Revenue fell 34 percent at the Pizza Inn and Pie Five parent company.
Rave Restaurant Group won’t be sidelined by COVID-19, CEO Brandon Solano said. Just like October 2019, when the former Pei Wei began executive began his turnaround plan at Pie Five and Pizza Inn, he’s “resolute in repositioning Rave for long-term success,” Solano said in the company’s Q1 review.
But there’s no question the challenges have changed. Buffet chain Pizza Inn shed 11 units (five domestic and six international) this past quarter, which ended September 27. Overall, the brand’s growth trajectory has shifted downward over the past year-plus. Throughout 2018, Pizza Inn grew its domestic unit count by eight to bring the total to 153. The next year, it bumped two to finish at 155 restaurants.
On June 30, 2019, there were 203 Pizza Inns, including international. By October of 2020, there were 178.
For fast casual Pie Five, retraction was already in the works pre-virus. It had 73 restaurants in summer 2018 and 84 the year before. Further, there were 99 on December 25, 2016. It’s now a 39-unit chain.
Pizza Inn has leaned into innovation of late as it tries to emerge from one of COVID’s deepest cut sectors—buffets. The chain created a “Contactless Buffet To-Go” service to maximize value and variety, and to offset the setback of reduced foot traffic, Solano said. The chain added new options in late October with three new meals designed to feed two to six people. Every pizza on the Conctactless Buffet To-Go allows guests to choose a different option for each half and can be customized with up to two topping per.
- Jojo’s Party Pack ($12.99)—Two half pizzas (one medium pizza with up to two toppings on each side) and the choice of one side.
- Jojo’s Family Feast ($25.99—Four half pizzas (two medium pizzas with up to two toppings on each side) and the choice of two sides.
- Jojo’s Ultimate Variety ($32.99)—Four half pizzas (two medium pizzas with up to two toppings on each side) and the choice of three sides.
In many of Pizza Inn’s restaurants, it’s pivoted to more of a cafeteria-style system, COO Mike Burns told FSR earlier. So customers now move down a line with a tray, with employees serving them. Pizza Inn also implemented sanitation stations, began changing out serving utensils after every use, and attempted to move guests toward the idea of letting employees serve them.
Burns added Pizza Inn’s footprint—heavily rooted in smaller towns—has generally faced looser capacity restrictions than metro markets. And customers were eager to return.
THE COVID ROAD FOR RAVE:
The chain reopened with a “Right-Way Buffet” system that included, among other things, one-way buffet traffic (in stores that aren’t serving guests cafeteria style). Other stores bring food to customers at their tables. Things like plates, silverware, napkins, and condiments were previously self-service. They’re now also brought over by Pizza Inn employees.
Each buffet has a dedicated and visible “Sanitizer Captain” to roam the restaurant. Salad bars also look different by location, depending on regulations. Some are grab-and-go, others are served at the table. At locations with a fully operational salad bar, guests are given gloves or sanitizer. Self-serve beverage stations were closed (employees bring those to the table, too).
Most recently, Pizza Inn launched curbside pick-up. Guests who arrive park in designated spots and wait for employees to bring food out.
These efforts helped counter some of the lofty barriers, but Rave is still struggling to generate positive sales. Revenues decreased 34 percent, year-over-year, in Q1 from $2.9 million to $1.9 million.
Domestic same-store sales fell 22 percent for Pizza Inn and 23 percent at Pie Five. Rave’s income before taxes was $78,000 compared to $310,000 last year. Earnings per share were $0.00 versus $0.01 in Q1 2019.
Rave received a delisting warning from Nasdaq in July, with the financial market saying the company was no longer in compliance with its standard listing minimum of $2.5 million to stockholder equity. Rave also failed to meet the requirement of at least $35 million in listed securities of $500,000 of net income for the most recent fiscal year or two of the last three (either was needed). The company was able to get past those concerns in October, according to a securities filing that noted Rave earned $3.65 million from at-the-market sales of more than 2.5 million shares of stock.
Rave’s cash and cash equivalents fell by $33,000 during Q1. “Income before taxes of $78,000 is an encouraging start for the first quarter of fiscal 2021 and demonstrates our commitment to controlling costs amid revenue declines," Clint Fendley, VP of finance said in a statement. "Rave's cash balance of $2.9 million at September 27, 2020, coupled with $3.8 million of gross proceeds from sales of common stock subsequent to the first quarter, reinforces our position as we continue to confront near-term uncertainty in our industry."
On Pie Five, Solano said the chain continues to test menu upgrades and looks “forward to rolling out several new options soon.
"We are also continuing to leverage the Circle of Crust rewards program and are seeing a steady return in traffic along with positive sales trends with third-party delivery utilization,” he said.
In early October, Rave hired Darren Webb as director of development, supporting Pizza Inn and Pie Five, and Dion Firooznia as franchise business consultant for Pizza Inn. Webb previously served as director of real estate at Bojangles. Firooznia also worked at Bojangles as regional VP before becoming an operating partner for 14 Qdoba restaurants in North Carolina.
Following the unit count
Q4 2019 (ended June 30, 2019)
- Domestic: 155
- International: 48
- Total: 203
- Domestic: 58
Q1 2020 (ended September 29, 2019)
- Domestic (including Pizza Inn Express kiosks): 152
- International: 34
- Total: 186
- Domestic: 56
Q2 2020 (ended December 29, 2019)
- Domestic: 153
- International: 34
- Total: 187
- Domestic: 53
Q3 2020 (ended March 29)
- Domestic: 152
- International: 37
- Total: 189
- Domestic: 43
Q4 2020 (ended June 28)
- Domestic: 151
- International: 38
- Total: 189
- Domestic: 42
Q1 2021 (ended September 27, 2020)
- Domestic: 146
- International: 32
- Total: 178
- Domestic: 39