Rave Restaurant Group Inc. said same-store sales at its fast-casual Pie Five concept fell 13.7 percent in the second quarter ended Dec. 24.
The Dallas-based company, which also owns the Pizza Inn buffet concept, said its net count of Pie Five units fell by three in the second quarter, with five of the brand’s restaurants closing and two new ones opening.
“We continue to see an opportunity to take advantage of growth in areas such as delivery, cauliflower pizza crusts and shareable pizzas, with the goal of increasing frequency among our loyal guest base," said Scott Crane, Rave CEO, in a statement.
Crane said Rave was streamlining its business by discontinuing its own Norco distribution division and using third-party suppliers and distributors of food, equipment and supplies.
"Our new, simplified approach to supply chain management provides more transparency and efficiency for our franchisees,” Crane said. “It has also provided us opportunities to make reductions in general and administrative costs.”
The company said the sale of food, equipment and supplies will no longer be recognized as revenue and the cost of such items will no longer be included in cost of sales. The company now recognizes incentive revenues received from third-party suppliers and distributors as revenue.
For the second quarter, the company reported that revenue declined 38.1 percent, to $4.2 million, compared to $6.8 million in the same quarter last year. The company trimmed its net loss to $7.3 million from $7.9 million in the prior-year period.
The company reported a loss of 4 cents a share for the second quarter compared to a loss of 74 cents a share a year ago.
"By all indications, we have a solid plan in place that is driving improvements to profitability of continuing operations and lowering overhead expenses,” Crane said. “As we simplify our business through the outsourcing of our supply chain and distribution business, as well as reducing our corporate store footprint, we will lessen our overall financial exposure and improve the stability of our business model."
Pizza Inn domestic same-store sales increased 2.7 percent in the quarter, the company reported.
In December, Rave introduced a new Pizza Inn Express kiosk for non-traditional locations.
Crane said it was a complementary offshoot of Pizza Inn that could go into convenience stores, airports or entertainment venues.
“Convenience stores are a $575 billion industry with 70 percent of sales attributed to in-store purchase,” Crane said. “This new concept allows Pizza Inn to diversify its footprint and is a great way to reach new customers in a faster setting, while still serving the same iconic, quality pizza our guests have come to expect."
During the quarter, the number of Pizza Inn domestic units declined to 156, while international units increased to 62.
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