Rave Restaurant Group, Inc. — Fiscal 2026 Form 10-K Summary
Business context and reporting period
Rave Restaurant Group, Inc. franchises Pizza Inn and Pie Five restaurants and ghost kitchens and facilitates food, equipment and supply distribution through third-party distributors. The fiscal year ended June 28, 2026 included 52 weeks; the prior comparable year ended June 29, 2025 and also included 52 weeks.
- At year-end, the system included 109 franchised Pizza Inn restaurants, 13 franchised Pie Five units and no licensed PIE kiosks.
- Pizza Inn comprised 91 domestic units and 18 international units. Pie Five comprised 13 domestic units, including no ghost kitchens.
- The remaining PIE kiosk closed during the quarter, and management does not intend to open additional PIE units.
Financial performance and key metrics
| Metric | FY2026 | FY2025 | Change |
|---|---|---|---|
| Revenue | $12.910 million | $12.039 million | +7.2% |
| Operating income | $3.474 million | $3.247 million | +7.0% |
| Net income | $2.878 million | $2.702 million | +6.5% |
| Basic and diluted EPS | $0.20 | $0.19 | +$0.01 |
| Operating margin | 26.9% | 27.0% | Broadly stable |
| Net margin | 22.3% | 22.4% | Broadly stable |
| EBITDA | $3.660 million | $3.448 million | +6.1% |
| Adjusted EBITDA | $3.948 million | $3.583 million | +10.2% |
| Cash flow from operations | $3.552 million | $3.395 million | +4.6% |
Pizza Inn franchise revenue increased 11.2% to $12.0 million, primarily from higher supplier and distributor incentives and domestic royalties. Pie Five franchise revenue declined 23.6% to $0.9 million because of lower retail sales and unit closures. General and administrative expense increased 12.7% to $5.9 million, principally due to higher salaries. Income tax expense increased to $1.006 million from $0.918 million, and the effective tax rate was 25.9%.
Domestic Pizza Inn system-wide retail sales increased 3.4% to $112.1 million, while domestic Pie Five retail sales decreased 23.8% to $8.6 million. Total domestic comparable-store retail sales increased to $115.7 million from $114.1 million, reflecting Pizza Inn growth that more than offset the decline at Pie Five.
Liquidity, cash, investments and debt
- Cash and cash equivalents were $1.123 million at June 28, 2026, compared with $2.859 million at June 29, 2025.
- Short-term investments, consisting of U.S. Treasury bills, increased to $12.487 million from $7.024 million. Total cash and short-term investments were approximately $13.6 million.
- Cash used in investing activities was $5.288 million, primarily reflecting purchases of short-term investments. Capital expenditures were $49 thousand.
- Financing cash flow was zero in FY2026; the prior year included $1.204 million of treasury-stock purchases and $182 thousand of taxes paid on restricted stock units.
- Total liabilities were $2.206 million and shareholders’ equity was $17.330 million. The filing does not disclose conventional funded debt; reported lease liabilities totaled $205 thousand.
- Management expects to fund FY2027 operations and planned capital expenditures from cash on hand and operating cash flow and believes liquidity is sufficient for FY2027 and beyond.
Material changes and outlook
- Pizza Inn domestic average units open increased from 100 to 95? The filing reports a decrease from 100 total domestic average units in FY2025 to 95 in FY2026, while average Buffet Units increased from 77 to 80. Total domestic Pizza Inn ending units declined from 96 to 91.
- International Pizza Inn units declined from 22 to 18, while total Pizza Inn units declined from 118 to 109 after 17 closures and eight openings.
- Pie Five domestic units declined from 17 to 13, with four closures and no openings. Management expects Pie Five units to decrease in future periods.
- Management expects modest increases in domestic and international Pizza Inn units and plans to evaluate new Pizza Inn Buffet and Delco development internationally in FY2027.
- Management will opportunistically evaluate domestic Pie Five franchise development but is focusing on experienced, well-capitalized operators.
Risks, contingencies and unusual items
- The CEO submitted an August 31, 2026 complaint alleging workplace harassment, discrimination, intimidation and threats involving the board and compensation committee. The Company engaged outside counsel on September 1, 2026 to conduct an independent investigation. The Company had not received notification from the Texas Workforce Commission regarding the related claim as of the report date.
- The CEO’s base salary was increased to $370,000 during FY2026. His employment letter provides for incentive compensation of up to $555,000, split between cash bonus and restricted stock units.
- The Company is subject to ordinary-course claims involving employment agreements, franchise disputes, lawsuits, taxes and food-product contracts. Management believes pending matters are insured or will not materially affect results or financial condition.
- Revenue concentration is notable: one supplier accounted for approximately 14% of FY2026 revenue. The Company does not hedge commodity costs and remains exposed to supply disruption and food-price volatility.
- The Company faces intense competition from larger pizza and restaurant chains, fast-casual concepts, local operators and retail food products.
- The corporate headquarters is expected to relocate within the Dallas market in January 2027; a new lease was still being negotiated.
- The Company changed independent auditors in February 2026, dismissing Whitley Penn LLP and engaging Bodwell Vasek Wells DeSimone LLP. The FY2026 audit opinion was unqualified, and no critical audit matters were identified.
- Management reported effective disclosure controls and internal control over financial reporting. No independent auditor attestation was required because the Company is a smaller reporting company.
Most important facts for investors to verify
- Whether Pizza Inn unit growth can offset continuing Pie Five contraction and declining international units.
- The sustainability and quality of revenue growth, particularly supplier and distributor incentive revenue, which increased substantially year over year.
- The outcome and potential financial, governance or retention effects of the CEO’s discrimination and harassment claims and related investigation.
- The composition, maturity and liquidity of the $12.5 million Treasury bill portfolio and the reduction in cash balances.
- Whether the $3.9 million Adjusted EBITDA measure reconciles appropriately under the Company’s non-GAAP definitions and how stock-based compensation affects future dilution.
- The realizability of the $3.1 million net deferred tax asset and the use of approximately $12 million of federal net operating loss carryforwards.
- Future headquarters relocation costs, lease commitments and any effects from the pending new lease.