EX-99.1 2 ex99_1.htm EXHIBIT 99.1
Exhibit 99.1

 RAVE Restaurant Group Inc.  (NASDAQ: RAVE)  Sally Wallick, CFA 404-806-1398  swallick@renmarkfinancial.com  Introduction  Dallas-based RAVE Restaurant Group is a holding company for the Pizza Inn, Pie Five and PIE brands. Pizza Inn is an internationalpizza chain that has been serving customers since 1958; Pie Five is a leader in the rapidly growing fast-casual pizza space; and PIE,RAVE’s newest brand, is a kiosk pizza concept geared towards non-traditional locations.  Highlights                        Large, Growing Market. RAVE’s market is large and growing. According to the 2019 Pizza Power Report1, 83% ofAmericans eat pizza at least once a month and the nearly $145-billion worldwide market for pizza is projected to grow morethan 10% annually over the next five years.  Decades of Experience. During its more than six decades in the pizza business, RAVE has proven adept at responding tochanges in consumer preferences and industry trends while maintaining its brands’ authenticity.  New Management Team. Since the beginning of 2017, RAVE’s management team has been strengthened by the naming ofexperienced restaurant industry executives to key leadership positions, beginning with Chief Executive Officer (CEO) ScottCrane, who previously served as President and CEO of the high-growth, fast-casual dining company Smashburger.  Strategic Initiatives Driving Positive Change. This new team implemented strategic initiatives that have expanded RAVE’spotential market, reinvigorated sales growth, reduced sales volatility, cut overhead, lowered capital requirements andstrengthened the balance sheet. Key initiatives include streamlining corporate operations, implementing restaurant-levelchanges to drive sales, introducing new restaurant formats, and strengthening the balance sheet.  Streamlining Corporate Operations. Among the steps taken to streamline corporate operations were discontinuing thedistribution division, closing underperforming restaurants, re-franchising owned restaurants, and upgrading technology. Theyresulted in a simpler business model with less volatility and greater predictability, reduced credit risk and lower costs.  Restaurant-Level Sales Drivers. At the restaurants, the rollout of revenue-enhancing products and services, such as onlineordering; customer loyalty programs; new menu items; and an enhanced store remodel program, are driving improvedperformance.  New Innovative Restaurant Formats. With the launch of a new Pizza Inn brand, PIE, for non-traditional locations and asmaller Pie Five format, RAVE franchisees now have options to serve the full range of market opportunities.  Strengthened Financial Position. RAVE’s financial position has strengthened significantly since Scott Crane became CEO asa result of actions taken to boost working capital, reduce ongoing capital requirements and raise equity, among them closingthe distribution division and issuing equity and convertible debt.  Positive Financial Trends. The initial success of the strategic initiatives is reflected in recent financial results: eightconsecutive quarters of domestic comparable-store sales growth at Pizza Inn, improvement in sales trends at Pie Five, andsharply positive year-over-year swings in Adjusted EBITDA2, net income and earnings per share in the first half of fiscal 2019.  Substantial Unit-Growth Potential. Improving restaurant performance and the rollout of new store formats have contributedto a notable increase in interest in new restaurant development from existing and new franchisees. As a result, managementtargets annual unit growth of 10% or better at both Pizza Inn and Pie Five over the next three years.  Substantial Insider Ownership. Directors and executive officers own approximately 48% of RAVE’s outstanding commonstock.  February 2019  Page 1 of 16 
 

 Company History  RAVE has offered consumers affordable, high quality pizza since 1958, when brothers Joe and R. L. Spillman opened the first Pizza Innrestaurant in Dallas, Texas. Pizza Inn awarded the first domestic franchise in 1963 and opened the first Pizza Inn buffet restaurant in 1969.The Company began franchising the Pizza Inn brand internationally in the late 1970s. In June 2011, RAVE opened the first Pie Fiverestaurant in Ft. Worth, Texas, and, in November 2012, signed its first franchise development agreement for Pie Five. In 2018, RAVElaunched the PIE kiosk and convenience store format to meet consumer demand for tasty, high-quality pizzas in a grab-and-go deliverymodel.  In 1993, Pizza Inn Holdings, Inc. began trading on the NASDAQ Stock Market under the ticker symbol "PZZI." In January 2015, theCompany became RAVE Restaurant Group, which reflected its transformation from a single-brand to a multi-brand restaurant company.RAVE Restaurant Group is traded on the NASDAQ Capital Market under the ticker symbol “RAVE”.  RAVE RESTAURANT CONCEPTS  RAVE operates, franchises and licenses under three distinct brands: Pizza Inn, the Company’s heritage buffet brand; Pie Five, its fast-casualbrand, and PIE, its non-traditional brand. As of December 23, 2018, there were 155 Pizza Inn units operating in the U.S. and 48 Pizza Innunits operating internationally, and there were 64 franchised domestic Pie Five restaurants and one Company-owned Pie Five restaurant  Table 1  RAVE Restaurant GroupUnit Count by BrandAs of December 23, 2018  PIZZA INN  DomesƟc Units  Buffet Units - Franchised  89  Delco/Express Units - Franchised  59  PIE Units - Licensed  7  Total DomesƟc Units  155  InternaƟonal  48  Total Pizza Inn Units  203  PIE FIVE  DomesƟc Units  DomesƟc Units - Franchised  64  DomesƟc Units - Company-Owned  1  Total DomesƟc Units  65  Grand Total Worldwide  268  February 2019  Page 2 of 16 
 

 Pizza Inn  RAVE franchises Buffet, Delco and Express units and licenses PIE kiosks under the Pizza Inn brand.  Pizza Inn buffet restaurants offer dine-in, carryout and catering services and, in many cases, also offer delivery service. Nearly allof the restaurants have all-day buffets. Buffet menus include a variety of pizza crusts with standard toppings and special combina-tions of toppings in addition to pasta, salad, sandwiches, appetizers, desserts and beverages (including beer and wine in some loca-tions). They have an informal, family-oriented atmosphere and are generally located in free standing buildings or strip centers nearoffices, shopping centers and residential areas. The buffet is typically offered at prices from $6.99 to $9.99 with evening and week-end prices higher than at other times.  Delco Units offer delivery and carryout service and drive-throughs in some cases and are typically located in shopping centers.RAVE discontinued offering new Delco unit franchises domestically during fiscal 2014. Delco Units typically offer a variety ofcrusts and some combination of side items. Delco Units occupy approximately 1,200 square feet, are primarily production facilitiesand, in most instances, do not offer seating.  Express units serve customers through a variety of non-traditional points of sale, such as convenience stores, food courts, collegecampuses, airport terminals, travel plazas, athletic facilities or other commercial venues. They have limited or no seating, onlyoffer quick carryout service and have a limited menu. An Express unit commonly is operated by the operator or food service licen-see of the commercial host facility.  The first PIE unit opened in fiscal 2018, making this Pizza Inn’s newest brand. PIE is a licensed pizza-only kiosk model gearedtowards convenience stores, airports, entertainment venues and other non-traditional locations. They allow customers to order andpay at a kiosk for grab-and-go or to pick up their food at a designated spot and can be located in sites as small as 52 feet.  Delco, Express and PIE units are primarily production-oriented facilities and, therefore, do not require as much equipment, labor orsquare footage as the Buffet unit.  Table 2  PIZZA INN BRANDS  Buffet  Delco  Express  P.I.E.  shopping centers or other  non-tradiƟonal,  free-standing building or  in-line retail  convenience stores,  kiosk for non-tradiƟonal  LocaƟon  strip center  developments  shopping centers  locaƟons  Full, beer and wine at some  Menu  locaƟons  Limited  Limited  Limited  Services  dine-in, carryout, catering  delivery, carryout  carryout  carryout  Delivery  some restaurants  yes  no  no  SeaƟng  150 minimum  none  limited or none  none  Contract  franchise  franchise  franchise  license  Sq. Footage  3,000-5,000  1,200  200-400  52-400  FY18 Retail Sales (mil).  $80.1  $1.8  $4.9  NA  FY18 Avg. Ticket/Person  $10.50  NA  NA  NA  February 2019  Page 3 of 16 
 

 Pizza Inn (Cont.)  Domestic Pizza Inn restaurants and kiosks are located predominantly in the southern half of the United States, with Texas, Arkansas,North Carolina, South Carolina and Mississippi currently accounting for nearly 75%, of the total number of domestic units.  Table 3  Pizza Inn  Restaurant Count by State As of 12/23/18  Texas  39  Arkansas  27  North Carolina  27  South Carolina  12  Mississippi  12  Tennessee  8  Oklahoma  6  Missouri  6  Georgia  4  Virginia  4  New Mexico  3  Alabama  3  Kentucky  2  Florida  1  Louisiana  1  Total  155  Pizza Inn franchised restaurants have operated in international markets since the late 1970s. As of December 23, 2018, there were 48Pizza Inn restaurants operating internationally. With the exception of three restaurants in Honduras, all of these restaurants are in theUnited Arab Emirates, Saudi Arabia and adjoining countries.  February 2019  Page 4 of 16 
 

 Pie Five  Pie Five is a fast-casual pizza concept offering individualized pizzas that are baked in 140 seconds in a specially designed oven.Customers customize their pizzas by choosing from a variety of freshly prepared and displayed toppings, cheeses, sauces and doughsand complete the purchase process in less than five minutes. In addition to pizza, Pie Five menus include freshly prepared side salads,desserts and beverages (including beer and wine in some locations). The majority of Pie Five restaurants also sell calzones and largeformat pizzas. Item prices typically range from $5.99 to $12.99, and the average ticket price per meal, including a drink, wasapproximately $9.50 per person for fiscal year 2018.  During fiscal 2018, a new Pie Five prototype with only 1,400 square feet and seating for 20 to 25 customers was developed tominimize retail space needs and to offer franchisees a more cost-efficient option.  Pie Five restaurants typically are located 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 also offered, as are drive-throughs, in some locations.  Table 4  PIE FIVE FORMATS  Original  New Prototype  retail strip, mulƟ-unit retail,  LocaƟon  retail strip or mulƟ-unit retail  non-tradiƟonal  pizza, salads, calzones,  pizza, salads, calzones,  desserts, beverages,  desserts, beverages,  including beer and wine in  including beer and wine in  Menu  some locaƟons  some locaƟons  dine-in, carryout, delivery  Services  dine-in, carryout, delivery  Drive-thrus  Delivery  yes  yes  SeaƟng  65-85  20-25  Contract  franchise  franchise  Sq. Footage  1,800-2,400  1,400  FY18 Revenue - in mil.  $25.60  NA  FY18 Avg. Ticket/Person  $9.50  NA  February 2019  Page 5 of 16 
 

 Pie Five (Cont.)  Pie Five restaurants are less concentrated geographically than Pizza Inn restaurants, as shown in Table 5.  Table 5  Pie Five  Restaurant Count by State As of 12/23/18  Texas  14  Kansas  9  Tennessee  8  Maryland  7  Oklahoma  5  Missouri  5  Florida  2  Arkansas  2  Georgia  2  Kentucky  2  California  1  Iowa  1  Mississippi  1  Alabama  1  Illinois  1  Virginia  1  Delaware  1  Rhode Island  1  North Carolina  1  Total  65  February 2019  Page 6 of 16 
 

 COMPANY HIGHLIGHTS  MARKET AND MARKET POSITIONING  RAVE participates in a worldwide market that is large and growing. According to the 2019 Pizza Power Report1, the worldwidemarket for pizza totaled nearly $145 billion in 2018 and is projected to grow 10.7% annually over the next five years, while the U.S.market for pizza was approximately $46 billion and has a projected five-year growth rate of 10.2% annually. Internationally, thefastest growing pizza markets over the next five years are expected to be Latin America (19% projected growth rate) and China andAsia Pacific (with projected growth rates of approximately 22% and 23%, respectively). In the U.S., pizza remains as popular asever, with 83% of U.S. consumers saying that they eat pizza at least once a month  More than 60 years of experience in the pizza business positions RAVE to take advantage of the industry’s strong growthprospects. Throughout its history, the Company has proven adept at responding to changes in consumer preferences and industrytrends while maintaining its brands’ authenticity. That remains true today.  The 2019 Pizza Power Report1 report identified freshness and quality ingredients, technology and fast-casual concepts as key pizzaindustry trends in 2019. RAVE has strategies in place to address all three.  With regard to freshness and quality, both Pizza Inn and Pie Five offer consumers customized pizzas with freshly preparedingredients, Pie Five has also introduced innovative choices such as cauliflower crust, vegan cheese, and gluten-free crust that appealto health-conscious consumers.  On the technology front, the introduction of online ordering and new point-of-sale systems in Pizza Inn and Pie Five restaurants haveenhanced the customer experience while improving store productivity.  RAVE’s Pie Five brand not only is in the trending fast-casual space, but is known for its ahead-of-the curve technology—itspropriety pizza-oven technology can bake a complete pizza in just over two minutes and can produce up to 500 pizzas per hour.Also, Pie Five’s new prototype, with its emphasis on speed and simplicity, enhances its position in the growing fast-casual sector.  February 2019  Page 7 of 16 
 

 NEW MANAGEMENT TEAM, NEW GROWTH STRATEGIES  Since the beginning of 2017, RAVE’s management team has been strengthened with the naming of experienced restaurantindustry executives to leadership positions.  On January 9, 2017, Scott Crane was named RAVE’s CEO. Prior to joining RAVE, Mr. Crane was President and CEO of the high-growth fast-casual dining company Smashburger. Under his leadership, Smashburger grew from a two-unit start up concept in 2007to a global company with annual sales in excess of $350 million and more than 330 corporate and franchise locations in 35 states andseven countries. Previously, Mr. Crane was at Fugate Enterprises, Inc., one of the largest Pizza Hut franchisees in the U.S., where heoversaw the operation of 210 Pizza Hut units, in addition to Taco Bell, Wing Street, Sonic and Blockbuster Video locations.  On September 18, 2018, Bob Bafundo was named President of RAVE. In this position, he oversees day-to-day operations for allRAVE brands. Mr. Bafundo joined RAVE in 2016 as president of Pizza Inn, where he developed and implemented successful initia-tives leading to eight consecutive quarters of positive domestic same-store sales and a resurgence in restaurant growth. He also spear-headed the introduction of a new non-traditional Pizza Inn brand, PIE, as a complement to its other pizza restaurant concepts.  On September 18, 2018, Andrea Allen was named Chief Accounting and Administrative Officer. In this role, she oversees all ac-counting, finance and administrative needs for the company. She joined RAVE in 2017 as Vice President of Accounting/Controllerand has been instrumental in streamlining accounting processes through new technology initiatives and collaborating with Companyleaders on financial planning and reporting. Prior to joining RAVE, she served as Vice President of Procurement and InformationSystems and Controller at Bar Louie, BL Restaurant Operations, and was a financial consultant for TGI Fridays.  After becoming RAVE’s CEO, Scott Crane introduced a number of strategies that have expanded the Company’s potentialmarket; reinvigorated sales growth; strengthened the balance sheet; and reduced sales volatility, overhead, and capital re-quirements. These strategic initiatives, which are discussed in more detail below, included:   Streamlining corporate operations,   Implementing restaurant-level initiatives aimed at enhancing the customer experience, boosting traffic, and improv- ing sales and operating performance,   Introducing innovative pizza restaurant formats to expand RAVE’s potential markets, including a new brand, PIE, and new Pie Five format, as well as reinvigorating RAVE’s heritage Pizza Inn brand with a new prototype, and   Strengthening RAVE’s financial position by building cash and working capital balances, reducing debt, increasing shareholders’ equity, and lowering ongoing capital requirements.  Streamlining Corporate Operations  In the past two years, RAVE has streamlined corporate operations, resulting in a simpler business model with less volatilityand greater predictability, reduced credit risk and lowered costs. Key aspects of this strategic shift include discontinuingNorco, RAVE’s distribution division; eliminating underperforming units; refranchising owned Pie Five restaurants; and in-troducing efficiency-enhancing technology upgrades.  Discontinuing Distribution Services  During the second quarter of fiscal 2018, RAVE discontinued its Norco distribution division, which provided product sourcing, pur-chasing, and other services to the Pizza Inn and Pie Five restaurant systems, and revised its arrangements with third party suppliersand distributors of food, equipment and supplies. Following the shutdown, franchisees and licensees began purchasing food and sup-plies directly from authorized, reputable and experienced supply and distribution companies. Closing the distribution division elimi-nated the credit risk, overhead expense, and delivery responsibilities of directly supplying franchised restaurants and PIE kiosks.  Pizza Inn and Pie Five purchases of food, equipment and supplies made from Norco were recognized as revenue and their cost wasincluded in cost of sales. As a result, after Norco was discontinued, revenue and cost of goods dropped sharply. However, since thesewere low-margined items, there was little effect on RAVE’s bottom line.  Eliminating Underperforming Stores/Refranchising of Owned Stores  During fiscal 2017 and 2018, RAVE took significant steps to rationalize its store base by closing underperforming units and transfer-ring all but one Pie Five owned restaurant to the franchise model. As show in Table 6, RAVE’s total restaurant count declined by 42units or 14% from the end of fiscal 2016 to the end of the first half of fiscal 2019. At the same time the number of domestic ownedrestaurants fell by 31 units, while the number of domestic franchised units increased by one.  February 2019  Page 8 of 16 
 

 Table 6  RAVE Restaurant GroupUnit Count Changes  Total  12 Month Ended  6 Mo. Ended Period  6/26/16  6/25/17  6/24/18  12/23/18  Change  Companywide Unit Totals  Total DomesƟc Owned Units  32  13  1  1  -97%  Total DomesƟc Franchised Units  218  232  225  219  0%  Total DomesƟc Units  250  245  226  220  -12%  Total InternaƟonal Units  60  60  58  48  -20%  Total Companywide Units  310  305  284  268  -14%  Unit Change from Prior Period Shown  Total DomesƟc Owned Units  -19  -12  0  -31  Total DomesƟc Franchised Units  14  -7  -6  1  Total DomesƟc Units  -5  -19  -6  -30  Total InternaƟonal Units  0  -2  -10  -12  Total Companywide Units  -5  -21  -16  -42  Closing underperforming units eliminated their drag on sales, costs, capital and management time, while the re-franchising strategysimplified RAVE’s business model, reduced the volatility of RAVE’s future financial performance (since franchise revenue largelyconsists of recurring royalty and fee income) and eliminated the $400,000-$500,000 investment required for an owned store. In addi-tion, re-franchising opened up opportunities in six major cities, Dallas, Houston, Chicago, Phoenix, Atlanta and Minneapolis, thatwere previously held for corporate growth. Pie Five continues to own and operate one restaurant in Plano, Texas near RAVE’s head-quarters. It is used, in part, as a concept development restaurant.  Introducing Efficiency-Enhancing Technology Upgrades  At the corporate level, RAVE has upgraded technology, resulting in increased productivity, reduced costs and more useful infor-mation for oversight and planning.  Introducing Revenue-Enhancing Restaurant-Level Initiatives  At the restaurant level, RAVE has introduced technologies, products, services and facility upgrades aimed at enhancing thecustomer experience, boosting traffic, and improving sales and operating performance. These include online ordering; cus-tomer loyalty programs; new menu items; and an upgraded store remodel program.  In the past two years, online ordering has been rolled out to all Pizza Inn and Pie Five restaurants, making it easier for customers topurchase their favorite pizzas and, as a result, driving incremental sales.  Likewise, the introduction of customer loyalty programs at both Pizza Inn and Pie Five has given customers a reason to visit moreoften, whether in-store or online.  New product introductions also have been restaurant revenue boosters. They are part of an ongoing effort to keep the menu fresh andreflective of changing consumer tastes, as well as management’s proactive response to customer feedback. For example, Pie Five’sintroduction of a new 14" shareable pizza in 2018 was the result of customer requests, during RAVE’s annual consumer survey, and itbetter positions the brand to take advantage of consumer occasions for families and larger groups.  The development of a store-remodel support system is helping to drive a pickup in store remodels. This system makes upgradingeasier for franchisees by providing a store remodel package with approved choices of color schemes and other design elements. Aremodel typically results in a lift in restaurant sales.  February 2019  Page 9 of 16 
 

 Introducing Innovative Restaurant Formats  In recent years, RAVE has expanded its portfolio of pizza restaurant formats to include a new Pizza Inn brand, PIE, and anew Pie Five format.  The introduction of a new non-traditional brand, PIE, which is a complement to the brand refresh and expansion initiatives at PizzaInn, represents an incremental growth opportunity for Pizza Inn, by diversifying its footprint and expanding its customer reach to in-clude convenience stores, malls, travel centers, airports and other retail outlets. Convenience stores alone are a $575 billion industrywith 70% of sales attributed to in-store purchases. PIE units can range from 52 to 400 square feet and are highly adaptable, whichallows for creative deployment to sites that can’t accommodate a larger unit. Strong interest from large multi-unit retailers domesti-cally and internationally enhance PIE’s growth prospects. As of December 23, 2018, there were seven PIE units in operation.  Pie Five’s new prototype features a smaller footprint and reimagined interior package, logo and menu. With labor and real estate costconcerns top of mind for restaurant operators, this “Goldilocks” format offers franchisees an affordable business model with lowerstartup costs and competitive returns. The focus in these stores is on speed and simplicity, with an emphasis on off-premise sales,carryout, online ordering and third-party delivery. The new format complements the larger Pie Five unit and greatly expands the po-tential market for new Pie Five units.  With the addition of PIE and the new Pie Five format, RAVE now has a full range of pizza-based formats from the smallest,kiosks, to the largest, full-sized restaurants, that can serve nearly any market from traditional stand-alone or retail development sites tonon-traditional locations, such as convenience stores, airports, travel centers, malls and other retail outlets. As a result, the Compa-ny’s potential to expand in existing and new markets is greater than ever.  Strengthening RAVE’s Financial Position  As shown in Table 7, RAVE’s financial position strengthened significantly from the end of the second quarter of fiscal 2017,the quarter prior to Scott Crane being named CEO, to the end of the second quarter of fiscal 2019. During this period, cashincreased more than $800,000, working capital turned positive, shareholders’ equity increased more than $4 million and accountsreceivable and accounts payable both experienced sharp declines.  Table 7  RAVE Restaurant Group  Balance Sheet Highlights (in thousands)  As of  12/25/2016  12/23/2018  Change  Cash  $  1,098  $  1,906  $  808  Accounts receivable  $  2,430  $  1,520  $  (910)  Accounts payable  $  4,495  $  773  $  (3,722)  Working capital  $  (2,215)  $  3,173  $  5,388  Total assets  $  11,029  $  11,450  $  421  Debt:  Short-term debt  $  1,000  $  -  $  (1,000)  Convertible notes  $  -  $  1,574  $  1,574  Total debt  $  1,000  $  1,574  $  574  Shareholders' equity  $  878  $  5,331  $  4,453  February 2019  Page 10 of 16 
 

 Strengthening RAVE’s Financial Position (Cont.)  This improvement resulted from a number of steps taken by the Company to boost working capital, reduce ongoing capital requirements,and raise equity, including:   Elimination of the Norco distribution division, which resulted in sharply lower accounts receivable and accounts payable bal-  ances and contributed to a positive swing in working capital.   Completion of two significant financings, including shareholder rights offerings of convertible notes and of common stock, as  detailed in Table 8. On March 3, 2017, the Company announced the successful completion of a shareholder rights offering ofconvertible senior notes resulting in gross offering proceeds of $3.0 million, and on September 13, 2017, the Company com-pleted a shareholder rights offering of common stock resulting in gross offering proceeds of $5.0 million.   Implementation of an At Market Issuance Sales Agreement (ATM) with B. Riley FBR, Inc. Under the terms of the agreement,  RAVE may offer and sell shares of its common stock with an aggregate offering price of up to $5 million from time to time.Through December 23, 2018, the Company had sold an aggregate of 173,852 shares in the 2017 ATM Offering, realizing ag-gregate gross proceeds of $0.3 million.  Table 8  RAVE Restaurant Group Financings  CompleƟon Date  March 3, 2017  Type of Offering  Registered shareholder rights offering  Financial Instrument Offered  ConverƟble senior notes  Par Value Per Note  $100  Offered to:  ExisƟng shareholders  Purchase Offer Terms:  Right to purchase one $100 converƟble note per 355 shares of common stock held  Gross Proceeds  $3.0 million  Maturity  February 15, 2022  Annual Interest Rate  4%  Conversion Rate  $2.00 per share*  Use of Proceeds  Repay short-term debt, general working capital purposes, restaurant development acƟviƟes  *Each $100 note converts to 50 shares  CompleƟon Date  September 13, 2017  Type of Offering  Registered shareholder rights offering  Financial Instrument Offered  Common stock  Gross Proceeds  $5.0 million  Number of Shares Issued  3,571,429  Price per Share  $1.40  Offered to:  ExisƟng shareholders at rate of one right per share of common stock owned on 8/1/17  Exercise Value of Each Right  0.3351393 shares of common stock at $1.40 per share  Use of Proceeds  Repay short-term debt, general working capital purposes, restaurant development acƟviƟes  February 2019  Page 11 of 16 
 

 RECENT RESULTS SHOW STRATEGIC SHIFT IS PAYING OFF  The initial success of the strategic initiatives implemented by RAVE’s management team are apparent in recent financial results,including improving trends in net income, earnings per share and Adjusted EBITDA2 in the first half of fiscal 2019.  Table 9  RAVE Restaurant Group  Summary Fiscal Year-To-Date Income Statement  (figures in thousands, except per share data)  Six Months Ended  12/24/17  12/23/18  Year-over-Year Change  Sales, net  $  9,629  $  6,186  -35.8%  $  (3,443)  Operating expenses  $  10,171  $  5,667  -44.3%  $  (4,504)  Pretax income (loss) -continuing operations  $  (542)  $  519  NM  $  1,061  Net income (loss) - continuing operations  $  (528)  $  340  NM  $  868  Net income (loss)  $  (933)  $  340  NM  $  1,273  Diluted income (loss) per share:  Income (loss) from continuing operations  $  (0.04)  $  0.02  NM  $  0.06  Net income (loss)  $  (0.07)  $  0.02  NM  $  0.09  Wtd. Avg. diluted common shares outstanding  12,742  15,901  24.8%  3,159  Adjusted EBITDA2  $  505  $  1,013  100.1%  $  508  Percent of sales, net:  Operating expenses  105.6%  91.6%  Pretax income (loss) -continuing operations  -5.6%  8.4%  Net income (loss) - continuing operations  -5.5%  5.5%  Net income (loss)  -9.7%  5.5%  Adjusted EBITDA2  5.2%  16.4%  Highlights of RAVE’s second quarter and first half performance include:  Consistent Sales Growth at Pizza Inn. In the second quarter of fiscal 2019, Pizza Inn reported its eighth consecutive quarter of positiveyear-over-year domestic comparable-store sales growth. A number of innovations contributed to this record of consistent growth, includ-ing online ordering, a new point-of-sale system, offsite catering, and a new customer rewards program. Remodels also have boostedsales in some existing markets. Another positive result of this resurgence in the brand has been a pickup in new development.  February 2019  Page 12 of 16 
 

 Improvement in Sales Trends at Pie Five. Pie Five, while reporting a 3.6% comparable-store sales decline year over year in the secondquarter, nevertheless, achieved significant improvement in year-over-year comparable-store sales comparisons since the quarter endedSeptember 24, 2017. As at Pizza Inn, there are multiple contributors to this improving trend, including new products (low-carb cauli-flower crusts, 14" large shareable pizzas, wings and sandwich melts), new delivery and online ordering capabilities, and Pie Five's popu-lar Circle of Crust loyalty program.  February 2019  Page 13 of 16 
 

 A year-over-year positive swing of $1,061,000 in pretax profit from continuing operations in the first half of fiscal 2019. Whilesales declined year over year in the first half as a result of restaurant closings and the elimination of distribution sales, sharply lower op-erating expenses more than offset this drop.  Net income of $340,000 or $0.02 per share in the first half of fiscal 2019, compared with a net loss of $933,000 or $0.07 per share inthe prior-year period.  Adjusted EBITDA2 of $1,013,000 in the first half of fiscal 2019, reflecting a positive swing $508,000 from Adjusted EBITDA2 of$505,000 in the prior-year first half.  UNIT GROWTH REACCELERATING  Store closings in recent years, while resulting in more financially sound restaurants overall, also resulted in a decline in the store count.  Given the favorable sales trends at both Pizza Inn and Pie Five in recent periods and a strengthening of the Company’s sales team, RAVEhas seen a notable increase in new restaurant development from both existing franchisees and new franchisees.  At Pizza Inn, RAVE is seeing new franchisees enter the system for the first time in many years. As a result, the Company intends toexpand the Pizza Inn system domestically and internationally by opening new restaurants with new and existing franchisees in marketswith significant long-term growth potential. The Company also plans to seek new domestic licensees for PIE kiosks and to evaluate thecontinued development of new Pizza Inn buffet and Delco units in international markets, particularly in the Middle East. Domestically,Pizza Inn’s “County Seat” initiative is focusing on opportunities in municipalities with populations of 30,000 to 100,000.  At Pie Five, RAVE intends to continue developing franchised Pie Five units domestically and to take the Pie Five brand into internation-al markets for the first time, starting with Pakistan and Panama. Pie Five’s development focus is on the new more flexible “Goldilocks”model and on opportunities with experienced multi-restaurant operators to cluster units in a market and accelerate growth.  Based on current growth opportunities, management targets annual unit growth of 10% or better at both Pizza Inn and Pie Five over thenext three years. PIE, RAVE’s newest concept, could grow even faster, given its relatively low investment, non-traditional market focus,and potential to attract large, multi-unit licensees.  Share Ownership  As of October 17, 2018, directors and executive officers owned approximately 48% of RAVE’s outstanding common stock.  February 2019  Page 14 of 16 
 

 Additional Information  12019 Pizza Power Report: A State-of-the-Industry Analysis (December 2018)2Non-GAAP Financial Measures  The Company's financial statements are prepared in accordance with United States generally accepted accounting princi-ples ("GAAP"). However, the Company also presents and discusses certain non-GAAP financial measures that it believesare useful to investors as measures of operating performance. Management may also use such non-GAAP financialmeasures in evaluating the effectiveness of business strategies and for planning and budgeting purposes. However, thesenon-GAAP financial measures should not be viewed as an alternative or substitute for its financial statements prepared inaccordance with generally accepted accounting principles.  The Company considers EBITDA and Adjusted EBITDA to be important supplemental measures of operating performancethat are commonly used by securities analysts, investors and other parties interested in our industry. The Company believesthat EBITDA is helpful to investors in evaluating its results of operations without the impact of expenses affected by fi-nancing methods, accounting methods and the tax environment. The Company believes that Adjusted EBITDA providesadditional useful information to investors by excluding non-operational or non-recurring expenses to provide a measure ofoperating performance that is more comparable from period to period. Management also uses these non-GAAP financialmeasures for evaluating operating performance, assessing the effectiveness of business strategies, projecting future capitalneeds, budgeting and other planning purposes.  "EBITDA" represents earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA represents earningsbefore interest, taxes, depreciation and amortization, stock compensation expense, pre-opening expense, gain/loss sale ofassets, costs related to impairment, discontinued operations and closed and non-operating store costs. A reconciliation ofthese non-GAAP financial measures to net income is included with the accompanying financial statements.  Table 10  RAVE Restaurant Group  Adjusted EBITDA Reconciliation (in thousands)  Six Months Ended  12/24/17  12/23/18  Net income (loss)  $  (933)  $  340  Interest expense  $  131  $  51  Income taxes  $  (14)  $  179  Depreciation & amortization expense  $  600  $  265  EBITDA  $  (216)  $  835  Stock compensation expense  $  19  $  281  Pre-opening costs  $  114  $  -  (Gain) loss on sale/disposal of assets  $  (165)  $  (354)  Impairment of long-lived assets & other lease charges  $  681  $  170  Discontinued operations, excluding taxes  $  408  $  -  Closed & non-operating store costs  $  (336)  $  81  Adjusted EBITDA  $  505  $  1,013  February 2019  Page 15 of 16 
 

 Note Regarding Forward-Looking Statements  RAVE RESTAURANT GROUP INC.  3551 Plano ParkwayThe Colony, TX 75056  Phone: 469-384-5000 www.raverg.com  February 2019  Certain statements in this report, other than historical information, may be considered for-ward-looking statements within the meaning of the Private Securities Litigation ReformAct of 1995, and are intended to be covered by the safe harbors created thereby. These for-ward-looking statements are based on current expectations that involve numerous risks,uncertainties and assumptions. Assumptions relating to these forward-looking statementsinvolve judgments with respect to, among other things, future economic, competitive andmarket conditions, regulatory framework and future business decisions, all of which aredifficult or impossible to predict accurately and many of which are beyond the control ofRAVE Restaurant Group, Inc. Although the assumptions underlying these forward-lookingstatements 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 beaccurate. In light of the significant uncertainties inherent in these forward-looking state-ments, the inclusion of such information should not be regarded as a representation that theobjectives and plans of RAVE Restaurant Group, Inc. will be achieved.  Page 16 of 16