Pizza Inn Announces 2nd Quarter Financial Results

PIZZA INN, INC. today reported earnings per share for its second quarter ended December 26, 2004 of 1 cent versus 6 cents for the same quarter last year. Net income was $51,000 versus $558,000, on revenues of $13.8 million versus $14.8 million in the previous year. For the six-month period ended December 26, 2004, earnings per share were 3 cents versus 11 cents last year. Net income for the six month period was $336,000 compared to $1,062,000 last year on revenues of $28.2 million and $30.1 million, respectively.

The decrease in revenues for the latest quarter is primarily due to reduced prices on certain key ingredients and lower overall retail sales. Also impacting the sales decline was the replacement of a company-owned buffet location with a new smaller delivery/carryout location. Net income for the quarter was adversely impacted by product cost inflation of approximately 5%, which was not passed through to franchisees. The previous year's quarter also included the reversal of $264,000 in bad debt expense. Additionally, legal and professional fees increased $188,000 for the quarter compared to the same quarter last year as a result of ongoing litigation and related matters.

Bob Page, the Company's Acting Chief Executive Officer commented, "Although operating margins are significantly lower due to product cost inflation that was not passed on to franchisees, we are encouraged by the continued progress of our previously outlined strategic plan. The plan remains on schedule and we believe it will position us for future growth by improving unit-level economics."

The Company also reported that through the quarter ended December 26, 2004, it has purchased approximately 39,000 shares of its common stock since the Board authorized resumed purchases earlier this year pursuant to a previously approved stock buy-back plan.

Certain statements in this press release, other than historical information, may be considered forward-looking statements, within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, and are subject to various risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may differ from those anticipated, estimated or expected. Among the key factors that may have a direct bearing on Pizza Inn's operating results, performance or financial condition are its ability to implement its growth strategies, national, regional and local economic conditions affecting the restaurant industry, competition within each of the restaurant industries, store sales cannibalization, success of its franchise operations, negative publicity, fluctuations in quarterly results of operations, including seasonality, government regulations, weather, commodity, insurance and labor costs.

Pizza Inn, Inc. is headquartered in The Colony, Texas, along with its distribution division, Norco Restaurant Distribution Services. Pizza Inn represents over 400 restaurants with annual sales of approximately $170 million.

   Pizza Inn, Inc.                For more information contact:
   3551 Plano Parkway             Robert B. Page
   The Colony, TX  75056          Acting Chief Executive Officer
                                  (469) 384-5000

        For more information about the company, visit Pizza Inn at

                             PIZZA INN, INC.
            (In thousands, except share and per share amounts)

              2nd Quarter
                                              December 26,      December 28,
                                                  2004              2003
  Revenue                                        $13,804           $14,769

  Income before taxes                                $79            $1,045

  Net Income                                         $51              $558

  Diluted earnings per share                       $0.01             $0.06

  Basic earnings per share                         $0.01             $0.06

  Weighted average shares outstanding:
     Diluted                                  10,140,853        10,122,605
     Basic                                    10,104,404        10,071,037

            Six Months
                                              December 26,      December 28,
                                                  2004              2003
  Revenue                                        $28,225           $30,145

  Income before taxes                               $520            $1,809

  Net Income                                        $336            $1,062

  Diluted earnings per share                       $0.03             $0.11

  Basic earnings per share                         $0.03             $0.11

  Weighted average shares outstanding:
     Diluted                                  10,154,987        10,104,332
     Basic                                    10,119,039        10,065,130

SOURCE: Pizza Inn, Inc.

CONTACT: Robert B. Page, Acting Chief Executive Officer of Pizza Inn,
Inc., +1-469-384-5000