RAVE RESTAURANT GROUP, INC. - 10-Q Summary
Business Context and Reporting Period
This filing is a Quarterly Report on Form 10-Q for the period ended December 28, 2025. Rave Restaurant Group, Inc. operates as a franchisor for the Pizza Inn (buffet, delivery, express, and ghost kitchens) and Pie Five Pizza Company (fast casual) brands. The company also licenses Pizza Inn Express (PIE) kiosks. As of the period end, the system consisted of 116 total units (97 domestic Pizza Inn, 19 international Pizza Inn, and 16 domestic Pie Five).
Key Financial Metrics
| Metric (in thousands) | 3 Months Ended Dec 28, 2025 | 6 Months Ended Dec 28, 2025 |
|---|---|---|
| Total Revenues | $3,042 | $6,255 |
| Net Income | $637 | $1,282 |
| Operating Income | $742 | $1,494 |
| Adjusted EBITDA | $852 | $1,682 |
| Cash from Operations | N/A | $914 |
| Cash & Short-Term Investments | $10,903 | $10,903 |
| Total Liabilities | $2,011 | $2,011 |
| Shares Outstanding | 14,211,566 | 14,211,566 |
Note: Cash and Short-Term Investments combined ($624k + $10,279k) represents total liquid assets.
Material Changes vs. Prior Period
- Revenue Growth: Total revenues increased 6.0% year-over-year (YoY) for the quarter ($3.04M vs. $2.87M) and 5.7% for the six-month period ($6.26M vs. $5.92M).
- Profitability: Net income rose 4.9% for the quarter ($637k vs. $607k) and 13.2% for the six-month period ($1.28M vs. $1.13M).
- Segment Performance:
- Pizza Inn: Domestic retail sales increased 4.1% (quarter) and 7.1% (six months), driven by an increase in average Buffet units open and comparable store sales growth.
- Pie Five: Domestic retail sales decreased 16.3% (quarter) and 17.6% (six months), primarily due to a reduction in average store count and lower comparable store sales.
- Unit Count: Total domestic Pizza Inn units increased by 1 (net), while Pie Five units decreased by 1 (net). International Pizza Inn units decreased by 1 (quarter) and 3 (six months).
- Expenses: General and administrative expenses increased 15.6% for the quarter, driven by higher salaries and legal fees. Franchise expenses decreased 11.7% for the quarter due to lower salaries related to franchise operations.
Outlook, Risks, and Commentary
- Liquidity: Management believes cash and short-term investments ($10.9M total) combined with operating cash flow are sufficient to fund operations for the next 12 months. The company holds significant U.S. Treasury bills ($10.3M) classified as short-term investments.
- Ghost Kitchens: The company closed its remaining two ghost kitchen locations (Pizza Inn and Pie Five) during the quarter ended December 28, 2025, though it may franchise them in the future.
- Future Growth: Management expects a modest increase in Pizza Inn units and a modest decrease in Pie Five units in future periods.
- Risks: The company is subject to standard franchise disputes, employment claims, and tax matters. Management believes no pending claims will have a material adverse effect. As a smaller reporting company, the filing does not include detailed risk factor disclosures or market risk disclosures.
- Accounting Updates: The company adopted ASU 2023-09 regarding income tax disclosures with no material impact. It is currently evaluating ASU 2024-03 (expense disaggregation) and ASU 2025-11 (interim reporting).
Investor Verification Checklist
- Pie Five Decline: Verify the strategic rationale behind the continued decline in Pie Five unit count and retail sales (-17.6% YoY) and whether this trend is expected to reverse.
- Investment Portfolio: Confirm the composition and liquidity of the $10.3M in short-term investments (U.S. Treasury bills) and the impact of interest rate changes on future interest income.
- Operating Cash Flow: Review the $0.3M decrease in operating cash flow YoY (six months), attributed to increased prepaid expenses for marketing and insurance.
- Legal Contingencies: Monitor the status of franchise disputes and employment claims, as these are the primary legal risks cited.
- Stock-Based Compensation: Note the $100k expense for RSUs in the six-month period and the $591k of unamortized expense remaining, which impacts future earnings.