RAVE Restaurant Group, Inc. Reports Second Quarter of Fiscal Year 2015 Financial Results

THE COLONY, Texas - Feb. 11, 2015 // PRNewswire // - RAVE Restaurant Group, Inc. (NASDAQ: RAVE) today reported financial results for the second quarter of fiscal 2015 ended December 28, 2014.

Second Quarter Highlights:

  • Pizza Inn domestic comparable store retail sales increased 6.4% from the same period of the prior year.
  • Pie Five comparable store retail sales increased 16.9% year over year.
  • Pie Five system-wide total retail sales increased 118%, and average weekly sales increased 31.6%, year over year.
  • Total consolidated revenue increased 11.0% year over year.
  • Net loss of $0.4 million was similar to the same quarter of the prior year.
  • Adjusted EBITDA increased by $0.2 million over the same quarter of the prior year.
  • Seven additional Pie Five restaurants opened during the quarter bringing the total Pie Five restaurants open at the end of the quarter to 31.
  • Pie Five signed four additional franchisees with commitments to build up to 72 restaurants in five states.

RAVE Restaurant Group, Inc. (NASDAQ: RAVE) today announced results for its second quarter of fiscal 2015 ended December 28, 2014. The Company's net loss of $0.4 million in the second quarter was similar to the comparable period in the prior fiscal year. Year-to-date net loss improved by $0.1 million to a net loss of $0.7 million, while Adjusted EBITDA for the first six months improved by $0.4 million to a profit of $0.1 million.

"The first half of our fiscal year was critical to establishing our growth foundation," said Randy Gier, CEO. "Pizza Inn recorded its third consecutive quarter of positive comp sales, reflecting a clear stabilization of our legacy brand. Pie Five continues to report double digit comps, while we invest resources to open new Company and franchisee restaurants," added Gier.

Second Quarter Fiscal 2015 Operating Results

Total revenues for the second quarter of fiscal 2015 and the comparable prior year quarter were $11.1 million and $10.0 million, respectively, an increase of 11.0% 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 6.4% from the same period in the prior year. "We are pleased with the growth of the Pizza Inn brand, resulting from focused improvement of ingredient qualities, cooperative marketing programs and store remodeling," said Gier. "Importantly, our momentum is continuing into the current quarter as a result of close cooperation with our franchisees around key sales and operations initiatives."

For Pie Five, system-wide retail sales increased 118% for the second quarter of fiscal 2015 when compared to the same period in the prior year driven by a 62.5% increase in average units open and a 31.6% increase in the system-wide average weekly sales. Average weekly sales by $3,543 to $14,759 for the second quarter of fiscal 2015 compared to the same period of the prior year. Comparable store retail sales, which is reported for restaurants open 18 months or longer during the quarter, increased by 16.9% for the most recent fiscal quarter compared to the same period in the prior year. The increase in average weekly sales was due to both the strong sales increase in existing Company-owned restaurants and higher than average sales levels of newer franchised and Company-owned restaurants.

"The story continues for Pie Five," said Gier, "We continue to see both strong comps and steady improvement in average weekly volumes. Consumers continue to embrace the concept and increase their visit frequency. We continue to refine our real estate selection and deliver stronger new store opening support. Our ability to simultaneously grow both comparable store retail sales and average unit volumes is a testament to a sustainable, expandable investment model for ourselves and our franchisees," concluded Gier.

For the second quarter of fiscal 2015, revenue from the Franchising and Food and Supply Distribution segment increased $0.6 million, or 7.3%.

Second quarter revenues from the Company-owned Restaurants segment increased $0.5 million, or 23.5%, compared to the prior year. This increase was primarily the net result of an increase in comparable store retail sales.

Development Review

Seven new Pie Five restaurants were opened by the Company and franchisees in the second quarter fiscal 2015, bringing the fiscal quarter-end total to 31 restaurants. In the Pizza Inn system, franchisees opened 3 new restaurants for the quarter while closing 2 restaurants, ending the fiscal quarter at 252 total Pizza Inn Company-owned and franchised restaurants worldwide.

"We are on track with our development plans to aggressively, but intelligently, expand the Pie Five brand," said Gier. "Given the current leases executed for new Company-owned and franchised restaurants and the pipeline of new potential sites, we expect to end the 2015 fiscal year with 60 to 65 total restaurants open in the Pie Five system, which includes an estimated 25 to 28 total Company-owned restaurants."

"Since the start of the current third fiscal quarter, we have already opened an additional two Company-owned and three franchised restaurants. While construction is never an exact science, we are on track to open high quality sites within our targeted range for the year," added Gier.

During the second quarter of fiscal 2015, the Company signed four new franchise development agreements to develop up to 72 additional Pie Five restaurants in Michigan, Wisconsin, Colorado, Indiana and Kentucky. The Company currently has Pie Five franchise restaurant development commitments for a total of up to 329 restaurants.

Gier continued, "We are pleased that our pipeline of new restaurants is coming to fruition. We have been selective in bringing on high quality, experienced franchise operators, and diligent in holding out for high quality sites to open Pie Five Company-owned and franchised restaurants."

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, impairment, gain/loss on sale of assets, lease charges and costs related to closed restaurants. 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.

Headquartered in the Dallas suburb of The Colony, TX, RAVE Restaurant Group, Inc., is an owner, franchisor and supplier of a system of restaurants operating domestically and internationally under the trademarks "Pizza Inn" and "Pie Five Pizza Co." Pizza Inn is an international pizza chain featuring traditional and specialty pizzas, as well as freshly made pastas, sandwiches, and desserts. Pie Five Pizza Co. is a fast-casual concept offering individual pizzas made to order and cooked in less than five minutes. Founded in 1958, RAVE Restaurant Group, Inc. owns and franchises approximately 280 restaurants. The Company's common stock is listed on the Nasdaq Capital Market under the symbol "RAVE". For more information, please visit www.raverestaurantgroup.com.

SOURCE RAVE Restaurant Group, Inc.

Contact:

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

RAVE RESTAURANT GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

(In thousands, except per share amounts)

(Unaudited)

                                  
                         
                         
           

Three Months Ended

 

Six Months Ended

           

December 28,

 

December 29,

 

December 28,

 

December 29,

           

2014

 

2013

 

2014

 

2013

                         
                         

REVENUES:

   

$          11,127

 

$          10,028

 

$          22,434

 

$           20,095

                         

COSTS AND EXPENSES:

                 
 

Cost of sales

   

9,534

 

8,445

 

19,148

 

17,119

 

General and administrative expenses

   

1,215

 

1,135

 

2,324

 

2,151

 

Franchise expenses

   

750

 

806

 

1,465

 

1,473

 

Pre-opening expenses

   

136

 

70

 

172

 

156

 

Bad debt

   

12

 

65

 

92

 

110

 

Interest expense

   

3

 

36

 

109

 

79

           

11,650

 

10,557

 

23,310

 

21,088

                         

LOSS FROM CONTINUING OPERATIONS BEFORE TAXES

   

(523)

 

(529)

 

(876)

 

(993)

 

Income tax benefit

   

(167)

 

(180)

 

(282)

 

(334)

LOSS FROM CONTINUING OPERATIONS

   

(356)

 

(349)

 

(594)

 

(659)

                         
 

Loss from discontinued operations, net of taxes

   

(43)

 

(48)

 

(70)

 

(89)

NET LOSS

   

$              (399)

 

$              (397)

 

$              (664)

 

$               (748)

                         

LOSS PER SHARE OF COMMON STOCK - BASIC:

                 
 

Loss from continuing operations

   

$             (0.04)

 

$             (0.04)

 

$             (0.06)

 

$              (0.08)

 

Loss from discontinued operations

   

-

 

(0.01)

 

(0.01)

 

(0.01)

 

Net loss

   

$             (0.04)

 

$             (0.05)

 

$             (0.07)

 

$              (0.09)

                         

LOSS PER SHARE OF COMMON STOCK - DILUTED:

                 
                         
 

Loss from continuing operations

   

$             (0.04)

 

$             (0.04)

 

$             (0.06)

 

$              (0.07)

 

Loss from discontinued operations

   

-

 

-

 

(0.01)

 

(0.01)

 

Net loss

   

$             (0.04)

 

$             (0.04)

 

$             (0.07)

 

$              (0.08)

                         

Weighted average common shares outstanding - basic

   

9,393

 

8,615

 

9,392

 

8,510

                         

Weighted average common and

                 

     potential dilutive common shares outstanding

   

9,895

 

9,246

 

9,905

 

9,115

 

RAVE RESTAURANT GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

                   
             

December 28,

 

June 29,

ASSETS

   

2014 (unaudited)

 

2014

                   

CURRENT ASSETS

         
 

Cash and cash equivalents

 

$

2,189

    $

2,796

 

Accounts receivable, less allowance for bad debts

         
 

 

     accounts of $259 and $276, respectively

   

2,751

 

3,276

 

Notes receivable

   

88

 

81

 

Inventories

   

1,444

 

1,703

 

Income tax receivable

   

384

 

386

 

Deferred income tax assets

   

1,010

 

951

 

Prepaid expenses and other

   

679

 

173

 

 

          Total current assets

   

8,545

 

9,366

                   

LONG-TERM ASSETS

         
 

Property, plant and equipment, net

   

6,014

 

5,133

 

Long-term notes receivable

   

125

 

134

 

Long-term deferred tax asset

   

1,220

 

939

 

Deposits and other

   

268

 

396

 

 

          Total assets

 

$

16,172

$

15,968

                   

LIABILITIES AND SHAREHOLDERS' EQUITY

         

CURRENT LIABILITIES

         
 

Accounts payable - trade

 

$

1,233

$

2,023

 

Accrued expenses

   

976

 

926

 

Deferred rent

   

143

 

163

 

Deferred revenues

   

328

 

177

 

Bank debt

   

-

 

500

 

 

          Total current liabilities

   

2,680

 

3,789

                   

LONG-TERM LIABILITIES

         
 

Bank debt, net of current portion

   

-

 

267

 

Deferred rent, net of current portion

   

904

 

822

 

Deferred revenues, net of current portion

   

1,154

 

791

 

Deferred gain on sale of property

   

21

 

34

 

Other long-term liabilities

   

30

 

23

 

 

          Total liabilities

   

4,789

 

5,726

                   

COMMITMENTS AND CONTINGENCIES

         
                   

SHAREHOLDERS' EQUITY

         
 

Common stock, $.01 par value; authorized 26,000,000

         
 

 

     shares; issued 16,573,335 and 16,240,412 shares, respectively;

         
 

 

     outstanding 9,453,935 and 9,121,012 shares, respectively

   

166

 

162

 

Additional paid-in capital

   

17,706

 

15,905

 

Retained earnings

   

18,147

 

18,811

 

Treasury stock at cost

         
 

 

     Shares in treasury: 7,119,400 

   

(24,636)

 

(24,636)

 

 

          Total shareholders' equity 

   

11,383

 

10,242

           

$

16,172

$

15,968

 

RAVE RESTAURANT GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(In thousands)

 

(Unaudited)

 
                       
           

Six Months Ended

 
           

December 28,

 

December 29,

 
           

2014

 

2013

 
                   

CASH FLOWS FROM OPERATING ACTIVITIES:

         
                   

 

Net loss

 

$                (664)

 

$                  (748)

 

 

Adjustments to reconcile net loss to 

         

 

     cash (used in) provided by operating activities:

         

 

     Depreciation and amortization

 

741

 

687

 

 

     Stock compensation expense

 

53

 

30

 

 

     Deferred income taxes

 

(340)

 

(388)

 

 

     Gain on sale of assets

 

-

 

(40)

 

 

     Provision for bad debt

 

92

 

110

 

 

Changes in operating assets and liabilities:

         

 

     Notes and accounts receivable

 

438

 

(526)

 

 

     Inventories

 

259

 

249

 

 

     Accounts payable - trade

 

(790)

 

465

 

 

     Accrued expenses

 

58

 

111

 

 

     Deferred revenue

 

501

 

263

 

 

     Prepaid expenses and other

 

(376)

 

(26)

 

 

     Cash (used in) provided by operating activities

 

(28)

 

187

 
                   

CASH FLOWS FROM INVESTING ACTIVITIES:

         

 

     Proceeds from sale of assets

 

-

 

40

 

 

     Capital expenditures

 

(1,564)

 

(1,873)

 

 

          Cash used in investing activities

 

(1,564)

 

(1,833)

 
           

CASH FLOWS FROM FINANCING ACTIVITIES:

         

 

     Proceeds from sale of stock

 

1,752

 

2,625

 

 

     Repayments of bank debt

 

(767)

 

(1,019)

 

 

          Cash provided by financing activities 

 

985

 

1,606

 
                   

Net decrease in cash and cash equivalents

 

(607)

 

(40)

 

Cash and cash equivalents, beginning of period

 

2,796

 

919

 

Cash and cash equivalents, end of period

 

$               2,189

 

$                   879

 
                   
                   
                   

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

 
                   
                   

CASH PAYMENTS FOR:

       
                   

 

     Interest

 

$                    12

 

$                     79

 

 

     Income taxes - net

 

$                      -

 

$                       1

 

 

RAVE RESTAURANT GROUP, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(In thousands)

(Unaudited)

               
               
               
               
 

Three Months Ended

 

Six Months Ended

 

December 28,

    

December 29,

    

December 28,

    

December 29,

 

2014

 

2013

 

2014

 

2013

 Net loss 

$              (399)

 

$              (397)

 

$              (664)

 

$              (748)

 Interest expense 

3

 

36

 

109

 

79

 Income Taxes--Continuing Operations 

(167)

 

(180)

 

(282)

 

(334)

 Income Taxes--Discontinued Operations 

(19)

 

(25)

 

(34)

 

(47)

 Depreciation and amortization 

365

 

322

 

741

 

687

 EBITDA 

$              (217)

 

$              (244)

 

$              (130)

 

$              (363)

 Stock compensation expense 

30

 

15

 

53

 

30

 Pre-opening costs 

120

 

65

 

134

 

143

 Asset disposals, closure costs and restaurant impairment 

43

 

(70)

 

70

 

(64)

 Adjusted EBITDA 

$                (24)

 

$              (234)

 

$               127

 

$              (254)

SOURCE RAVE Restaurant Group, Inc.

###

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