Rave Restaurant Group's FY2026 revenue rose 7.2% to $12.9M and diluted EPS to $0.20, driven by supplier rebates and Pizza Inn buffet growth (+2.4% comparable sales), while Pie Five kept shrinking and the CEO filed a complaint against the board.
Revenue
$13M
+7.2% YoY
Net income
$2.9M
+6.5% YoY
Diluted EPS
$0.20
+5.3% YoY
Operating margin
26.9%
Overview
Rave Restaurant Group, the franchisor behind Pizza Inn (mostly buffet restaurants) and the smaller Pie Five fast-casual chain, grew revenue 7.2% to $12.9 million in fiscal 2026 (the 52 weeks ended June 28, 2026) and lifted net income 6.5% to $2.9 million, or $0.20 per diluted share versus $0.19. Rave does not run restaurants itself: it earns royalties (a percentage of franchisees' sales), fees, and rebates from food suppliers and distributors that sell to its franchisees. So its revenue depends on how much the restaurants carrying its brands sell.
The year had two sides. Pizza Inn buffets had a solid year: more of them were open and their like-for-like sales rose. That, plus much higher supplier rebates, drove nearly all of the growth. Pie Five kept shrinking, and higher corporate overhead used up much of the gain before it reached net income.
Key Figures
Metric
FY2026
FY2025
YoY Change
Total revenue
$12.91M
$12.04M
+7.2%
Operating income
$3.47M
$3.25M
+7.0%
Operating margin
26.9%
27.0%
-0.1 pts
Net income
$2.88M
$2.70M
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+6.5%
Diluted EPS
$0.20
$0.19
+5.3%
Adjusted EBITDA (non-GAAP)
$3.95M
$3.58M
+10.2%
Pizza Inn domestic comparable store retail sales
$107.1M
$104.7M
+2.4%
Pie Five domestic comparable store retail sales
$8.5M
$9.5M
-9.9%
Franchise royalties
$4.68M
$4.62M
+1.3%
Supplier and distributor incentive revenues
$5.73M
$4.94M
+16.0%
Ending units, all brands (domestic + international)
122
135
-13 units
Operating margin is the share of revenue left after running the business, before interest income and tax. "Comparable store retail sales" counts only restaurants open at least 18 months, so it shows whether existing locations are selling more, separate from the effect of openings and closures. Retail sales figures are what franchisees sold, not Rave's revenue.
Where the revenue growth came from: supplier rebates, not royalties
The revenue breakdown in the notes to the financial statements shows the growth did not come mainly from royalties:
Revenue line
FY2026
FY2025
Change
Supplier and distributor incentives
$5,728K
$4,940K
+$788K
Advertising fund contributions
$2,161K
$2,031K
+$130K
Franchise royalties
$4,679K
$4,620K
+$59K
Franchise license fees
$106K
$153K
-$47K
Rental income
$0K
$53K
-$53K
Other (convention funds, area development, other)
$236K
$242K
-$6K
Total
$12,910K
$12,039K
+$871K
Supplier and distributor incentives are rebates food suppliers and distributors pay Rave based on what its franchisees buy. They added $788K, about 90% of the year's revenue increase, and are now the company's largest revenue line, well ahead of royalties. Management says their volume depends on total system sales and on the products franchisees buy through the company's third-party distributors. The filing also discloses that a single supplier made up about 14.0% of total revenue in fiscal 2026. That is a real concentration risk for a company this size.
Royalties rose only 1.3% even though Pizza Inn's domestic retail sales rose 3.4%. The main reason is Pie Five: its royalties fell with its sales. The $2.2M in advertising fund contributions is money franchisees pay into the brands' marketing funds, and Rave spends it on their behalf. It raises revenue and expenses by roughly the same amount, so it adds little to profit. Excluding it, revenue grew 7.4% ($10.75M vs $10.01M).
Pizza Inn: more buffets, higher same-store sales
Domestic retail sales rose $3.7M (+3.4%) to $112.1M. Management attributes this "primarily" to more Buffet Units (80 open on average vs 77), with comparable store sales up $2.5M (+2.4%) to $107.1M on top.
Mix inside the brand: buffet sales rose to $109.8M from $105.2M, while delivery/carry-out and express units fell to $2.3M from $3.2M. The average number of those smaller-format units open dropped from 21 to 14.
Unit counts: domestic units fell from 96 to 91. That was 5 openings and 10 closures, but the closures were concentrated in the smaller formats. Buffets went from 79 to 80 (4 opened, 3 closed, plus 4 transfers between owners), Delco/Express from 15 to 11, and the last PIE kiosk and the last ghost kitchen (delivery-only kitchen) closed. International units fell from 22 to 18 (3 opened, 7 closed), and international retail sales were $5.6M.
Segment results: Pizza Inn franchise revenue rose 11.2% to $12.0M, which management says was "driven by increases in supplier and distributor incentives and domestic royalties." Segment income was $8.9M, up from $7.8M. Management says it expects both domestic and international Pizza Inn unit counts to "increase modestly in future periods."
Pie Five: a shrinking brand
Domestic retail sales fell 23.8% to $8.6M. The average number of units open dropped from 20 to 15, and comparable store sales fell 9.9% to $8.5M. Management says the decline was mainly due to fewer stores, "supplemented by" weaker comparable sales. So the restaurants still open are also selling less.
Units fell from 17 to 13, with no openings; the last Pie Five ghost kitchen also closed.
Pie Five revenue fell 23.6% to $0.9M, and segment income fell to $0.64M from $0.80M. Lower franchise expenses (down 31.8%) cushioned the drop.
Management says directly that it believes "Pie Five units will decrease in future periods." Pie Five now makes up about 7% of total revenue, so its continued shrinking is a small drag rather than a threat to the business.
Costs: overhead grew faster than revenue
General and administrative expenses (corporate overhead) rose 12.7% to $5.9M, faster than revenue. Management says this was "driven by increases in salaries, offset by decreases in legal fees." Stock-based compensation, which is part of G&A, more than doubled to $298K from $136K. Franchise expenses stayed flat at $3.4M. As a result, operating margin was essentially unchanged at 26.9% even though revenue grew 7.2%. That is also why Adjusted EBITDA (+10.2%) grew faster than net income: it adds back the higher stock compensation. Adjusted EBITDA is the company's non-GAAP earnings measure, meaning it is not calculated under standard accounting rules.
Taxes: reported profit understates the cash earned
Income tax expense rose to $1.01M, an effective rate of 25.9% (versus 25.4%). Management says the increase came from higher taxable income and fewer tax benefits tied to vesting restricted stock units. Almost all of that tax expense is non-cash. The cash flow statement shows $892K of it as a deferred tax charge, which is Rave using up past losses. The company "utilized net operating losses to offset federal taxes payable." It still has about $12 million of federal net operating loss carryforwards, which begin to expire in 2035. Its net deferred tax asset fell to $3.1M from $4.0M as those losses were used. No valuation allowance (a write-down for tax assets the company may not be able to use) was needed in either year.
In practice, for as long as those losses last, Rave pays little federal tax in cash. Operating cash flow was $3.6M, above net income of $2.9M.
Balance sheet and capital returns
Cash plus short-term Treasury bills rose to $13.6M from $9.9M ($1.1M cash plus $12.5M in T-bills). Rave has no debt, and total liabilities were only $2.2M. Rave bought back no shares in fiscal 2026, after a $1.4M financing outflow in fiscal 2025 that the company attributes primarily to buybacks. Diluted weighted shares still fell 1.8% (14.30M vs 14.56M) because of those earlier purchases. On unrounded figures that lifted per-share earnings slightly faster than net income; the reported +5.3% EPS change is compressed by rounding to whole cents. It pays no dividend and has no stated plan to start. Management says cash on hand and operating cash flow will cover its needs for fiscal 2027 and beyond. The company also plans to move its Dallas-area headquarters in January 2027.
CEO complaint against the board
The 10-K discloses under Legal Proceedings that on August 31, 2026, CEO Brandon Solano sent the Audit Committee chair a complaint alleging harassment and discrimination by the Board, the Compensation Committee and Chairman Mark Schwarz. According to the company, the complaint relates to his compensation. Solano says he also filed a complaint with the Texas Workforce Commission's Civil Rights Division. The company says it has received no notice of that claim. The company has hired an outside law firm (Hagan Law Group) to investigate.
The filing gives the board's account in some detail. Solano's salary was raised to $370,000 in October 2025. On August 26, 2026, he asked for a much larger package rising to $2.3 million a year by fiscal 2029, plus a board seat. The chairman called that request a "non-starter." The complaint arrived four days later. The board says it will decide what action, if any, to take after the investigation. The company has not estimated any financial exposure. The practical risk is leadership instability at a very small company whose CEO has led it since late 2019.
Takeaway: Rave's growth is increasingly driven by supplier rebates tied to Pizza Inn buffet volume, not by royalties. Rebates added $788K of the $871K revenue increase, and a single supplier is 14% of revenue. Pizza Inn buffets are healthy (+2.4% comparable sales, net +1 unit). But a 12.7% jump in overhead kept operating margin flat, and a public dispute between the CEO and the board over pay is now the main uncertainty.
Outlook
Management gave no numerical guidance. Its only forward statements are about unit counts: Pizza Inn domestic and international units should "increase modestly," and Pie Five units should keep falling. Based on the filing:
What supports earnings: positive comparable sales and a net gain in buffets at Pizza Inn, rising supplier rebates, about $0.4M a year of interest on the $13.6M cash and T-bill balance, and roughly $12M of tax losses that keep cash taxes near zero.
What could hold growth back: total unit count fell by 13 (135 to 122) even as buffets grew. Pie Five and the international business are both shrinking, and G&A is growing faster than revenue. Because rebates now matter more than royalties, earnings are more exposed to supplier contract terms and to the 14% single-supplier concentration.
What to watch next: the Q1 fiscal 2027 10-Q (quarter ending late September 2026), for Pizza Inn comparable sales, whether buffet openings continue, whether G&A growth slows, and any developments in the CEO investigation or the Texas Workforce Commission claim.