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What changed in RAVE RESTAURANT GROUP, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of RAVE RESTAURANT GROUP, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+86 added−107 removedSource: 10-K (2024-09-26) vs 10-K (2023-09-21)

Top changes in RAVE RESTAURANT GROUP, INC.'s 2024 10-K

86 paragraphs added · 107 removed · 64 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeAdditionally, we license PIE Units under the Pizza Inn brand. Buffet Units and Delco Units feature crusts that are hand-made from dough made fresh in the restaurant each day. Our pizzas are made with a proprietary all-in-one flour mixture, real mozzarella cheese, and a proprietary mix of classic pizza spices.
Biggest changePizza Inn We franchise Buffet Units, Delco Units, Express Units and Pizza Inn Ghost Kitchen Units under the Pizza Inn brand. Additionally, we license PIE Units under the Pizza Inn brand. Buffet Units and Delco Units feature crusts that are hand-made from dough made fresh in the restaurant each day.
Site Selection We consider the restaurant site selection process critical to a restaurant’s long-term success and devote significant resources to the investigation and evaluation of potential sites. The site selection process includes a review of trade area demographics and an evaluation process.
Site Selection We consider the restaurant site selection process critical to a restaurant’s long-term success and devote resources to the investigation and evaluation of potential sites. The site selection process includes a review of trade area demographics and an evaluation process.
In 2019, we launched the PIE kiosk and convenience store solution to meet the consumer demand for tasty and high-quality pizzas within a grab-and-go delivery model. Our Concepts We operate and franchise restaurant concepts under two distinct brands: Pizza Inn and Pie Five. Pizza Inn We franchise Buffet Units, Delco Units and Express Units under the Pizza Inn brand.
In 2019, we launched the PIE kiosk and convenience store solution to meet the consumer demand for tasty and high-quality pizzas within a grab-and-go delivery model. Our Concepts We operate and franchise restaurant concepts under two distinct brands: Pizza Inn and Pie Five.
Some foreign countries also have disclosure requirements and other laws regulating franchising and the franchisor-franchisee relationship. Employees As of June 25, 2023, we had 25 full-time employees. None of our employees are currently covered by collective bargaining agreements.
Some foreign countries also have disclosure requirements and other laws regulating franchising and the franchisor-franchisee relationship. Employees As of June 30, 2024, we had 21 full-time employees. None of our employees are currently covered by collective bargaining agreements.
As of June 25, 2023, there were 34 Pizza Inn restaurants operating internationally. Except for three restaurants in Honduras and one restaurant in New Zealand, all of the Pizza Inn restaurants operated or sub-licensed by our international master licensees are in the United Arab Emirates, Saudi Arabia and adjoining countries.
As of June 30, 2024, there were 24 Pizza Inn restaurants operating internationally. Except for three restaurants in Honduras and one restaurant in New Zealand, all of the Pizza Inn restaurants operated or sub-licensed by our international master licensees are in the United Arab Emirates, Saudi Arabia and adjoining countries.
ITEM 1. BUSINESS. General Rave Restaurant Group, Inc., through its subsidiaries (collectively, the “Company” or “we,” “us” or “our”) franchises pizza buffet (“Buffet Units”), delivery/carry-out (“Delco Units”) and express (“Express Units”) restaurants under the trademark “Pizza Inn” and franchises fast casual pizza restaurants (“Pie Five Units”) under the trademarks “Pie Five Pizza Company” or “Pie Five”.
General Rave Restaurant Group, Inc., through its subsidiaries (collectively, the “Company” or “we,” “us” or “our”), franchises pizza buffet (“Buffet Units”), delivery/carry-out (“Delco Units”), express (“Express Units”) restaurants and ghost kitchens (“Pizza Inn Ghost Kitchen Units”) under the trademark “Pizza Inn” and franchises fast casual pizza restaurants (“Pie Five Units”) and ghost kitchens (“Pie Five Ghost Kitchen Units”) under the trademarks “Pie Five Pizza Company” or “Pie Five”.
Domestic Pizza Inn restaurants and kiosks were located predominantly in the southern half of the United States, with Arkansas, Texas, North Carolina and Mississippi accounting for approximately 23%, 20%, 15% and 9%, respectively, of the total number of domestic units.
Domestic Pizza Inn restaurants and kiosks were located predominantly in the southern half of the United States, with Texas, North Carolina, Arkansas and Mississippi accounting for approximately 23%, 16%, 14% and 10%, respectively, of the total number of domestic units.
The Company also licenses Pizza Inn Express, or PIE, kiosks (“PIE Units”) under the trademark “Pizza Inn”. We facilitate food, equipment, and supply distribution to our domestic and international system of restaurants through agreements with third party distributors. As of June 25, 2023, we had 152 franchised Pizza Inn restaurants, 27 franchised Pie Five Units, and 5 licensed PIE Units.
The Company also licenses Pizza Inn Express, or PIE, kiosks (“PIE Units”) under the trademark “Pizza Inn”. We facilitate food, equipment, and supply distribution to our domestic and international system of restaurants through agreements with third party distributors. As of June 30, 2024, we had 126 franchised Pizza Inn restaurants, 20 franchised Pie Five Units, and three licensed PIE Units.
The Company previously granted area developer rights for Pizza Inn restaurants in existing domestic markets. However, the Company is no longer pursuing such agreements. A Pizza Inn area developer typically paid a negotiated fee to purchase the right to operate or develop restaurants within a defined territory and agreed to a multi-restaurant development schedule.
However, the Company is no longer pursuing such agreements. A Pizza Inn area developer typically paid a negotiated fee to purchase the right to operate or develop restaurants within a defined territory and agreed to a multi-restaurant development schedule.
The area developer assisted us in local franchise service and quality control in exchange for half of the franchise fees and royalties from all restaurants within the territory during the term of the agreement. 3 Index We intend to continue developing franchised Pie Five Units domestically.
The area developer assisted us in local franchise service and quality control in exchange for half of the franchise fees and royalties from all restaurants within the territory during the term of the agreement. We will opportunistically evaluate developing franchised Pie Five Units domestically.
We plan to expand our Pizza Inn branded domestic restaurant base primarily through opening new franchised restaurants with new and existing franchisees. We expect to evaluate the continued development of new Pizza Inn Buffet and Delco Units in international markets in fiscal 2024, particularly in the Middle East.
We plan to expand our Pizza Inn branded domestic restaurant base primarily through opening new franchised restaurants with new and existing franchisees. We expect to evaluate the continued development of new Pizza Inn Buffet and Delco Units in international markets in fiscal 2025. 3 Index The Company previously granted area developer rights for Pizza Inn restaurants in existing domestic markets.
We intend to continue to focus on franchise development opportunities with experienced, well-capitalized restaurant operators. Domestic Franchise Operations Franchise and development agreements. Since the Pizza Inn concept was first franchised in 1963, industry franchising concepts and development strategies have evolved, and our present franchise relationships are evidenced by a variety of contractual forms.
Since the Pizza Inn concept was first franchised in 1963, industry franchising concepts and development strategies have evolved, and our present franchise relationships are evidenced by a variety of contractual forms.
In international markets, the menu mix of toppings and side items is occasionally adapted to local tastes. 2 Index Buffet Units offer dine-in, carryout, and catering service and, in many cases, also offer delivery service.
Our pizzas are made with a proprietary all-in-one flour mixture, real mozzarella cheese, and a proprietary mix of classic pizza spices. In international markets, the menu mix of toppings and side items is occasionally adapted to local tastes. 2 Index Buffet Units offer dine-in, carryout, and catering service and, in many cases, also offer delivery service.
Our efforts to maintain consistent operations may result, from time to time, in the closing of certain kiosks that have not maintained a consistent standard of quality or operations. We also maintain adherence to our standards through ongoing support and education of our licensees by our franchise business consultants, who are deployed locally in markets where our licensees are located.
Our efforts to maintain consistent operations may result, from time to time, in the closing of certain kiosks that have not maintained a consistent standard of quality or operations.
We presently intend to open and operate Company-owned restaurants in the future. 4 Index International Franchise Operations We also offer master license rights to develop Pizza Inn and Pie Five restaurants in certain foreign countries, with negotiated fees, development schedules, and ongoing royalties.
We also maintain adherence to our standards through ongoing support and education of our licensees by our franchise business consultants, who are deployed locally in markets where our licensees are located. 4 Index International Franchise Operations We also offer master license rights to develop Pizza Inn and Pie Five restaurants in certain foreign countries, with negotiated fees, development schedules, and ongoing royalties.
The 118 domestic franchised Pizza Inn restaurants were comprised of 77 Buffet Units, 7 Delco Units and 34 Express Units. As of June 25, 2023, there were 34 international franchised Pizza Inn restaurants.
The 102 domestic franchised Pizza Inn restaurants were comprised of 78 Buffet Units, six Delco Units, 17 Express Units and one Pizza Inn Ghost Kitchen Unit. As of June 30, 2024, there were 24 international franchised Pizza Inn restaurants.
Removed
Company-Owned Restaurant Operations As of June 25, 2023 and June 26, 2022, we did not operate any Company-owned restaurants.
Added
Pizza Inn Ghost Kitchen Units primarily serves customers online through third-party delivery companies and are located in a Pie Five restaurant. Dine-in, carryout, or catering services are not offered. We have attempted to strategically locate Pizza Inn Ghost Kitchen Units in areas where Pie Five restaurants are presently located, but Pizza Inn is not.
Added
We intend to continue to focus on franchise development opportunities with experienced, well-capitalized restaurant operators. We believe that Pie Five units will decrease modestly in future periods. Domestic Franchise Operations Franchise and development agreements.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeTwo of the lease obligations have been subleased and six of the lease obligations have been assigned to franchisees. These leased properties range in size from 2,025 to 3,000 square feet, have annual rental rates ranging from approximately $30.00 to $42.00 per square foot and expire between 2023 and 2028. 6 Index
Biggest changeOne of the lease obligations have been subleased and three of the lease obligations have been assigned to franchisees. These leased properties range in size from 2,193 to 2,428 square feet, have annual rental rates ranging from approximately $35.00 to $42.00 per square foot and expire between 2025 and 2028.
The Company amended its lease agreement in June 2020 and elected to defer one-half of the monthly base rent for the period from June 2020 through May 2021. As of June 25, 2023, the Company had contingent and direct lease obligations for eight additional restaurant locations.
The Company amended its lease agreement in June 2020 and elected to defer one-half of the monthly base rent for the period from June 2020 through May 2021. As of June 30, 2024, the Company had contingent and direct lease obligations for four additional restaurant locations.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe Company believes that all such claims and actions currently pending against it are either adequately covered by insurance or would not have a material adverse effect on the Company’s annual results of operations, cash flows or financial condition if decided in a manner that is unfavorable to the Company.
Biggest changeManagement believes that any such claims and actions currently pending are either covered by insurance or would not have a material adverse effect on the Company’s annual results of operations or financial condition if decided in a manner that is unfavorable to the Company. 7 Index
Removed
ITEM 3. LEGAL PROCEEDINGS. On January 6, 2020, the Company’s former Chief Executive Officer, Scott Crane, filed suit in the U.S. District Court for the Eastern District of Texas alleging various claims in connection with the Company’s termination of his employment in July 2019.
Added
ITEM 3. LEGAL PROCEEDINGS. The Company is subject to various claims and contingencies related to employment agreements, franchise disputes, lawsuits, taxes, food product purchase contracts and other matters arising out of the normal course of business.
Removed
In general, the suit asserted that the Company terminated Crane for the purpose of depriving him of certain equity compensation that otherwise would have been due to him on October 15, 2019. The Company asserted that Crane failed to meet the contractual qualifications for the equity, as well as other defenses.
Removed
The matter proceeded to trial which resulted in a verdict in favor of Crane, and the trial court entered judgment in Crane’s favor.
Removed
The Company appealed the judgment to the Fifth Circuit Court of Appeals, which on May 31, 2023 issued an opinion reversing the trial court and rendering judgment in favor of the Company on all claims brought by Crane, and returning the matter to the trial court for consideration of costs and attorney fees to be awarded to the Company as the prevailing party in the litigation.
Removed
The Company is subject to other claims and legal actions in the ordinary course of its business.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeSchwarz, who is also the Executive Chairman of Hallmark, recused himself from all deliberations with respect to the Stock Purchase Agreement with Hallmark. 8 Index Equity Compensation Plan Information The following table furnishes information with respect to the Company’s stock option equity compensation plans as of June 25, 2023: Plan Category Number of securities to be issued upon exercise of outstanding options, warrants, and rights Weighted average exercise price of outstanding options, warrants, and rights Number of securities remaining available for future issuance under equity compensation plans (1) Stock option compensation plans approved by security holders 151,750 $ 5.19 1,543,603 Stock option compensation plans not approved by security holders — — — Total 151,750 $ 5.19 1,543,603 (1) Securities remaining available for future issuance under the 2015 Long Term Incentive Program are net of a maximum of 1,328,531 shares of common stock issuable pursuant to outstanding restricted stock units, subject to applicable vesting requirements and performance criteria.
Biggest changeEquity Compensation Plan Information The following table furnishes information with respect to the Company’s stock option equity compensation plans as of June 30, 2024: Plan Category Number of securities to be issued upon exercise of outstanding options, warrants, and rights Weighted average exercise price of outstanding options, warrants, and rights Number of securities remaining available for future issuance under equity compensation plans (1) Stock option compensation plans approved by security holders 114,286 $ 4.89 1,585,656 Stock option compensation plans not approved by security holders — — — RSU compensation plans approved by security holders 403,595 1.59 — Total 517,881 $ 2.32 1,585,656 (1) Securities remaining available for future issuance under the 2015 Long Term Incentive Program are net of a maximum of 403,595 shares of common stock issuable pursuant to outstanding restricted stock units, subject to applicable vesting requirements and performance criteria.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. The Company’s common stock is listed on the Capital Market of the NASDAQ Stock Market, LLC (“NASDAQ”) under the symbol “RAVE”. As of September 18, 2023, there were approximately 1,888 stockholders of record of the Company’s common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. The Company’s common stock is listed on the Capital Market of the NASDAQ Stock Market, LLC (“NASDAQ”) under the symbol “RAVE”. As of September 19, 2024, there were approximately 1,887 stockholders of record of the Company’s common stock.
See Note I to the audited consolidated financial statements included in this report.
See Note H to the audited consolidated financial statements included in this report.
The Company had no sales of unregistered securities during fiscal 2023 or 2022. The Company did not pay any dividends on its common stock during the fiscal years ended June 25, 2023 or June 26, 2022.
The Company had no sales of unregistered securities during fiscal 2024 or 2023. The Company has not paid dividends historically, and currently there is no intention to pay any dividends on our common stock, but dividends may be considered in the future.
Removed
Any determination to pay cash dividends in the future will be at the discretion of the Company’s board of directors and will be dependent upon the Company’s results of operations, financial condition, capital requirements, contractual restrictions, and other factors deemed relevant.
Removed
Currently, there is no intention to pay any dividends on our common stock. 2007 Stock Purchase Plan On May 23, 2007, the Company’s board of directors approved a stock purchase plan (the “2007 Stock Purchase Plan”) authorizing the purchase on our behalf of up to 1,016,000 shares of our common stock in the open market or in privately negotiated transactions.
Removed
On June 2, 2008, the Company’s board of directors amended the 2007 Stock Purchase Plan to increase the number of shares of common stock the Company may repurchase by 1,000,000 shares to a total of 2,016,000 shares.
Removed
On April 22, 2009, the Company’s board of directors amended the 2007 Stock Purchase Plan again to increase the number of shares of common stock the Company may repurchase by 1,000,000 shares to a total of 3,016,000 shares.
Removed
On June 28, 2022, the Company’s board of directors amended the 2007 Stock Purchase Plan again to increase the number of shares of common stock the Company may repurchase by 5,000,000 shares to a total of 8,016,000 shares. The 2007 Stock Purchase Plan does not have an expiration date.
Removed
The following table furnishes information for purchases made pursuant to the 2007 Stock Purchase Plan during fiscal 2023: Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plan Maximum Number of Shares that May Yet Be Purchased Under the Plan June 27, 2022 - July 31, 2022 891,350 $ 1.20 3,552,399 4,463,601 August 1, 2022 - August 28, 2022 219,541 1.35 3,771,940 4,244,060 August 29, 2022 - September 25, 2022 0 0 3,771,940 4,244,060 September 26, 2022 - October 30, 2022 0 0 3,771,940 4,244,060 October 31, 2022 - November 27, 2022 0 0 3,771,940 4,244,060 November 28, 2022 - December 25, 2022 2,246,086 1.60 6,018,026 1,997,974 December 26, 2022 - January 29, 2023 0 0 6,018,026 1,997,974 January 30, 2023 - February 26, 2023 0 0 6,018,026 1,997,974 February 27, 2023 - March 26, 2023 0 0 6,018,026 1,997,974 March 27, 2023 - April 30, 2023 0 0 6,018,026 1,997,974 May 1, 2023 - May 28, 2023 0 0 6,018,026 1,997,974 May 29, 2023 - June 25, 2023 0 0 6,018,026 1,997,974 Total 3,356,977 $ 1.48 The Company’s ability to purchase shares of our common stock is subject to various laws, regulations, and policies as well as the rules and regulations of the Securities and Exchange Commission (the “SEC”).
Removed
The Company may also purchase shares of our common stock other than pursuant to the 2007 Stock Purchase Plan or other publicly announced plans or programs. On December 21, 2022, the Company entered into a Stock Purchase Agreement with Hallmark Financial Services, Inc.
Removed
(“Hallmark”) pursuant to which the Company purchased from certain direct or indirect subsidiaries of Hallmark an aggregate of 2,246,086 shares of the Company’s common stock at a price of $1.60 per share, resulting in an aggregate purchase price of $3,593,738.
Removed
The price per share represented the average closing price of the Company’s common stock on the Nasdaq Capital Market for the preceding 15 trading days. The transaction was approved by the Audit Committee of the Company, which consists of all of the independent directors of the Company. The Chairman of the Company, Mark E.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following is additional business segment information for the Fiscal Years ended June 25, 2023 and June 26, 2022 (in thousands): Pizza Inn Franchising Pie Five Franchising Company-Owned Stores Corporate Total Fiscal Year Ended Fiscal Year Ended Fiscal Year Ended Fiscal Year Ended Fiscal Year Ended June 25, 2023 June 26, 2022 June 25, 2023 June 26, 2022 June 25, 2023 June 26, 2022 June 25, 2023 June 26, 2022 June 25, 2023 June 26, 2022 REVENUES: Franchise and license revenues $ 9,810 $ 8,535 $ 1,870 $ 1,950 $ — $ — $ — $ — $ 11,680 $ 10,485 Rental income — — — — — — 186 186 186 186 Interest income and other — — 23 17 — — — 4 23 21 Total revenues 9,810 8,535 1,893 1,967 — — 186 190 11,889 10,692 COSTS AND EXPENSES: Cost of sales — — — — — 1 — — — 1 General and administrative expenses — — — — — 2 5,490 5,444 5,490 5,446 Franchise expenses 3,059 2,313 897 971 — — — — 3,956 3,284 Impairment of long-lived assets and other lease charges — — — — — — 5 6 5 6 Bad debt expense — — — — — — 73 46 73 46 Interest expense — — — — — — 1 61 1 61 Depreciation and amortization expense — — — — — — 214 187 214 187 Total costs and expenses 3,059 2,313 897 971 — 3 5,783 5,744 9,739 9,031 OTHER INCOME: Employee retention credit — — — — — — — 704 — 704 Total other income — — — — — — — 704 — 704 INCOME/(LOSS) BEFORE TAXES $ 6,751 $ 6,222 $ 996 $ 996 $ — $ (3 ) $ (5,597 ) $ (4,850 ) $ 2,150 $ 2,365 Revenues: Revenues are derived from franchise royalties, franchise fees and supplier and distributer incentives, advertising funds, area development exclusivity fees and foreign master license fees, supplier convention funds, sublease rental income, interest and other income, and sales by Company-owned restaurants.
Biggest changeThe following is additional business segment information for the Fiscal Years ended June 30, 2024 and June 25, 2023 (in thousands): Pizza Inn Franchising Pie Five Franchising Corporate Total Fiscal Year Ended Fiscal Year Ended Fiscal Year Ended Fiscal Year Ended June 30, 2024 June 25, 2023 June 30, 2024 June 25, 2023 June 30, 2024 June 25, 2023 June 30, 2024 June 25, 2023 REVENUES: Franchise and license revenues $ 10,295 $ 9,810 $ 1,708 $ 1,870 $ — $ — $ 12,003 $ 11,680 Rental income — — — — 131 186 131 186 Other income — — 16 23 — — 16 23 Total revenues 10,295 9,810 1,724 1,893 131 186 12,150 11,889 COSTS AND EXPENSES: General and administrative expenses — — — — 5,267 5,490 5,267 5,490 Franchise expenses 2,985 3,059 671 897 — — 3,656 3,956 Impairment of long-lived assets and other lease charges — — — — — 5 — 5 Provision for credit losses — — — — 69 73 69 73 Interest (income) expense — — — — (153 ) 1 (153 ) 1 Depreciation and amortization expense — — — — 219 214 219 214 Total costs and expenses 2,985 3,059 671 897 5,402 5,783 9,058 9,739 INCOME/(LOSS) BEFORE TAXES $ 7,310 $ 6,751 $ 1,053 $ 996 $ (5,271 ) $ (5,597 ) $ 3,092 $ 2,150 Revenues: Revenues are derived from franchise royalties, supplier and distributer incentives, franchise license fees, area development exclusivity fees and foreign master license fees, advertising funds, supplier convention funds, sublease rental income, and other income.
The Company continually reviews the realizability of its deferred tax assets, including an analysis of factors such as future taxable income, reversal of existing taxable temporary differences, and tax planning strategies. In assessing the need for the valuation allowance, the Company considers both positive and negative evidence related to the likelihood of realization of deferred tax assets.
The Company continually reviews the realizability of its deferred tax assets, including an analysis of factors such as future taxable income, reversal of existing taxable temporary differences, and tax planning strategies. In assessing the need for a valuation allowance, the Company considers both positive and negative evidence related to the likelihood of realization of deferred tax assets.
If the actual loss from a contingency differs from management’s estimate, operating results could be adversely impacted. Leases The Company determines if an arrangement is a lease at inception of the arrangement. To the extent that it can be determined that an arrangement represents a lease, it is classified as either an operating lease or a finance lease.
If the actual loss from a contingency differs from management’s estimate, operating results could be adversely impacted. The Company determines if an arrangement is a lease at inception of the arrangement. To the extent that it can be determined that an arrangement represents a lease, it is classified as either an operating lease or a finance lease.
The following key performance indicators presented herein, some of which represent non-GAAP financial measures, have the meaning and are calculated as follows: • “EBITDA” represents earnings before interest, taxes, depreciation and amortization. • “Adjusted EBITDA” represents earnings before interest, taxes, depreciation and amortization, stock-based compensation expense, severance, gain/loss on sale of assets, costs related to impairment and other lease charges, franchisee default and closed store revenue/expense, and closed and non-operating store costs. • “Retail sales” represents the restaurant sales reported by our franchisees and Company-owned restaurants, which may be segmented by brand or domestic/international locations. • “Comparable store retail sales” includes the retail sales for restaurants that have been open for at least 18 months as of the end of the reporting period.
The following key performance indicators presented herein, some of which represent non-GAAP financial measures, have these meanings and are calculated as follows: • “EBITDA” represents earnings before interest, taxes, depreciation and amortization. • “Adjusted EBITDA” represents earnings before interest, taxes, depreciation and amortization, stock-based compensation expense, severance, gain/loss on sale of assets, costs related to impairment and other lease charges, franchisee default and closed store revenue/expense, and closed and non-operating store costs. • “Retail sales” represents the restaurant sales reported by our franchisees, which may be segmented by brand or domestic/international locations. • “Comparable store retail sales” includes the retail sales for restaurants that have been open for at least 18 months as of the end of the reporting period.
Changes in the estimates and judgments could significantly impact the Company’s results of operations and financial condition in future periods. Accounts receivable consist primarily of receivables generated from franchise royalties and supplier concessions.
Changes in the estimates and judgments could significantly impact the Company’s results of operations and financial condition in future periods. 15 Index Accounts receivable consist primarily of receivables generated from franchise royalties and supplier concessions.
The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. As of June 25, 2023 and June 26, 2022, the Company had no uncertain tax positions.
The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. As of June 30, 2024 and June 25, 2023, the Company had no uncertain tax positions.
The volume of supplier incentive revenues is dependent on the level of chain-wide retail sales, which are impacted by changes in comparable store sales and restaurant count, as well as the products sold to franchisees through third-party food distributors. Total revenues for fiscal 2023 and fiscal 2022 were $11.9 million and $10.7 million, respectively.
The volume of supplier incentive revenues is dependent on the level of chain-wide retail sales, which are impacted by changes in comparable store sales and restaurant count, as well as the products sold to franchisees through third-party food distributors. Total revenues for fiscal 2024 and fiscal 2023 were $12.2 million and $11.9 million, respectively.
See “Forward-Looking Statements.” Overview The Company franchises pizza buffet (“Buffet Units”), delivery/carry-out (“Delco Units”) and express (“Express Units”) restaurants under the trademark “Pizza Inn” and franchises fast casual pizza restaurants (“Pie Five Units”) under the trademarks “Pie Five Pizza Company” or “Pie Five”. The Company also licenses Pizza Inn Express kiosks (“PIE Units”) under the trademark “Pizza Inn”.
See “Forward-Looking Statements.” Overview The Company franchises pizza buffet (“Buffet Units”), delivery/carry-out (“Delco Units”), express (“Express Units”) restaurants and ghost kitchens (“Pizza Inn Ghost Kitchen Units”) under the trademark “Pizza Inn” and franchises fast casual pizza restaurants (“Pie Five Units”) and ghost kitchens (“Pie Five Ghost Kitchen Units”) under the trademarks “Pie Five Pizza Company” or “Pie Five”.
The sales results for a restaurant that was closed temporarily for remodeling or relocation within the same trade area are included in the calculation only for the days that the restaurant was open in both periods being compared. • “Store weeks” represent the total number of full weeks that specified restaurants were open during the period. • “Average units open” reflects the number of restaurants open during a reporting period weighted by the percentage of the weeks in a reporting period that each restaurant was open. • “Average weekly sales” for a specified period is calculated as total retail sales (excluding partial weeks) divided by store weeks in the period. • “Restaurant operating cash flow” represents the pre-tax income earned by Company-owned restaurants before (1) allocated marketing and advertising expenses, (2) depreciation and amortization, (3) impairment and other lease charges, and (4) non-operating store costs. • “Non-operating store costs” represent gain or loss on asset disposal, store closure expenses, lease termination expenses and expenses related to abandoned store sites. • “Franchisee default and closed store revenue/expense” represents the net of accelerated revenues and costs attributable to defaulted area development agreements and closed franchised stores. 13 Index Financial Results The Company defines its operating segments as Pizza Inn Franchising, Pie Five Franchising and Company-Owned Restaurants.
The sales results for a restaurant that was closed temporarily for remodeling or relocation within the same trade area are included in the calculation only for the days that the restaurant was open in both periods being compared. • “Store weeks” represent the total number of full weeks that specified restaurants were open during the period. • “Average units open” reflects the number of restaurants open during a reporting period weighted by the percentage of the weeks in a reporting period that each restaurant was open. • “Average weekly sales” for a specified period is calculated as total retail sales (excluding partial weeks) divided by store weeks in the period. • “Non-operating store costs” represent gain or loss on asset disposal, store closure expenses, lease termination expenses and expenses related to abandoned store sites. • “Franchisee default and closed store revenue/expense” represents the net of accelerated revenues and costs attributable to defaulted area development agreements and closed franchised stores. 12 Index Financial Results The Company defines its operating segments as Pizza Inn Franchising and Pie Five Franchising.
Tax years that remain subject to examination by the IRS are the years ended June 28, 2020 through June 26, 2022. Tax years that remain subject to examination by state authorities are the years ended June 30, 2019 through June 26, 2022.
Tax years that remain subject to examination by the IRS are the years ended June 28, 2021 through June 25, 2023. Tax years that remain subject to examination by state authorities are the years ended June 30, 2020 through June 25, 2023.
As of June 25, 2023, the Company had federal net operating loss carryforwards totaling $21 million that are available to reduce future taxable income and will begin to expire in 2035. Under the Tax Cuts and Jobs Act, approximately $1.4 million of the loss carryforwards are limited to 80% and do not expire.
At the end of tax year ended June 30, 2024, the Company had federal net operating loss carryforwards totaling $18.9 million that are available to reduce future taxable income and will begin to expire in 2035. Under the Tax Cuts and Jobs Act, approximately $1.3 million of the loss carryforwards are limited to 80% and do not expire.
The following table sets forth a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods shown (in thousands): Fiscal Year Ended June 25, 2023 June 26, 2022 Net income $ 1,613 $ 8,022 Interest expense 1 61 Income taxes 537 (5,657 ) Depreciation and amortization 214 187 EBITDA $ 2,365 $ 2,613 Stock-based compensation expense 345 169 Severance — 53 Impairment of long-lived assets and other lease charges 5 6 Franchisee default and closed store revenue (13 ) (38 ) Closed and non-operating store costs — 3 Adjusted EBITDA $ 2,702 $ 2,806 Results of operations for the fiscal years 2023 and 2022 both included 52 weeks.
The following table sets forth a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods shown (in thousands): Fiscal Year Ended June 30, 2024 June 25, 2023 Net income $ 2,473 $ 1,613 Interest (income) expense (153 ) 1 Income taxes 619 537 Depreciation and amortization 219 214 EBITDA $ 3,158 $ 2,365 Stock-based compensation expense 149 345 Severance 5 — Impairment of long-lived assets and other lease charges — 5 Franchisee default and closed store revenue (156 ) (13 ) Adjusted EBITDA $ 3,156 $ 2,702 Results of operations for the fiscal years 2024 and 2023 included 53 weeks and 52 weeks, respectively.
Liquidity and Capital Resources Sources and Uses of Funds Our primary sources of liquidity are cash flows from operating activities, loan proceeds, and proceeds from the sale of securities. 15 Index Cash flows from operating activities generally reflect net income adjusted for certain non-cash items including depreciation and amortization, changes in deferred taxes, share based compensation, and changes in working capital.
Liquidity and Capital Resources Sources and Uses of Funds During fiscal 2024, the Company’s primary source of liquidity was proceeds from operating activities. Cash flows from operating activities generally reflect net income adjusted for certain non-cash items including depreciation and amortization, changes in deferred taxes, stock-based compensation, and changes in working capital.
Diluted net income per common share decreased $0.35 to net income of $0.10 per share for fiscal 2023 compared to a net income of $0.45 per share in the prior fiscal year.
Diluted net income per common share increased $0.07 to net income of $0.17 per share for fiscal 2024 compared to a net income of $0.10 per share in the prior fiscal year.
Cash flows from financing activities generally reflect changes in the Company’s borrowings and securities activity during the period. Net cash used in financing activities was $5.0 million for the fiscal year ended June 25, 2023 compared to net cash used in financing activities of $2.3 million for the fiscal year June 26, 2022.
Cash flows used in financing activities generally reflect changes in the Company’s stock and debt activity during the period. Net cash used in financing activities was $0.3 million for fiscal 2024 compared to net cash used in financing activities of $5.0 million for fiscal 2023.
Franchise fees, area development and foreign master license agreement fees are amortized into revenue on a straight-line basis over the term of the related contract agreement. Royalties and advertising fund revenues, which are based on a percentage of franchise retail sales, are recognized as income as retail sales occur.
Franchise revenue consists of income from license fees, royalties, area development and foreign master license agreements, advertising fund revenues, supplier incentive and convention contribution revenues. Franchise fees, area development and foreign master license agreement fees are amortized into revenue on a straight-line basis over the term of the related contract agreement.
The Company records a provision for doubtful receivables to allow for any amounts which may be unrecoverable based upon an analysis of the Company’s prior collection experience, customer creditworthiness and current economic trends.
The Company records an allowance for credit losses to allow for any amounts which may be unrecoverable based upon an analysis of the Company’s prior collection experience, customer creditworthiness and current economic trends. Actual realization of accounts receivable could differ materially from the Company’s estimates.
Based on budgeted and year-to-date cash flow information, we believe that we have sufficient liquidity to satisfy our cash requirements for the 2024 fiscal year and beyond.
Liquidity We expect to fund continuing operations and planned capital expenditures for the next fiscal year primarily from cash on hand and operating cash flow. Based on budgeted and year-to-date cash flow information, we believe that we have sufficient liquidity to satisfy our cash requirements for the 2025 fiscal year and beyond.
We believe that EBITDA is helpful to investors in evaluating our results of operations without the impact of expenses affected by financing methods, accounting methods and the tax environment.
We consider EBITDA and Adjusted EBITDA to be important supplemental measures of operating performance that are commonly used by securities analysts, investors and other parties interested in our industry. We believe that EBITDA is helpful to investors in evaluating our results of operations without the impact of expenses affected by financing methods, accounting methods and the tax environment.
Pie Five Brand Summary The following tables summarize certain key indicators for the Pie Five franchised and Company-owned restaurants that management believes are useful in evaluating performance. 52 Weeks Ended June 25, 2023 June 26, 2022 (in thousands, except unit data) Pie Five Retail Sales - Total Units Domestic Units - Franchised $ 20,002 $ 20,311 Total Domestic Retail Sales $ 20,002 $ 20,311 Pie Five Comparable Store Retail Sales - Total $ 19,173 $ 18,184 Pie Five Average Units Open in Period Domestic Units - Franchised 29 32 Total Domestic Units 29 32 Pie Five domestic total retail sales decreased $0.3 million, or 1.5%, compared to the prior year and average units open in the period decreased to 29 from 32 the prior year.
Pie Five Brand Summary The following tables summarize certain key indicators for the Pie Five franchised restaurants that management believes are useful in evaluating performance: 53 Weeks Ended June 30, 2024 July 2, 2023 Pie Five Retail Sales - Total Units (in thousands, except unit data) Pie Five Units - Franchised $ 16,875 $ 20,385 Pie Five Ghost Kitchen Units - Franchised 11 — Total Domestic Retail Sales $ 16,886 $ 20,385 Pie Five Comparable Store Retail Sales - Total $ 16,801 $ 17,450 Pie Five Average Units Open in Period Pie Five Units - Franchised 24 30 Pie Five Ghost Kitchen Units - Franchised 1 — Total Domestic Units 25 30 11 Index Pie Five total domestic retail sales decreased by $3.5 million, or 17.2%, for fiscal 2024 when compared to the prior year.
Net income decreased $6.4 million to net income of $1.6 million for fiscal 2023 compared to a net income of $8.0 million for the prior fiscal year on revenues of $11.9 million for fiscal 2023 as compared to $10.7 million in fiscal 2022. 10 Index Adjusted EBITDA for the fiscal year ended June 25, 2023, decreased to $2.7 million compared to $2.8 million for the prior fiscal year.
Net income increased $0.9 million to net income of $2.5 million for fiscal 2024 compared to a net income of $1.6 million for the prior fiscal year on revenues of $12.2 million for fiscal 2024 as compared to $11.9 million in fiscal 2023.
At June 25, 2023 and June 26, 2022, Company-owned and franchised restaurants consisted of the following (in thousands, except unit data): Fiscal Year Ended June 25, 2023 (in thousands, except unit data) Pizza Inn Pie Five All Concepts Ending Units Retail Sales Ending Units Retail Sales Ending Units Retail Sales Domestic Franchised/Licensed 123 $ 100,361 27 $ 20,002 150 $ 120,363 Company-Owned – – – – – – Total Domestic Units 123 $ 100,361 27 $ 20,002 150 $ 120,363 International Franchised 34 – 34 The domestic units were located in 18 states predominately situated in the southern half of the United States.
At June 30, 2024, franchised and licensed restaurants consisted of the following: Fiscal Year Ended June 30, 2024 (in thousands, except unit data) Pizza Inn Pie Five All Concepts Ending Units Retail Sales Ending Units Retail Sales Ending Units Retail Sales Domestic Franchised/Licensed 105 $ 106,418 20 $ 16,886 125 $ 123,304 International Franchised 24 $ 5,486 — $ — 24 $ 5,486 The domestic units were located in 15 states predominately situated in the southern half of the United States.
We facilitate food, equipment and supply distribution to our domestic and international system of restaurants through agreements with third party distributors.
The Company also licenses Pizza Inn Express, or PIE, kiosks (“PIE Units”) under the trademark “Pizza Inn”. We facilitate food, equipment and supply distribution to our domestic and international system of restaurants through agreements with third party distributors.
Cash provided by operations was $2.6 million in fiscal 2023 compared to cash provided by operations of $1.4 million in fiscal 2022. Cash flows from investing activities primarily reflect net proceeds from sale of assets and capital expenditures for the purchase of Company assets.
Cash flows from investing activities reflect purchases and maturities of short term investments as well as net proceeds from the sale of assets and capital expenditures for the purchase of Company assets. Cash used in investing activities during fiscal 2024 was $4.9 million compared to cash used in investing activities of $15 thousand in fiscal 2023.
Future sources of taxable income are also considered in determining the amount of the recorded valuation allowance. Based on this analysis, the Company reversed the full amount of the established valuation allowance as of June 26, 2022. There are no uncertain tax positions.
Future sources of taxable income are also considered in determining the amount of any required valuation allowance. There are no material uncertain tax positions.
Management’s position is that all relevant requirements are met and necessary returns have been filed, and therefore the tax positions taken on the tax returns would be sustained upon examination.
Management’s position is that all relevant requirements are met and necessary returns have been filed, and therefore the tax positions taken on the tax returns would be sustained upon examination. 14 Index Basic net income per common share increased $0.06 to net income of $0.17 per share for fiscal 2024 compared to a net income of $0.11 per share in the prior fiscal year.
Pie Five Franchise and License Revenues Pie Five franchise revenues decreased by $0.1 million to $1.9 million for fiscal 2023 compared to $2.0 million for fiscal 2022. The 4.1% decrease was primarily the result of lower store count.
Pie Five Franchise and License Pie Five franchise revenues decreased by $0.2 million to $1.7 million for fiscal 2024 as compared to $1.9 million for fiscal 2023. The 8.7% decrease was driven by decreases in domestic royalties and advertising fund revenues, offset by increases in default and closed store revenues.
Impairment is evaluated based on the sum of undiscounted estimated future cash flows expected to result from use and eventual disposition of the assets compared to their carrying value. If impairment is indicated, the carrying value of an impaired asset is reduced to its fair value, based on discounted estimated future cash flows.
The Company reviews long-lived assets for impairment when events or circumstances indicate that the carrying value of such assets may not be fully recoverable. Impairment is evaluated based on the sum of undiscounted estimated future cash flows expected to result from use and eventual disposition of the assets compared to their carrying value.
However, the Company also presents and discusses certain non-GAAP financial measures that it believes are useful to investors as measures of operating performance. Management may also use such non-GAAP financial measures in evaluating the effectiveness of business strategies and for planning and budgeting purposes.
Management may also use such non-GAAP financial measures in evaluating the effectiveness of business strategies and for planning and budgeting purposes. However, these non-GAAP financial measures should not be viewed as an alternative or substitute for the results reflected in the Company’s GAAP financial statements.
Pizza Inn domestic comparable store retail sales increased by $9.8 million, or 11.3%, for the same reason. 11 Index The following chart summarizes Pizza Inn restaurant activity for the fiscal year ended June 25, 2023: Fiscal Year Ended June 25, 2023 Beginning Units Opened Closed Ending Units Domestic Units: Buffet Units - Franchised 72 5 — 77 Delco/Express Units - Franchised 47 — 6 41 PIE Units - Licensed 9 — 4 5 Total Domestic Units 128 5 10 123 International Units (all types) 31 3 — 34 Total Units 159 8 10 157 The net decrease of five domestic units was primarily due to declines in Delco and PIE units.
The following chart summarizes Pizza Inn restaurant activity for the fiscal year ended June 30, 2024: Fiscal Year Ended June 30, 2024 Beginning Units Opened Concept Change Transfer Closed Ending Units Buffet Units - Franchised 77 2 2 4 3 78 Delco/Express Units - Franchised 41 1 — — 19 23 PIE Units - Licensed 5 — — — 2 3 Pizza Inn Ghost Kitchen Units - Franchised — 1 — — — 1 Total Domestic Units 123 4 2 4 24 105 International Units (all types) 34 6 — — 16 24 Total Units 157 10 2 4 40 129 There was a net decrease of 18 units in the total domestic Pizza Inn unit count during fiscal 2024.
Pizza Inn Brand Summary The following tables summarize certain key indicators for the Pizza Inn franchised and licensed domestic restaurants that management believes are useful in evaluating performance. 52 Weeks Ended June 25, 2023 June 26, 2022 Pizza Inn Retail Sales - Total Domestic Units (in thousands, except unit data) Domestic Units Buffet Units - Franchised $ 94,836 $ 81,546 Delco/Express Units - Franchised 5,335 6,198 PIE Units - Licensed 190 233 Total Domestic Retail Sales $ 100,361 $ 87,977 Pizza Inn Comparable Store Retail Sales - Total Domestic $ 96,021 $ 86,253 Pizza Inn Average Units Open in Period Domestic Units Buffet Units - Franchised 75 71 Delco/Express Units - Franchised 44 51 PIE Units - Licensed 7 10 Total Domestic Units 126 132 Pizza Inn total domestic retail sales increased by $12.4 million, or 14.1% compared to the prior year.
The following table summarizes domestic comparable store retail sales for the Company. 53 Weeks Ended June 30, 2024 July 2, 2023 (in thousands) Pizza Inn Domestic Comparable Store Retail Sales $ 100,875 $ 98,610 Pie Five Domestic Comparable Store Retail Sales 16,801 17,450 Total Rave Comparable Store Retail Sales $ 117,676 $ 116,060 10 Index Pizza Inn Brand Summary The following tables summarize certain key indicators for the Pizza Inn franchised and licensed domestic units that management believes are useful in evaluating performance: 53 Weeks Ended June 30, 2024 July 2, 2023 Pizza Inn Retail Sales - Total Domestic Units (in thousands, except unit data) Buffet Units - Franchised $ 102,498 $ 96,872 Delco/Express Units - Franchised 3,846 5,418 PIE Units - Licensed 70 208 Pizza Inn Ghost Kitchen Units - Franchised 4 — Total Domestic Retail Sales $ 106,418 $ 102,498 Pizza Inn Comparable Store Retail Sales - Total Domestic $ 100,875 $ 98,610 Pizza Inn Average Units Open in Period Buffet Units - Franchised 76 73 Delco/Express Units - Franchised 29 44 PIE Units - Licensed 4 8 Pizza Inn Ghost Kitchen Units - Franchised — — Total Domestic Units 109 125 Pizza Inn total domestic retail sales increased by $3.9 million, or 3.8%, for fiscal 2024 when compared to the prior 53 weeks.
In assessing the need for the valuation allowance, the Company considers both positive and negative evidence related to the likelihood of realization of deferred tax assets. Future sources of taxable income are also considered in determining the amount of the recorded valuation allowance.
The Company assess whether a valuation allowance should be established against its deferred tax assets based on consideration of all available evidence, using a “more likely than not” standard. In assessing the need for the valuation allowance, the Company considers both positive and negative evidence related to the likelihood of realization of deferred tax assets.
Pizza Inn Franchise and License Revenues Pizza Inn franchise revenues increased by $1.3 million to $9.8 million in fiscal 2023 compared to $8.5 million in fiscal 2022. The 14.9% increase was primarily the result of an increase in store count, effective marketing campaigns, and a reduction in the impact of COVID-19.
Pizza Inn Franchise and License Pizza Inn franchise revenues increased by $0.5 million to $10.3 million for fiscal 2024 as compared to $9.8 million for fiscal 2023. The 4.9% increase was driven by increases in supplier and distributor incentives.
Impairment of long-lived assets and other lease charges for Company-owned restaurants of zero in fiscal 2023 remained essentially unchanged from the prior year. Bad Debt Expense The Company monitors franchisee receivable balances and adjusts credit terms when necessary to minimize the Company’s exposure to high risk accounts receivable.
Provision for Credit Losses The Company monitors franchisee receivable balances and adjusts credit terms when necessary to minimize the Company’s exposure to high risk accounts receivable. Provision for credit losses decreased by $4 thousand to $69 thousand for fiscal 2024 as compared to $73 thousand for fiscal 2023.
The $44 thousand, or 0.8%, increase in total general and administrative expenses was primarily the result of increased corporate expenses related to a decrease in miscellaneous income offset by a decrease in legal fees. 14 Index Franchise Expenses Franchise expenses include general and administrative expenses directly related to the sale and continuing service of domestic and international franchises.
The 4.1% decrease was driven by decreased salary and stock-based compensation expense. 13 Index Franchise Expenses Franchise expenses include general and administrative expenses directly related to the sale and continuing service of domestic and international franchises. Total franchise expenses decreased by $0.3 million to $3.7 million in fiscal 2024 as compared to $4.0 million for fiscal 2023.
Provision for Income Tax For the year ended June 25, 2023, the Company recorded an income tax expense of $0.5 million. The federal and state tax expense was $0.4 million and $0.1 million, respectively. The Company utilized net operating losses to offset federal taxes.
The federal and state tax expense was $530 thousand and $89 thousand, respectively. The change in both federal and state tax expense was primarily driven by the increase in net income, utilization of jurisdictional operating losses and a current year tax deduction for stock-based compensation. The Company utilized net operating losses to offset federal taxes.
Total franchise expenses increased $0.7 million to $4.0 million in fiscal 2023 from $3.3 million in the prior fiscal year. Pizza Inn franchise expenses increased $0.8 million to $3.1 million in fiscal 2023 compared to $2.3 million in the prior fiscal year primarily as a result of an increase in payroll and related, advertising, and travel costs.
Pizza Inn franchise expenses decreased $0.1 million to $3.0 million for fiscal 2024 compared to $3.1 million for fiscal 2023. The 2.4% decrease was driven by decreases in advertising fees. Pie Five franchise expenses decreased $0.2 million to $0.7 million for fiscal 2024 compared to $0.9 million for fiscal 2023.
The following chart summarizes Pie Five restaurant activity for the fiscal year ended June 25, 2023: Fiscal Year Ended June 25, 2023 Beginning Units Opened Closed Ending Units Domestic - Franchised 31 — 4 27 Total Domestic Units 31 — 4 27 The net decrease of four Pie Five units during fiscal 2023 was primarily the result of the closure of poor-performing units. 12 Index Non-GAAP Financial Measures and Other Terms The Company’s financial statements are prepared in accordance with United States generally accepted accounting principles (“GAAP”).
The following chart summarizes Pie Five restaurant activity for the fiscal year ended June 30, 2024: Fiscal Year Ended June 30, 2024 Beginning Units Opened Concept Change Transfer Closed Ending Units Pie Five Units - Franchised 27 — (2 ) 6 7 18 Pie Five Ghost Kitchen Units - Franchised — 2 — 1 — 2 Total Domestic Units 27 2 (2 ) 7 7 20 The was a net decrease of seven units in the total domestic Pie Five unit count during fiscal 2024.
The Company recognized pre-tax, non-cash impairment charges of $5 thousand and $6 thousand during fiscal 2023 and 2022, respectively. The Company had $0.2 million in sublease income during fiscal 2023 and 2022. Franchise revenue consists of income from license fees, royalties, area development and foreign master license agreements, advertising fund revenues, supplier incentive and convention contribution revenues.
If impairment is indicated, the carrying value of an impaired asset is reduced to its fair value, based on discounted estimated future cash flows. The Company recognized pre-tax, non-cash impairment charges of zero and $5 thousand during fiscal 2024 and 2023, respectively. The Company had $0.1 million and $0.2 million in sublease income during fiscal 2024 and 2023, respectively.
Pie Five franchise expenses decreased $0.1 million to $0.9 million in fiscal 2023 compared to $1.0 million in the prior fiscal year primarily as a result of lower store count. Impairment Expenses Impairment of long-lived assets and other lease charges were $5 thousand for fiscal 2023 compared to $6 thousand for fiscal 2022.
The 25.2% decrease was driven by decreases in advertising fees and salaries. Impairment of Long-lived Assets and Other Lease Charges Impairment of long-lived assets and other lease charges was zero for fiscal 2024 compared to $5 thousand for fiscal 2023. The decrease was primarily due to impaired beverage equipment in the prior period.
We believe that this trend of net domestic store closures is moderating and will reverse in future periods. The net increase of three international Pizza Inn units was due to new units in the Middle East and New Zealand.
The Company believes the number of both domestic and international Pizza Inn units will increase modestly in future periods.
Removed
The international restaurants were located in eight foreign countries predominantly in the Middle East.
Added
The international restaurants were located in eight foreign countries predominantly in the Middle East. Fiscal years 2024 and 2023 included 53 weeks and 52 weeks, respectively. In order to reflect comparable 53 week periods, the first week of fiscal 2024 has been included in both periods in the presentation of retail sales, average units open and comparable store retail sales.
Removed
The following table summarizes domestic comparable store retail sales for the Company. 52 Weeks Ended June 25, 2023 June 26, 2022 (in thousands) Pizza Inn Domestic Comparable Store Retail Sales $ 96,021 $ 86,253 Pie Five Domestic Comparable Store Retail Sales 19,173 18,184 Total Rave Comparable Store Retail Sales $ 115,194 $ 104,437 Basic net income per common share decreased $0.34 to net income of $0.11 per share for fiscal 2023 compared to a net income of $0.45 per share in the prior fiscal year.
Added
Compared to the prior year, average Buffet Units open in the period increased from 73 to 76. Comparable store retail sales increased by $2.3 million to $100.9 million for fiscal 2024 as compared to the prior 53 weeks.
Removed
COVID-19 Pandemic On March 11, 2020, the World Health Organization declared the outbreak of novel coronavirus (COVID-19) as a pandemic, and the disease spread rapidly throughout the United States and the world. Federal, state and local responses to the COVID-19 pandemic, as well as our internal efforts to protect customers, franchisees, and employees, severely disrupted our business operations.
Added
For fiscal 2024, the increase in domestic retail sales were primarily the result of the increase in Buffet Units, supplemented by an increase in comparable domestic store retail sales.
Removed
Further, the COVID-19 pandemic precipitated significant job losses and a national economic downturn that impacted the demand for restaurant food service. Although most of our domestic restaurants continued to operate under these conditions, we have experienced temporary closures from time to time during the pandemic.
Added
There were four transfers in the total domestic Pizza Inn unit count during fiscal 2024. For fiscal 2024, the number of international Pizza Inn units decreased by 10 units.
Removed
During much of the COVID-19 pandemic, we experienced dramatically reduced aggregate in-store retail sales at Buffet Units and Pie Five Units, modestly offset by increased aggregate carry-out and delivery sales. The decreased aggregate retail sales correspondingly decreased supplier rebates and franchise royalties payable to the Company.
Added
Twelve units were terminated in Saudi Arabia for failure to pay royalties and subsequently a 50-unit development agreement was signed with a new franchise partner who opened five Pizza Inn units in Saudi Arabia in fiscal year 2024. There were zero transfers in the total international Pizza Inn unit count during fiscal 2024.
Removed
In most cases, in-store dining has now resumed subject to seating capacity limitations, social distancing protocols, and/or enhanced cleaning and disinfecting practices. As a result, the adverse impacts of the COVID-19 pandemic have diminished in recent periods.
Added
Compared to the prior year, average units open in the period decreased from 30 to 25. Comparable store retail sales decreased by $0.6 million to $16.8 million for fiscal 2024 as compared to the prior year.
Removed
Nonetheless, an outbreak or perceived outbreak of COVID-19 connected to restaurant dining could cause negative publicity directed at any of our brands and cause customers to avoid our restaurants. Therefore, despite the official end of the pandemic, the ultimate impact of COVID-19 on our future results of operations and liquidity cannot presently be predicted.
Added
For fiscal 2024, the decrease in domestic retail sales were primarily the result of the decrease in store count, supplemented by a decrease in comparable store retail sales.
Removed
The increase in domestic retail sales was primarily the result of the diminished impact of COVID-19 and increased customer engagement.
Added
There was a net increase of one Pie Five Ghost Kitchen Units during fiscal 2024. Two Pie Five units converted to become Pizza Inn Buffet units. Of the seven Pie Five closures, two were due to lease expirations, one was closed by mutual decision of the franchise owner and Rave management, and four were unilaterally closed by franchise owner decision.
Removed
The decrease in domestic retail sales was primarily the result of lower store count. Comparable store retail sales increased by $1.0 million, or 5.4% during fiscal 2023 compared to the prior year. The improvement in comparable store retail sales was primarily the result of the diminished impact of COVID-19 and increased customer engagement.
Added
We believe that Pie Five units will decrease modestly in future periods. Non-GAAP Financial Measures and Other Terms The Company’s financial statements are prepared in accordance with United States generally accepted accounting principles (“GAAP”). However, the Company also presents and discusses certain non-GAAP financial measures that it believes are useful to investors as measures of operating performance.
Removed
However, these non-GAAP financial measures should not be viewed as an alternative or substitute for the results reflected in the Company’s GAAP financial statements. We consider EBITDA and Adjusted EBITDA to be important supplemental measures of operating performance that are commonly used by securities analysts, investors, and other parties interested in our industry.
Added
Costs and Expenses: General and Administrative Expenses Total general and administrative expenses decreased by $0.2 million to $5.3 million for fiscal 2024 as compared to $5.5 million for fiscal 2023.
Removed
Restaurant Sales We had no restaurant sales, which consist of revenue generated by Company-owned restaurants, in fiscal 2023 or fiscal 2022 because we closed our single remaining Company-owned restaurant during the third quarter of fiscal 2020.
Added
The 4.7% decrease was driven by the write-off of bad debt, partially offset by the increase in accounts over 90 days. Interest Expense and Income Interest expense decreased $1 thousand for fiscal 2024 to zero compared to $1 thousand in the prior year.
Removed
Costs and Expenses: Cost of Sales Cost of sales primarily includes food and supply costs, labor costs, and lease costs directly related to Company-owned restaurant sales. These costs decreased to zero for fiscal 2023 compared to $1 thousand in fiscal 2022.
Added
Interest income increased $153 thousand for fiscal 2024 to $153 thousand compared to zero in the prior year. The increase was primarily driven by interest received on U.S. Treasury bills. Amortization and Depreciation Expense Amortization and depreciation expense increased slightly for fiscal 2024, compared to fiscal 2023.
Removed
The decrease was primarily the result of the closure of the remaining Company-owned stores during the third quarter of fiscal 2020 partially offset by ongoing lease costs directly related to closed Company-owned stores. General and Administrative Expenses Total general and administrative expenses increased to $5.5 million for fiscal 2023 compared to $5.4 million in the prior fiscal year.
Added
The increase was primarily the result of higher amortization of intangible assets from an increase in expenditures for developing a new prototype.
Removed
Bad debt expense increased by $27 thousand to $73 thousand in fiscal 2023 compared to $46 thousand in fiscal 2022 primarily related to collectability concerns on international accounts receivable. Interest Expense Interest expense decreased $60 thousand for fiscal 2023 to $1 thousand compared to $61 thousand in the prior year.
Added
Provision for Income Taxes Total income tax expense consists of the following (in thousands): Fiscal Year Ended June 30, 2024 June 25, 2023 Federal tax expense $ 530 $ 394 State tax expense 89 143 Total income tax expense $ 619 $ 537 For the year ended June 30, 2024, the Company recorded an income tax expense of $619 thousand.
Removed
Amortization and Depreciation Expense Amortization and depreciation expense increased $27 thousand to $214 thousand in fiscal 2023 compared to $187 thousand in fiscal 2022 primarily as a result of higher amortization of intangible assets. Other Income Other income represents non-recurring income that is not derived from the operations of the Company.
Added
Adjusted EBITDA for the fiscal year ended June 30, 2024, increased to $3.2 million compared to $2.7 million for the prior fiscal year.
Removed
The Company had a $0.7 million refundable employee retention tax credit during fiscal 2022 which was the result of governmental actions to mitigate the economic impacts of the COVID-19 pandemic. (See, “Liquidity and Capital Resources – Employee Retention Credit” below.) Management does not presently expect similar benefits to be available in subsequent periods.
Added
Cash provided by operating activities was $2.7 million in fiscal 2024 compared to cash provided by operating activities of $2.6 million in fiscal 2023. The primary driver of increased operating cash flow during fiscal 2024 was increased net income due to lower employee related expenses.
Removed
For the year ended June 26, 2022, the Company recorded an income tax benefit of $5.7 million including federal deferred tax benefit of $5.5 million and current/deferred state tax benefit of $0.2 million.
Added
Net cash used by financing activities in fiscal 2024 was primarily attributable to taxes paid on vested Restricted Stock Units (“RSUs”). Net cash used by financing activities in fiscal 2023 was primarily attributable to repurchases of the Company’s stock.
Removed
Cash used in investing activities was $15 thousand in fiscal 2023 compared to cash provided by investing activities of $0.3 million in fiscal 2022. The $0.3 million decrease in cash provided by investing activities was primarily the result of decreased payments on notes receivable from prior sales of assets.
Added
In the event of a closed franchise or defaulted development agreement, the remaining balance of unamortized license fees will be recognized in entirety as of the date of the closure or default. Royalties and advertising fund revenues, which are based on a percentage of franchise retail sales, are recognized as income as retail sales occur.
Removed
The cash used in financing activities in fiscal 2023 was primarily the result of $5.0 million used to repurchase shares of the Company’s common stock. The cash used in financing activities in fiscal 2022 was primarily attributable to the retirement of all outstanding convertible notes, the repurchase of the Company’s common stock, and the repayment of a short term loan.
Added
In making such assessment, more weight is given to evidence that can be objectively verified, including recent operating performance. Future sources of taxable income are also considered in determining the amount of the recorded valuation allowance.
Removed
Employee Retention Credit On December 27, 2020, the Consolidated Appropriations Act of 2021 (the “CAA”) was signed into law.

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