Pie Five Continues to Face Growth Challenges

    The fast casual has lost 66 percent of its footprint since 2017. 

    Fast Casual | February 7, 2022 | Ben Coley
    Pie Five Pizza Co. store exterior.
    Pie Five Pizza
    Pie Five's comp sales grew 15 percent in Q2, but experienced a 1 percent decline on a two-year basis.

    When fast-casual Pie Five launched in the summer of 2011, Pizza Inn claimed it was "redefining the pizza dining experience." 

    The concept was inspired by Chipotle, with customers watching their pizzas being assembled as they walk through the line. The initial strategy was to grow up to 100 locations per year. Because of Pie Five's expansion potential, Pizza Inn formed multi-brand platform RAVE Restaurant Group in 2015. 

    The chain opened its 100th store in February 2017, but that marked the end of the brand's momentum. 

    By the end of March that year, Pie Five was at 86 locations. At the time, the fast casual described the decline in franchised and company-owned restaurant as "an aberration primarily attributable to overly aggressive expansion in certain isolated markets." The expectation was that net increases would resume in future periods. That wasn't the case. 

    Pie Five finished Q2 2021 (period ending December 26) with 34 units, or a loss of approximately 66 percent of its footprint since peaking in early 2017. The fast casual is now completely franchised, with the last remaining corporate store closing in 2020. In the six months ending December 26, Pie Five opened a net of one store, and RAVE believes "the stabilization of Pie Five units will continue in the near term and expects Pie Five units to increase modestly in future periods."

    Pizza Inn hasn't fared much better. Since March 2017, the casual-dining brand has closed a net of 31 restaurants domestically, putting its footprint at 128.  Additionally, the international footprint has been nearly slashed in half, going from 60 restaurants to 33. RAVE believes "the modest net closure" of U.S. Pizza Inn units will continue in the near term, but reverse in future quarters, while the international system is expected to "increase moderately" in the future. 

    RAVE has put forth effort to spark growth in recent years. Darren Webb, an industry veteran with 15 years of experience, was announced as director of development in October 2020, but his tenure ended in June 2021. Additionally, the brand brought on former CKE Restaurants and Bojangles executive Dion Firooznia as a franchise business consultant. He signed a six-unit development agreement to open Pizza Inn units in North Carolina and Tennessee. 

    Pie Five's comp sales grew 15 percent in Q2, but experienced a 1 percent decline on a two-year basis. The fast casual is currently using four stores to test a new decor, refreshed speciality pizza menu, and a strong emphasis on house-made curated salads. The brand also launched Mike's Sticky Fingers pizza, which features chili-infused Mike's Hot Honey. 

    Pizza Inn's same-store sales lifted 31 percent in the second quarter, or growth of 13 percent on a two-year stack. The sales momentum was attributed to the introduction of House Pan Pizza in September. 

    RAVE record $457,000 in net income in Q2, marking the seventh consecutive quarter of profitability. 

    "Our franchisees have done amazing work serving customers and their communities and remain motivated to support and retain employees who are the heartbeat of our hometown pizza establishments," CEO Brandon Solano said in a statement. "RAVE continues our best streak of positive income in nearly a decade and is holding more than $8 million in cash."

    The company has faced multiple struggles throughout the COVID pandemic. In 2020, RAVE received multiple delisting notices from Nasdaq, including one for trading below the minimum of $1 per share. As of Monday morning, the company was trading at 97 cents.