Earnings News Update – RAVE Restaurant Group, Inc. (NASDAQ:RAVE)

RAVE Restaurant Group, Inc. (NASDAQ:RAVE) stock soared 3.1% and now trading at $1.6. The stock opened the session at $1.5 and touched its highest price point at $1.65. Its recent trading capacity is 32417 shares versus to its average trading volume of 103705 shares. The company’s stock’s lowest price point for the session stood at $1.5.RAVE traded as low as $ 1.27 in the past 52 weeks, and shares hit its peak level to $2.7.

RAVE Restaurant Group, Inc. (NASDAQ: RAVE) today reported financial results for the second quarter of fiscal 2018 ended December 24, 2017.

Second Quarter Highlights:

  • Total consolidated revenue decreased 38.1% to $4.2 million compared to $6.8 million in the second quarter of fiscal 2017.
  • Pizza Inn domestic comparable store retail sales increased 2.7% from the same period of the prior year, while total domestic retail sales decreased by 3.3%.
  • Pie Five comparable store retail sales decreased 13.7% from the same period of the prior year, while total system-wide retail sales decreased by 18.8%.
  • Company-owned Pie Five average weekly sales increased 10.2% year over year.
  • Net loss improved by $7.3 million to $0.6 million for the second quarter of fiscal 2018 compared to $7.9 million for the same quarter of the prior year, primarily due to closures of underperforming Company Pie Five units, lower closed store expenses, increased gains from sale of assets, lower impairment expenses, lower lease termination expenses, and reductions to general and administrative expenses.
  • On a fully diluted basis, the company reported a loss of $0.04 per share for the second quarter of fiscal 2018 compared to a loss of $0.74 per share for the same period of the prior year.
  • Adjusted EBITDA of ($0.2) million was $0.9 million better than the same quarter of the prior year.
  • Company-owned Pie Five operating cash flow decreased $0.1 million from the same period of the prior year.
  • Net reduction of three Pie Five restaurants during the quarter brought the total Pie Five restaurants open at the end of the quarter to 80.

Second Quarter Fiscal 2018 Operating Results

Revenues of $4.2 million and $9.6 million for the second quarter and year to date fiscal 2018 were 38.1% and 32.4% lower, respectively, than the same periods of the prior year. For the three and six month periods ended December 24, 2017, the Company reported a net loss of $0.6 million and $0.9 million, respectively, compared to a loss of $7.9 million and $9.4 million for the same periods of the prior year. On a fully diluted basis, the loss was $0.04 per share and $0.07 per share, respectively, for the second quarter and year to date fiscal 2018, compared to a loss of $0.74 per share and $0.89 per share for the same periods of the prior year. The decreased loss for the three month period ended December 24, 2017 was primarily the result of $5.8 million improvement in loss from continuing operations before taxes from Company-owned restaurants, $0.8 million improvement in gain on sale of assets, and $0.5 million decrease in corporate general and administrative expenses. The decreased loss for the six month period ended December 24, 2017 was primarily the result of $6.4 million improvement in loss from continuing operations before taxes from Company-owned restaurants, $0.9 million improvement in gain on sale of assets, and $0.4 million decrease in corporate general and administrative expenses. The Company continued to provide a full valuation allowance against its deferred tax assets.  Adjusted EBITDA improved $0.9 million and $1.4 million for the three and six month periods ended December 24, 2017 to ($0.2) million and $0.5 million, respectively. The improvement in Adjusted EBITDA was driven by improvements to net loss, decreased depreciation and amortization, increased average weekly sales at Company-owned Pie Five locations, and positive comparable sales at Pizza Inn locations.

During the fiscal quarter ended December 24, 2017, the Company discontinued its Norco distribution division and revised its arrangements with third party suppliers and distributors of food, equipment and supplies. As a result, sale of food, equipment and supplies is no longer recognized as revenue and the cost of such items is no longer included in cost of sales. The Company now recognizes incentive revenues received from third party suppliers and distributors as revenue.

Pie Five system-wide retail sales decreased 18.8% for the second quarter of fiscal 2018 when compared to the same period in the prior year, primarily driven by a 15.5% decrease in average units open. Comparable store retail sales decreased by 13.7% for the most recent fiscal quarter compared to the same period in the prior year. Year to date, Pie Five system-wide retail sales decreased 18.0% compared to the same period in the prior year, primarily driven by a 10.8% decrease in average units open. Comparable store retail sales decreased by 15.5% during the first six months of fiscal 2018 compared to the same period of the prior year.

In keeping with health-based consumer trends, Pie Five recently introduced a cauliflower pizza crust to its dough line-up. The new cauliflower crust, along with continued testing of other product innovations, are all part of enhancing the Pie Five guest experience.

Pizza Inn total domestic retail sales decreased 3.3% and 2.1%, respectively, for the three and six month periods ended December 24, 2017, compared to the same periods of the prior year. Pizza Inn domestic comparable store retail sales increased 2.7% and 2.2%, respectively, for the three and six month periods ended December 24, 2017, compared to the same periods of the prior year.

Geared towards convenience stores, but also an airport or entertainment venue option, P.I.E will allow customers to order and pay at a kiosk for grab-and-go, or pick up their food at a designated spot. Pizza Inn has a strong presence in the southeastern part of the country where the convenience store segment has the nation’s highest grouping of independent operators.

Development Review

In the second quarter of fiscal 2018, two new franchised Pie Five restaurants were opened, while five franchised restaurants were closed, bringing the quarter-end total unit count to 80 restaurants. The Company also refranchised 11 Company-owned locations in the DFW market during the quarter.

During the second fiscal quarter, the number of Pizza Inn domestic units declined to 156, while international units increased to 62.

Rave Restaurant Group, Inc., together with its subsidiaries, operates and franchises pizza buffet, delivery/carry-out (delco), and express restaurants under the Pizza Inn trademark. It operates in two segments, Franchising and Food and Supply Distribution; and Company-Owned Restaurants. The company’s buffet restaurants, which are located in free standing buildings or strip centers in retail developments that offer dine-in, carryout, and catering services, as well as delivery services. Its delco restaurants provide delivery and carryout services that are located in shopping centers or other in-line retail developments. The company’s Express restaurants serve customers through various non-traditional points of sale that are located in convenience stores, food courts, college campuses, airport terminals, travel plazas, athletic facilities, or other commercial facilities. Rave Restaurant Group, Inc. also operates and franchises fast casual restaurants under the Pie Five Pizza Company or Pie Five trademark. As of September 25, 2017, it owned, operated, and franchised approximately 300 Pie Five Pizza Co. and Pizza Inn restaurants in the United States and internationally. The company was formerly known as Pizza Inn Holdings, Inc. and changed its name to Rave Restaurant Group, Inc. in January 2015. Rave Restaurant Group, Inc. was founded in 1958 and is based in The Colony, Texas.

 

About the Author

Kyle Webster
Kyle Webster
Kyle Webster is a self taught investor and follows the value investing approach to picking stocks. He possesses over 10 years of investment experience, an M.B.A. from Louisiana State University, and is also certified in Risk Management Assurance. Kyle is a Certified Internal Auditor, Data Miner, and author with a career broadly spanning over multiple business areas. He has exploited those observations and developed investment tactics within a fundamentally sound long-term investment strategy. He currently covers Research News category for our site. He can be reached via Email Contact -  kyle@mostvolatilestocks.com.

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