Executive Summary
RAVE Restaurant Group reported a solid Q4 2024 with a revenue of $3.355 million, marking a 10.1% year-over-year increase and 13.3% sequential growth. The quarter delivered a robust gross margin of 75.3%, translating to gross profit of $2.527 million and an EBITDA of $1.265 million. Net income reached $0.88 million, or $0.061 per share (diluted $0.060), yielding a net margin of 26.2% and a strong operating margin of 33.4%. These results reflect a lean cost structure and a franchise-centric business model, contributing to meaningful profitability on a relatively small revenue base.
Cash generation remained positive, with operating cash flow of $1.409 million and free cash flow of $1.401 million. However, the company posted a negative net change in cash of $3.432 million for the period, driven by investing activities of approximately $4.841 million (notably categorized under other investing activities), partially offset by cash on hand and investments. The balance sheet shows a conservative liability profile and ample liquidity: total current assets of $9.536 million against current liabilities of $2.019 million, cash and short-term investments totaling $7.831 million, and net debt of about -$1.929 million. This positions RAVE well to fund franchise expansion opportunities and any selective capex needs while maintaining financial flexibility.
From a valuation standpoint, RAVE trades with a price-to-sales around 8.05 and a price-to-earnings near 7.7, with a price-to-book of 2.13. The enterprise value multiple sits near 19.8x, suggesting the stock commands a premium relative to asset-heavy or slower-growing peers, which may reflect the market’s appreciation for its franchising model and cash-generating potential. Absent a formal earnings-call transcript in the provided data, management commentary could not be quoted directly; the analysis below integrates the disclosed financials with typical franchise-driven growth signals and peer-adjacent benchmarks to form a forward-looking perspective.
Key Performance Indicators
Key Insights
Revenue: $3.355 million for QQ4 2024, up 10.07% YoY and 13.27% QoQ. Gross Profit: $2.527 million, gross margin 75.32% (YoY +18.92%, QoQ +20.79%). Operating Income: $1.12 million, operating margin 33.38% (QoQ: +38.44%). Net Income: $0.88 million, net margin 26.23% (YoY +38.58%, QoQ +34.56%). EPS: $0.061 (diluted $0.060); YoY EPS growth +35.86%, QoQ +36.16%. EBITDA: $1.265 million; EBITDA margin implied around 37.70%. Cash Flow: Net cash provided by operating activities $1.409 million; free cash f...
Financial Highlights
Revenue: $3.355 million for QQ4 2024, up 10.07% YoY and 13.27% QoQ. Gross Profit: $2.527 million, gross margin 75.32% (YoY +18.92%, QoQ +20.79%). Operating Income: $1.12 million, operating margin 33.38% (QoQ: +38.44%). Net Income: $0.88 million, net margin 26.23% (YoY +38.58%, QoQ +34.56%). EPS: $0.061 (diluted $0.060); YoY EPS growth +35.86%, QoQ +36.16%. EBITDA: $1.265 million; EBITDA margin implied around 37.70%. Cash Flow: Net cash provided by operating activities $1.409 million; free cash flow $1.401 million. Balance Sheet: Cash and cash equivalents $2.887 million; short-term investments $4.945 million; total cash & short-term investments $7.831 million. Total assets $15.819 million; total liabilities $3.117 million; total stockholders’ equity $12.701 million. Liquidity: Current ratio 4.72x; quick ratio 4.72x; cash ratio 1.429x. Leverage: total debt to capitalization 7.01%; net debt position -$1.929 million (net cash). Profitability/efficiency: gross margin 75.32%, net margin 26.23%, ROA 5.56%, ROE 6.93%, ROCE 8.12%. Valuation: P/S 8.05x; P/B 2.13x; P/E 7.67x; Enterprise Value/Multi ~19.82x. Four-Quarters snapshot shows improving quarterly momentum alongside a stable cost structure.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
3.36M |
10.07% |
13.27% |
| Gross Profit |
2.53M |
18.92% |
20.79% |
| Operating Income |
1.12M |
N/A |
38.44% |
| Net Income |
880.00K |
38.58% |
34.56% |
| EPS |
0.06 |
35.86% |
36.16% |
Key Financial Ratios
operatingProfitMargin
33.4%
operatingCashFlowPerShare
$0.1
freeCashFlowPerShare
$0.1
Management Commentary
No earnings-call transcript data provided in the prompt. Consequently, no management quotes or theme-driven highlights could be extracted from a QQ4 2024 call. Summary of implied management commentary (based on disclosed results and typical franchise-model signaling):
- Strategy: Continue expanding the Pizza Inn and Pie Five franchise footprint, leveraging a cost-effective, asset-light model to sustain high margin economics.
- Operations: Maintain tight cost control and optimize the franchise mix to preserve the high gross margin observed in Q4 2024.
- Market Conditions: Favorable demand signals for quick-service and casual-dining concepts with diversified nontraditional formats (Express) aiding resilience.
Forward Guidance
No formal forward-looking guidance was provided in the data set. However, the implicit trajectory from QQ4 2024 results suggests several focal points for management: (1) leverage franchise growth to sustain top-line expansion while preserving the high gross margin through licensing/franchising revenue; (2) deploy cash flow into franchise development and selective capex while maintaining a comfortable liquidity cushion; (3) monitor franchisee performance and unit economics to safeguard margins as the brand footprint scales. Given the current liquidity position (net cash of ~$1.93 million) and absence of material debt, the company has ample flexibility to fund expansion or opportunistic investments. Key factors investors should monitor include same-store sales trends (where applicable), pipeline of franchised units for Pizza Inn and Pie Five, the contribution mix of franchising versus company-owned revenue, and any changes in royalty/licensing structures that could affect gross margin.