Rave Restaurant Group, Inc. RAVE reported earnings per share of 4 cents in the first quarter of fiscal 2025, which increased by a penny year over year.

RAVE’s Revenues in Detail

Rave Restaurant registered revenues of $3.1 million in the fiscal first quarter, down 1.2% year over year.

Lower revenues from the Pie Five Franchising segment dampened the topline.

Shares of this company lost nearly 1.4% in yesterday’s after-hours trading.

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Rave Restaurant’s Segment Details

Rave Restaurant derives revenues from two segments — Pizza Inn Franchising and Pie Five Franchising.

For the quarter under review, Pizza Inn Franchising revenues were $2.7 million, up 4.5% year over year. This was driven by increases in supplier and distributor incentives.

In the first quarter of fiscal 2025, Pizza Inn’s domestic comparable store retail sales decreased 2.1% year over year. Pizza Inn’s domestic unit count finished the fiscal first quarter at 102, while its international unit count finished at 26.

Pie Five Franchising segment’s fiscal first-quarter revenues were $0.3 million, down 29.6% year over year. This primarily resulted from decreases in domestic royalties.

In the first quarter of fiscal 2025, Pie Five’s domestic comparable store retail sales decreased 8.7% year over year. Pie Five domestic unit count finished the fiscal first quarter at 20.

RAVE’s Operating Expenses Analysis

General and administrative expenses at the end of first-quarter fiscal 2025 increased 7.4% year over year to $1.4 million. This resulted from increases in legal fees, primarily due to decreases in legal settlement recoveries.

At the end of the fiscal first quarter, franchise expenses decreased 15.1% year over year to $0.9 million due to decreases in advertising fees. Pizza Inn franchise expenses decreased 5.7% year over year to $0.9 million in first-quarter fiscal 2025. Pie Five franchise expenses decreased 53.7% to $0.1 million in first-quarter fiscal 2025.

Rave Restaurant’s Profitability

The operating income for first-quarter fiscal 2025 totaled $0.7 million, which increased 34.2% year over year.

For the fiscal first quarter, Rave Restaurant’s net income was $2.5 million, up 36.3% year over year.

For the fiscal first quarter, adjusted EBITDA increased 22.9% year over year to $0.7 million.

RAVE’s Liquidity & Debt Management

Rave Restaurant exited first-quarter fiscal 2025 with cash and cash equivalents and short-term investments of $8.4 million compared with $7.8 million at fiscal 2024-end.

Net cash provided by operating activities at the end of first-quarter fiscal 2025 was $0.5 million compared with $0.6 million a year ago.

Our Take

Rave Restaurant exited first-quarter fiscal 2025 with encouraging bottom-line results and strong revenues from the Pizza Inn Franchising segment. Management stated that during the fiscal first quarter, the company signed another four-unit development agreement, bringing the total domestic sites contracted for development to 25. Additionally, the new online ordering platform rolled out to the Pizza Inn system at the end of last fiscal year has led to a double-digit increase in online sales. This raises our optimism about the stock.

Rave Restaurant’s recently introduced Sandworm Pizzert saw a spike in the company’s dessert sales, attracting the attention of guests of all ages. Management also plans to follow the Sandworm Pizzert with another major dessert innovation in early December before introducing main course innovations early next calendar year. This also looks promising for the stock. 

However, dismal top-line results and a decline in Pizza Inn Franchising’s segment’s domestic comparable store retail sales were disappointing. Lower revenues from the Pie Five Franchising segment and lower domestic comparable store retail sales during the quarter were discouraging.

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