RAVE Restaurant Group, Inc. reported financial results for the second quarter of fiscal 2017 ended December 25, 2016.
Second Quarter Highlights:
Total consolidated revenue decreased 3.4 percent to $14.8 million compared to $15.3 million in the second quarter of fiscal 2016.
Pie Five comparable store retail sales decreased 17.4 percent from the same period of the prior year.
Pie Five system-wide retail sales increased 9.7 percent, while average weekly sales declined 14.7 percent, year over year.
Pizza Inn domestic comparable store retail sales decreased 1.2 percent from the same period of the prior year, while total domestic retail sales increased by 0.4 percent.
Net loss of $7.9 million was $3.1 million greater than the same quarter of the prior year primarily due to increased impairments and other lease charges, and losses from the sale of assets.
Company-owned Pie Five operating cash flow decreased $0.3 million from the same period of the prior year.
Net addition of seven Pie Five restaurants during the quarter brought the total Pie Five restaurants open at the end of the quarter to 99.
“We are aggressively exploring bold new strategies that can be deployed to ultimately improve financial performance,” says Scott Crane, chief executive officer for Rave Restaurant Group, Inc. “Over the next year we will be addressing underperforming markets while also improving the overall customer experience at all of our restaurants.”
Second Quarter Fiscal 2017 Operating Results
Revenues of $14.8 million and $30.2 million for the second quarter and year to date fiscal 2017 were 3.4 percent lower and 1.3 percent higher, respectively, than the same periods of the prior year. For the three and six months ended December 25, 2016, the company reported a net loss of $7.9 million and $9.4 million, respectively, compared to a loss of $4.8 million and $5.4 million for the comparable periods of the prior year.
On a fully diluted basis, the loss was $0.74 per share and $0.89 per share for the second quarter and year to date fiscal 2017, compared to a loss of $0.47 per share and $0.52 per share for the same periods of the prior year.
The increased losses for the three and six month periods ended December 27, 2015 were primarily the result of a $4.8 million non-cash impairment expense in the second quarter of fiscal 2017 related to the carrying value of Company-owned Pie Five restaurants, as well as other lease charges and losses on sale of assets. In addition, the company continued to provide a full valuation allowance against its deferred tax assets.
Pie Five system-wide retail sales increased 9.7 percent for the second quarter of fiscal 2017 when compared to the same period in the prior year driven by a 31.1 percent increase in average units open, while system-wide average weekly sales decreased by 14.7 percent, year over year. Comparable store retail sales decreased by 17.4% for the most recent fiscal quarter compared to the same period in the prior year.
Year to date, Pie Five system-wide retail sales increased 21.6 percent compared to the prior year driven by a 40.9 percent increase in average units open, while system-wide average weekly sales declined 13.7 percent year over year.
Comparable store retail sales decreased 16.1 percent during the first six months of fiscal 2017 compared to the same period of the prior year. The company continues to believe that increased competition within the fast-casual segment and general industry softness contributed to weakened trends within the Pie Five system.
Pizza Inn total domestic retail sales increased 0.4 percent and decreased 0.6 percent for the three and six months ended December 25, 2016 compared to the same periods of the prior year. Pizza Inn domestic comparable store retail sales decreased 1.2 percent and 0.5 percent for the three and six months ended December 25, 2016 compared to the same periods of the prior year.
“Restaurant trends around the country continue to be challenging,” says Crane. “The Pie Five system continues to add new locations and is addressing sales trends through the testing of new sales channels and menu innovation. Pizza Inn continues to see progress through enhanced franchisee engagement and the addition of initiatives such as the new loyalty program and refreshed branding.”
Development Review
In the second quarter of fiscal 2017, eight new franchised Pie Five restaurants were opened, while one franchised restaurant was closed, bringing the fiscal quarter-end total unit count to 99 restaurants.
“We continue to see growth of the Pie Five system in key markets,” says Crane. “We are excited to see additional traditional and non-traditional opportunities for further development.”
