RAVE Restaurant (RAVE) 10-Q 2 Nov 23 2024 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Sep. 24, 2023	Oct. 30, 2023
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Period End Date	Sep. 24, 2023
Current Fiscal Year End Date	--06-30
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q1
Document Transition Report	false
Entity File Number	0-12919
Entity Registrant Name	RAVE RESTAURANT GROUP, INC.
Entity Central Index Key	0000718332
Entity Incorporation, State or Country Code	MO
Entity Tax Identification Number	45-3189287
Entity Address, Address Line One	3551 Plano Parkway
Entity Address, City or Town	The Colony
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	75056
City Area Code	469
Local Phone Number	384-5000
Title of 12(b) Security	Common Stock, $0.01 par value
Trading Symbol	RAVE
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		14,586,566

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Sep. 24, 2023	Sep. 25, 2022
CONDENSED CONSOLIDATED STATEMENTS OF INCOME [Abstract]
REVENUES	$ 3,089	$ 3,005
COSTS AND EXPENSES:
General and administrative expenses	1,319	1,343
Franchise expenses	1,172	1,202
Impairment of long-lived assets and other lease charges	0	5
Bad debt expense	25	4
Interest expense	0	1
Depreciation and amortization expense	55	51
Total costs and expenses	2,571	2,606
INCOME BEFORE TAXES	518	399
Income tax expense	(132)	(92)
NET INCOME	$ 386	$ 307
INCOME PER SHARE OF COMMON STOCK - BASIC: (in dollars per share)	$ 0.03	$ 0.02
INCOME PER SHARE OF COMMON STOCK - DILUTED: (in dollars per share)	$ 0.03	$ 0.02
Weighted average common shares outstanding - basic (in shares)	14,154	16,632
Weighted average common shares outstanding - diluted (in shares)	14,762	16,632

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 24, 2023	Jun. 25, 2023
CURRENT ASSETS
Cash and cash equivalents	$ 5,944	$ 5,328
Accounts receivable, less allowance for bad debts of $12 and $58, respectively	1,072	1,145
Notes receivable, current	122	105
Assets held for sale	34	19
Deferred contract charges, current	31	33
Prepaid expenses and other current assets	388	204
Total current assets	7,591	6,834
LONG-TERM ASSETS
Property and equipment, net	231	258
Operating lease right of use assets, net	1,115	1,227
Intangible assets definite-lived, net	312	328
Notes receivable, net of current portion	44	28
Deferred tax asset, net	5,234	5,342
Deferred contract charges, net of current portion	202	220
Total assets	14,729	14,237
CURRENT LIABILITIES
Accounts payable - trade	583	502
Accrued expenses	1,172	891
Operating lease liabilities, current	446	463
Deferred revenues, current	222	342
Total current liabilities	2,423	2,198
LONG-TERM LIABILITIES
Operating lease liabilities, net of current portion	848	958
Deferred revenues, net of current portion	602	690
Total liabilities	3,873	3,846
COMMITMENTS AND CONTINGENCIES (SEE NOTE C)
SHAREHOLDERS' EQUITY
Common stock, $0.01 par value; authorized 26,000,000 shares; issued 25,090,058 and 25,090,058 shares, respectively; outstanding 14,154,453 and 14,154,453 shares, respectively	251	251
Additional paid-in capital	37,808	37,729
Retained earnings	2,825	2,439
Treasury stock, at cost Shares in treasury: 10,935,605 and 10,935,605 respectively	(30,028)	(30,028)
Total shareholders' equity	10,856	10,391
Total liabilities and shareholders' equity	$ 14,729	$ 14,237

CONDENSED CONSOLIDATED BALANC_2

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Sep. 24, 2023	Jun. 25, 2023
CURRENT ASSETS
Accounts receivable, allowance for bad debts	$ 12	$ 58
SHAREHOLDERS' EQUITY
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	26,000,000	26,000,000
Common stock, shares issued (in shares)	25,090,058	25,090,058
Common stock, shares outstanding (in shares)	14,154,453	14,154,453
Treasury stock at cost (in shares)	10,935,605	10,935,605

CONDENSED CONSOLIDATED STATEM_2

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Treasury Stock [Member]	Total
Beginning balance at Jun. 26, 2022	$ 251	$ 37,384	$ 826	$ (25,049)	$ 13,412
Beginning balance (in shares) at Jun. 26, 2022	25,090,000
Treasury stock (in shares) at Jun. 26, 2022				(7,579,000)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation expense	$ 0	86	0	$ 0	86
Purchase of treasury stock	$ 0	0	0	$ (1,384)	(1,384)
Purchase of treasury stock (in shares)	0			(1,111,000)
Net income	$ 0	0	307	$ 0	307
Ending balance at Sep. 25, 2022	$ 251	37,470	1,133	$ (26,433)	12,421
Ending balance (in shares) at Sep. 25, 2022	25,090,000
Treasury stock (in shares) at Sep. 25, 2022				(8,690,000)
Beginning balance at Jun. 25, 2023	$ 251	37,729	2,439	$ (30,028)	$ 10,391
Beginning balance (in shares) at Jun. 25, 2023	25,090,000				25,090,058
Treasury stock (in shares) at Jun. 25, 2023				(10,936,000)	(10,935,605)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation expense	$ 0	79	0	$ 0	$ 79
Net income	0	0	386	0	386
Ending balance at Sep. 24, 2023	$ 251	$ 37,808	$ 2,825	$ (30,028)	$ 10,856
Ending balance (in shares) at Sep. 24, 2023	25,090,000				25,090,058
Treasury stock (in shares) at Sep. 24, 2023				(10,936,000)	(10,935,605)

CONDENSED CONSOLIDATED STATEM_3

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Sep. 24, 2023	Sep. 25, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 386	$ 307
Adjustments to reconcile net income to cash provided by operating activities:
Impairment of long-lived assets and other lease charges	0	5
Stock-based compensation expense	79	86
Depreciation and amortization	34	35
Amortization of operating right of use assets	112	108
Amortization of intangible assets definite-lived	21	16
Allowance for bad debts	25	4
Deferred income tax	108	0
Changes in operating assets and liabilities:
Accounts receivable	48	491
Notes receivable	(48)	5
Deferred contract charges	20	9
Prepaid expenses and other assets	(184)	38
Accounts payable - trade	81	20
Accrued expenses	281	284
Operating lease liabilities	(127)	(120)
Deferred revenues	(208)	(153)
Cash provided by operating activities	628	1,135
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments received on notes receivable	15	30
Purchase of intangible assets definite-lived	(5)	(39)
Purchase of property and equipment	(22)	(14)
Cash used in investing activities	(12)	(23)
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock	0	(1,384)
Payments on short term loan	0	(30)
Cash used in financing activities	0	(1,414)
Net increase/(decrease) in cash and cash equivalents	616	(302)
Cash and cash equivalents, beginning of period	5,328	7,723
Cash and cash equivalents, end of period	5,944	7,421
CASH (REFUNDED)/PAID FOR:
Income taxes	$ (5)	$ 9

Summary of Significant Accounti

Summary of Significant Accounting Policies	3 Months Ended
	Sep. 24, 2023
Summary of Significant Accounting Policies [Abstract]
Summary of Significant Accounting Policies	Note A - Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements include the accounts of Rave Restaurant Group, Inc. and its subsidiaries, all of which are wholly owned. All appropriate inter-company balances and transactions have been eliminated. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Fiscal Quarters The three month periods ended September 24, 2023 and September 25, 2022 each contained 13 weeks. Use of Management Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company’s management to make estimates and assumptions that affect its reported amounts of assets, liabilities, revenues, expenses and related disclosure of contingent liabilities. The Company bases its estimates on historical experience and other various assumptions that it believes are reasonable under the circumstances. Estimates and assumptions are reviewed periodically. Actual results could differ materially from estimates. Revenue Recognition Revenue is measured based on consideration specified in contracts with customers and excludes incentives and amounts collected on behalf of third parties, primarily sales tax. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction that are collected by the Company from a customer are excluded from revenue. The following describes principal activities, separated by major product or service, from which the Company generates its revenues: Franchise Revenues Franchise revenues consist of 1) franchise royalties, 2) supplier and distributor incentive revenues, 3) franchise license fees, 4) area development exclusivity fees and foreign master license fees, 5) advertising funds, and 6) supplier convention funds. Franchise royalties, which are based on a percentage of franchise restaurant sales, are recognized as sales occur. Supplier and distributor incentive revenues are recognized when title to the underlying commodities transfer. Franchise license fees are typically billed upon execution of the franchise agreement and amortized over the term of the franchise agreement which typically range from five Area development exclusivity fees and foreign master license fees are typically billed upon execution of the area development and foreign master license agreements. Area development exclusivity fees are included in deferred revenue in the accompanying Condensed Consolidated Balance Sheets and allocated on a pro rata basis to all stores opened under that specific development agreement as the stores are opened. Area development exclusivity fees that include rights to sub-franchise are amortized as revenue over the term of the contract. Advertising fund contributions for Pizza Inn and Pie Five units represent contributions collected where we have control over the activities of the fund. Contributions are based on a percentage of net retail sales. We have determined that we are the principal in these arrangements, and advertising fund contributions and expenditures are, therefore, reported on a gross basis in the Condensed Consolidated Statements of Income. In general, we expect such advertising fund contributions and expenditures to be largely offsetting and, therefore, do not expect a significant impact on our reported income before income taxes. Our obligation related to these funds is to develop and conduct advertising activities. Pizza Inn and Pie Five marketing fund contributions are billed and collected weekly or monthly. Supplier convention funds are deferred until the obligations of the agreement are met and the event takes place. Rental Income The Company subleases some of its restaurant space to third parties. The Company’s two subleases have terms that end in 2023 and 2025. The sublease agreements are noncancelable through the end of the term and both parties have substantive rights to terminate the lease when the term is complete. Sublease agreements are not capitalized and are recorded as rental income in the period that rent is received. Total revenues consist of the following (in thousands): Three Months Ended September 24, 2023 September 25, 2022 Franchise royalties $ 1,225 $ 1,214 Supplier and distributor incentive revenues 1,100 1,070 Franchise license fees 101 30 Area development exclusivity fees and foreign master license fees 4 4 Advertising funds contributions 422 466 Supplier convention funds 187 172 Rental income 46 47 Other 4 2 $ 3,089 $ 3,005 Stock-Based Compensation The Company accounts for stock options using the fair value recognition provisions of the authoritative guidance on share-based payments. The Company uses the Black-Scholes formula to estimate the value of stock-based compensation for options granted to employees and directors and expects to continue to use this acceptable option valuation model in the future. The authoritative guidance also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow. Restricted stock units (“RSUs”) represent the right to receive shares of common stock upon the satisfaction of vesting requirements, performance criteria and other terms and conditions. Compensation cost for RSUs is measured as an amount equal to the fair value of the RSUs on the date of grant and is expensed over the vesting period if achievement of the performance criteria is deemed probable, with the amount of the expense recognized based on the best estimate of the ultimate achievement level.

Leases

Leases	3 Months Ended
	Sep. 24, 2023
Leases [Abstract]
Leases	Note B - Leases The Company determines if an arrangement is a lease at inception of the arrangement. To the extent that it can be determined that an arrangement represents a lease, it is classified as either an operating lease or a finance lease. The Company does not currently have any finance leases. The Company capitalizes operating leases on the Condensed Consolidated Balance Sheets through a right of use asset and a corresponding lease liability. Right of use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Short-term leases that have an initial term of one year or less are not capitalized. The Company does not presently have any short-term leases. Operating lease right of use assets and liabilities are recognized at the commencement date of an arrangement based on the present value of lease payments over the lease term. In addition to the present value of lease payments, the operating lease right of use asset also includes any lease payments made to the lessor prior to lease commencement less any lease incentives and initial direct costs incurred. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. Nature of Leases The Company leases certain office space, restaurant space, and information technology equipment under non-cancelable leases to support its operations. A more detailed description of significant lease types is included below. Office Agreements The Company rents office space from third parties for its corporate location. Office agreements are typically structured with non-cancelable terms of one Restaurant Space Agreements The Company rents restaurant space from third parties for its Company-owned restaurants. Restaurant space agreements are typically structured with non-cancelable terms of one The Company subleases some of its restaurant space to third parties. The Company’s two subleases have terms that end in 2023 and 2025. The sublease agreements are noncancelable through the end of the term and both parties have substantive rights to terminate the lease when the term is complete. Sublease agreements are not capitalized and are recorded as rental income in the period that rent is received. As of and June 25, 2023, the Company had no Company-owned restaurants. Information Technology Equipment The Company rents information technology equipment, primarily printers and copiers, from a third party for its corporate office location. Information technology equipment agreements are typically structured with non-cancelable terms of one Discount Rate Leases typically do not provide an implicit interest rate. Accordingly, the Company is required to use its incremental borrowing rate in determining the present value of lease payments based on the information available at the lease commencement date. The Company’s incremental borrowing rate reflects the estimated rate of interest that it would pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments in a similar economic environment. The Company uses the implicit rate in the limited circumstances in which that rate is readily determinable. Lease Guarantees The Company has guaranteed the financial responsibilities of certain franchised store leases. These guaranteed leases are not considered operating leases because the Company does not have the right to control the underlying asset. If the franchisee abandons the lease and fails to meet the lease’s financial obligations, the lessor may assign the lease to the Company for the remainder of the term. If the Company does not expect to assign the abandoned lease to a new franchisee within 12 months, the lease will be considered an operating lease and a right-of-use asset, and lease liability will be recognized. Practical Expedients and Accounting Policy Elections Certain lease agreements include lease and non-lease components. For all existing asset classes with multiple component types, the Company has utilized the practical expedient that exempts it from separating lease components from non-lease components. Accordingly, the Company accounts for the lease and non-lease components in an arrangement as a single lease component. In addition, for all existing asset classes, the Company has made an accounting policy election not to apply the lease recognition requirements to short-term leases (that is, a lease that, at commencement, have a lease term of 12 months or less and does not include an option to purchase the underlying asset that the Company is reasonably certain to exercise). Accordingly, we recognize lease payments related to our short-term leases in our income statements on a straight-line basis over the lease term which has not changed from our prior recognition. To the extent that there are variable lease payments, we recognize those payments in our income statements in the period in which the obligation for those payments is incurred. The components of total lease expense for the three months ended September 24, 2023 and September 25, 2022, the majority of which is included in general and administrative expense in the accompanying Condensed Consolidated Statements of Income, are as follows (in thousands ): Three Months Ended Three Months Ended September 24, 2023 September 25, 2022 Operating lease cost $ 123 $ 124 Sublease income (47 ) (47 ) Total lease expense, net of sublease income $ 76 $ 77 Weighted average remaining lease term and weighted average discount rate for operating leases are as follows: September 24, 2023 September 25, 2022 Weighted average remaining lease term 1.8 Years 2.8 Years Weighted average discount rate 4.0 % 4.0 % Operating lease liabilities with enforceable contract terms that are greater than one year mature as follows (in thousands): Operating Leases 2024 $ 370 2025 433 2026 382 2027 191 Total operating lease payments $ 1,376 Less: imputed interest (82 ) Total operating lease liability $ 1,294

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Sep. 24, 2023
Commitments and Contingencies [Abstract]
Commitments and Contingencies	Note C - Commitments and Contingencies The Company is subject to various claims and contingencies related to employment agreements, franchise disputes, lawsuits, taxes, food product purchase contracts and other matters arising out of the normal course of business. Management believes that any such claims and actions currently pending are either covered by insurance or would not have a material adverse effect on the Company’s results of operations or financial condition if decided in a manner that is unfavorable to the Company.

Stock-Based Compensation

Stock-Based Compensation	3 Months Ended
	Sep. 24, 2023
Stock-Based Compensation [Abstract]
Stock-Based Compensation	Note D - Stock-Based Compensation Stock Options: For the three months ended September 24, 2023 and September 25, 2022, the Company recognized stock-based compensation expense related to stock options of zero and $4 thousand, respectively. As of September 24, 2023, there was no unamortized stock-based compensation expense related to stock options. The following table summarizes the number of shares of the Company’s common stock subject to outstanding stock options: Three Months Ended September 24, 2023 September 25, 2022 Shares Shares Outstanding at beginning of year 151,750 111,750 Granted — 40,000 Exercised — — Forfeited/Canceled/Expired (8,664 ) — Outstanding at end of period 143,086 151,750 Exercisable at end of period 143,086 111,750 Restricted Stock Units: For the three months ended September 24, 2023 and September 25, 2022, the Company had stock-based compensation expense related to RSUs of $79 thousand and $82 thousand, respectively. As of September 24, 2023, there was $138 thousand unamortized stock-based compensation expense related to RSUs. As of September 24, 2023 and September 25, 2022, the RSUs will be amortized during the next one Three September 24, 2023 September 25 2022 Unvested at beginning of year 885,687 885,687 Performance Adjustment (25,223 ) — Granted — — Issued — — Forfeited — — Unvested at end of period 860,464 885,687

Earnings per Share (EPS)

Earnings per Share (EPS)	3 Months Ended
	Sep. 24, 2023
Earnings per Share (EPS) [Abstract]
Earnings per Share (EPS)	Note E - Earnings per Share (EPS) The following table shows the reconciliation of the numerator and denominator of the basic EPS calculation to the numerator and denominator of the diluted EPS calculation (in thousands, except per share amounts): Three Months Ended September 24, 2023 September 25, 2022 Net income available to common shareholders $ 386 $ 307 BASIC: Weighted average common shares 14,154 16,632 Net income per common share $ 0.03 $ 0.02 DILUTED: Weighted average common shares 14,154 16,632 Dilutive RSU 589 — Dilutive stock options 19 — Weighted average common shares outstanding 14,762 16,632 Net income per common share $ 0.03 $ 0.02 For the three months ended September 24, 2023, exercisable options to purchase 103,086 shares of common stock at exercise prices from $3.95 to $13.11 were excluded from the computation of diluted EPS because they had an intrinsic value of zero. For the three months ended September 24, 2023, 90,625 RSUs were excluded from the computation of diluted EPS because performance criteria is not probable at period end. For the three months ended September 25, 2022, exercisable options to purchase 111,750 shares of common stock at exercise prices ranging from $3.95 to $13.11 were excluded from the computation of diluted EPS because they had an intrinsic value of zero. For the three months ended September 25, 2022, zero RSUs were excluded from the computation of diluted EPS .

Income Taxes

Income Taxes	3 Months Ended
	Sep. 24, 2023
Income Taxes [Abstract]
Income Taxes	Note F - Income Taxes For the three months ended September 24, 2023, the Company recorded an income tax expense of $132 thousand. For the three months ended September 25, 2022, the Company recorded an income tax expense of $92 thousand. For the three months ended September 24, 2023, the federal and state tax expense were $108 thousand and $24 thousand, respectively. For the three months ended September 25, 2022, the federal and state tax expense were $82 thousand and $10 thousand, respectively. The Company continually reviews the realizability of its deferred tax assets, including an analysis of factors such as future taxable income, reversal of existing taxable temporary differences, and tax planning strategies. In assessing the need for the valuation allowance, the Company considers both positive and negative evidence related to the likelihood of realization of deferred tax assets.

Segment Reporting

Segment Reporting	3 Months Ended
	Sep. 24, 2023
Segment Reporting [Abstract]
Segment Reporting	Note G - Segment Reporting The Company has two reportable operating segments as determined by management using the “management approach” as defined by ASC 280 Disclosures about Segments of an Enterprise and Related Information: The Pizza Inn and Pie Five Franchising segments establish franchisees, licensees and territorial rights. Revenue for these segments are derived from franchise royalties, franchise fees, sale of area development and foreign master license rights and incentive payments from third party suppliers and distributors. Assets for these segments include equipment, furniture and fixtures. The Company-Owned Restaurants segment includes sales and operating results for all Company-owned restaurants. Assets for this segment include equipment, furniture and fixtures for the Company-owned restaurants. As of September 24, 2023, the Company did not operate any Company-owned restaurants. Corporate administration and other assets primarily include cash and short-term investments, as well as furniture and fixtures located at the corporate office and trademarks and other intangible assets. All assets are located within the United States. Summarized in the following tables are net operating revenues, depreciation and amortization expense, and income before taxes for the Company’s reportable segments as of the three months ended September 24, 2023 and September 25, 2022 (in thousands) : Three Months Ended September 24, 2023 September 25, 2022 Net sales and operating revenues: Pizza Inn Franchising $ 2,604 $ 2,469 Pie Five Franchising 438 488 Corporate administration and other 47 48 Consolidated revenues $ 3,089 $ 3,005 Depreciation and amortization: Corporate administration and other $ 55 $ 51 Depreciation and amortization $ 55 $ 51 Income before taxes: Pizza Inn Franchising $ 1,661 $ 1,511 Pie Five Franchising 209 244 Combined 1,870 1,755 Corporate administration and other (1,352 ) (1,356 ) Income before taxes $ 518 $ 399 Geographic information (revenues): United States $ 3,036 $ 2,929 Foreign countries 53 76 Consolidated revenues $ 3,089 $ 3,005

Summary of Significant Accoun_2

Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Sep. 24, 2023
Summary of Significant Accounting Policies [Abstract]
Principles of Consolidation	Principles of Consolidation The consolidated financial statements include the accounts of Rave Restaurant Group, Inc. and its subsidiaries, all of which are wholly owned. All appropriate inter-company balances and transactions have been eliminated.
Cash and Cash Equivalents	Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.
Fiscal Quarters	Fiscal Quarters The three month periods ended September 24, 2023 and September 25, 2022 each contained 13 weeks.
Use of Management Estimates	Use of Management Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company’s management to make estimates and assumptions that affect its reported amounts of assets, liabilities, revenues, expenses and related disclosure of contingent liabilities. The Company bases its estimates on historical experience and other various assumptions that it believes are reasonable under the circumstances. Estimates and assumptions are reviewed periodically. Actual results could differ materially from estimates.
Revenue Recognition	Revenue Recognition Revenue is measured based on consideration specified in contracts with customers and excludes incentives and amounts collected on behalf of third parties, primarily sales tax. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction that are collected by the Company from a customer are excluded from revenue. The following describes principal activities, separated by major product or service, from which the Company generates its revenues: Franchise Revenues Franchise revenues consist of 1) franchise royalties, 2) supplier and distributor incentive revenues, 3) franchise license fees, 4) area development exclusivity fees and foreign master license fees, 5) advertising funds, and 6) supplier convention funds. Franchise royalties, which are based on a percentage of franchise restaurant sales, are recognized as sales occur. Supplier and distributor incentive revenues are recognized when title to the underlying commodities transfer. Franchise license fees are typically billed upon execution of the franchise agreement and amortized over the term of the franchise agreement which typically range from five Area development exclusivity fees and foreign master license fees are typically billed upon execution of the area development and foreign master license agreements. Area development exclusivity fees are included in deferred revenue in the accompanying Condensed Consolidated Balance Sheets and allocated on a pro rata basis to all stores opened under that specific development agreement as the stores are opened. Area development exclusivity fees that include rights to sub-franchise are amortized as revenue over the term of the contract. Advertising fund contributions for Pizza Inn and Pie Five units represent contributions collected where we have control over the activities of the fund. Contributions are based on a percentage of net retail sales. We have determined that we are the principal in these arrangements, and advertising fund contributions and expenditures are, therefore, reported on a gross basis in the Condensed Consolidated Statements of Income. In general, we expect such advertising fund contributions and expenditures to be largely offsetting and, therefore, do not expect a significant impact on our reported income before income taxes. Our obligation related to these funds is to develop and conduct advertising activities. Pizza Inn and Pie Five marketing fund contributions are billed and collected weekly or monthly. Supplier convention funds are deferred until the obligations of the agreement are met and the event takes place. Rental Income The Company subleases some of its restaurant space to third parties. The Company’s two subleases have terms that end in 2023 and 2025. The sublease agreements are noncancelable through the end of the term and both parties have substantive rights to terminate the lease when the term is complete. Sublease agreements are not capitalized and are recorded as rental income in the period that rent is received. Total revenues consist of the following (in thousands): Three Months Ended September 24, 2023 September 25, 2022 Franchise royalties $ 1,225 $ 1,214 Supplier and distributor incentive revenues 1,100 1,070 Franchise license fees 101 30 Area development exclusivity fees and foreign master license fees 4 4 Advertising funds contributions 422 466 Supplier convention funds 187 172 Rental income 46 47 Other 4 2 $ 3,089 $ 3,005
Stock-Based Compensation	Stock-Based Compensation The Company accounts for stock options using the fair value recognition provisions of the authoritative guidance on share-based payments. The Company uses the Black-Scholes formula to estimate the value of stock-based compensation for options granted to employees and directors and expects to continue to use this acceptable option valuation model in the future. The authoritative guidance also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow. Restricted stock units (“RSUs”) represent the right to receive shares of common stock upon the satisfaction of vesting requirements, performance criteria and other terms and conditions. Compensation cost for RSUs is measured as an amount equal to the fair value of the RSUs on the date of grant and is expensed over the vesting period if achievement of the performance criteria is deemed probable, with the amount of the expense recognized based on the best estimate of the ultimate achievement level.

Summary of Significant Accoun_3

Summary of Significant Accounting Policies (Tables)	3 Months Ended
	Sep. 24, 2023
Summary of Significant Accounting Policies [Abstract]
Total Revenues	Total revenues consist of the following (in thousands): Three Months Ended September 24, 2023 September 25, 2022 Franchise royalties $ 1,225 $ 1,214 Supplier and distributor incentive revenues 1,100 1,070 Franchise license fees 101 30 Area development exclusivity fees and foreign master license fees 4 4 Advertising funds contributions 422 466 Supplier convention funds 187 172 Rental income 46 47 Other 4 2 $ 3,089 $ 3,005

Leases (Tables)

Leases (Tables)	3 Months Ended
	Sep. 24, 2023
Leases [Abstract]
Components of Total Lease Expense	The components of total lease expense for the three months ended September 24, 2023 and September 25, 2022, the majority of which is included in general and administrative expense in the accompanying Condensed Consolidated Statements of Income, are as follows (in thousands ): Three Months Ended Three Months Ended September 24, 2023 September 25, 2022 Operating lease cost $ 123 $ 124 Sublease income (47 ) (47 ) Total lease expense, net of sublease income $ 76 $ 77
Weighted Average Remaining Lease Term and Weighted Average Discount Rate	Weighted average remaining lease term and weighted average discount rate for operating leases are as follows: September 24, 2023 September 25, 2022 Weighted average remaining lease term 1.8 Years 2.8 Years Weighted average discount rate 4.0 % 4.0 %
Maturities of Operating Lease Liabilities	Operating lease liabilities with enforceable contract terms that are greater than one year mature as follows (in thousands): Operating Leases 2024 $ 370 2025 433 2026 382 2027 191 Total operating lease payments $ 1,376 Less: imputed interest (82 ) Total operating lease liability $ 1,294

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	3 Months Ended
	Sep. 24, 2023
Stock-Based Compensation [Abstract]
Outstanding Stock Options	The following table summarizes the number of shares of the Company’s common stock subject to outstanding stock options: Three Months Ended September 24, 2023 September 25, 2022 Shares Shares Outstanding at beginning of year 151,750 111,750 Granted — 40,000 Exercised — — Forfeited/Canceled/Expired (8,664 ) — Outstanding at end of period 143,086 151,750 Exercisable at end of period 143,086 111,750
Summary of Restricted Stock Units	As of September 24, 2023 and September 25, 2022, the RSUs will be amortized during the next one Three September 24, 2023 September 25 2022 Unvested at beginning of year 885,687 885,687 Performance Adjustment (25,223 ) — Granted — — Issued — — Forfeited — — Unvested at end of period 860,464 885,687

Earnings per Share (EPS) (Table

Earnings per Share (EPS) (Tables)	3 Months Ended
	Sep. 24, 2023
Earnings per Share (EPS) [Abstract]
Earnings per Share Basic and Diluted	The following table shows the reconciliation of the numerator and denominator of the basic EPS calculation to the numerator and denominator of the diluted EPS calculation (in thousands, except per share amounts): Three Months Ended September 24, 2023 September 25, 2022 Net income available to common shareholders $ 386 $ 307 BASIC: Weighted average common shares 14,154 16,632 Net income per common share $ 0.03 $ 0.02 DILUTED: Weighted average common shares 14,154 16,632 Dilutive RSU 589 — Dilutive stock options 19 — Weighted average common shares outstanding 14,762 16,632 Net income per common share $ 0.03 $ 0.02

Segment Reporting (Tables)

Segment Reporting (Tables)	3 Months Ended
	Sep. 24, 2023
Segment Reporting [Abstract]
Segment Reporting Information	Summarized in the following tables are net operating revenues, depreciation and amortization expense, and income before taxes for the Company’s reportable segments as of the three months ended September 24, 2023 and September 25, 2022 (in thousands) : Three Months Ended September 24, 2023 September 25, 2022 Net sales and operating revenues: Pizza Inn Franchising $ 2,604 $ 2,469 Pie Five Franchising 438 488 Corporate administration and other 47 48 Consolidated revenues $ 3,089 $ 3,005 Depreciation and amortization: Corporate administration and other $ 55 $ 51 Depreciation and amortization $ 55 $ 51 Income before taxes: Pizza Inn Franchising $ 1,661 $ 1,511 Pie Five Franchising 209 244 Combined 1,870 1,755 Corporate administration and other (1,352 ) (1,356 ) Income before taxes $ 518 $ 399 Geographic information (revenues): United States $ 3,036 $ 2,929 Foreign countries 53 76 Consolidated revenues $ 3,089 $ 3,005

Summary of Significant Accoun_4

Summary of Significant Accounting Policies (Details) $ in Thousands	3 Months Ended
	Sep. 24, 2023 USD ($) Lease	Sep. 25, 2022 USD ($)
Revenues [Abstract]
Number of subleases | Lease	2
Revenues	$ 3,089	$ 3,005
Minimum [Member]
Franchise Revenues [Abstract]
Amortization term of franchise license fees	5 years
Maximum [Member]
Franchise Revenues [Abstract]
Amortization term of franchise license fees	20 years
Franchise Royalties [Member]
Revenues [Abstract]
Revenues	$ 1,225	1,214
Supplier and Distributor Incentive Revenues [Member]
Revenues [Abstract]
Revenues	1,100	1,070
Franchise License Fees [Member]
Revenues [Abstract]
Revenues	101	30
Area Development Exclusivity Fees and Foreign Master License Fees [Member]
Revenues [Abstract]
Revenues	4	4
Advertising Funds Contributions [Member]
Revenues [Abstract]
Revenues	422	466
Supplier Convention Funds [Member]
Revenues [Abstract]
Revenues	187	172
Rental Income [Member]
Revenues [Abstract]
Revenues	46	47
Other [Member]
Revenues [Abstract]
Revenues	$ 4	$ 2

Leases (Details)

Leases (Details) $ in Thousands	3 Months Ended
	Sep. 24, 2023 USD ($) Lease Restaurant	Sep. 25, 2022 USD ($)	Jun. 25, 2023 Restaurant
Operating Lease, Description [Abstract]
Number of subleases | Lease	2
Components of Total Lease Expense [Abstract]
Operating lease cost	$ 123	$ 124
Sublease income	(47)	(47)
Total lease expense, net of sublease income	$ 76	$ 77
Weighted Average Remaining Lease Term and Discount Rate [Abstract]
Weighted average remaining lease term	1 year 9 months 18 days	2 years 9 months 18 days
Weighted average discount rate	4%	4%
Maturities of Operating Lease Liabilities [Abstract]
2024	$ 370
2025	433
2026	382
2027	191
Total operating lease payments	1,376
Less: imputed interest	(82)
Total operating lease liability	$ 1,294
Information Technology Equipment [Member] | Minimum [Member]
Operating Lease, Description [Abstract]
Term of contract	1 year
Information Technology Equipment [Member] | Maximum [Member]
Operating Lease, Description [Abstract]
Term of contract	5 years
Office Agreements [Member] | Minimum [Member]
Operating Lease, Description [Abstract]
Term of contract	1 year
Office Agreements [Member] | Maximum [Member]
Operating Lease, Description [Abstract]
Term of contract	10 years
Restaurant Space Agreements [Member]
Operating Lease, Description [Abstract]
Number of subleases | Lease	2
Number of company-owned restaurants | Restaurant	0		0
Restaurant Space Agreements [Member] | Minimum [Member]
Operating Lease, Description [Abstract]
Term of contract	1 year
Restaurant Space Agreements [Member] | Maximum [Member]
Operating Lease, Description [Abstract]
Term of contract	10 years

Stock-Based Compensation (Detai

Stock-Based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 24, 2023	Sep. 25, 2022
Stock Options [Member]
Share-based Arrangement [Abstract]
Stock-based compensation expense recognized	$ 0	$ 4
Unamortized stock-based compensation expense	$ 0
Summary of Shares of Common Stock Subject to Outstanding Stock Options [Roll Forward]
Outstanding at beginning of year (in shares)	151,750	111,750
Granted (in shares)	0	40,000
Exercised (in shares)	0	0
Forfeited/Canceled/Expired (in shares)	(8,664)	0
Outstanding at end of period (in shares)	143,086	151,750
Exercisable at end of Period (in shares)	143,086	111,750
Restricted Stock Units [Member]
Share-based Arrangement [Abstract]
Stock-based compensation expense recognized	$ 79	$ 82
Unamortized stock-based compensation expense	$ 138
Amortization period	1 month	13 months
Summary of Restricted Stock Units [Roll forward]
Unvested at beginning of year (in shares)	885,687	885,687
Performance Adjustment (in shares)	(25,223)	0
Granted (in shares)	0	0
Issued (in shares)	0	0
Forfeited (in shares)	0	0
Unvested at end of period (in shares)	860,464	885,687

Earnings per Share (EPS) (Detai

Earnings per Share (EPS) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Sep. 24, 2023	Sep. 25, 2022
Earnings Per Share [Abstract]
Net income available to common shareholders	$ 386	$ 307
BASIC [Abstract]
Weighted average common shares (in shares)	14,154,000	16,632,000
Net income per common share (in dollars per share)	$ 0.03	$ 0.02
DILUTED [Abstract]
Weighted average common shares (in shares)	14,154,000	16,632,000
Dilutive RSU (in shares)	589,000	0
Dilutive stock options (in shares)	19,000	0
Weighted average common shares outstanding (in shares)	14,762,000	16,632,000
Net income per common share (in dollars per share)	$ 0.03	$ 0.02
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings per Share [Abstract]
Exercisable options to purchase shares of common stock excluded from computation of diluted EPS (in shares)	103,086	111,750
Intrinsic value of options outstanding	$ 0	$ 0
Stock Options [Member] | Minimum [Member]
Antidilutive Securities Excluded from Computation of Earnings per Share [Abstract]
Exercisable options to purchase shares of common stock exercise price (in dollars per share)	$ 3.95	$ 3.95
Stock Options [Member] | Maximum [Member]
Antidilutive Securities Excluded from Computation of Earnings per Share [Abstract]
Exercisable options to purchase shares of common stock exercise price (in dollars per share)	$ 13.11	$ 13.11
Restricted Stock Units [Member]
Antidilutive Securities Excluded from Computation of Earnings per Share [Abstract]
Exercisable options to purchase shares of common stock excluded from computation of diluted EPS (in shares)	90,625	0

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 24, 2023	Sep. 25, 2022
Income Taxes [Abstract]
Income tax expense	$ 132	$ 92
Federal tax expense	108	82
State tax expense	$ 24	$ 10

Segment Reporting (Details)

Segment Reporting (Details) $ in Thousands	3 Months Ended
	Sep. 24, 2023 USD ($) Segment	Sep. 25, 2022 USD ($)
Segment Reporting [Abstract]
Number of reportable segments | Segment	2
Number of operating segments | Segment	3
Segment Reporting Information, Profit (Loss) [Abstract]
Consolidated revenues	$ 3,089	$ 3,005
Depreciation and amortization	55	51
Income before taxes	518	399
Operating Segments [Member]
Segment Reporting Information, Profit (Loss) [Abstract]
Income before taxes	1,870	1,755
Corporate Administration and Other [Member]
Segment Reporting Information, Profit (Loss) [Abstract]
Consolidated revenues	47	48
Depreciation and amortization	55	51
Income before taxes	(1,352)	(1,356)
Reportable Geographical Components [Member]
Segment Reporting Information, Profit (Loss) [Abstract]
Consolidated revenues	3,089	3,005
Reportable Geographical Components [Member] | United States [Member]
Segment Reporting Information, Profit (Loss) [Abstract]
Consolidated revenues	3,036	2,929
Reportable Geographical Components [Member] | Foreign Countries [Member]
Segment Reporting Information, Profit (Loss) [Abstract]
Consolidated revenues	53	76
Pizza Inn Franchising [Member] | Operating Segments [Member]
Segment Reporting Information, Profit (Loss) [Abstract]
Consolidated revenues	2,604	2,469
Income before taxes	1,661	1,511
Pie Five Franchising [Member] | Operating Segments [Member]
Segment Reporting Information, Profit (Loss) [Abstract]
Consolidated revenues	438	488
Income before taxes	$ 209	$ 244