RAVE RESTAURANT GROUP, INC.

Previous wording

The following discussion should be read in conjunction with the consolidated financial statements and accompanying notes appearing elsewhere in this Quarterly Report on Form 10-Q, our Annual Report on Form 10-K for the year ended June 29, 2025, together with our Quarterly Report on Form 10-Q for the period ended September 28, 2025, may contain certain forward-looking statements that are based on current management expectations. Generally, verbs in the future tense and the words “believe,” “expect,” “anticipate,” “estimate,” “intends,” “opinion,” “potential” and similar expressions identify forward-looking statements. Forward-looking statements in this report include, without limitation, statements relating to our business objectives, our customers and franchisees, our liquidity and capital resources, and the impact of our historical and potential business strategies on our business, financial condition, and operating results. Our actual results could differ materially from our expectations. Further information concerning our business, including additional factors that could cause actual results to differ materially from the forward-looking statements contained in this Quarterly Report on Form 10-Q, are set forth in our Annual Report on Form 10-K for the year ended June 29, 2025, as well as our Quarterly Report on Form 10-Q for the period ended September 28, 2025. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The forward-looking statements contained herein speak only as of the date of this Quarterly Report on Form 10-Q and, except as may be required by applicable law, we do not undertake, and specifically disclaim any obligation to, publicly update or revise such statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

Current wording

The following discussion should be read in conjunction with the consolidated financial statements and accompanying notes appearing elsewhere in this Quarterly Report on Form 10-Q, our Annual Report on Form 10-K for the year ended June 29, 2025, together with our Quarterly Reports on Form 10-Q for the periods ended September 28, and December 28, 2025, may contain certain forward-looking statements that are based on current management expectations. Generally, verbs in the future tense and the words “believe,” “expect,” “anticipate,” “estimate,” “intends,” “opinion,” “potential” and similar expressions identify forward-looking statements. Forward-looking statements in this report include, without limitation, statements relating to our business objectives, our customers and franchisees, our liquidity and capital resources, and the impact of our historical and potential business strategies on our business, financial condition, and operating results. Our actual results could differ materially from our expectations. Further information concerning our business, including additional factors that could cause actual results to differ materially from the forward-looking statements contained in this Quarterly Report on Form 10-Q, are set forth in our Annual Report on Form 10-K for the year ended June 29, 2025, as well as our Quarterly Report on Form 10-Q for the periods ended September 28, and December 28, 2025. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The forward-looking statements contained herein speak only as of the date of this Quarterly Report on Form 10-Q and, except as may be required by applicable law, we do not undertake, and specifically disclaim any obligation to, publicly update or revise such statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

Previous wording

Adjusted EBITDA for the fiscal quarter ended December 28, 2025 increased $0.1 million compared to the same period of the prior fiscal year. Year-to-date Adjusted EBITDA increased $0.2 million compared to the same period of the prior fiscal year. The following table sets forth a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods shown (in thousands):

Current wording

Adjusted EBITDA for the fiscal quarter ended March 29, 2026 increased $0.2 million compared to the same period of the prior fiscal year. Year-to-date Adjusted EBITDA increased $0.3 million compared to the same period of the prior fiscal year. The following table sets forth a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods shown (in thousands):

Previous wording

Pizza Inn total domestic retail sales increased by $1.1 million, or 4.1%, for the three months ended December 28, 2025 when compared to the same period of the prior year. Compared to the same fiscal quarter of the prior year, average Buffet Units open in the period increased from 78 to 80. Comparable store retail sales increased by $0.6 million, or 2.5%, for the three month period ended December 28, 2025 as compared to the same period of the prior fiscal year. For the three months ended December 28, 2025, the increase in domestic retail sales were primarily the result of the increase in the average number of Buffet units, supplemented by an increase in comparable domestic store retail sales.

Current wording

Pizza Inn total domestic retail sales increased by $1.9 million, or 7.2%, for the three months ended March 29, 2026 when compared to the same period of the prior year. Compared to the same fiscal quarter of the prior year, average Buffet Units open in the period increased from 77 to 82. Comparable store retail sales increased by $0.6 million, or 2.3%, for the three month period ended March 29, 2026 as compared to the same period of the prior fiscal year. For the three months ended March 29, 2026, the increase in domestic retail sales were primarily the result of the increase in the average number of Buffet units, supplemented by an increase in comparable domestic store retail sales.

Previous wording

Pizza Inn total domestic retail sales increased by $3.6 million, or 7.1%, for the six months ended December 28, 2025 when compared to the same period of the prior year. Compared to the same fiscal period of the prior year, average Buffet Units open in the period increased from 78 to 79. Comparable store retail sales increased by $2.7 million, or 5.3%, for the six month period ended December 28, 2025 as compared to the same period of the prior fiscal year. For the six months ended December 28, 2025, the increase in domestic retail sales were primarily the result of the increase in the average number of Buffet Units, supplemented by an increase in comparable domestic store retail sales.

Current wording

Pizza Inn total domestic retail sales increased by $5.5 million, or 7.1%, for the nine months ended March 29, 2026 when compared to the same period of the prior year. Compared to the same fiscal period of the prior year, average Buffet Units open in the period increased from 78 to 80. Comparable store retail sales increased by $3.3 million, or 4.3%, for the nine month period ended March 29, 2026 as compared to the same period of the prior fiscal year. For the nine months ended March 29, 2026, the increase in domestic retail sales were primarily the result of the increase in the average number of Buffet Units, supplemented by an increase in comparable domestic store retail sales.

Previous wording

The following chart summarizes Pizza Inn restaurant activity for the three and six months ended December 28, 2025:

Current wording

The following chart summarizes Pizza Inn restaurant activity for the three and nine months ended March 29, 2026:

Previous wording

There was a net increase of one unit in the total domestic Pizza Inn unit count during the three and six months ended December 28, 2025, respectively. There were zero and two units transferred between franchisees in the total domestic Pizza Inn unit count during the three and six months ended December 28, 2025, respectively. For the three and six months ended December 28, 2025, the number of international Pizza Inn units decreased by one and three net units, respectively. There were zero transfers in the total international Pizza Inn unit count during the three and six months ended December 28, 2025. The Company believes the number of both domestic and international Pizza Inn units will increase modestly in future periods.

Current wording

There was a net increase of zero and one unit in the total domestic Pizza Inn unit count during the three and nine months ended March 29, 2026, respectively. There were one and four units transferred between franchisees in the total domestic Pizza Inn unit count during the three and nine months ended March 29, 2026, respectively. For the three and nine months ended March 29, 2026, the number of international Pizza Inn units decreased by one and four net units, respectively. There were zero transfers in the total international Pizza Inn unit count during the three and nine months ended March 29, 2026. The Company believes the number of both domestic and international Pizza Inn units will increase modestly in future periods.

Previous wording

Pie Five total domestic retail sales decreased by $0.4 million, or 16.3%, for the three months ended December 28, 2025 when compared to the same period of the prior year. Compared to the same fiscal quarter of the prior year, average units open in the period decreased from 18 to 16. Comparable store retail sales decreased by $34 thousand, or 1.5%, for the three month period ended December 28, 2025 as compared to the same period of the prior fiscal year. For the three months ended December 28, 2025, the decrease in domestic retail sales were primarily the result of the decrease in average store count, supplemented by a decrease in comparable store retail sales.

Current wording

Pie Five total domestic retail sales decreased by $0.7 million, or 24.1%, for the three months ended March 29, 2026 when compared to the same period of the prior year. Compared to the same fiscal quarter of the prior year, average units open in the period decreased from 18 to 15. Comparable store retail sales decreased by $0.3 million, or 11.6%, for the three month period ended March 29, 2026 as compared to the same period of the prior fiscal year. For the three months ended March 29, 2026, the decrease in domestic retail sales were primarily the result of the decrease in average store count, supplemented by a decrease in comparable store retail sales.

Previous wording

Pie Five total domestic retail sales decreased by $1.0 million, or 17.6%, for the six months ended December 28, 2025 when compared to the same period of the prior year. Compared to the same fiscal period of the prior year, average units open in the period decreased from 18 to 16. Comparable store retail sales decreased by $0.3 million, or 5.7%, for the six month period ended December 28, 2025 as compared to the same period of the prior fiscal year. For the six months ended December 28, 2025, the decrease in domestic retail sales were primarily the result of the decrease in average store count, supplemented by a decrease in comparable store retail sales.

Current wording

Pie Five total domestic retail sales decreased by $1.7 million, or 19.7%, for the nine months ended March 29, 2026 when compared to the same period of the prior year. Compared to the same fiscal period of the prior year, average units open in the period decreased from 18 to 16. Comparable store retail sales decreased by $0.6 million, or 7.6%, for the nine month period ended March 29, 2026 as compared to the same period of the prior fiscal year. For the nine months ended March 29, 2026, the decrease in domestic retail sales were primarily the result of the decrease in average store count, supplemented by a decrease in comparable store retail sales.

Previous wording

The following chart summarizes Pie Five restaurant activity for the three and six months ended December 28, 2025:

Current wording

The following chart summarizes Pie Five restaurant activity for the three and nine months ended March 29, 2026:

Previous wording

There was a net decrease of one unit in the total domestic Pie Five unit count during the three and six months ended December 28, 2025. There were zero transfers in the total domestic Pie Five unit count during the three and six months ended December 28, 2025. We believe that Pie Five units will decrease modestly in future periods.

Current wording

There was a net decrease of two and three units in the total domestic Pie Five unit count during the three and nine months ended March 29, 2026. There were zero transfers in the total domestic Pie Five unit count during the three and nine months ended March 29, 2026. We believe that Pie Five units will decrease modestly in future periods.

Previous wording

In addition to Corporate overhead support, the Company defines its operating segments as Pizza Inn Franchising and Pie Five Franchising. The following is additional business segment information for the three and six months ended December 28, 2025 and December 29, 2024 (in thousands):

Current wording

In addition to Corporate overhead support, the Company defines its operating segments as Pizza Inn Franchising and Pie Five Franchising. The following is additional business segment information for the three and nine months ended March 29, 2026 and March 30, 2025 (in thousands):

Previous wording

Total revenues for the three month period ended December 28, 2025 and for the same period in the prior fiscal year were $3.0 million and $2.9 million, respectively.

Current wording

Total revenues for the three month period ended March 29, 2026 and for the same period in the prior fiscal year were $3.2 million and $3.0 million, respectively.

Previous wording

Total revenues for the six month period ended December 28, 2025 and for the same period in the prior fiscal year were $6.3 million and $5.9 million, respectively.

Current wording

Total revenues for the nine month period ended March 29, 2026 and for the same period in the prior fiscal year were $9.5 million and $8.9 million, respectively.

Previous wording

Pizza Inn franchise revenues increased by $0.3 million to $2.8 million for the three month period ended December 28, 2025 as compared to the same period in the prior fiscal year. The 10.5% increase was driven by increases in supplier and distributor incentives and domestic royalties mainly due to an increase in system-wide retail sales. Pizza Inn franchise revenues increased by $0.5 million to $5.8 million for the six month period ended December 28, 2025 as compared to the same period in the prior fiscal year. The 9.9% increase was driven by increases in supplier and distributor incentives and domestic royalties mainly due to an increase in system-wide retail sales.

Current wording

Pizza Inn franchise revenues increased by $0.3 million to $3.0 million for the three month period ended March 29, 2026 as compared to the same period in the prior fiscal year. The 12.2% increase was driven by increases in supplier and distributor incentives and domestic royalties mainly due to an increase in system-wide retail sales. Pizza Inn franchise revenues increased by $0.8 million to $8.8 million for the nine month period ended March 29, 2026 as compared to the same period in the prior fiscal year. The 10.7% increase was driven by increases in supplier and distributor incentives and domestic royalties mainly due to an increase in system-wide retail sales.

Previous wording

Pie Five franchise revenues decreased by $0.1 million to $0.2 million for the three month period ended December 28, 2025 as compared to the same period in the prior fiscal year. The 21.7% decrease was driven by decreases in domestic royalties and supplier and distributor incentives from lower system-wide retail sales mainly due to unit closures. Pie Five franchise revenues decreased by $0.1 million to $0.5 million for the six month period ended December 28, 2025 as compared to the same period in the prior fiscal year. The 21.9% decrease was driven by decreases in domestic royalties and supplier and distributor incentives from lower system-wide retail sales mainly due to unit closures.

Current wording

Pie Five franchise revenues decreased by $0.1 million to $0.2 million for the three month period ended March 29, 2026 as compared to the same period in the prior fiscal year. The 20.1% decrease was driven by decreases in domestic royalties from lower system-wide retail sales mainly due to unit closures. Pie Five franchise revenues decreased by $0.2 million to $0.7 million for the nine month period ended March 29, 2026 as compared to the same period in the prior fiscal year. The 21.9% decrease was driven by decreases in domestic royalties from lower system-wide retail sales mainly due to unit closures.

Previous wording

Total general and administrative expenses increased by $0.2 million for the three month period ended December 28, 2025 as compared to the same period of the prior fiscal year. The 15.6% increase was driven by increases in salaries, supplemented by increases in legal fees, which reflect fewer legal settlements recognized in the current year compared to the prior year. Total general and administrative expenses increased by $0.1 million to $2.9 million for the six month period ended December 28, 2025 as compared to the same period of the prior fiscal year. The 2.3% increase was driven by increases in salaries.

Current wording

Total general and administrative expenses increased by $0.2 million to $1.5 million for the three month period ended March 29, 2026 as compared to the same period of the prior fiscal year. The 11.8% increase was driven by increases in salaries, offset by decreases in legal fees. Total general and administrative expenses increased by $0.3 million to $4.4 million for the nine month period ended March 29, 2026 as compared to the same period of the prior fiscal year. The 7.9% increase was driven by increases in salaries, offset by decreases in legal fees.

Previous wording

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 $0.1 million to $0.7 million for the three month period ended December 28, 2025 as compared to the same period of the prior fiscal year. The 11.7% decrease was driven by decreases in salaries directly related to franchise operations. Total franchise expenses decreased by $0.1 million to $1.8 million for the six month period ended December 28, 2025 as compared to the same period of the prior fiscal year. The 3.0% decrease was driven by decreases in salaries directly related to franchise operations, offset by increases in advertising fees.

Current wording

Franchise expenses include general and administrative expenses directly related to the sale and continuing service of domestic and international franchises. Total franchise expenses remained relatively stable at $0.7 million for the three month period ended March 29, 2026 as compared to the same period of the prior fiscal year. The 2.7% decrease was driven by decreases in salaries directly related to franchise operations, offset by increases in advertising fees. Total franchise expenses decreased by $0.1 million to $2.5 million for the nine month period ended March 29, 2026 as compared to the same period of the prior fiscal year. The 2.9% decrease was driven by decreases in salaries directly related to franchise operations, offset by increases in advertising fees.

Previous wording

The Company monitors franchisee receivable balances and adjusts credit terms when necessary to minimize the Company’s exposure to high-risk accounts receivable. For the three month period ended December 28, 2025, provision for credit losses were $7 thousand compared to $9 thousand for the same period in the prior fiscal year. For the six month period ended December 28, 2025, provision for credit losses were $11 thousand compared to recoveries for credit losses of $8 thousand for the same period in the prior fiscal year.

Current wording

The Company monitors franchisee receivable balances and adjusts credit terms when necessary to minimize the Company’s exposure to high-risk accounts receivable. For the three month period ended March 29, 2026, provision for credit losses were $9 thousand compared to recoveries for credit losses of $14 thousand for the same period in the prior fiscal year. For the nine month period ended March 29, 2026, provision for credit losses were $20 thousand compared to recoveries for credit losses of $22 thousand for the same period in the prior fiscal year.

Previous wording

Depreciation and amortization expense decreased by $11 thousand to $42 thousand for the three month period ended December 28, 2025 as compared to the same period in the prior fiscal year. The decrease was primarily the result of lower depreciation of equipment. Depreciation and amortization expense decreased by $12 thousand to $84 thousand for the six month period ended December 28, 2025 as compared to the same period in the prior fiscal year. The decrease was primarily the result of lower depreciation of equipment due to less capital expenditure spend.

Current wording

Depreciation and amortization expense decreased by $2 thousand to $42 thousand for the three month period ended March 29, 2026 as compared to the same period in the prior fiscal year. The decrease was primarily the result of lower depreciation of equipment. Depreciation and amortization expense decreased by $14 thousand to $126 thousand for the nine month period ended March 29, 2026 as compared to the same period in the prior fiscal year. The decrease was primarily the result of lower depreciation of equipment due to less capital expenditure spend.

Previous wording

Interest income increased by $4 thousand to $91 thousand for the three month period ended December 28, 2025 as compared to the same period in the prior fiscal year and increased by $13 thousand to $182 thousand for the six month period ended December 28, 2025 as compared to the same period in the prior fiscal year. The increase was primarily driven by interest received on U.S. Treasury bills.

Current wording

Interest income increased by $14 thousand to $98 thousand for the three month period ended March 29, 2026 as compared to the same period in the prior fiscal year and increased by $27 thousand to $280 thousand for the nine month period ended March 29, 2026 as compared to the same period in the prior fiscal year. The increase was primarily driven by interest received on U.S. Treasury bills.

Previous wording

For the three and six months ended December 28, 2025, the Company recorded an income tax expense of $205 thousand and $411 thousand, respectively. For the three and six months ended December 29, 2024, the Company recorded an income tax expense of $144 thousand and $313 thousand, respectively. The increase for the three months ended as of December 28, 2025 was driven by increases in federal taxes, primarily due to higher taxable income and fewer discrete tax items related to restricted stock units vesting than in the prior year. The increase for the six months ended as of December 28, 2025 was primarily driven by increases in federal taxes, primarily due to higher taxable income and fewer discrete tax items related to restricted stock units vesting than in the prior year.

Current wording

For the three and nine months ended March 29, 2026, the Company recorded an income tax expense of $255 thousand and $666 thousand, respectively. For the three and nine months ended March 30, 2025, the Company recorded an income tax expense of $228 thousand and $541 thousand, respectively. The increase for the three months ended as of March 29, 2026 was driven by increases in federal taxes, primarily due to higher taxable income and fewer discrete tax items related to restricted stock units vesting than in the prior year. The increase for the nine months ended as of March 29, 2026 was primarily driven by increases in federal taxes, primarily due to higher taxable income and fewer discrete tax items related to restricted stock units vesting than in the prior year.

Previous wording

Basic net income per share increased $0.01 per share to $0.09 per share for the six months ended December 28, 2025, compared to the comparable period in the prior fiscal year. The Company had net income of $1.3 million for the six months ended December 28, 2025 compared to net income of $1.1 million in the comparable period in the prior fiscal year, on revenues of $6.3 million for the six months ended December 28, 2025 compared to $5.9 million in the comparable period in the prior fiscal year.

Current wording

Basic net income per share increased $0.01 per share to $0.06 per share for the three months ended March 29, 2026, compared to the comparable period in the prior fiscal year. The Company had net income of $0.8 million for the three months ended March 29, 2026 compared to net income of $0.7 million in the comparable period in the prior fiscal year, on revenues of $3.2 million for the three months ended March 29, 2026 compared to $3.0 million in the comparable period in the prior fiscal year.

Previous wording

Basic net income per share remained relatively stable at $0.04 per share for the three months ended December 28, 2025, compared to the comparable period in the prior fiscal year. The Company had net income of $0.6 million for the three months ended December 28, 2025 compared to net income of $0.6 million in the comparable period in the prior fiscal year, on revenues of $3.0 million for the three months ended December 28, 2025 compared to $2.9 million in the comparable period in the prior fiscal year.

Current wording

Basic net income per share increased $0.02 per share to $0.15 per share for the nine months ended March 29, 2026, compared to the comparable period in the prior fiscal year. The Company had net income of $2.1 million for the nine months ended March 29, 2026 compared to net income of $1.9 million in the comparable period in the prior fiscal year, on revenues of $9.5 million for the nine months ended March 29, 2026 compared to $8.9 million in the comparable period in the prior fiscal year.

Previous wording

During the six month period ended December 28, 2025, the Company's primary source of liquidity was proceeds from operating activities.

Current wording

During the nine month period ended March 29, 2026, the Company's primary source of liquidity was proceeds from operating activities.

Previous wording

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. Cash provided by operating activities was $0.9 million for the six month period ended December 28, 2025 compared to cash provided by operating activities of $1.2 million for the six month period ended December 29, 2024. The primary driver of decreased operating cash flow during the six month period ended December 28, 2025 was increased prepaid expenses related to marketing and insurance.

Current wording

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. Cash provided by operating activities was $2.1 million for the nine month period ended March 29, 2026 compared to cash provided by operating activities of $2.2 million for the nine month period ended March 30, 2025. The primary driver of decreased operating cash flow during the nine month period ended March 29, 2026 was increased accounts receivable due to the timing of payments.

Previous wording

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 the six month period ended December 28, 2025 was $3.1 million compared to cash used in investing activities of $1.1 million for the six month period ended December 29, 2024. Net cash used in investing activities during the six month period ended December 28, 2025 was primarily attributable to decreased maturities of U.S. Treasury bills.

Current wording

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 the nine month period ended March 29, 2026 was $3.8 million compared to cash used in investing activities of $3.0 million for the nine month period ended March 30, 2025. Net cash used in investing activities during the nine month period ended March 29, 2026 was primarily attributable to increased purchases of U.S. Treasury bills.

Previous wording

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 zero for the six month period ended December 28, 2025 compared to net cash used in financing activities of $0.2 million for the six month period ended December 29, 2024. Net cash used by financing activities for the six month period ended December 29, 2024 was primarily attributable to taxes paid on vested RSUs.

Current wording

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 zero for the nine month period ended March 29, 2026 compared to net cash used in financing activities of $1.4 million for the nine month period ended March 30, 2025. Net cash used by financing activities for the nine month period ended March 30, 2025 was primarily attributable to repurchases of the Company's stock.