Good day and welcome to the RAVE Restaurant Group Incorporated reports First Quarter 2020 Financial Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Jacq Barjon. Please go ahead sir.

Good afternoon and thank you all for joining RAVE Restaurant Group’s fiscal first quarter 2020 earnings conference call. Everyone should have access to our fiscal first quarter 2020 earnings release that was published this morning. The press release can be found at www.raverg.com in the Investor Relations section. Before we begin, I would like to remind everyone that part of our discussions today will include some forward-looking statements. These forward-looking statements are not guarantees of future performance, and therefore, you should not put undue reliance on them. These statements are also subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. We refer all of you to our recent SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial conditions. Please note that in today’s conference call, we will discuss certain non-GAAP financial measures, which we believe can be useful in evaluating our performance. Any discussions of such information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation of comparable GAAP measures is available in our earnings release. And with that, I’d like to introduce our new CEO, Brandon Solano.

Thanks, Jacq. Good afternoon everyone, I'm excited to be joining RAVE at such an important time. The restaurant industry and specifically the pizza category are experiencing tremendous change. The shift has led to challenges that are being felt across the industry, but it's also creating new opportunities. The share leader has changed for the first time in 60 years from Pizza Hut to Domino's. Technology is rapidly transforming how consumers shop, order and connect. Competition has never been more ubiquitous and labor costs are challenging every brand. As a company, we're taking a direct approach to face obstacles and building on the strengths of our brands. While Pizza Inn has turned in solid same store sales growth, we have an opportunity to build on that strength, with new technologies that modernize our ability to better serve our guests. Pie Five has tremendous upside, as a fast-casual pizza pioneer, we have a solid core offering and are developing a plan to recapture that leadership position. By focusing on a craveable menu, social media engagement, and flawless execution we plan to build a deep connection with consumers to transform the brand and restore growth. At Domino's, I was the guy who wasn't afraid to say we could do better and I'm not afraid to say that here at RAVE we're going to do better and to do that we're going to build out an amazing team with the capability to really disrupt the category, delight consumers and create value for shareholders and franchisees. We will leverage our strengths and we'll build new ones and win. We will grow, RAVE’s top line revenue and profits, creating opportunities for our employees and returns for our shareholders. We're also partnering with our franchisees to drive profitable traffic and unit economics. While I have a background…

Thank you, Brandon. Total revenue for the company was $2.9 million for the first quarter of fiscal 2020 compared to $3.0 million for the same period of the prior year. The company's net income of $0.2 million in the first quarter of fiscal 2020 was an increase to $0.1 million compared to the same period of the prior year. Diluted income per share was $0.01 in both the first quarter of fiscal 2020 and the same period of the prior year. The increase in net income in the first quarter of fiscal 2020 over the prior year was largely due to improvement in the Pizza Inn franchising segment and reduced general and administrative expense. Adjusted EBITDA of $0.4 million in the first quarter of fiscal 2020 was a decrease of $0.1 million compared to the same period of the prior year. Domestic Pizza Inn units decreased by three units during the quarter, bringing total domestic units open at the end of the quarter to 152. International Pizza Inn units decreased by 14 during the quarter to end at 34 as our sub-franchisee in Saudi Arabia ceased operation. Total international units open at the end of the quarter was 34. Pie Five ended the quarter with 56 open units. The company's cash and cash equivalents decreased to $2.4 million as of the end of the quarter, a $157,000 improvement over the prior year end. The increase in cash and cash equivalents resulted from $132,000 in cash provided by operating activities, $22,000 in cash provided by investing activities and $2,000 in cash used by financing activities. In February, 2016 the FASBI issued ASC 842 leases. ASC 842, requires the lessee to recognize the lease right of use asset and a lease liability for arrangements longer than 12 months. The company adopted the new standard in the first quarter of fiscal 2020. With our adoption of ASC 842 certain line items were adjusted on our opening balance sheet as of the beginning of the first fiscal quarter. As of July 1, the line items impacted and adjustments consisted of the addition of $3.4 million in non-current operating lease right of used assets, $0.5 million in current operating lease liabilities and $3.3 million in non-current operating lease liabilities, as well as the removal of $37,000 in current deferred rent, $0.4 million in non-current deferred rent and $14,000 in accrued expenses. Additional detail on the adoption and fiscal 2020 impact of the new lease accounting standard and other brand specific financial and operating details can be found in a company's Form 10-Q for the quarterly period ended September 29, 2019 filed with the SEC this morning. I'm now turning to call back over to Brandon for his final remarks, before we take Q&A.

Thanks Jacq. I want to close by saying that I see a lot of opportunity and I'm thrilled to be here. I'm just encouraged by our success as I am by our passion and focus on addressing the areas where we can improve. We have amazing brands, a talented team, a strong franchise base and I believe our best days are ahead. With that, let's open up the line for questions.

Thank you. [Operator Instructions] And our first question will come from Scott Banks of Retail. Please go ahead, sir.

Thank you. First off, Brandon welcome aboard, I think it greats that you joined the company and as a long-term shareholder I'm looking forward to tracking and following your execution, so just wanted to start off by saying welcome aboard. But, my question for you is, in the press release today, you seem to really highlight or talked about the growth of the buffet side of Pizza Inn was high, it seemed that the previous management team was really going after this convenience store segment or the opportunity that Pie Five represented[ph], but I was just hoping you can kind of talk through those comments and kind of what you're seeing and kind of what the game plan is or what the initial game plan is out of the gate?

Yes, Scott for sure. And thanks for the warm welcome. I really appreciate it. I'm thrilled to be here. I've been here little over three weeks, so still early days, that said, I've got experience in development. I ran development for Domino's for several years. They had a convenience store program at the time, and what we did there was we fixed the core business and instead of selling, low volume convenience stores, we started building, high-volume and higher-volume every year core restaurants. And so, there's an opportunity in Pie, there's an opportunity to extend the brand, there's time is in place but that makes sense. But the store is not a store in my opinion, a Pie store, which is going to be lower volume in a convenience store does not provide the same returns to RAVE or to our ad fund for that matter that our traditional buffet would. So as I kind of think about our development strategy we'll continue to support our business partners and franchisees who have invested in Pie, we will continue to sell Pie, but as a kind of a strategic focus of the development department, we really want to build traditional buffets and traditional Pie Five stores.

Great. And I think you used the words, across the country, is it fair to say that you're looking to expand the concept outside of the traditional development areas, let's call them rural areas. Can we see these buffet concepts for example, in California in urban areas? Or would it still be in the same type of trade areas?

Based on the rules, regs and tax base in California, not my favorite place to go and do business, to be honest, no offense to California or Californians. As we think about our brand, one of the things in our brands, one of the things that I'd like to do is to have more dense penetration in areas where we have strength, places where we've had stores and closed them or we have nearby stores avoiding cannibalization and all that sort of thing. I really believe that if we can get more densely – more store density then we're going to have a better time buying media in markets, we're going to have better brand awareness generally within the area, we'll have logistics, potentially logistics advantages of being there. I'm not a huge fan of orphan stores. I'd rather put them close to our footprint and get them strong that said there are places and opportunities that we should begin to expand. So international is certainly an exception to that rule. We've been on record, that we've got a Pie Five opening in Panama, we also – I think have commented that we've got some going into the West coast, which we're pretty excited for. But in general I would prefer to be closer to our existing footprint, but opportunistically we will take a look at opportunities outside of that.

Got it. And last question for me on the Pie Five side, obviously, you come from Domino's, everybody knows the success and the turnaround story that happened there and we know the numbers for delivery and the growth there. How do you think about, Pie Five taking market share in its markets from those that would order from a Domino's or Papa John's, et cetera, because I've always felt that there's opportunity. I think that the quality of the product is just as good, if not better. And as you know – people in Dallas, ordering on a Friday night or have something delivered, why not have Pie Five as the option verse Domino’s , how do you think about that, because I think there's an opportunity there and I've always wondered, when somebody would go after that?

I think the demographics of delivery and the demographics of Pie Five have a lot of intersections. So delivery is for all intents and purposes in my opinion, a rich person's luxury. And I know that everybody who orders from DoorDash and Grubhub are not billionaires, I got it, but it's expensive. As we think – if we think about $4 delivery charge, $3 from Domino's, $4, Grubhub and DoorDash are significantly above that generally, plus tip often you're at $5, $6 or more to have something delivered. So, I think that's a certain group of folks that are trading dollars for convenience. Same thing with Pie Five, we have a more affluent user base and consumer base. So I think there's definitely overlap, but most of our sales are dine-in, I think we have a lot of opportunity to get, our menu right, our operation right, our stores cleaner. We have a lot of work to do. So I think there's opportunity in delivery. We're strengthening our team in terms of digital marketing and our ability to integrate and execute digitally. So we're going to have the capability. And again, I think that's a little bit more opportunistic at this moment than it is kind of core business. But we have fundamentals of this business that we really need to address first. I don't want to have a menu that's kind of a little bit tired, which I would argue our menu is today on the Pie Five side and then go chase something else. I want to get first things first, core business set and we will from – a position of strength with our core offering, go chase hard incremental business. But, listen, if somebody wants to order from us on DoorDash today, we have got a lot of stores up on it. We will 100% take their money, but as you think about focus, it's not the key focus for us right now. It's really about, for me, assessing the team, building the team, writing the right strategies, focusing on the areas of the highest value, whether we're talking about development strategy or menu or kind of brand positioning. So it's an opportunity for us, we're interested we'll take some of the business. It's not going to be kind of the core focus area in the near term.

Great. I appreciate the answers and best of luck.

Thank you so much. I appreciate it, Scott.

Our next question will come from Michael Distler[ph] of [indiscernible]. Please go ahead, sir.

Yes. Hey there Brandon, welcome aboard. I've followed your career incredibly. I've just thought that Mr. Banks, preceding me got most of my questions. I won't waste your time. And I want you to know that you have a solid core of shareholders beyond your two largest shareholders, who have really I think I spelled that you are aboard. I just want to say two quick things, which is the KidZania thing, is the perfect type of connection doesn't have to be that one going forward if it doesn't work out, but that kind of a savage social media and then bringing the seven and eight, 10 year olds, whatever, making pizzas board fence, that sounds like a fabulous idea. And the other thing I mentioned on the last call, which you were not present for, was just that the current Pizza Inn multiunit franchisees, I think you guys could do a really small pilot discount program for those folks. And you could do that in Texas, close by to home base there, just to see how it works in terms of just getting some more folks to come aboard on the Pie Five concept, who are already Pizza Inn multiunit people, and I'm just throwing that out there. And I wish you a very good luck and just wanted you to know that we're all standing behind you.

Michael, this is – I'm a rookie CEO as not news. Let me acknowledge the known. But I'm going to leave little bit of feedback here, sorry about that. But the idea that you followed my career, this is my first earnings call. So thanks for being here and sharing the experience with me, it's a lot of fun. I'm super excited to be here, so I appreciate the welcome. As far as KidZania, I will tell you we're thrilled with that concept, I've raised five kids, so I know that on Saturday afternoon when they're driving you crazy in the house, it's a great thing to be able to get out and go do – we release anything in KidZania yet?

Okay. So it's a little blurb in here.

Listen, I review a thousand press releases, it seems like in my PR from he's ever been here. It's hard to keep it straight, we're opening there and they're a fantastic partner for us. We're thrilled with it. We'd love to do many, many more with them. But I think it's good for kids to kind of see the brand, see how things are done, see the quality of the ingredients that we have on the make line. So I'm thrilled with it and we're going to be working toward making that successful. We're not going to hope for success, because if you ever heard, failure's not an option, hope is not a strategy, hard work is. So we're going to be all over that and we want to be wildly successful with KidZania and have them as partners be happy with us and continue to grow. As far as moving, offering pizza in franchisees the opportunity to buy in Pie Five, I haven't had a conversation with anyone about that. I think, we're still continuing to push development of Pie Five. We're excited about some of the things we have in the pipeline, but my focus right now with our Pizza Inn franchisee is on technology, unit economics, not hey, let's go buy a Pie Five franchise today. Certainly if they're interested we'll have that conversation, but with the Pizza Inn folks, it's really about what can we do on Pizza Inn, and with Pie Five while we have a development team and they're hard at work, most of our time in the near term is going to be spent on kind of really – kind of retooling the brand by driving relevance. We have to have programs that make consumers want to push open the front door, have…

I understand that. Having seen the YouTube of the fathers, [Indiscernible], I understand completely. I want to thank you and welcome you aboard and just want you to know that there is a solid core of shareholders out there who are ready to assist you in any manner. Okay?

Excellent, Michael. Thank you so much, thanks for your engagement. Really appreciate it.

Absolutely. Good luck.

Thank you.

[Operator Instructions] This concludes our question-and-answer session as well as our conference call for today. Thank you for attending today's presentation. You may now disconnect.