As the chain attempts a turnaround, the franchisee group said it’s lost faith in leadership.
Citing a lack of engagement from leadership, the Pizza Inn Franchisee Association Board of Directors unanimously approved a vote of no confidence for Pizza Inn CEO Brandon Solano.
In a letter addressed to the RAVE Restaurant Group Board of Directors, the Association said it’s grown increasingly concerned with the direction and leadership from the parent company.
“Current management’s lack of leadership is reflected in self-serving and reckless behavior, which has had negative impacts on the business and threatens to do irreparable damage to the Pizza Inn Brand,” the letter said. “We are writing to engage the Board before the value of the Brand is damaged irreparably.”
The letter is signed by franchisees who represent almost 40 percent of the Pizza Inn system and more than 55 percent of sales.
RAVE CEO Brandon Solano says the Association has the right to voice their opinion, but adds that the vote does not speak for all franchisees.
“We work for our franchisees—all of them, not PIAP [Pizza Inn Advertising Plan], not PIFA [Pizza Inn Franchise Association], not any single franchisee,” Solano says. “We work for all of our franchisees, our customers, and our shareholders. This is just another tactic to try and harm the brand. … I’d love for us all to get on the same page and move forward together, and we will as we work through this and put this behind us.”
In a previous letter, the Pizza Inn Advertising Plan, or PIAP, said Solano is pressuring Pizza Inn operators into signing onto the National Advertising Fund, or entering a franchise agreement of the same effect. The group said this would give RAVE control of the ad fund and advertising decisions. Currently, franchisees have oversight of advertising and pay into the Pizza Inn Advertising Plan.
Pizza Inn sued PIAP in federal court over use of its intellectual property and strategy. PIAP countersued, but the judge ruled against each of the counterclaims because there’s no evidence that Pizza Inn expressly licensed trademarks to PIAP.
“There’s no agreement between PIAP and the company and the judge saw that pretty clearly,” Solano says. “I think they have really worked hard to make this ‘it’s all the franchisees versus this mean long-haired guy from Flint, Michigan.’ And that’s just not really the case at all.”
“We have a turnaround to execute,” he adds. “And the status quo—I just don’t know how anyone can argue for the status quo. This brand has been in decline for decades, literally. My team and I are turnaround specialists. We don’t know everything and we make mistakes like anyone else, but we have been on several, notable restaurant turnarounds that have gone fantastically well. We’re capable of fixing this brand.”
The Association also voiced concern over Pizza Inn’s contactless to-go buffet. The group claimed that if customers come to expect the contactless buffet experience when dining rooms reopen, restaurants will be forced to shoulder increased labor costs.
In addition, the Association said corporate recommended a move away from menus in favor of buffets. The organization said if customers expect to be served, they’ll have to provide menus, which would be an added expense that “restaurants are not ready to sustain in the current environment.” Overall sales have been down more than 50 percent and dozens of stores may close, the Association said.
Solano says that after contactless to-go was launched, it became the most used avenue by consumers. The company said there was a 17 percent increase in online revenue and a 20 percent increase in online transactions compared to the week prior to the launch.
“Contactless buffet has been great,” Solano says. “I’d love to see the data that that’s a problem for consumers. That’s an unfounded assertion, just like they’re assertion of control over our intellectual property and our strategy. … Contactless to-go is a strong consumer concept and we’ve seen great results from it. As we move to dine-in and open up our buffets, we’ll make a decision on whether we continue that as part of our to-go strategy.”
Solano also mentions what the company calls a “right way buffet,” which includes several operational changes such as distancing, one-way traffic flow, a modified salad bar, and spatulas for each consumer.
The Association then alleged that RAVE let go of franchise business consultants, but Solano said the consultants were furloughed because of government-mandated traveling restrictions amid the pandemic. The CEO said the company will begin recalling consultants next week.
The group of franchisees also showed concern over RAVE using a portion of its more than $650,000 Paycheck Protection Program loan to bring back a corporate accountant as opposed to supporting “employees on the frontlines feeding customers during this difficult time."
Solano said the accountant was brought back to assist with financial matters.
“I think the implication is, ‘Hey, why didn’t you bring back an FBC [franchise business consultant] first,’” Solano says. “The finance department was the place where we had significant furloughs. We’re a publicly traded company. We have FCC deadlines and filings and things to get done. We’re bringing back our FBCs as stores reopen. I think it’s a reasonable plan.”
The Association said in the letter that while many companies are rallying behind supportive leaders, Pizza Inn management “has done virtually nothing.”
The group referred to it as a leadership vacuum that has forced franchisees to take matters into their own hands.
“We, as franchisees, are having regular calls to discuss our best path forward and sharing information from our legal team about how to navigate the crisis on the business side,” the Association said. “Ironically, only after hearing that these calls were taking place did Mr. Solano decide to ‘take action.’ His ‘action’ consists of giving us information that is publicly available on the internet and otherwise suggesting to us that the company is in financial peril and can do little else to help. I do not have to tell you that this does not engender faith in management.”
Solano says that within a month of furloughing two-thirds of the corporate staff, the company launched the contactless buffet to-go, the right way buffet, and a program that helps feed essential workers. In addition, he notes the company has assisted with ramping up third-party delivery services and social media. The CEO says “some of the franchisees who are complaining are opting not to use the tools we’ve given them.”
The Association said it fears that a lack of leadership will have a lasting impact on business. It demanded a leadership team that thinks “strategically about the future of Pizza Inn” and inspires “us to galvanize behind a vision that propels the business into a successful future.”
Solano counters that his team is on the right path.
I think [the Pizza Inn brand] is imminently fixable,” Solano says. “We just need to be able to do that and the degrees of freedom to do that.”