RAVE Restaurant Group, Inc. reported financial results for the first quarter of fiscal 2017 ended September 25.
First Quarter Highlights:
Total consolidated revenue increased 6.3 percent to $15.5 million compared to $14.5 million in the first quarter of fiscal 2016.
Pie Five comparable store retail sales decreased 14.7 percent from the same period of the prior year.
Pie Five system-wide retail sales increased 35.5 percent, while average weekly sales declined 12.8 percent, year over year.
Pizza Inn domestic comparable store retail sales increased 0.2 percent from the same period of the prior year, while total domestic retail sales decreased by 1.6 percent.
Net loss of $1.5 million was $0.9 million greater than the same quarter of the prior year primarily due to closed store expenses, lease termination costs and lower sales and financial performance by company-owned Pie Five stores.
"Sales trends continued to be very challenging in the first fiscal quarter for the Pie Five system while sales in the Pizza Inn system were comparatively stable, and these trends have continued so far in the current quarter," says Clinton Coleman, interim chief executive officer for Rave Restaurant Group, Inc. "We are implementing several new service, product, and marketing initiatives to address these poor traffic trends at Pie Five, including the recent launch of online ordering."
First Quarter Fiscal 2017 Operating Results
Total revenues for the third quarter of fiscal 2017 and the comparable prior year quarter were $15.5 million and $14.5 million, respectively, an increase of 6.3 percent year over year. Additional franchise development fees previously received from Pie Five franchisees have been deferred and will be recognized as future restaurants are opened. Pizza Inn domestic comparable store retail sales increased 0.2 percent from the same period in the prior year.
For Pie Five, system-wide retail sales increased 35.5 percent for the first quarter of fiscal 2017 when compared to the same period in the prior year driven by a 57.9 percent increase in average units open, while system-wide average weekly sales decreased by 12.8%, year over year. Comparable store retail sales decreased by 14.7 percent for the most recent fiscal quarter compared to the same period in the prior year. The Pie Five comparable store retail sales were adversely impacted by restaurants recently entering the comparable store base having lower average sales than in prior years. The company believes that increased competition within the fast-casual segment and general industry softness contributed to weakened trends within the Pie Five system.
"At Pie Five we are focused on making it faster and more convenient for our customers to get a consistently great personalized pizza," says Coleman. "Meanwhile, I'm pleased that Pizza Inn is performing relatively well in a tough dine-in restaurant environment, and the performance of recent new and remodeled franchised restaurants indicates a potential for establishing a sustainable growth path for the brand."
Development Review
In the first quarter of fiscal 2017, six new franchised Pie Five restaurants were opened, while one franchised and one company restaurants were closed, bringing the fiscal quarter-end total unit count to 92 restaurants. The company signed two new franchise development agreements with an existing franchisee for up to 16 additional Pie Five restaurants in Louisiana and Nevada. The company currently has franchise restaurant development commitments totaling up to an additional 363 Pie Five restaurants.
"We have an accelerated rate of franchised restaurant openings in the next six months, including stores in several new markets," says Coleman.
