RAVE Restaurant Group, Inc. Reports Second Quarter 2025 Results

Rhea-AI Summary

RAVE Restaurant Group reported strong financial results for Q2 FY2025. Net income reached $0.6 million, up 9.8% year-over-year, while total revenue increased 4% to $2.8 million. The company's Adjusted EBITDA saw a significant 51% increase to $0.8 million.

Pizza Inn's domestic comparable store sales grew 0.8%, while Pie Five experienced an 11.4% decrease. The company maintains a strong financial position with $2.9 million in cash and $6.0 million in short-term investments. Pizza Inn's expansion continues with 30 buffet restaurants under development agreements and successful introduction of new menu items including stuffed crust chocolate chip Pizzert and planned baked pasta varieties.

The company marked its 19th consecutive quarter of profitability, with Pizza Inn operating 102 domestic and 27 international units, while Pie Five maintains 20 domestic locations.

Positive

• Net income increased 9.8% to $0.6 million
• Total revenue grew 4% to $2.8 million
• Adjusted EBITDA surged 51% to $0.8 million
• Pizza Inn comparable store sales up 0.8%
• 30 new buffet restaurants under development agreements
• Strong balance sheet with $8.9 million in cash and short-term investments

Negative

• Pie Five domestic comparable store sales declined 11.4%
• Net income per share remained flat at $0.04

Insights

Financial Analyst

The Q2 2025 results reveal a company executing a calculated growth strategy while maintaining strong fiscal discipline. The 39% increase in pre-tax income and 51% jump in Adjusted EBITDA demonstrate improving operational efficiency, particularly noteworthy for a small-cap restaurant operator in a challenging market.

The divergent performance between brands tells an important story: Pizza Inn's 0.8% comparable sales growth, coupled with 30 new development agreements, signals successful brand revitalization. The buffet concept's expansion in Oklahoma and menu innovations (stuffed crust desserts, upcoming pasta offerings) show strategic evolution beyond traditional pizza offerings. Conversely, Pie Five's 11.4% comparable sales decline remains concerning, though operational improvements targeting doubled make-line capacity could help reverse this trend.

The company's financial position is particularly strong for its size:

• Combined cash and short-term investments of $8.9 million
• Current assets at 7x current liabilities, indicating excellent liquidity
• Sustained profitability across 19 quarters demonstrates consistent execution

The shift from paper gift certificates to a digital gift card program, while seemingly minor, represents important modernization that could improve cash flow tracking and reduce fraud risk. The reimage program for nine units suggests commitment to maintaining brand relevance and protecting market position.

The 30 signed development agreements for Pizza Inn buffets represent significant potential for future revenue growth, though execution and market conditions will be critical factors in realizing this potential. The focus on operational improvements and menu innovation indicates management is balancing growth with operational excellence.

DALLAS, Feb. 06, 2025 (GLOBE NEWSWIRE) -- RAVE Restaurant Group, Inc. (NASDAQ: RAVE) today reported financial results for the second quarter of fiscal 2025 ended December 29, 2024.

Second Quarter Highlights:

• The company recorded net income of $0.6 million for the second quarter of fiscal 2025, a 9.8% increase from the same period of the prior year.
• Income before taxes increased by $0.2 million to $0.7 million for the second quarter of fiscal 2025 compared to the same period of the prior year, a 39% increase.
• Total revenue increased by $0.1 million to $2.8 million for the second quarter of fiscal 2025 compared to the same period of the prior year, a 4% increase.
• Adjusted EBITDA increased by $0.3 million to $0.8 million for the second quarter of fiscal 2025 compared to the same period of the prior year, a 51% increase.
• On a fully diluted basis, net income was $0.04 per share for the second quarter of fiscal 2025, the same as it was in the same period of the prior year.
• Pizza Inn domestic comparable store retail sales increased 0.8% in the second quarter of fiscal 2025 compared to the same period of the prior year.
• Pie Five domestic comparable store retail sales decreased 11.4% in the second quarter of fiscal 2025 compared to the same period of the prior year.
• Cash and cash equivalents were $2.9 million on December 29, 2024.
• Short-term investments were $6.0 million on December 29, 2024.
• Pizza Inn domestic unit count finished at 102.
• Pizza Inn international unit count finished at 27.
• Pie Five domestic unit count finished at 20.

“Quarter Two represented our 19^th consecutive quarter of profitability and we have no plans on letting our foot off the accelerator,” said Brandon Solano, Chief Executive Officer of RAVE Restaurant Group, Inc.

“It’s an exciting time at Pizza Inn as we continue to deliver solid results in the current quarter and are getting ready to grow with 30 buffet restaurants currently signed to development agreements," continued Solano. “During the second quarter, we opened our fourth Pizza Inn buffet restaurant in the state of Oklahoma with strong sales. Many new guests to the brand were able to enjoy all the buffet favorites plus the new stuffed crust chocolate chip Pizzert which was successfully introduced in the second quarter. And we continue to expand our restaurant reimage program with nine units starting the process, eight of which are planned to be finished this fiscal year."

Solano concluded, “We continue to innovate our food offerings. While the first two quarters saw new desserts introduced at Pizza Inn, the third quarter will see three varieties of baked pastas added to the buffet and available for carryout. Pizza Inn continues to give guests more reasons to visit more often as we offer more than just pizza on the buffet with a focus on high quality desserts, salads, and now baked pastas. Pizza Inn also replaced legacy paper gift certificates with a new gift card program just in time for the holidays.”

“We have a keen focus on operational improvements at Pie Five,” says Vice President of Operations Zack Viljoen, adding “our new operational format will double make-line capacity allowing us to better and more quickly serve our guests thus increasing volume at peak hours while at the same time improving the guest experience.”

Chief Financial Officer Jay Rooney added, “Quarter two was a continuation of the solid financial start to the fiscal year seen in Quarter One. Pizza Inn same store sales were positive year over year for the quarter as the sales momentum generated by quarter one dessert and online ordering initiatives carried through to the second quarter. Total revenue was up $123 thousand from the second quarter last year and total expenses were down $88 thousand. For the fiscal year to date, Profit before Tax is now up over 36% from the prior year and our balance sheet remains strong with current assets totaling seven times the amount of current liabilities.” 

Non-GAAP Financial Measures

The Company’s financial statements are prepared in accordance with United States generally accepted accounting principles (“GAAP”). However, the Company also presents and discusses certain non-GAAP financial measures that it believes are useful to investors as measures of operating performance. Management may also use such non-GAAP financial measures in evaluating the effectiveness of business strategies and for planning and budgeting purposes. 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.

The Company 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. 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, severance, gain/loss on sale of assets, costs related to impairment and other lease charges, franchise default and closed store revenue/expense, and closed and non-operating store costs. A reconciliation of these non-GAAP financial measures 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, the effectiveness of our cost cutting measures, the timing to complete as well as the continued returns on our reimaging initiatives, the strength of our development pipeline, as well as 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.
Dallas-based RAVE Restaurant Group [NASDAQ: RAVE] has inspired restaurant innovation and countless customer smiles with its trailblazing pizza concepts. The Company franchises, licenses and supplies Pie Five and Pizza Inn restaurants operating domestically and internationally. The Pizza Inn experience is unlike your typical buffet. Since 1958, Pizza Inn's house-made dough, house-shredded 100% whole milk mozzarella cheese, fresh ingredients and house-made signature sauce combined with friendly service solidified the brand to become America's favorite hometown pizza place. These, in addition to its small-town vibe, are the hallmarks of Pizza Inn restaurants. In 2011, RAVE introduced Pie Five Pizza, pioneering a fast-casual pizza brand that transformed the classic pizzeria into a concept offering personalization, sophisticated ingredients and speed. Pie Five's craft pizzas are baked fresh daily and feature house-made ingredients, creative recipes and craveable crust creations. For more information, visit www.raverg.com, and follow on Instagram @pizzainn and @piefivepizza.

RAVE RESTAURANT GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except share amounts) (Unaudited)
	Three Months Ended								Six Months Ended
	December 29, 2024				December 24, 2023				December 29, 2024				December 24, 2023
REVENUES	$	2,869			$	2,746			$	5,919			$	5,833
COSTS AND EXPENSES
General and administrative expenses		1,314				1,341				2,730				2,660
Franchise expenses		829				844				1,824				2,016
Provision (recovery) for credit losses		9				10				(8	)			35
Interest income		(87	)			(46	)			(169	)			(48	)
Depreciation and amortization expense		53				57				96				112
Total costs and expenses		2,118				2,206				4,473				4,775
INCOME BEFORE TAXES		751				540				1,446				1,058
Income tax expense (benefit)		144				(13	)			313				119
NET INCOME	$	607			$	553			$	1,133			$	939
INCOME PER SHARE OF COMMON STOCK
Basic	$	0.04			$	0.04			$	0.08			$	0.07
Diluted	$	0.04			$	0.04			$	0.08			$	0.07
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic		14,690				14,444				14,638				14,299
Diluted		14,716				14,465				14,660				14,319

RAVE RESTAURANT GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share amounts) (Unaudited)
	December 29, 2024				June 30, 2024
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	2,871			$	2,886
Short-term investments		6,045				4,945
Accounts receivable, less allowance for credit losses of $42 and $57, respectively		1,115				1,411
Notes receivable, current		65				68
Assets held for sale		26				33
Deferred contract charges, current		23				26
Prepaid expenses and other current assets		207				167
Total current assets		10,352				9,536
LONG-TERM ASSETS
Property and equipment, net		171				182
Operating lease right-of-use assets, net		648				817
Intangible assets definite-lived, net		211				252
Notes receivable, net of current portion		56				79
Deferred tax asset, net		4,492				4,756
Deferred contract charges, net of current portion		185				197
Total assets	$	16,115			$	15,819
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable - trade	$	455			$	359
Accrued expenses		498				915
Operating lease liabilities, current		371				402
Deferred revenues, current		116				343
Total current liabilities		1,440				2,019
LONG-TERM LIABILITIES
Operating lease liabilities, net of current portion		393				555
Deferred revenues, net of current portion		503				543
Total liabilities		2,336				3,117
COMMITMENTS AND CONTINGENCIES (SEE NOTE C)
SHAREHOLDERS’ EQUITY
Common stock, $0.01 par value; authorized 26,000,000 shares; issued 25,647,171 and 25,522,171 shares, respectively; outstanding 14,711,566 and 14,586,566 shares, respectively		256				255
Additional paid-in capital		37,506				37,563
Retained earnings		6,045				4,912
Treasury stock, at cost
Shares in treasury: 10,935,605 and 10,935,605 respectively		(30,028	)			(30,028	)
Total shareholders' equity		13,779				12,702
Total liabilities and shareholders' equity	$	16,115			$	15,819

RAVE RESTAURANT GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
	Six Months Ended
	December 29, 2024				December 24, 2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	1,133			$	939
Adjustments to reconcile net income to cash provided by operating activities:
Amortization of discount on short-term investment		(63	)			—
Impairment of long-lived assets and other lease charges		9				—
Stock-based compensation expense		126				82
Depreciation and amortization		47				70
Amortization of operating right-of-use assets		169				219
Amortization of definite-lived intangible assets		41				42
Non-cash lease expense		43				—
Provision (recovery) for credit losses		(8	)			35
Deferred income tax		264				71
Changes in operating assets and liabilities:
Accounts receivable		304				(69	)
Notes receivable		—				(54	)
Deferred contract charges		15				11
Prepaid expenses and other current assets		(40	)			(254	)
Accounts payable - trade		96				151
Accrued expenses		(417	)			(442	)
Operating lease liabilities		(236	)			(249	)
Deferred revenues		(267	)			(247	)
Cash provided by operating activities		1,216				305
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short-term investments		(8,102	)			—
Maturities of short-term investments		7,065				—
Payments received on notes receivable		26				30
Proceeds from sale of assets		7				—
Purchase of definite-lived intangible assets		—				(8	)
Purchase of property and equipment		(45	)			(38	)
Cash used in investing activities		(1,049	)			(16	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Taxes paid on issuance of restricted stock units		(182	)			(311	)
Cash used in financing activities		(182	)			(311	)
Net decrease in cash and cash equivalents		(15	)			(22	)
Cash and cash equivalents, beginning of period		2,886				5,328
Cash and cash equivalents, end of period	$	2,871			$	5,306
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
CASH PAID FOR:
Income taxes (net of refunds)	$	98			$	4

RAVE RESTAURANT GROUP, INC. ADJUSTED EBITDA (In thousands) (Unaudited)
	Three Months Ended								Six Months Ended
	December 29, 2024				December 24, 2023				December 29, 2024				December 24, 2023
Net income	$	607			$	553			$	1,133			$	939
Interest income		(87	)			(46	)			(169	)			(48	)
Income taxes		144				(13	)			313				119
Depreciation and amortization		53				57				96				112
EBITDA	$	717			$	551			$	1,373			$	1,122
Stock-based compensation expense		53				3				126				82
Severance		5				—				5				—
Franchisee default and closed store revenue		32				(18	)			23				(82	)
Adjusted EBITDA	$	807			$	536			$	1,527			$	1,122

        

FAQ

What was RAVE's net income for Q2 2025?

RAVE reported a net income of $0.6 million for Q2 FY2025, representing a 9.8% increase from the same period last year.

How many consecutive profitable quarters has RAVE achieved as of Q2 2025?

RAVE has achieved 19 consecutive quarters of profitability as of Q2 2025.

What was Pizza Inn's comparable store sales growth in Q2 2025?

Pizza Inn's domestic comparable store sales increased by 0.8% in Q2 FY2025 compared to the same period of the prior year.

How many Pizza Inn restaurants are planned for development?

Pizza Inn has 30 buffet restaurants currently signed to development agreements.

What was RAVE's Adjusted EBITDA for Q2 2025?

RAVE's Adjusted EBITDA increased by $0.3 million to $0.8 million, representing a 51% increase compared to Q2 FY2024.

How much cash and short-term investments did RAVE have as of December 29, 2024?

RAVE had $2.9 million in cash and $6.0 million in short-term investments as of December 29, 2024.