Rave Restaurant Group Inc. is adding delivery, wines and tap beers to its Pie Five Pizza Co. concept as it works to stem sliding same-store sales and store closures at the fast-casual brand, the company said Monday.
Dallas-based Rave, which also owns the Pizza Inn express and buffet brand, said Pie Five’s same-store sales fell 16.2 percent in the fiscal fourth quarter ended June 25 from the same period a year earlier.
“Pie Five has been challenged by a rapidly evolving consumer landscape that is confronting much of the restaurant industry," said Scott Crane, Rave CEO, in a statement that accompanied the company’s Monday earnings release.
Pie Five earlier this year began offering delivery and has expanded the platform to about a third of its 84 restaurants, which Crane said was an additional channel for guest orders.
“Consumer research showed that our guests would frequent Pie Five more often if we offered delivery and online ordering,” Crane said. “We began rolling out delivery earlier this year and approximately 30 percent of Pie Five locations now offer the service. We plan to deliver from 100 percent of our locations by mid-year 2018."
Also to help drive traffic, Rave in August opened a new prototype in Plano, Texas, he said.
“The next-generation design also offers wine by the bottle and glass and craft beer on tap,” Crane said. “Our new restaurant prototype provides another opportunity for our brand to grow."
In the fourth quarter, a net five new Pie Five franchise restaurants were opened. The company has closed some owned locations this year, including seven in Chicago and two in Minnesota, amid a franchisee lawsuit that claimed the company provided misleading information about the chain’s sales and profitability.
The year-end Pie Five total was 84 restaurants in 19 states. The company has signed franchise development agreements, including its first development for Pakistan.
For the fourth quarter ended June 25, Rave said it narrowed its net loss to $1.1 million. Revenue fell 14.2 percent, to $13.3 million, from $15.5 million in the prior-year quarter.
For fiscal 2017, Rave’s net loss widened to $12.5 million, or $1.18 a share, from $8.9 million, or 86 cents a share, last year. Revenue declined 4.5 percent, to $57.1 million from nearly $60 million in fiscal 2016.
While same-store sales declined at Pie Five, they rose 0.2 percent at Rave’s buffet-based Pizza Inn.
"We've now seen a full year of positive same-store sales for Pizza Inn," Crane said. "Our Pizza Inn team has worked closely with franchise leadership to formulate a plan that is generating improved performance. We are seeing activity that suggests these improved sales will begin translating into both facility upgrades and new store development.”
Crane said he was optimistic about Rave’s strategic direction.
"Our leadership team has moved swiftly to address sales declines and improve profitability in all areas of our business,” he said. “We've made excellent progress in cleaning up the balance sheet and making adjustments in underperforming markets. We also recently completed a $5 million rights offering that strengthens our shareholder equity."
As of June 25, Rave owned and operated 13 Pie Five restaurants. The company also franchised 71 Pie Five Units and 221 Pizza Inn buffets, express and delivery-carry-out restaurants.
Contact Ron Ruggless at [email protected]
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