UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8‑K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):

June 29, 2020

Rave Restaurant Group, Inc.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (469) 384-5000

Securities registered pursuant to Section 12(b) of the Act:

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).  Emerging growth company   ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ☐

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On June 29, 2020 Rave Restaurant Group, Inc. issued a press release discussing financial results of its third fiscal quarter ended March 29, 2020, a copy of which is attached as Exhibit 99.1 hereto.

(d)          Exhibits.

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

June 29, 2020

RAVE Restaurant Group, Inc. Reports Third Quarter

2020 Financial Results

Dallas, Texas – RAVE Restaurant Group, Inc. (NASDAQ: RAVE) today reported financial results for the third quarter of fiscal 2020 ended March 29, 2020.

 

Third Quarter Highlights:

 

 

 

 

 

 

 

 

 

 

 

 

“During this unprecedented time for the restaurant industry, I’m extremely proud of how our franchisees and team members have responded,” said Brandon Solano, Chief Executive Officer of Rave Restaurant Group, Inc.  “I’ve been inspired by our system’s resilience and their tireless efforts to ensure that our restaurants remain a safe place to work and dine during the Coronavirus outbreak. Additionally, we have taken extensive measures to protect Rave’s financial stability. We looked at all areas to reduce expenses, including furloughing two-thirds of our support staff and an across-the-board 20% pay reduction for all other employees and executive leadership late in the third quarter. I am grateful for our team’s sacrifices and the continued support of our guests and communities.”

The Company’s basic net loss increased $0.28 per share to $0.30 per share for the three months ended March 29, 2020, compared to basic net loss of $0.02 per share for the same period of the prior year. The Company had net loss of $4.5 million for the third quarter of fiscal 2020 and compared to net loss of $0.3 million for the same period of the prior year.  Revenues were $2.7 million for the three months ended March 29, 2020 compared to $3.1 million in the comparable period in the prior fiscal year.  The decline in revenue was primarily due to decreases in restaurant sales, franchise royalties and franchise license fees, partially offset by an increase in advertising funds.

 

EBITDA of -$0.4 million for the third quarter of fiscal 2020 was a $0.3 million decrease from the same period of the prior year.  Adjusted EBITDA of $0.0 million for the third quarter of fiscal 2020 was a $0.2 million decrease from the same period of the prior year.

 

Third Quarter and Year to Date Fiscal 2020 Operating Results

 

“As our buffet business was particularly challenged, we took prompt action to maximize value to guests and reduce the impact of dining room closures,” said Solano. “Pizza Inn launched Contactless Buffet To-Go for carryout and delivery to provide guests a customized buffet option in the comfort and safety of their own homes. We also recognized the need for off-premise solutions and quickly expanded our online footprint along with negotiating favorable terms with third-party delivery services. Last month, we introduced the ‘Right Way Buffet™’ that allows our buffet locations to open their dining rooms while practicing enhanced health and safety measures.”

Consolidated revenues of $2.7 million and $8.4 million for the third quarter and year to date fiscal 2020 were 11.9% and 9.1% lower, respectively, than the same periods of the prior year.

Development Review

During the third quarter of fiscal 2020, Pizza Inn opened three domestic units and closed four units to finish the quarter at 152 domestic units comprised of 83 Buffet Units, 56 Delco/Express Units and 13 PIE Units. As of today, we have 79 domestic Buffet Units, 53 Delco/Express Units and 12 PIE Units open for business with eight temporary closures.

 

In the third quarter of fiscal 2020, Pie Five opened zero new domestic units and closed ten domestic units, bringing the domestic unit count to 43 restaurants at the end of the quarter. As of today, we have 32 Pie Five restaurants open for business with six temporary closures.

 

Conference Call

 

A conference call and audio webcast have been scheduled to discuss these results. Details of the conference call are as follows:

 

 

 

The conference call will be webcast at raverg.com. A web-based archive of the conference call will also be available at the above website.

 

About RAVE Restaurant Group, Inc.

 

 

Non-GAAP Financial Measures

 

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. 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 its financial statements prepared in accordance with generally accepted accounting principles.

 

The Company considers 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. The Company believes that EBITDA is helpful to investors in evaluating its results of operations without the impact of expenses affected by financing methods, accounting methods and the tax environment. The Company believes that Adjusted EBITDA provides additional useful information to investors by excluding non-operational or non-recurring expenses to provide a measure of operating performance that is more comparable from period to period. Management also uses these non-GAAP financial measures for evaluating operating performance, assessing the effectiveness of business strategies, projecting future capital needs, budgeting and other planning purposes.

 

“EBITDA” represents earnings before interest, taxes, depreciation and amortization. “Adjusted EBITDA” represents earnings before interest, taxes, depreciation and amortization, stock compensation expense, severance, gain/loss on sale of assets, costs related to impairment and other lease charges, discontinued operations, franchisee default and closed store revenue/expense, and closed and non-operating store costs.

Note Regarding Forward Looking Statements

 

Certain statements in this press release, other than historical information, may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and are intended to be covered by the safe harbors created thereby. These forward-looking statements are based on current expectations that involve numerous risks, uncertainties and assumptions. Assumptions relating to these forward-looking statements involve judgments with respect to, among other things, future economic, competitive and market conditions, regulatory framework and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of RAVE Restaurant Group, Inc. Although the assumptions underlying these forward-looking statements are believed to be reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that any forward-looking statements will prove to be accurate. In light of the significant uncertainties inherent in these forward-looking statements, the inclusion of such information should not be regarded as a representation that the objectives and plans of RAVE Restaurant Group, Inc. will be achieved.

 

Contact:

Investor Relations

RAVE Restaurant Group, Inc.

469-384-5000

RAVE RESTAURANT GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

		March 29, 2020				June 30, 2019
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	1,535			$	2,264
Accounts receivable, less allowance for bad debts of $254 and $209, respectively			1,214				1,191
Notes receivable, less allowance for bad debt of $916 and $916, respectively			802				389
Inventories			-				7
Income tax receivable			4				4
Property held for sale			-				231
Deferred contract charges			44				38
Prepaid expenses and other			413				346
Total current assets			4,012				4,470
LONG-TERM ASSETS
Property, plant and equipment, net			399				500
Operating lease right of use asset, net			3,712				-
Intangible assets definite-lived, net			164				196
Long-term notes receivable			200				735
Deferred tax asset, net			-				4,060
Long-term deferred contract charges			241				232
Deposits and other			240				233
Total assets		$	8,968			$	10,426
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable - trade		$	299			$	400
Accounts payable - lease termination impairments			376				832
Accrued expenses			1,154				834
Deferred rent			-				37
Operating lease liability, current			620				-
Deferred revenues			154				275
Total current liabilities			2,603				2,378
LONG-TERM LIABILITIES
Convertible notes			1,542				1,584
Deferred rent, net of current portion			-				397
Operating lease liability, net of current portion			3,635				-
Deferred revenues, net of current portion			996				1,561
Other long-term liabilities			51				72
Total liabilities			8,827				5,992
COMMITMENTS AND CONTINGENCIES (SEE NOTE 5)
SHAREHOLDERS’ EQUITY
Common stock, $.01 par value; authorized 26,000,000 shares; issued 22,231,014 and 22,208,141 shares, respectively; outstanding 15,145,860 and 15,090,837 shares, respectively			222				222
Additional paid-in capital			33,203				33,327
Accumulated deficit			(8,747	)			(4,483	)
Treasury stock at cost
Shares in treasury: 7,085,154 and 7,117,304, respectively			(24,537	)			(24,632	)
Total shareholders’ equity			141				4,434
Total liabilities and shareholders’ equity		$	8,968			$	10,426

		Nine Months Ended
		March 29, 2020				March 24, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)		$	(4,264	)		$	77
Adjustments to reconcile net income to cash provided by (used in) operating activities:
Impairment of fixed assets and other assets			836				389
Stock compensation expense			(104	)			410
Depreciation and amortization			109				353
Amortization of operating lease asset			(396	)			-
Amortization of intangible assets definite-lived			32				32
Amortization of debt issue costs			22				19
Gain on the sale of assets			7				(250	)
Provision for bad debt			39				25
Provision for bad debt (notes receivable)			-				186
Deferred income tax			4,060				151
Changes in operating assets and liabilities:
Accounts receivable			(62	)			202
Operating notes receivable			14				-
Inventories			7				(10	)
Prepaid expenses, deposits and other, net			(74	)			(201	)
Deferred revenue			(661	)			(758	)
Accounts payable - trade			(101	)			(19	)
Accounts payable - lease termination impairments			(972	)			(64	)
Operating lease liability			380				-
Accrued expenses, deferred rent and other			325				(121	)
Cash (used in) provided by operating activities			(803	)			421
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments received on notes receivable from fixed asset sales			117				-
Proceeds from sale of assets			-				169
Purchase of property, plant and equipment			(53	)			(76	)
Cash provided by investing activities			64				93
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of stock			14				36
Equity issuance costs			(4	)			(4	)
Cash provided by financing activities			10				32
Net (decrease)/increase in cash and cash equivalents			(729	)			546
Cash and cash equivalents, beginning of period			2,264				1,386
Cash and cash equivalents, end of period		$	1,535			$	1,932
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
CASH PAID FOR:
Interest		$	66			$	71
Income taxes		$	18			$	145
Non-cash activities:
Conversion of notes to common shares		$	64			$	-

		Three Months Ended								Nine Months Ended
		March 29, 2020				March 24, 2019				March 29, 2020				March 24, 2019
Net income		$	(4,515	)		$	(263	)		$	(4,264	)		$	77
Interest expense			24				26				75				77
Income taxes			4,008				9				4,077				188
Depreciation and amortization			45				120				141				385
EBITDA		$	(438	)		$	(108	)		$	29			$	727
Stock compensation expense (income)			(19	)			129				(104	)			410
Severance			38				-				157				-
Loss (gain) on sale/disposal of assets			18				104				7				(250	)
Impairment of long-lived assets and other lease charges			495				219				836				389
Franchisee default and closed store revenue			(133	)			(248	)			(587	)			(714	)
Closed and non-operating store costs			45				70				50				151
Adjusted EBITDA		$	6			$	166			$	388			$	713

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