by $0.01 to $0.05 per share for the three months ended March 30, 2025, with net income of $0.7 million on revenues of $3.0 million [109]. Cash Flow and Investments - Cash provided by operating activities was $2.2 million for the nine months ended March 30, 2025, compared to $1.3 million for the same period in the prior fiscal year, primarily due to increased collections of accounts receivable [113]. - Cash used in investing activities was $2.9 million for the nine months ended March 30, 2025, primarily attributable to increased purchases of U.S. Treasury bills [114]. - Net cash used in financing activities was $1.4 million for the nine months ended March 30, 2025, primarily due to repurchases of the Company's stock [116]. Future Outlook - The company anticipates a modest increase in both domestic and international Pizza Inn units in future periods [90]. - The company anticipates a modest decrease in Pie Five units in future periods [94]. - Management believes that cash and short-term investments on hand, combined with net cash provided by operations, will be sufficient to fund operations for the next 12 months and beyond [117]. Other Financial Metrics - Recoveries for credit losses were $14 thousand for the three months ended March 30, 2025, compared to a provision for credit losses of $11 thousand for the same period in the prior fiscal year [104]. - Interest income increased by $39 thousand to $84 thousand for the three months ended March 30, 2025, primarily driven by interest received on U.S. Treasury bills [105]. - Depreciation and amortization expense decreased by $14 thousand to $44 thousand for the three months ended March 30, 2025, due to lower depreciation of equipment [106]. - The Company recorded $0.7 million of other income for the employee retention credit for the fiscal year ended June 26, 2022, with $0.6 million received and $0.1 million still outstanding as of March 30, 2025 [118].

Core Insights - RAVE Restaurant Group, Inc. reported its financial results for the third quarter of fiscal 2025, marking the 20th consecutive quarter of profitability [3][4]. Financial Performance - The company recorded a net income of $0.7 million for the third quarter of fiscal 2025, representing a 10.4% increase from the same period in the prior year [6]. - Income before taxes increased by $0.1 million to $1.0 million, an 11.2% increase year-over-year [6]. - Total revenue remained stable at $3.0 million, unchanged from the same period in the prior year [6]. - Adjusted EBITDA rose by $0.1 million to $1.0 million, reflecting a 13.2% increase compared to the same period last year [6]. - On a fully diluted basis, net income per share increased by $0.01 to $0.05 [6]. Sales Performance - Pizza Inn domestic comparable store retail sales increased by 2.5% in the third quarter compared to the same period last year [6]. - Pie Five domestic comparable store retail sales decreased by 5.6% in the same timeframe [6]. - The company introduced a new promotion at Pizza Inn, resulting in year-over-year sales increases of over 20% at the test locations [4]. Operational Improvements - Operational enhancements at Pie Five have led to a significant reduction in average wait times from 20 minutes to 9 minutes, with in-store throughput nearly doubling [4]. - The company plans to complete 8 to 10 reimaged stores by the end of the fiscal year, with reimage results showing an average sales lift of 7.6% and a return on investment of 56% [4]. Shareholder Actions - RAVE repurchased 500,000 shares of common stock for $1.2 million during the third quarter [6].

Core Insights - RAVE Restaurant Group, Inc. reported a 2.9% increase in shares following the announcement of its second-quarter fiscal 2025 earnings, outperforming the S&P 500 Index which declined by 0.7% during the same period [1] - The company achieved total revenues of $2.9 million, a 4.5% increase from $2.7 million year-over-year, with net income rising 9.8% to $0.6 million, maintaining earnings per share at $0.04 [2] - Adjusted EBITDA surged by 50.6% year-over-year to $0.8 million, supported by a 3.9% reduction in total expenses to $2.1 million [2] Performance Metrics - Pizza Inn's domestic comparable store sales increased by 0.8% year-over-year, while Pie Five experienced an 11.4% decline in comparable store sales [3] - By the end of the quarter, Pizza Inn had 102 domestic and 27 international units, while Pie Five operated 20 domestic units [3] Operational Highlights - The second quarter marked RAVE's 19th consecutive quarter of profitability, attributed to innovation and strategic growth initiatives, including the opening of a new Pizza Inn buffet restaurant [4] - The company is advancing its reimage program, with nine Pizza Inn units undergoing renovations, eight of which are expected to be completed within the fiscal year [4] Menu and Operational Innovations - Pizza Inn introduced a stuffed crust chocolate chip Pizzert and plans to launch baked pasta options in the third quarter, while Pie Five is implementing a new make-line format to enhance operational capacity [5] Financial Health - RAVE maintains a solid financial position with $2.9 million in cash and cash equivalents and $6 million in short-term investments, with current assets seven times greater than current liabilities [6] Factors Influencing Results - The modest revenue increase was driven by Pizza Inn's sales initiatives, although Pie Five's decline offset some gains; lower general and administrative expenses contributed to improved profitability [7] Management Outlook - Management is optimistic about future growth, with plans for 30 new Pizza Inn buffet locations and a focus on long-term growth through innovation and operational enhancements [8][9] Other Developments - RAVE replaced its legacy paper gift certificates with a digital gift card program and expanded Pizza Inn's menu to include non-pizza offerings, aligning with consumer preferences [10]