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Pizza Inn, Inc. Reports Results for the Third Quarter Fiscal Year 2006

PIZZA INN, INC. today reported a net loss per share for its third quarter ended March 26, 2006 of ($0.05) versus earnings of $0.00 per share for the same quarter last year. The quarter resulted in a net loss of ($477,000) versus a net loss of ($20,000) for the same quarter last year on revenues of $12.8 million and $13.4 million, respectively.

   Third Quarter FY 2006 versus Third Quarter FY 2005 Results

   * Diluted EPS was ($0.05) versus $0.00 on a net loss of ($477,000) versus
     a net loss of ($20,000) for the same quarter last year.

   * Same store buffet restaurant sales increased 1.1% for the quarter and
     same store chainwide retail sales increased 0.4% for the quarter.

   * Total revenues decreased approximately 4%, or $589,000, primarily due
     to 2.6% overall lower chainwide retail sales as a result of fewer net
     stores and lower cheese prices.  The resulting reductions in food and
     supply sales and royalty revenues were partially offset by higher
     company-owned restaurant sales due to the opening of three new company
     buffet restaurants in the current fiscal year.

   * Losses for company-owned restaurants increased approximately $140,000
     to ($238,000).

   * Salaries increased approximately $134,000 due to increased staffing
     levels and severance payments made.

   * Energy costs increased approximately $114,000.

   * General and administrative expenses included non-cash stock
     compensation expense of $88,000 for approximately 560,000 stock option
     rights granted previously.  The prior year did not include any non-cash
     compensation expense.

The Company's President and CEO, Tim Taft, commented, "Following months of research and preparation, we implemented the first phase of our marketing plan in January of this year and are already seeing encouraging results from these efforts. In addition, the renewed trust and confidence our franchise partners have in the brand's new direction is producing positive results. We continue to work together to establish the proper direction for Pizza Inn, one focused on our competitive strengths and advantages. Although sales performance is improving at Pizza Inn, we have not lost sight of our opportunity to improve its operating performance."

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. is headquartered in The Colony, Texas, along with its distribution division, Norco Restaurant Services Company. Pizza Inn franchises approximately 378 restaurants and currently owns four restaurants with annual chainwide sales of approximately $155 million.

   Pizza Inn, Inc.             For more information contact:
   3551 Plano Parkway          Kevin Kleiner
   The Colony, TX  75056       Controller
                               (469) 384-5203

For more information about the company, visit Pizza Inn at https://www.pizzainn.com/ .

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

                                  Three Months Ended     Nine Months Ended
                                 March 26,   March 27,  March 26,  March 27,
  REVENUES:                         2006       2005       2006       2005

     Food and supply sales        $11,131    $11,859    $33,654     $36,981
     Franchise revenue              1,200      1,319      3,579       3,884
     Restaurant sales                 512        223      1,069         721

                                   12,843     13,401     38,302      41,586

  COSTS AND EXPENSES:
     Cost of sales                 11,225     11,241     33,451      35,125
     Franchise expenses               783        723      2,384       2,044
     General and administrative
      expenses                      1,363      1,311      4,461       3,497
                                   13,371     13,275     40,296      40,666

  OPERATING (LOSS) INCOME            (528)       126     (1,994)        920

     Gain on sale of asset              2        ---        149         ---
     Interest expense                (211)      (157)      (579)       (431)

  (LOSS) INCOME BEFORE
   INCOME TAXES                      (737)       (31)    (2,424)        489

     Provision for income taxes      (260)       (11)      (856)        173

  NET (LOSS) INCOME                 $(477)      $(20)   $(1,568)       $316

  Basic (loss) earnings per
   common share                    $(0.05)      $---     $(0.15)      $0.03

  Diluted (loss) earnings per
   common share                    $(0.05)      $---     $(0.15)      $0.03

  Weighted average common shares   10,138     10,089     10,118      10,109

  Weighted average common and
   potential dilutive common
   shares                          10,188     10,117     10,164      10,142



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

                                                  March 26,         June 26,
  ASSETS                                             2006             2005
                                                 (unaudited)
  CURRENT ASSETS
    Cash and cash equivalents                        $190             $173
    Accounts receivable, less allowance
     for doubtful accounts of $209 and
     $360, respectively                             2,894            3,419
    Accounts receivable - related parties             465              622
    Notes receivable, current portion,
     less allowance for doubtful accounts
     of $0 and $11, respectively                       63              ---
    Inventories                                     1,996            1,918
    Property held for sale                            ---              301
    Deferred tax assets, net                        1,011              193
    Prepaid expenses and other                        353              355
        Total current assets                        6,972            6,981

  LONG-TERM ASSETS
    Property, plant and equipment, net             13,340           12,148
    Property under capital leases, net                ---               12
    Long-term receivable                               10              ---
    Long-term receivable - related party              313              314
    Goodwill                                          153              ---
    Reacquired development territory                  479              623
    Deposits and other                                196              177
                                                  $21,463          $20,255
  LIABILITIES AND SHAREHOLDERS' EQUITY
  CURRENT LIABILITIES
    Accounts payable - trade                       $2,558           $1,962
    Accrued expenses                                1,896            1,374
    Current portion of long-term debt               8,648              406
    Current portion of capital lease
     obligations                                      ---               11
        Total current liabilities                  13,102            3,753

  LONG-TERM LIABILITIES
    Long-term debt                                    ---            7,297
    Long-term capital lease obligations               ---               13
    Deferred tax liability, net                       ---                3
    Other long-term liabilities                       523              283
                                                   13,625           11,349

  COMMITMENTS AND CONTINGENCIES

  SHAREHOLDERS' EQUITY
    Common Stock, $.01 par value;
     authorized 26,000,000 shares; issued
     15,090,319 and 15,046,319 shares,
     respectively; outstanding 10,138,494
     and 10,094,494 shares, respectively              151              150
    Additional paid-in capital                      8,371            8,005
    Retained earnings                              19,014           20,582
    Accumulated other comprehensive loss              (54)            (187)
    Treasury stock at cost
      Shares in treasury: 4,951,825 and
       4,951,825, respectively                    (19,644)         (19,644)
        Total shareholders' equity                  7,838            8,906
                                                  $21,463          $20,255



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

                                                     Nine Months Ended
                                                  March 26,       March 27,
                                                     2006            2005

  CASH FLOWS FROM OPERATING ACTIVITIES:

     Net (loss) income                             $(1,568)           $316
     Adjustments to reconcile net (loss)
      income to cash provided by operating
      activities:
        Depreciation and amortization                  884             861
        Gain on property held for sale                (159)            ---
        Provision for bad debt                         100              30
        Utilization of deferred taxes                  ---             (20)
        Stock compensation expense                     285             ---
        Deferred rent                                   32             ---
     Changes in assets and liabilities:
        Notes and accounts receivable                  491            (358)
        Inventories                                    (79)           (435)
        Accounts payable - trade                       596             786
        Accrued expenses                              (166)           (711)
        Prepaid expenses and other                     158              51
        Cash provided by operating
         activities                                    574             520

  CASH FLOWS FROM INVESTING ACTIVITIES:

     Proceeds from sale of assets                      589             ---
     Capital expenditures                           (2,165)           (721)
        Cash used for investing
         activities                                 (1,576)           (721)

  CASH FLOWS FROM FINANCING ACTIVITIES:

     Repayments of long-term bank debt
      and capital lease obligations                   (110)           (102)
     Borrowings of bank debt                         1,047             ---
     Stock repurchase                                  ---            (160)
     Proceeds from exercise of stock
      options                                           82              16
        Cash provided by (used for)
         financing activities                        1,019            (246)

  Net increase (decrease) in cash and
   cash equivalents                                     17            (447)
  Cash and cash equivalents, beginning
   of period                                           173             617
  Cash and cash equivalents, end of
   period                                             $190            $170

SOURCE: Pizza Inn, Inc.

CONTACT: Kevin Kleiner, Controller of Pizza Inn, Inc., +1-469-384-5203