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Pizza Inn, Inc. Reports Results for the Second Quarter Fiscal Year 2007

PIZZA INN, INC. today reported a net income per share for its second fiscal quarter ended December 24, 2006 of $0.01 versus a net loss of ($0.06) per share for the same quarter last year. The quarter resulted in net income of $152,000 versus a net loss of ($601,000) for the same quarter last year on revenues of $12.4 million and $12.8 million, respectively.

   *  Comparable buffet restaurant sales increased 0.6% for the quarter.
      Domestic chain-wide comparable restaurant sales decreased 1.3% for the
      quarter.
   *  Total domestic chain-wide restaurant sales decreased 6% for the
      quarter due to the decrease in comparable restaurant sales and a net
      reduction in franchised restaurants.
   *  Excluding the impact of gains on sale of assets and rental income, the
      Company's revenues decreased approximately 8%, or $1,028,000,
      primarily due to the Company's recent decision to reduce the prices of
      key food and supply products sold to franchisees through the Company's
      distribution division, lower chain-wide restaurant sales, as discussed
      above, lower cheese prices, and lower equipment sales.  The resulting
      reductions in food and supply sales and royalty revenue were partially
      offset by increased restaurant sales at company-owned restaurants as a
      result of the opening of three company-owned buffet restaurants in
      fiscal year 2006.
   *  During the quarter, the Company incurred $375,000 of legal fees, as
      compared to $442,000 in the prior year, which is reflected in general
      and administrative expenses.
   *  During the quarter, the Company incurred non-cash stock compensation
      expense of $55,000 as compared to $94,000 in the prior year, which is
      reflected in general and administrative expenses.
   *  During the quarter, the Company recognized a $108,000 benefit from the
      reduction to the provision for litigation costs due to the reduction
      of accounts payable to PepsiCo as a result of the Company's recent
      settlement with PepsiCo, which is broken out separately in the
      statement of operations.

The Company's President and CEO, Tim Taft, commented, "Much has been accomplished in the pursuit of turning around this brand. Franchisees report being healthier than they have been in a long while and, with the recent hiring of Charlie Morrison (CFO) and Susan Gray (Training, HR), we have a complete management team capable of significantly affecting our positive momentum."

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/ entertainment industry, competition within each of the restaurant and entertainment 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. (https://www.pizzainn.com/ ) is headquartered in The Colony, Texas, along with its distribution division, Norco Restaurant Services Company. Pizza Inn franchises approximately 282 domestic and 77 international restaurants and owns three restaurants with annual domestic and international chain-wide sales of approximately $145 million.

   For more information contact:
   Charlie Morrison
   Chief Financial Officer
   (469) 384-5203



                             PIZZA INN, INC.
             CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 (In thousands, except per share amounts)
                               (Unaudited)

                              Three Months Ended       Six Months Ended
                         December 24, December 25, December 24, December 25,
                            2006          2005         2006         2005
  REVENUES:

    Food and supply
     sales                 $10,232       $11,215      $20,620      $22,523
    Franchise revenue        1,118         1,199        2,307        2,379
    Restaurant sales           375           339          745          557
    Gain on sale of assets     554           ---          564          147
    Rental income              146           ---          179          ---

                            12,425        12,753       24,415       25,606

  COSTS AND EXPENSES:
    Cost of sales           10,207        11,060       20,385       22,153
    Franchise expenses         746           793        1,418        1,601
    General and
     administrative
     expenses                1,154         1,581        2,745        3,171
    Provision for
     litigation costs         (108)          ---          302          ---
    Interest expense           274           199          474          368

                            12,273        13,633       25,324       27,293

  INCOME (LOSS) BEFORE
   INCOME TAXES                152          (880)        (909)      (1,687)

    Credit for income taxes    ---          (279)         ---         (596)

  NET INCOME (LOSS)           $152         $(601)       $(909)     $(1,091)

  Basic income (loss)
   per common share          $0.01        $(0.06)      $(0.09)      $(0.11)

  Diluted income (loss)
   per common share          $0.01        $(0.06)      $(0.09)      $(0.11)

  Weighted average common
   shares outstanding       10,138        10,108       10,138       10,119

  Weighted average common
   and potential dilutive
   common shares
   outstanding              10,138        10,108       10,138       10,119



                             PIZZA INN, INC.
                  CONDENSED CONSOLIDATED BALANCE SHEETS
                   (In thousands, except share amounts)

                                                 December 24,       June 25,
  ASSETS                                            2006              2006
                                                 (unaudited)

  CURRENT ASSETS
    Cash and cash equivalents                        $287             $184
    Accounts receivable, less allowance
     for doubtful accounts of $331 and
     $324, respectively                             2,625            2,627
    Accounts receivable -- related parties            364              452
    Notes receivable, current portion,
     less allowance                                    28               52
    Inventories                                     1,560            1,772
    Assets held for sale                              383              ---
    Current deferred income tax asset               1,138            1,145
    Prepaid expenses and other                        411              299
      Total current assets                          6,796            6,531

  LONG-TERM ASSETS
    Property, plant and equipment, net              1,008           11,921
    Non-current notes receivable                       16               20
    Re-acquired development territory, net            335              431
    Deposits and other                                305               98
                                                   $8,460          $19,001
  LIABILITIES AND SHAREHOLDERS' EQUITY
  CURRENT LIABILITIES
    Accounts payable -- trade                      $2,843           $2,217
    Accrued litigation expenses                       410            2,800
    Other accrued expenses                          1,839            1,991
    Current portion of long-term debt                 ---            8,044
      Total current liabilities                     5,092           15,052

  LONG-TERM LIABILITIES
    Other long-term liabilities                       654              437
                                                    5,746           15,489

  COMMITMENTS AND CONTINGENCIES

  SHAREHOLDERS' EQUITY
    Common Stock, $.01 par value;
     authorized 26,000,000 shares;
     issued 15,090,319 and 15,090,319
     shares, respectively; outstanding
     10,138,494 and 10,138,494 shares,
     respectively                                     151              151
    Additional paid-in capital                      8,523            8,426
    Retained earnings                              13,684           14,593
    Accumulated other comprehensive loss              ---              (14)
    Treasury stock at cost
      Shares in treasury: 4,951,825 and
       4,951,825, respectively                    (19,644)         (19,644)
         Total shareholders' equity                 2,714            3,512
                                                   $8,460          $19,001



                             PIZZA INN, INC.
             CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (In thousands)
                               (Unaudited)

                                                     Six Months Ended
                                               December 24,     December 25,
                                                   2006             2005

  CASH FLOWS FROM OPERATING ACTIVITIES:

    Net loss                                       $(909)          $(1,091)
    Adjustments to reconcile net loss to
      cash used in operating activities:
      Depreciation and amortization                  448               568
      Deferred rent expense                            3                31
      Stock compensation expense                      97               197
      Litigation expense accrual                     302               ---
      Gain on sale of assets                        (564)             (147)
      Deferred revenue                               196               ---
    Changes in operating assets and liabilities:
      Notes and accounts receivable                  118               195
      Inventories                                    212              (425)
      Accounts payable -- trade                      626               645
      Accrued expenses                            (3,096)             (385)
      Prepaid expenses and other                    (331)               70
      Cash used in operating activities           (2,898)             (342)

  CASH FLOWS FROM INVESTING ACTIVITIES:

    Proceeds from sale of assets                  11,319               474
    Capital expenditures                            (248)           (1,315)
      Cash provided by (used for)
       investing activities                       11,071              (841)

  CASH FLOWS FROM FINANCING ACTIVITIES:
    Deferred financing costs                         (26)              ---
    Change in line of credit, net                    ---             1,381
    Repayments of long-term bank debt             (8,044)             (209)
    Proceeds from exercise of stock options          ---                22
      Cash (used for) provided by
       financing activities                       (8,070)            1,194

  Net increase in cash and cash equivalents          103                11
  Cash and cash equivalents, beginning
   of period                                         184               173
  Cash and cash equivalents, end of period          $287              $184

SOURCE: Pizza Inn, Inc.

CONTACT: Charlie Morrison, Chief Financial Officer of Pizza Inn, Inc.,
+1-469-384-5203