News Releases

RAVE Restaurant Group, Inc. Reports Fourth Quarter and Fiscal Year 2017 Financial Results
Fourth Quarter Net Loss Improves & Pizza Inn Sees Annual Comparable Sales Growth

DALLAS, Sept. 25, 2017 /PRNewswire/ -- RAVE Restaurant Group, Inc. (NASDAQ:RAVE) today reported financial results for the fourth quarter and fiscal year ended June 25, 2017.

Fourth Quarter Highlights:

  • Total consolidated revenue decreased 14.2% to $13.3 million compared to $15.5 million in the fourth quarter of fiscal 2016. 
  • Pie Five comparable store retail sales decreased 16.2% from the same period of the prior year.
  • Pie Five system-wide total retail sales decreased 9.5%, and average weekly sales decreased 7.3%, year over year.
  • Pizza Inn domestic comparable store retail sales increased 0.2% from the same period of the prior year, while total domestic franchise retail sales decreased by 0.3%.
  • Net loss of $1.1 million was $1.2 million less than the same quarter of the prior year primarily due to closure of underperforming company restaurants, decreased impairment of long-lived assets and other lease charges, and decreased loss on sale of assets.
  • Adjusted EBITDA was negative $0.5 million compared to negative $0.4 million in the same quarter of the prior year.

Annual Highlights:

  • Total consolidated revenue decreased 4.7% to $57.1 million compared to fiscal 2016. 
  • Pie Five comparable store retail sales decreased 16.0% from the prior year.
  • Pie Five system-wide total retail sales increased 7.2%, and average weekly sales decreased 13.5%, year over year.
  • Pizza Inn domestic comparable store retail sales increased 0.1% from the prior year, while total domestic retail sales decreased by 0.2%.
  • Net loss of $12.5 million was $3.6 million greater than prior year primarily due to $5.9 million of impairment charges and lease termination expenses.
  • Adjusted EBITDA decreased by $2.6 million over prior year to negative $2.7 million.
  • Net decrease of 4 Pie Five restaurants during the year bringing the total Pie Five restaurants open at the end of the fiscal year to 84.
  • Pie Five signed 7 new development agreements with commitments to build up to 27 restaurants in 6 states in addition to non-traditional outlets.

RAVE Restaurant Group, Inc. (NASDAQ:RAVE) today announced results for its fourth quarter and fiscal year ended June 25, 2017.  The Company's net loss of $1.1 million in the fourth quarter was $1.2 million less than the comparable period in the prior fiscal year primarily due to closure of underperforming company restaurants, decreased impairment of long-lived assets and other lease charges, and decreased loss on sale of assets.  Similarly, net loss of $12.5 million was $3.6 million greater than prior year primarily due to $5.9 million of impairment charges and lease termination expenses.  Adjusted EBITDA decreased by $2.6 million over prior year to negative $2.7 million.

"We are optimistic about Rave's strategic direction," said Scott Crane, Chief Executive Officer for Rave Restaurant Group, Inc. "Our leadership team has moved swiftly to address sales declines and improve profitability in all areas of our business.  We've made excellent progress in cleaning up the balance sheet and making adjustments in underperforming markets.  We also recently completed a $5 million rights offering that strengthens our shareholder equity."

Fourth Quarter Fiscal 2017 Operating Results

Total revenues for the fourth quarter of fiscal 2017 and the comparable prior year quarter were $13.3 million and $15.5 million, respectively, a decrease of 14.2% year over year.  Additional franchise development fees previously received from Pie Five franchisees have been deferred and will be recognized as future restaurants are opened.  Pizza Inn domestic comparable store retail sales increased 0.2% from the same period in the prior year. 

For Pie Five, system-wide retail sales decreased 9.5% for the fourth quarter of fiscal 2017 when compared to the same period in the prior year driven by a 2.3% decrease in average units open and a 7.3% decrease in the system-wide average weekly sales.  The decrease in average weekly sales was due to challenging economic conditions in the restaurant industry.  Comparable store retail sales decreased by 16.2% for the most recent fiscal quarter compared to the same period in the prior year. 

"We've now seen a full year of positive same store sales for Pizza Inn," said Crane. "Our Pizza Inn team has worked closely with franchise leadership to formulate a plan that is generating improved performance.  We are seeing activity that suggests these improved sales will begin translating into both facility upgrades and new store development.  Also, our team has outlined additional areas where we see growth potential for both concepts and we are building momentum behind these initiatives."

Fiscal Year 2017 Operating Results

Total revenues for the fiscal year 2017 and the comparable prior year were $57.1 million and $60.0 million, respectively, a decrease of 4.7% year over year.  Additional franchise development fees previously received from Pie Five franchisees have been deferred and will be recognized as future restaurants are opened.  Pizza Inn domestic comparable store retail sales increased 0.1% from the prior year. 

For Pie Five, system-wide retail sales increased 7.2% for fiscal 2017 when compared to the prior year, driven by a 23.3% increase in average units open and a 13.5% decrease in the system-wide average weekly sales.  The decrease in average weekly sales was due to weaker sales in non-core markets and challenging economic conditions in the restaurant industry.  Comparable store retail sales decreased by 16.0% compared to the prior year. 

"Pie Five has been challenged by a rapidly evolving consumer landscape that is confronting much of the restaurant industry," said Crane.  "We've been encouraged by the continued franchise interest, new restaurant openings and consumer support for our new initiatives. Just last month, we introduced a new Pie Five prototype in Plano, Texas. The next-generation design also offers wine by the bottle and glass and craft beer on tap. Our new restaurant prototype provides another opportunity for our brand to grow."

"We are also creating additional channels for guests to order from Pie Five," said Crane. "Consumer research showed that our guests would frequent Pie Five more often if we offered delivery and online ordering. We began rolling out delivery earlier this year and approximately 30% of Pie Five locations now offer the service. We plan to deliver from 100% of our locations by mid-year 2018."

Development Review

In the fourth quarter of fiscal 2017, a net five new Pie Five franchise restaurants were added while company restaurants decreased by seven, bringing the fiscal year-end total unit count to 84 Pie Five restaurants in 19 states.  So far in the current first fiscal quarter, the company opened one restaurant while franchisees have opened two new restaurants and the Company signed two new franchise development agreements in DFW and Pakistan for up to 57 additional Pie Five restaurants.  At fiscal year-end the Company had franchise restaurant development commitments for up to an additional 174 Pie Five restaurants.

"Pie Five just announced a franchise development deal for at least 40 international locations," said Crane.  "Our new international partners have already built a very successful global and domestic restaurant organization. We are also actively pursuing other international deals."

Pizza Inn opened eight new restaurants during the year while closing nine restaurants domestically and none internationally, ending the fiscal year at 221 total Pizza Inn Company-owned and franchised restaurants worldwide. 

"Pizza Inn is seeing double digit growth overseas," said Crane. "We've been buoyed by the renewed energy for Pizza Inn both internationally and domestically."

Conference Call

A conference call and audio webcast has been scheduled for 5:00 p.m. Central time today to discuss these results. Details of the conference call are as follows:

Date:


Monday, September 25, 2017




Time:


5:00 p.m. Central time




Dial-In #:


1-877-870-4263 U.S. & Canada






1-412-317-0790 International

Alternatively, the conference call will be webcast at raverg.com. A web-based archive of the conference call will also be available at the above website.

Non-GAAP Financial Measures

The Company uses certain non-GAAP financial measures in evaluating operating performance.  These non-GAAP financial measures should not be viewed as an alternative or substitute for its financial statements prepared in accordance with generally accepted accounting principles.  Adjusted EBITDA represents earnings before interest, taxes, depreciation and amortization, stock compensation expense, pre-opening expense, costs related to impairment, non-operating store costs and discontinued operations.  A reconciliation of Adjusted EBITDA to net income is included with the accompanying financial statements. 

Note Regarding Forward Looking Statements

Certain statements in this press release, other than historical information, may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and are intended to be covered by the safe harbors created thereby. These forward-looking statements are based on current expectations that involve numerous risks, uncertainties and assumptions.  Assumptions relating to these forward-looking statements involve judgments with respect to, among other things, future economic, competitive and market conditions, regulatory framework and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of RAVE Restaurant Group, Inc.  Although the assumptions underlying these forward-looking statements are believed to be reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that any forward-looking statements will prove to be accurate.  In light of the significant uncertainties inherent in these forward-looking statements, the inclusion of such information should not be regarded as a representation that the objectives and plans of RAVE Restaurant Group, Inc. will be achieved. 

About RAVE Restaurant Group, Inc.

Founded in 1958, Dallas-based RAVE Restaurant Group [NASDAQ: RAVE] owns, operates and franchises more than 300 Pie Five Pizza Co. and Pizza Inn restaurants domestically and internationally. Pie Five Pizza Co. is a leader in the rapidly growing fast-casual pizza space offering made to order pizzas made in under five minutes. Pizza Inn is an international chain featuring freshly made pizzas, along with salads, pastas, and desserts. The Company's common stock is listed on the Nasdaq Capital Market under the symbol "RAVE". For more information, please visit www.raverg.com

Contact:
Investor Relations
RAVE Restaurant Group, Inc.
469-384-5000

RAVE RESTAURANT GROUP, INC

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)






















Fiscal Year Ended






June 25,


June 26,






2017


2016









REVENUES:


$                  57,113


$                  59,953









COSTS AND EXPENSES:






Cost of sales


50,252


52,355


General and administrative expenses


7,710


7,109


Franchise expenses


3,896


3,636


Pre-opening expenses


162


883


Loss on sale of assets


882


-


Impairment of long-lived assets and other lease charges (See Note A)


5,877


1,698


Bad debt


342


101


Interest expense


106


4






69,227


65,786









LOSS FROM CONTINUING





OPERATIONS BEFORE TAXES


(12,114)


(5,833)










Income tax expense


53


2,654









LOSS FROM





CONTINUING OPERATIONS


(12,167)


(8,487)










Loss from discontinued operations, net of taxes


(324)


(399)









NET LOSS


$                (12,491)


$                  (8,886)









LOSS PER SHARE OF COMMON 





STOCK - BASIC:






Loss from continuing operations


$                    (1.15)


$                    (0.82)


Loss from discontinued operations


$                    (0.03)


$                    (0.04)


Net loss


$                    (1.18)


$                    (0.86)









LOSS PER SHARE OF COMMON





STOCK - DILUTED:






Loss from continuing operations


$                    (1.15)


$                    (0.82)


Loss from discontinued operations


$                    (0.03)


$                    (0.04)


Net loss


$                    (1.18)


$                    (0.86)









Weighted average common






shares outstanding - basic


10,617


10,317









Weighted average common






shares outstanding - diluted


10,617


10,317









 

RAVE RESTAURANT GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)












June 25,


June 26,

ASSETS



2017


2016








CURRENT ASSETS







Cash and cash equivalents


$

451

$

873


Accounts receivable, less allowance for doubtful accounts of $249 and $198, respectively



2,761


2,780


Notes receivable



675


167


Inventories



79


197


Income tax receivable



194


194


Property held for sale



671


-


Prepaid expenses and other



295


430



Total current assets



5,126


4,641








LONG-TERM ASSETS







Property, plant and equipment, net



3,808


12,979


Long-term notes receivable



127


382


Deposits and other, net



485


503



Total assets


$

9,546

$

18,505

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)






CURRENT LIABILITIES







Accounts payable - trade


$

4,165

$

3,815


Short-term debt



1,000


-


Accrued expenses



1,265


1,220


Deferred rent



101


160


Deferred revenues



212


304



Total current liabilities



6,743


5,499








LONG-TERM LIABILITIES







Convertible notes



2,749


-


Deferred rent, net of current portion



655


1,710


Deferred revenues, net of current portion



1,425


1,440


Other long-term liabilities



53


453



Total liabilities



11,625


9,102








COMMITMENTS AND CONTINGENCIES (See Notes F and J)













SHAREHOLDERS' EQUITY (DEFICIT)







Common stock, $.01 par value; authorized 26,000,000 shares; issued 17,786,049 and 17,460,951 shares, respectively; outstanding 10,666,649 and 10,341,551 shares, respectively



178


175


Additional paid-in capital



26,784


25,778


Retained earnings (accumulated deficit)



(4,405)


8,086


Treasury stock at cost








7,119,400 shares



(24,636)


(24,636)



Total shareholders' equity (deficit)



(2,079)


9,403



Total liabilities and shareholders' equity (deficit)


$

9,546

$

18,505








 

RAVE RESTAURANT GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)
















Fiscal Year Ended







June 25,


June 26,







2017


2016










CASH FLOWS FROM OPERATING ACTIVITIES:














Net loss

$    (12,491)


$     (8,886)


Adjustments to reconcile net loss to cash provided (used) by operating activities:






Impairment of fixed assets and other assets

4,773


1,698



Stock compensation expense

58


213



Deferred income taxes

-


2,593



Depreciation and amortization

2,456


2,722



Loss on the sale of assets

882


432



Provision for bad debt

342


101


Changes in operating assets and liabilities:






Notes and accounts receivable

(576)


(44)



Inventories

118


(17)



Income tax receivable

-


492



Prepaid expenses, deposits and other, net

116


419



Deferred revenue

(107)


195



Accounts payable - trade

350


940



Accrued expenses, deferred rent and other

(1,469)


1,088



   Cash provided (used) by operating activities

(5,548)


1,946










CASH FLOWS FROM INVESTING ACTIVITIES:














Proceeds from sale of assets

999


444


Capital expenditures

(573)


(8,110)



Cash provided (used) by investing activities

426


(7,666)










CASH FLOWS FROM FINANCING ACTIVITIES:














Net change in short-term debt

1,000


-


Proceeds from sale of stock

-


764


Proceeds from issuance of convertible notes

2,894


-


Proceeds from exercise of stock options

806


102












Cash provided by financing activities

4,700


866










Net decrease in cash and cash equivalents

(422)


(4,854)

Cash and cash equivalents, beginning of year

873


5,727

Cash and cash equivalents, end of year

$          451


$          873










SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION










CASH PAID FOR:















Interest

$            25


$              4



Income taxes

$            29


$               -










 

RAVE RESTAURANT GROUP, INC

ADJUSTED EBITDA

(In thousands)




















 Fiscal Year Ended 






 June 25, 


 June 26, 






2017


2016

 Net loss 





$         (12,491)


$          (8,886)

 Interest expense 





106


4

 Income taxes 





53


2,654

 Depreciation and amortization 





2,456


2,722

 EBITDA 





$           (9,876)


$          (3,506)

 Stock compensation expense 





58


213

 Pre-opening costs 





162


883

 Loss on sale/disposal of assets 





882


-

 Impairment charges, non-operating store costs and discontinued operations 


6,104


2,308

 Adjusted EBITDA 





$           (2,670)


$             (102)









 

RAVE Restaurant Group (PRNewsFoto/RAVE Restaurant Group)

 

SOURCE RAVE Restaurant Group, Inc.


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