DALLAS - Nov. 8, 2017 // PRNewswire // - RAVE Restaurant Group, Inc. (NASDAQ:RAVE) today reported financial results for the first quarter of fiscal 2018 ended September 24, 2017.
First Quarter Highlights:
"Our turnaround plan for RAVE is on-course with Pizza Inn showing positive comparable sales and unit growth in the pipeline, while Pie Five successfully exits underperforming markets and works to improve its underlying unit economics," said Scott Crane, Chief Executive Officer for Rave Restaurant Group, Inc. "In addition, we have made great strides in streamlining corporate overhead to become more efficient operationally while improving the bottom line."
Revenues of $13.2 million for the first quarter fiscal 2018 were 13.8% lower than the same period of the prior year. For the three months ended September 24, 2017, the Company reported a net loss of $0.4 million compared to a loss of $1.5 million for the comparable period of the prior year. On a fully diluted basis, the loss was $0.03 per share for the first quarter fiscal 2018, compared to a loss of $0.14 per share for the same period of the prior year. The decreased loss for the three month period ended September 24, 2017 was primarily the result of $0.7 million improvement in loss from continuing operations before taxes from Company-owned restaurants, $0.6 million increase in recognized franchise fees, and $0.6 million decrease in general and administrative expenses. The Company continued to provide a full valuation allowance against its deferred tax assets. Adjusted EBITDA improved $0.6 million for the three month period ended September 24, 2017, to $0.4 million. The improvement in Adjusted EBITDA was driven by improvements to net loss, decreased depreciation and amortization, increased average unit volumes at Company-owned Pie Five locations, and positive comparable sales at Pizza Inn locations.
Pie Five system-wide retail sales decreased 17.3% for the first quarter of fiscal 2018 when compared to the same period in the prior year driven by a 6.7% decrease in average units open. Comparable store retail sales also decreased by 17.3% for the most recent fiscal quarter compared to the same period in the prior year. The Company continues to believe that increased competition within the fast-casual segment and general industry softness has contributed to weakened trends within the Pie Five system.
Pizza Inn total domestic retail sales decreased 0.9% for the three months ended September 24, 2017 compared to the same period of the prior year. Pizza Inn domestic comparable store retail sales increased 1.4% for the three months ended September 24, 2017 compared to the same period of the prior year.
"There is a great deal of excitement around the Pizza Inn brand right now. With impressive international comparable store sales growth and 1.4% domestic comparable sales growth we are seeing franchisees reenergized and looking to add more units. While average weekly sales of Company-owned Pie Five stores have improved, we are continuing to focus on lifting the core unit economic model," said Crane.
In the first quarter of fiscal 2018, three new franchised and one new Company-owned Pie Five restaurants were opened, while five franchised restaurants were closed, bringing the quarter-end total unit count to 83 restaurants. During the first fiscal quarter, the number of Pizza Inn domestic units declined to 159, while international units remained steady at 60 units.
"International and non-traditional development are showing great promise for Pie Five," said Crane. "We just opened an airport location at SFO Airport and its initial sales are fantastic."
During the first quarter of fiscal 2018, RAVE completed an equity shareholder rights offering of $5.0 million.
A conference call and audio webcast have been scheduled to discuss these results. Details of the conference call are as follows:
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.
The Company uses certain non-GAAP financial measures in evaluating operating performance. EBITDA, Adjusted EBITDA and restaurant operating cash flow are non-GAAP financial measures that the Company believes are useful to investors in understanding its operating performance. However, 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.
RAVE Restaurant Group, Inc. considers EBITDA and Adjusted EBITDA to be important supplemental measures of operating performance that are commonly used by securities analysts, investors and other parties interested in our industry. The Company believes that EBITDA is helpful to investors in evaluating its results of operations without the impact of expenses affected by financing methods, accounting methods and the tax environment. The Company believes that Adjusted EBITDA provides additional useful information to investors by excluding non-operational or non-recurring expenses to provide a measure of operating performance that is more comparable from period to period. The Company believes that restaurant operating cash flow is a useful metric to investors in evaluating the ongoing operating performance of Company-owned Pie Five and Pizza Inn restaurants and comparing such store operating performance from period to period. Management also uses these non-GAAP financial measures for evaluating operating performance, assessing the effectiveness of business strategies, projecting future capital needs, budgeting and other planning purposes
"EBITDA" represents earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA represents earnings before interest, taxes, depreciation and amortization, stock compensation expense, pre-opening expense, gain/loss on sale of assets, costs related to impairment, other lease charges, non-operating store costs and discontinued operations. "Restaurant operating cash flow" represents the pre-tax income earned by Company-owned restaurants before (1) allocated marketing and advertising expenses, (2) depreciation and amortization, (3) pre-opening expenses, (4) operations management and extraordinary expenses, (5) impairment and other lease charges, and (6) non-operating store costs. A reconciliation of these non-GAAP financial measures to net income is included with the accompanying financial 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.
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 ready 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.comhttp://www.pizzainn.com/.
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RAVE Restaurant Group, Inc.
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SOURCE RAVE Restaurant Group, Inc.
Founded in 1958, Dallas-based RAVE Restaurant Group owns, operates and franchises Pie Five Pizza Co. and Pizza Inn restaurants domestically and internationally.