Executive Summary
RAVE Restaurant Group delivered a solid Q1 2025, characterized by a modest revenue tailing versus the prior year while preserving a robust profitability and liquidity profile. Revenue of $3.05 million declined roughly 1.3% year-over-year and about 9.1% quarter-over-quarter, yet gross profit rose 7.2% year-over-year to $2.055 million, yielding a gross margin of approximately 67.4%. EBITDA stood at $0.753 million and operating income was $0.613 million, translating to an operating margin near 20.1%. Net income reached $0.526 million, net margin 17.2%, and EPS $0.036 (diluted $0.0355). This combination signals effective cost discipline and favorable product mix during the quarter.
Liquidity remains a notable strength. Cash and cash equivalents totaled about $1.383 million, with short-term investments of roughly $7.050 million, yielding total cash and investments of around $8.433 million and a current ratio of 5.13. The company reports a net cash position of about $0.535 million (net debt negative), underscoring a conservative balance sheet with ample liquidity to support near-term franchise initiatives and nontraditional channel growth. Free cash flow for the quarter was $0.52 million, reinforcing the ability to fund select growth opportunities from internal resources. Cash outflows were driven by investing activities (net investing cash use of about $2.023 million), including a reallocation into marketable securities alongside maturities/sales, while operating cash flow contributed $0.52 million.
From a growth and competitive perspective, RAVE’s leverage remains modest and the margin profile appears stable, though revenue scale continues to be limited relative to larger peers. Management commentary is not captured in the provided transcript data, limiting the ability to extract direct guidance or color on unit economics, franchise pipeline, or strategy for Pizza Inn and Pie Five franchises. Absent explicit forward guidance, the trajectory will hinge on franchise development, same-store performance, and the company’s ability to optimize nontraditional channel sales. Overall, the QQ1 2025 results reinforce a cautious but constructive investment stance, with upside potential tied to disciplined cost control, franchise expansion, and monetization of nontraditional channels.
Key Performance Indicators
QoQ: -40.23% | YoY:36.27%
QoQ: -40.82% | YoY:32.23%
Key Insights
Revenue: $3,050,000; YoY change: -1.26%; QoQ change: -9.09%
Gross Profit: $2,055,000; Gross Margin: 67.38%; YoY Gross Profit Change: +7.20%; QoQ: -18.68%
EBITDA: $753,000; EBITDA Margin (EBITDA / Revenue): 24.69%
Operating Income: $613,000; Operating Margin: 20.10%
Total Other Income/Expenses: $82,000; Income Before Tax: $695,000; Income Tax Expense: $169,000; Net Income: $526,000; Net Margin: 17.25%
EPS: $0.0361 (diluted $0.0355); Weighted Avg Shares: 14.587 million (basic), 14.798 million (dil...
Financial Highlights
Revenue: $3,050,000; YoY change: -1.26%; QoQ change: -9.09%
Gross Profit: $2,055,000; Gross Margin: 67.38%; YoY Gross Profit Change: +7.20%; QoQ: -18.68%
EBITDA: $753,000; EBITDA Margin (EBITDA / Revenue): 24.69%
Operating Income: $613,000; Operating Margin: 20.10%
Total Other Income/Expenses: $82,000; Income Before Tax: $695,000; Income Tax Expense: $169,000; Net Income: $526,000; Net Margin: 17.25%
EPS: $0.0361 (diluted $0.0355); Weighted Avg Shares: 14.587 million (basic), 14.798 million (diluted)
Cash Flow: Operating cash flow $520,000; Free cash flow $520,000; Net cash used in investing activities: -$2,023,000; Net change in cash: -$1,503,000; Cash at end of period: $1,383,000; Cash at beginning: $2,886,000
Balance Sheet Highlights: Total assets $16.285 million; Total liabilities $2.984 million; Total stockholders’ equity $13.301 million; Cash and short-term investments $8.433 million; Short-term debt $383,000; Long-term debt $465,000; Net debt: -$535,000 (net cash)
Liquidity/Leverage: Current ratio 5.13; Quick ratio 5.13; Debt-to-equity 0.0638; Debt to capitalization 0.0599; Enterprise value multiple 38.61 (per peer context); Price-to-book 2.23; Price-to-sales 9.71
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
3.05M |
-1.26% |
-9.09% |
| Gross Profit |
2.06M |
7.20% |
-18.68% |
| Operating Income |
613.00K |
N/A |
-45.27% |
| Net Income |
526.00K |
36.27% |
-40.23% |
| EPS |
0.04 |
32.23% |
-40.82% |
Key Financial Ratios
operatingProfitMargin
20.1%
operatingCashFlowPerShare
$0.04
freeCashFlowPerShare
$0.04
Management Commentary
transcriptHighlights: No earnings call transcript data provided in the input. As a result, there are no management quotes or thematic insights to quote or categorize by themes (strategy, operations, market conditions). If supplemental call transcripts become available, they should be incorporated here with thematic groupings (growth initiatives, margin discipline, franchise pipeline, supply chain, and channel strategies).
Forward Guidance
There is no explicit forward guidance in the QQ1 2025 results. Our assessment, given the financials, suggests a conservative near-term outlook with visibility tied to: 1) franchise expansion and unit economics (Pizza Inn and Pie Five), 2) performance of nontraditional Express channels, 3) cost control and procurement efficiency to sustain the high gross margin, and 4) capital allocation strategy (balanced approach between liquidity retention and strategic investments). Management would likely need to communicate: targeted unit growth cadence, expected royalties/fees trajectory, same-store sales performance, and any anticipated capital expenditures. If the franchise pipeline accelerates and same-store performance stabilizes, gross margins and cash flow generation could support modest revenue growth and improved profitability in the balance of 2025. Key factors to monitor: franchise pipeline, same-store sales by banner, royalties revenue mix, margin stability, and cash deployment into investments versus returns to equity holders.