February 24, 2005 - CORRESP: A correspondence can be sent as a document with another submission type or can be sent as a separate submission. | Rave Restaurant Group, Inc. (RAVE)

Pizza Inn
3551 Plano Parkway
The Colony, TX 75056
(469) 384-5000

February 24, 2005

VIA EDGAR AND FACSIMILE (202.942.9648)

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

RE: Form 10-K for the fiscal year ended June 27, 2004
File Date: September 24, 2004
File No. 0-12919

Forms 10-Q for the periods ended September 26 and December 26, 2004

Ladies and Gentlemen:

As requested by the Securities and Exchange Commission, Pizza Inn, Inc.
hereby furnishes the following responses and supplemental information to the
comment letter dated February 14, 2005 from the Commission to Pizza Inn. The
following responses and supplemental information are keyed to the Commission's
comments, which are set forth in italics below.

FORM 10-K FOR THE FISCAL YEAR ENDED JUNE 27, 2004
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Item 7. Management's Discussion and Analysis of Financial Condition and Results
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of Operations
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Results of Operations
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Fiscal 2004 Compared to Fiscal 2003
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1. In future filings please consider including an overview section that adds
context for the remainder of the discussion by providing a balanced,
executive-level discussion that identifies the most important themes or other
significant matters with which management is concerned primarily in evaluating
the company's financial condition and operating results. See Section III.A of
SEC Release 33-8350.

Response:
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We will include an introductory or overview section in management's discussion
and analysis of financial condition and results of operations in future filings,
as appropriate, in an effort to address this comment.

2. Throughout this section, you refer to two or more factors that
contributed to material changes over the reported periods of the various
components of your results of operations. In future filings rather than simply
using the term "primarily" in describing changes, quantify the amount of the
change that is attributable to the primary source you identify as they relate to
these components. In addition to quantifying the dollar effect of the various
contributing factors ensure that you provide information about the quality of
and potential variability of your earnings, so that investors can ascertain the
likelihood that past performance is indicative of future performance. See
Section III.D of SEC Release 33-6835.

Response:
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We will quantify the contribution of factors that cause material year-to-year or
period-to-period changes in line items and provide information about the quality
and potential variability of earnings in management's discussion and analysis of
financial condition and results of operations in future filings, as reasonably
practicable and to the extent necessary to an understanding of our businesses as
a whole, in an effort to address these comments.

3. We note that 34 new franchise units were opened and 39 units were closed
during fiscal 2004. Please tell us and disclose in future filings what impact
these events had on your operations as well as the impact, if any, on
collectibility of any outstanding receivables and royalties due to the company.
Additionally, please consider including a rollforward within your MD&A to show
beginning units, units closed, new units and ending units for all applicable
years to supplement your discussion of results of operations and to enhance the
ability to evaluate trends in franchise operations. This disclosure should cover
each franchise format (e.g., Buffet's, Delco's and Express locations). If you
believe other information is more meaningful or appropriate, please advise.

Response:
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We will disclose what impact openings and closings had on operations as well as
the impact, if any, on collectibility of any outstanding receivables and
royalties due to us and other more meaningful or appropriate information, if
any, and consider including such a rollforward in management's discussion and
analysis of financial condition and results of operations in future filings, as
applicable and appropriate, in an effort to address these comments.

We do not believe that these closings had any material impact on collectibility
of any outstanding receivables and royalties due to us because (i) these amounts
have previously been reserved for by us with respect to units that were closed
during fiscal 2004 and (ii) these closed units were lower volume units whose
financial impact on our business as a whole was immaterial. For those units
that are anticipated to close or exhibiting signs of financial distress, credit
terms are typically restricted, weekly food orders are required to be paid for
on delivery and/or with certified funds, and royalty and advertising fees are
collected, as add-ons to the delivered price of weekly food orders.

4. It appears that at least 10% of your franchised locations have closed in
each of the past two years. Tell us, and revise your MD&A in future filings to
address, whether this level of store turnover is consistent with management's
expectations. If the level of store closures is above the level you have
experienced historically, please discuss the reasons, if known, for the high
level of turnover and the potential impact on your future prospects.

Response:
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Please refer to the table of store count below.

The level of store turnover described above was not materially inconsistent with
management's expectations. Although management believes that a comparison of
historical closings may not be predictive of future closings or otherwise
meaningful because the factors that contributed to historical closings may no
longer contribute to future closings, we will include the chart set forth above
in future Form 10-K filings and will also provide an explanation as to what
caused any unusual activity in store openings or closings, as applicable and
appropriate, in an effort to address these comments.

Contractual Obligations and Commitments
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5. In future filings please revise your contractual obligations table to
include estimated interest payments on your debt. Because the table is aimed at
increasing transparency of cash flow, we believe these payments should be
included in the table. If you choose not to include these payments, a footnote
to the table should clearly identify the excluded items and provide any
additional information that is material to an understanding of your cash
requirements. See Section 1V.A and footnote 46 to the Commission's MD&A Guidance
issued December 19, 2003 available at www.sec.gov.
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Response:
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We will revise the contractual obligations table in future filings to
include estimated interest payments or a footnote or footnotes to the table, as
applicable and appropriate, in an effort to address these comments.

Financial Statements
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Consolidated Balance Sheets
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6. You disclose in the proxy statement that the company expected the balance
of the Clairday Debt of $335,318 to be paid in full pending completion of
negotiations with Mr. Clairday. Please tell us the status of these negotiations.
In light of the age of the related receivables and the lack of significant
payment/set-off activity in recent years we assume that you classify any
unreserved balance associated with these receivables as a non-current asset.
Please confirm that our understanding is correct, or tell us why you believe
that current classification is appropriate. In this regard we refer you to ARB
43 Chapter 3 (especially paragraphs 4 and 6).

Response:
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We are actively pursuing payment discussions with Mr. Clairday regarding
repayment of his debt, through the company's credit and collection function as
we do with other past due receivables, and at the board level. Mr. Clairday, as
a member of the Company's board of directors, is entitled to receive monthly
board fees of $1,417 and board meeting fees of $1,000. We intend to withhold all
such amounts and apply them to reduce the principal balance of Mr. Clairday's
debt. Assuming four board meetings annually, we anticipate an annual offset of
$21,000. Additionally, Mr. Clairday is considering the sale of certain of his
real estate holdings, the proceeds of which he has indicated to us will be
applied to reduce the balance of his debt.

The account receivable is classified as a current asset because we believe
collection will occur within the next fiscal year.

Consolidated Statement of Operations
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7. The company discloses that it has a wholly-owned insurance operation
(PIBCO Ltd). Tell us, with a view towards future disclosure, whether this is a
captive insurance operation for the purpose of managing the company's
self-insured risk exposures and tax planning or an operating insurance
enterprise that serves third-party customers. To the extent that PIBCO Ltd.
serves third party customers, tell us:

- - the nature of the insurance operations (e.g., types of risks insured,
duration of policies, nature of customers, etc.);
- - gross dollar amount of coverage outstanding for policies in force and, to
the extent applicable, the extent to which risk associated with policies in
force bus been assumed by reinsurance arrangements;
- - the amount of premium revenues and associated expenses reflected for each
period presented;
- - where revenues and related costs of insurance operations are classified on
the consolidated statement of operations; and
- - where insurance related obligations are classified on the balance sheet.

Response:
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PIBCO, Ltd., a wholly owned insurance subsidiary of Pizza Inn, is a captive
insurance operation that was originally and primarily intended to provide
general business insurance to our franchisees. PIBCO does not serve parties not
affiliated with Pizza Inn. PIBCO has effectively ceased operations, except for
operations concerning the servicing of three (3) claims pending as a result of
incidents occurring on restaurant premises operated by franchisees. Currently,
the total claim service is approximately $3,500 per month. We intend to dissolve
or otherwise dispose of PIBCO after these remaining claims have been resolved.

Note A- Organization and Summary of Significant Accounting Policies
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Revenue Recognition
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8. Please confirm for us supplementally and revise your future disclosure to
specify, if true, that title and risk of loss transfer upon shipment in
accordance with the terms of your agreements with your franchisees, or tell us
why recognition of revenue upon shipment is appropriate. Clarify whether
equipment sales require installation or testing prior to franchisee acceptance.
Refer to SAB 104 for guidance.

Response:
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Title and risk of loss for products we sell transfer upon delivery. Revenue
has been historically recognized upon shipment, which approximates the results
of recognition upon delivery to within an insignificant degree. This occurs
because the product shipment and delivery cycle (the length of time between
loading an order on our trucks and receipt by the franchisee) is relatively
short and consistent between reporting periods. To validate and quantify the
immaterial difference between recognition on shipment and delivery at the end of
each reporting period, we analyze merchandise in transit to evaluate the amount
of revenue that should not be recognized at the end of the quarter then ended
and compare it to the similar amount from the previous quarter. The difference
is consistently below $15,000. Since these differences offset at the beginning
and ending of each quarter, there is no cumulative effect on revenue
recognition. The results historically show that the difference between revenue
recognition at time of shipment and delivery to be immaterial.

Equipment we sell does require installation prior to acceptance.
Recognition of revenue occurs upon installation of such equipment.

However, consistent with the requirements of SAB 104, we will revise future
disclosure, as appropriate, to specify that title and risk of loss transfer upon
delivery of product or installation of equipment or discuss why recognition of
revenue upon shipment is appropriate and clarify whether equipment sales require
installation or testing prior to franchisee acceptance.

Note I - Commitments and Contingencies
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9. With respect to store closings, openings and territory sales, please
address the disclosure requirements of paragraph 20 of SFAS 45 or tell us why
such disclosure is not required.

Response:
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We believe such disclosure is not required because there are no significant
commitments or obligations resulting from franchise agreements that require
disclosure. License fees are recognized as income when there has been
substantial performance of the agreement by both the franchisee and us,
generally at the time the unit is opened. Territory sales are recognized to the
extent obligations are fulfilled and cash received. Currently, we do not
purchase or lease land, buildings, or equipment on behalf of our franchisees,
nor do we guarantee franchise lease obligations or third-party vendor
obligations. Therefore, upon any unit closing no obligations normally exist.

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10. We note that your write-offs of receivables are net of recoveries.
Please tell us supplementally, and disclose in future filings, the amount of
write-offs and recoveries on a gross basis.

Response:
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We will disclose in future filings the amount of write-offs and recoveries on a
gross basis, as appropriate. Please see the supplemental table below.

FORM 10-Q FOR THE QUARTER ENDED DECEMBER 26, 2004
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
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of Operations
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11. Please tell us, with a view towards future disclosure, more about the
specific nature and amount of factors leading to the adverse changes in gross
margin over the past several quarters. For example, in your Form 10-K for the
fiscal year ended June 27, 2004 you attribute increased costs to an increase in
block cheese prices. It is unclear whether the company has the intent or ability
to raise prices to compensate for the increases in product costs you mention.
Based on the increased inventory levels on your balance sheet, we assume the
recognition of increased product costs will persist as you sell product in
future quarters. Identify any known or likely trend in costs, to the extent
applicable.

Response:
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We do not currently intend to raise prices to compensate for the increases
in product costs referenced. In addition, we may not be able to raise prices
for these increased costs because of the competitive environment in which we
operate.

We are not presently aware of trends in costs or other recurring events or
circumstances affecting costs. We do experience fluctuations in commodity
prices, particularly in the price of block cheese, increases in the price of
diesel fuel, fluctuations in interest rates, and net gains or losses in the
number of restaurants open in any particular reporting period, among other
things, each of which will affect product costs, but none of which can be
accurately predicted.

12. You include "Other Income" in revenues on your statement of operations.
It appears that this line item includes several non-revenue items, such as,
interest income, gains on asset sales, etc. Also, your references to
"third-party commissions" and "vendor incentives" also suggest that revenue
classification may not be appropriate. Please tell us the nature and amount of
each item included in "Other Income" for fiscal years 2002, 2003 and 2004 and
for the quarters ended September 26, 2004 and December 26, 2004 and how you
determined that revenue classification was appropriate. Please provide
references to authoritative literature supporting your classification, to the
extent possible. In this regard we refer you to Rule 5-03(b) of Regulation S-X
and remind you that other income, interest income and similar transactions must
be classified as non-operating income rather than revenues. Please refer to E1TF
02-16 for guidance on accounting for vendor incentives. We may have further
comments after reviewing your response.

Response:
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We have reviewed the "Other Income" category, and understand and agree with the
Commission's position regarding classification of certain items within "Other
Income." However, we believe the current classification of certain items, as
outlined in the accompanying table, that are clearly insignificant to revenue
and operating income does not distort earnings trends or mislead the reader.
Amounts to be reclassified are less than 1% of total revenue, except for fiscal
year ending June 30, 2002, which is less than 2% of total revenue, for each
period. Reclassifications are specific to each respective period. The fiscal
year ended June 30, 2002 included a non-cash reversal of a $700,000 reserve
originally set up as the Company emerged from bankruptcy in 1993 and
subsequently deemed unnecessary. Additionally, we have historically described
the included items in "Other Income" listed in our MD&A sections. Due to the
immateriality of the reclassification we respectfully request that we be
permitted to reclassify all years in future filings beginning with our Form 10-Q
for the period ending March 27, 2005. Listed below is a table detailing the
components of "Other Income" as reported previously.

In connection with responding to the Commission's comments, as requested by the
Commission, we acknowledge that (i) we are responsible for the adequacy and
accuracy of the disclosure in the filings; (ii) staff comments or changes to
disclosure in response to staff comments do not foreclose the Commission from
taking any action with respect to the filings; and (iii) we may not assert staff
comments as a defense in any proceeding initiated by the Commission or any
person under the federal securities laws of the United States.

Sincerely,

Pizza Inn, Inc.

By: /s/Shawn M. Preator
Name: Shawn M. Preator
Title: Chief Financial Officer