What changed in this filing

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Item 1. Business

2024-09-26 compared with 2023-09-21 · 102 added, 107 removed, 130 unchanged (62% of the section changed)

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”.

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.

(“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 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 102 domestic franchised Pizza Inn restaurants

were comprised of 77 Buffet Units, 7 Delco Units and 34 Express Units.

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.

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 has offered consumers affordable, high quality pizza since 1958, when the first Pizza Inn restaurant opened in Dallas, Texas.

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We began franchising the Pizza Inn brand internationally in the late 1970s.

In 1993, our stock began trading on the NASDAQ Stock Market and presently trades on the NASDAQ Capital Market under

the ticker symbol “RAVE.” In June 2011, we opened the first Pie Five restaurant in Ft.

In 1993, our stock began trading on the NASDAQ Stock Market and presently trades on the NASDAQ Capital Market

under the ticker symbol “RAVE.” In June 2011, we opened the first Pie Five restaurant in Ft.

Worth, Texas.

In November 2012, we signed our first franchise development agreement for Pie Five.

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.

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.

We operate and franchise restaurant concepts under two distinct brands:

Pizza Inn and Pie Five.

We franchise Buffet Units, Delco Units and Express 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.

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.

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

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.

In international markets, the menu mix of toppings and side items is occasionally adapted to local tastes.

Buffet Units offer dine-in, carryout, and catering service and, in many cases, also offer delivery service.

Buffet Units offer a variety of pizza crusts with standard

toppings and special combinations of toppings in addition to pasta, salad, sandwiches, appetizers, desserts and beverages, including beer and wine in some locations, in an informal, family-oriented atmosphere.

We occasionally offer other items

on a limited promotional basis.

Buffet Units offer a variety of pizza crusts with standard toppings

and special combinations of toppings in addition to pasta, salad, sandwiches, appetizers, desserts and beverages, including beer and wine in some locations, in an informal, family-oriented atmosphere.

We occasionally offer other items on a

limited promotional basis.

Buffet Units are generally located in free standing buildings or strip center locations in retail developments near offices, shopping centers and residential areas.

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Delco Units offer delivery and carryout service only and are typically located in shopping centers or other in-line retail developments.

Delco Units typically offer a

variety of crusts and some combination of side items.

Delco Units typically offer a variety

of crusts and some combination of side items.

Delco Units occupy approximately 1,200 square feet, are primarily production facilities and, in most instances, do not offer seating.

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Express Units serve our customers through a variety of non-traditional points of sale.

Express Units are typically located in a convenience store, food court, college

campus, airport terminal, travel plaza, athletic facility, or other commercial facility.

Express Units are typically located in a convenience store, food court, college campus,

airport terminal, travel plaza, athletic facility, or other commercial facility.

They have limited or no seating and solely offer quick carryout service of a limited menu of pizza and other foods and beverages.

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this concept to offer a lower initial investment and reduced labor and operating costs while maintaining product quality and consistency.

Like Delco Units, Express Units are primarily production-oriented facilities and, therefore, do not require

all of the equipment, labor or square footage of the Buffet Unit.

Like Delco Units, Express Units are primarily production-oriented facilities and, therefore, do not

require all of the equipment, labor or square footage of the Buffet Unit.

PIE Units serve customers through a non-traditional, licensed, pizza-only model called Pizza Inn Express.

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The Company does not intend to open additional PIE Units in the foreseeable future.

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

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.

Pie Five is a fast-casual pizza concept that creates individualized pizzas which are baked in our specially designed oven.

Pizzas are created at the direction of our

customers who choose from a variety of freshly prepared and displayed proprietary and non-proprietary toppings, cheeses, sauces and doughs.

Customers can also get freshly prepared side salads, also made to order from our recipes or at the

customer’s direction.

Pizzas are created at the direction of our customers

who choose from a variety of freshly prepared and displayed proprietary and non-proprietary toppings, cheeses, sauces and doughs.

Customers can also get freshly prepared side salads, also made to order from our recipes or at the customer’s

A variety of soft beverages are available, as well as beer and wine in some locations.

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seating for 65 to 85 customers in most units, and patio seating where available, Pie Five restaurants primarily serve lunch and dinner to families, adults and kids of all ages.

Pie Five restaurants typically are in high traffic, high visibility

urban or suburban sites in mid to large-size metropolitan areas.

Pie Five restaurants typically are in high traffic, high

visibility urban or suburban sites in mid to large-size metropolitan areas.

Sales are predominantly on-premise though carry out and delivery are offered as well.

Due to the relatively compact footprint of the restaurants, and other operating advantages, we

believe Pie Five is also well suited for non-traditional locations such as airports.

Due to the relatively compact footprint of the restaurants, and other operating

advantages, we believe Pie Five is also well suited for non-traditional locations such as airports.

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.

We may also rely on a franchisee’s knowledge of the trade area and market characteristics when selecting a location for a

franchised restaurant.

A member of our development team visits each potential domestic restaurant location.

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.

site selection process includes a review of trade area demographics and an evaluation process.

We may also rely on a franchisee’s knowledge of the trade area and market characteristics when selecting a location for a franchised restaurant.

member of our development team visits each potential domestic restaurant location.

Development and Operations

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We plan to expand our Pizza Inn branded domestic restaurant base primarily through opening new franchised restaurants with new and existing franchisees.

to evaluate the continued development of new Pizza Inn Buffet and Delco Units in international markets in fiscal 2024, particularly in the Middle East.

expect to evaluate the continued development of new Pizza Inn Buffet and Delco Units in international markets in fiscal 2025.

The Company previously granted area developer rights for Pizza Inn restaurants in existing domestic markets.

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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.

We intend to continue developing franchised Pie Five Units domestically.

The rate at which we will be able to continue to expand the Pie Five concept through franchise

development is determined in part by our success at selecting qualified franchisees, by our ability to identify satisfactory sites in appropriate markets, and by our ability to continue training and monitoring our franchisees.

continue to focus on franchise development opportunities with experienced, well-capitalized restaurant operators.

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.

The rate at which we will be able to continue to expand the Pie Five concept through

franchise development is determined in part by our success at selecting qualified franchisees, by our ability to identify satisfactory sites in appropriate markets, and by our ability to continue training and monitoring our franchisees.

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

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(i) require the franchisee to follow the Pizza Inn system of restaurant

operation and management, (ii) require the franchisee to pay a franchise fee, contribute a specified percentage of sales to a marketing fund managed by the Company, and pay continuing royalties, and (iii) except for Express Units, prohibit the

development of one restaurant within a specified distance from another.

the development of one restaurant within a specified distance from another.

We launched the franchise program for Pie Five in fiscal 2013.

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(i) follow the Pie Five system of restaurant

operation and management, (ii) pay a franchise fee and continuing royalties, (iii) contribute a specified percentage of sales to a marketing fund managed by the Company, and (iv) only open restaurants that comply with site and design standards

determined by the Company.

standards determined by the Company.

We offer numerous training programs for the benefit of franchisees and their restaurant crew managers.

The training programs,

taught by experienced Company employees, focus on food preparation, service, cost control, sanitation, safety, local store marketing, personnel management, and other aspects of restaurant operation.

The training programs include group classes,

supervised work in restaurants, and special field seminars.

programs, taught by experienced Company employees, focus on food preparation, service, cost control, sanitation, safety, local store marketing, personnel management, and other aspects of restaurant operation.

The training programs include

group classes, supervised work in restaurants, and special field seminars.

Initial and certain supplemental training programs are offered free of charge to franchisees, who pay their own travel and lodging expenses.

New franchisees also receive on-site

training from Company employees to assist with their first two restaurant openings under their development agreements.

Restaurant managers train their staff through on-the-job training using video and printed materials produced by us.

We require franchisee adherence to a variety of standards designed to ensure proper operations and to protect and enhance the

Pizza Inn and Pie Five brands.

New franchisees also

receive on-site training from Company employees to assist with their first two restaurant openings under their development agreements.

Restaurant managers train their staff through on-the-job training using video and printed materials

produced by us.

We require franchisee adherence to a variety of standards designed to ensure proper operations and to protect and enhance

the Pizza Inn and Pie Five brands.

All franchisees are required to operate their restaurants in compliance with these written policies, standards, and specifications, which include matters such as menu items, ingredients, materials, supplies,

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Our efforts to maintain consistent operations may result, from time to time, in the closing of certain restaurants 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 franchisees by our franchise business consultants, who are deployed locally in markets where our franchisees are located.

maintain adherence to our standards through ongoing support and education of our franchisees by our franchise business consultants, who are deployed locally in markets where our franchisees are located.

Domestic Kiosk License Operations

Kiosk license agreements.

Our PIE Units are typically offered for five-year initial license periods with options for additional five year

Our PIE Units are typically offered for five-year initial license periods with options for additional five

year renewals.

PIE Unit licensees are not charged development fees, license fees, royalties, or advertising assessments.

PIE Unit license agreements require that the licensee comply with standards of the Pizza Inn brand, including marketing, kiosk

system configuration, and sales and sourcing of authorized products and services.

PIE Unit license agreements require that the licensee comply with standards of the Pizza Inn brand, including marketing,

kiosk system configuration, and sales and sourcing of authorized products and services.

The mandated products and sourcing provisions within the PIE Unit licensing agreement result in supplier rebates for the Company.

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PIE Unit managers train their staff through on-the-job training, using video and printed materials produced by us.

We require licensee adherence to a variety of standards designed to ensure proper operations and to protect and enhance the

Pizza Inn brand.

All licensees are required to operate their kiosks in compliance with these written policies, standards, and specifications, which include matters such as menu items, ingredients, materials, supplies, services, furnishings,

decor, and signs.

We require licensee adherence to a variety of standards designed to ensure proper operations and to protect and enhance

the Pizza Inn brand.

furnishings, decor, and signs.

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.

Company-Owned Restaurant Operations

As of June 25, 2023 and June 26, 2022, we did not operate any Company-owned restaurants.

We presently intend to open and operate Company-owned restaurants in the future.

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.

International Franchise Operations

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A master licensee for a foreign country pays a negotiated fee to purchase the right to develop and operate restaurants within a defined territory, typically for a term of 20 years, plus a ten-year renewal option.

The master licensee

agrees to a multi-restaurant development schedule, and we train the master licensee to monitor and assist franchisees in their territory with local service and quality control with support from us.

In return, the master licensee typically

retains half the franchise fees and half the royalties on all restaurants within the territory during the term of the agreement.

Master licensees may open restaurants that they own and operate, or they may open sub-franchised restaurants owned

and operated by third parties through agreements with the master licensee subject to our approval.

licensee agrees to a multi-restaurant development schedule, and we train the master licensee to monitor and assist franchisees in their territory with local service and quality control with support from us.

In return, the master licensee

typically retains half the franchise fees and half the royalties on all restaurants within the territory during the term of the agreement.

Master licensees may open restaurants that they own and operate, or they may open sub-franchised

restaurants owned and operated by third parties through agreements with the master licensee subject to our approval.

Our first franchised Pizza Inn restaurant outside of the United States opened in the late 1970s.

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Our franchisees and licensees purchase food and supplies directly from authorized, reputable, and experienced supply and distribution companies.

The Company provides

sourcing, quality assurance, and research and development for both the Pizza Inn and Pie Five systems.

The authorized distributors make deliveries to all domestic units from several distribution centers, with delivery territories and

responsibilities for each determined according to geographical region.

As a franchisor, the Company is able to leverage the advantages of direct vendor negotiations and volume purchasing of food, equipment, and supplies for the franchisees’ and

licensees’ benefit in the form of a concentrated, one-truck delivery system, competitive pricing, and product consistency.

The Company provides sourcing,

quality assurance, and research and development for both the Pizza Inn and Pie Five systems.

The authorized distributors make deliveries to all domestic units from several distribution centers, with delivery territories and responsibilities

for each determined according to geographical region.

As a franchisor, the Company is able to leverage the advantages of direct vendor negotiations and volume purchasing of food, equipment, and supplies for the franchisees’ and licensees’

benefit in the form of a concentrated, one-truck delivery system, competitive pricing, and product consistency.

Franchisees and licensees are able to source all products and ingredients from authorized distributors.

assure product quality and consistency, our franchisees and licensees are required to purchase from authorized distributors certain food products that are proprietary to the Pizza Inn and Pie Five systems, including cheese, pizza sauce, flour

mixture, certain meats, and spice blend.

In order to assure product

quality and consistency, our franchisees and licensees are required to purchase from authorized distributors certain food products that are proprietary to the Pizza Inn and Pie Five systems, including cheese, pizza sauce, flour mixture,

certain meats, and spice blend.

Franchisees and licensees may purchase other non-proprietary food products and supplies either from authorized distributors or from other suppliers who meet our requirements for quality and reliability.

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Pizza Inn and Pie Five franchisees contribute a specified percentage of their sales to the Company to fund the creation and production of various marketing and advertising

programs and materials, which may include print and digital advertisements, direct mail materials, customer satisfaction systems, social media and e-mail marketing, television and radio commercials, in-store promotional materials, marketing and

public relations services, and consumer research.

and public relations services, and consumer research.

We anticipate continuing to optimize Pizza Inn and Pie Five marketing activities commensurate with the contributions of the marketing funds.

Pizza Inn and Pie Five franchisees are required to conduct independent marketing efforts in addition to their participation in the national marketing programs for each

Pizza Inn and Pie Five franchisees are required to conduct independent marketing efforts in addition to their participation in the national marketing programs for each brand.

We provide franchised restaurants with access to an assortment of local store marketing materials, including pre-approved print, radio, and digital media marketing materials.

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We and our franchisees are subject to various federal, state and local laws affecting the operation of our restaurants.

Each restaurant is subject to licensing and

regulation by several governmental authorities, which include health, safety, sanitation, wage and hour, alcoholic beverage, building and fire agencies in the state and municipality in which the restaurant is located.

Difficulties in obtaining,

or the failure to obtain, required licenses or approvals could delay or prevent the opening of a new restaurant or require the temporary or permanent closing of an existing restaurant in a particular area.

Each restaurant is subject to licensing and regulation

by several governmental authorities, which include health, safety, sanitation, wage and hour, alcoholic beverage, building and fire agencies in the state and municipality in which the restaurant is located.

Difficulties in obtaining, or the

failure to obtain, required licenses or approvals could delay or prevent the opening of a new restaurant or require the temporary or permanent closing of an existing restaurant in a particular area.

We are subject to Federal Trade Commission (“FTC”) regulations and to various state laws regulating the offer and sale of franchises.

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Industry and Competition

The restaurant industry is intensely competitive with respect to price, service, location, and food quality, and there are many well-established competitors with

substantially greater brand recognition and financial and other resources than the Company.

The restaurant industry is intensely competitive with respect to price, service, location, and food quality, and there are many well-established competitors with substantially

greater brand recognition and financial and other resources than the Company.

Competitors include a number of international, national, and regional restaurant and pizza chains, as well as local restaurants and pizza operators.

Some of our competitors may be better established in the markets where our restaurants are or may be located.

Within the pizza segment of the restaurant industry, we believe that our primary competitors are national pizza chains and several

regional chains.

competitors may be better established in the markets where our restaurants are or may be located.

Within the pizza segment of the restaurant industry, we believe that our primary competitors are national pizza chains and several regional

We also compete against the frozen pizza products available at grocery stores and large superstore retailers.

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factors affecting the sale of franchises are product quality, price, value, consumer acceptance, franchisor experience and support, and the quality of the relationship maintained between the franchisor and its franchisees.

In general, there is

active competition for management personnel and attractive commercial real estate sites suitable for our restaurants.

In general, there

is active competition for management personnel and attractive commercial real estate sites suitable for our restaurants.

RISK FACTORS.

Not required for a smaller reporting company.

UNRESOLVED STAFF COMMENTS.

Not applicable.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business