Pie Five drags down Rave Restaurant Group results: 2Q
Pizza Inn expands in North Carolina, Oklahoma
Rave Restaurant Group finished its second quarter of 2020 in much the same condition it started. Pizza Inn posted comparable restaurant sales of 2.4 percent, while Pie Five Pizza comparable sales fell 11 percent. Royalties decreased $180K to $1.03M, a 14.9 percent drop, according to a 10Q filing. Total revenue decreased $0.365 million to $2.80M, or an 11.4 percent drop. Fully diluted earnings per share decreased $0.02 per share to $0.00 from the same period in the prior year.
2Q financial results
The company continues with its transformation plan, said Brandon Solano, chief executive of Rave Restaurant Group. The company made several appointments and has bulked up its leadership team over the past several months with an eye on a bounce back. Rave added Mike Burns as chief operations officer and Douglas Kwong as Marketing vice president in November. In addition, the company named Clint Fendley vice president of Finance to start 2020.
Year-to-date, Pizza Inn comparable restaurant sales increased 2.7 percent, while Pie Five comparable sales decreased 10.8 percent. Total revenue for the six months ended December 29 came to $5.71M, a 7.8 percent drop, primarily due to a decrease in royalties and franchise-related revenues. Year-to-date diluted earnings per share were unchanged at $0.2 per share.
Pie Five to return positive momentum
“The ongoing improvements in operations, marketing and menu innovation will put us in position to drive long-term value and consistency for our consumers and shareholders,” said Solano in a statement, although the results are yet to materialize.
In speaking about Pie Five, he suggests the concept is not delivering on its fast-casual promise and can benefit from new consumer insights and marketing agency work. Additionally, Soland said the concept must reflect fast casual attributes (and not QSR) in terms of service system and menu offerings.
Looking forward, Rave will open additional Pie Five units In Kidzania centers. Kidzania operates interactive and fun learning centers for kids that simulate real-world cities. Rave executives continue to engage potential development partners as Pie Five continues to shrink as a chain. During 2Q, Pie Five opened 3 new units, but closed 3 for a net loss in store count.
Pizza Inn to grow
With 153-unit Pizza Inn, the company said it will will beef up consumer research and marketing initiatives. Solano referred the pizza chain as a “sleeping giant.” As part of ongoing improvements, a new council will help boost results for franchisees. Also, Pizza Inn will focus development to build up the North Carolina and Oklahoma markets.
Solano said, “We recently created the Pizza Inn Franchise Leadership Council, and plan to work side-by-side with franchisees to create more opportunities to drive profitable traffic.”
“The Vale location is our first Pizza Inn Neighborhood Buffet location in the Charlotte-area and we expect to see more development throughout North Carolina,” added Solano. “The Durant buffet location is the first of three new Pizza Inn buffets scheduled to open in Oklahoma this year.”
Photo credit: Pie Five (logo)
About the publisher of this restaurant news site.