Buffet-style restaurants have been hit hard by the pandemic, and Pizza Inn parent Rave Restaurant Group is no exception.
While many quick-service and full-service brands have seen double-digit positive gains as they’ve lapped the early onset of the pandemic, Pizza Inn’s same-store sales remain negative. The chain’s domestic comps dropped $500,000, or 3.1 percent in Q3, which ended March 28. On a two-year basis, Pizza Inn’s comps decreased 10.9 percent. Rave’s other brand, Pie Five, appears to be in a similar rut. The concept’s same-store sales were flat in Q3, but plummeted 21.4 percent on a two-year stack.
The footprint of both brands is declining, as well. Pizza Inn ended Q3 with 170 stores worldwide, compared to 189 in the year-ago period. That includes a decrease of 15 domestic stores and four international units. Rave said in a filing that it believes the “modest net closure” of U.S. Pizza Inn units will continue in the near term, but eventually reverse in future periods. It also expects international units to increase moderately in future periods.
Pie Five finished the quarter with 35 stores, compared to 43 in 2020. Rave said the modest net closure of Pie Five stores will continue in the near term, but eventually reverse.
Despite decreasing sales, Rave saw its fourth straight quarter of profitability.
“We are pleased that the heroic efforts of our management, franchisees, and team members have resulted in another profitable quarter amidst a pandemic and significant government restrictions,” said CEO Brandon Solano said in a statement. “While we are pleased with this quarter’s results, much work remains. We intend to continue our focus on innovation, operations consistency, technology upgrades, and cost controls to drive value and consistency for our customers and shareholders and position RAVE, Pizza Inn, and Pie Five for long term success.”
In Q3, Rave leveraged menu innovation to navigate the pandemic. Pizza Inn launched garlic-buttery crust systemwide, which Solano believes “holds significant opportunity.” The CEO noted that the chain has another buffet innovation planned for later in the month. Pie Five’s innovation came via the Panzano Pan pizza. The concept is scheduled to introduce a “differentiated pizza innovation with strong freshness/better-for-you cues” in May. Solano said that as part of the launch, Pie Five partnered with “a well-known brand in a growing segment of the food service industry.”
“Our team is poised and ready to deliver innovative menu items aimed at driving traffic and revenue growth for our franchisees as we remain optimistic for an improving environment for the restaurant industry,” said Clint Fendley, Rave’s vice president of finance, in a statement.
In 2020, Rave received two Nasdaq delisting notices, one of which was due to the company trading under $1 per share. Rave closed at $1.24 per share on Tuesday.
Total revenue decreased from $2.7 million to $2.2 million this year. Adjusted EBITDA was $397,000 compared to $6,000 last year, and net income was $416,000 compared to a net loss of $4.5 million in 2020.
“We hold significant cash, have limited leverage, and have resolved our NASDAQ listing deficiencies,” Solano said. “We have a strong team, a sound strategy, and gritty franchisees committed to winning.”