FOR IMMEDIATE RELEASE

Contact: Danny Meisenheimer

VP of Brand Management

Pizza Inn, Inc.

469-384-5000

dmeisenheimer@pihq.com

PIZZA INN REPORTS RESULTS FOR FOURTH QUARTER AND

FISCAL YEAR 2007

Operating Performance Strengthens as Company Posts Positive

Same Store Sales Growth in Q4

The Colony, Texas – September 20, 2007-- PIZZA INN INC. (NASDAQ:PZZI) today reported net income of $658,000, or $0.06 per share for the fourth quarter of the fiscal year ended June 24, 2007 versus ($4,421,000), or ($0.43) per share for the fourth quarter of fiscal 2006. The Company also reported net income of $206,000, or $0.02 per share for fiscal 2007 versus a net loss of ($5,989,000), or ($0.59) per share for fiscal 2006. Operating performance for the fourth quarter and fiscal 2007 reflected the following:

• Comparable buffet restaurant sales increased 3.1% for the fourth quarter from the fourth quarter of fiscal 2006. For fiscal 2007, comparable buffet restaurant sales increased 0.8% from fiscal 2006, the first such annual increase in five years.

• Domestic chain-wide comparable restaurant sales increased 1.1% for the fourth quarter from the fourth quarter of fiscal 2006. For fiscal 2007, domestic chain-wide comparable restaurant sales decreased 0.7% from fiscal 2006.

• Overall domestic chain-wide restaurant sales decreased 3.2% for the fourth quarter from the fourth quarter of fiscal 2006 due to a net reduction in franchise openings driven by additional closures of underperforming restaurants.

• General and administrative expenses for fiscal 2007 were lower by $1.5 million compared to fiscal 2006. The reduction was due primarily to a reduction in payroll expenses of $416,000, driven primarily by the outsourcing of our warehousing and distribution activities, and a reduction in stock compensation expense of $355,000, due primarily to the reversal of prior expenses for unvested options that terminated. Occupancy costs for fiscal 2007 were lower by $211,000 compared to fiscal 2006, also due primarily to the outsourcing initiative.

• Net income for the fourth quarter improved $5,079,000 compared to the fourth quarter of fiscal 2006, due primarily to accrued expenses in the fourth quarter of fiscal 2006 of $2,800,000 related to the litigation settlement between the Company and its former CEO as well as an impairment expense in the fourth quarter of fiscal 2006 of $1,166,000 related to two Company-owned restaurants.

Operating results for the fourth quarter mark the third consecutive profitable quarter for Pizza Inn, further strengthening the Company’s financial and cash positions.

Charlie Morrison, Interim CEO and Chief Financial Officer, commented, “We are encouraged by our continued progress. We believe that our foundation is much stronger as evidenced by our increases in cash and the elimination of our debt. The fiscal year end marks the fourth consecutive month of comparable buffet sales gains and reflects the momentum we have achieved in part due to the increasing number of franchisees remodeling their restaurants. We continue to strive to identify ways to reduce costs and improve the profitability of our franchisees to assist in the reinvestment in their businesses. While executing these initiatives, we are working on the long-term development of this chain, specifically in the areas of domestic and international restaurant growth.”

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 materially 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; success of its franchise operations; national, regional and local economic conditions affecting the restaurant industry; competition within the restaurant industry; restaurant sales cannibalization; negative publicity; fluctuations in quarterly results of operations, including seasonality; government regulations; weather; and commodity, insurance and labor costs

Pizza Inn, Inc. (www.pizzainn.com) is headquartered in The Colony, Texas, along with its distribution division, Norco Restaurant Services Company. Pizza Inn franchises approximately 350 restaurants and owns one restaurant with annual domestic and international chain-wide sales of approximately $145 million.

PIZZA INN, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
			Year Ended
			June 24,		June 25,		June 26,
			2007		2006		2005
REVENUES:
	Food and supply sales	$	41,029	$	44,202	$	49,161
	Franchise revenue		4,622		4,799		5,162
	Restaurant sales		1,485		1,458		946
			47,136		50,459		55,269
COSTS AND EXPENSES:
	Cost of sales		40,101		43,762		46,617
	Franchise expenses		2,633		3,126		2,791
	General and administrative expenses		4,002		5,531		4,882
	Gain on sale of assets		(570)		(149)		-
	Impairment of long-lived assets and goodwill		48		1,319		-
	Litigation settlement accrual		302		2,800		-
	Other (income) expense		(159)		-		-
	Provision for bad debt		96		301		30
	Total costs and expenses, net		46,453		56,690		54,320
OPERATING INCOME (LOSS)			683		(6,231)		949
	Interest expense		477		787		590
INCOME (LOSS) BEFORE INCOME TAXES			206		(7,018)		359
	Provision (benefit) for income taxes		-		(1,029)		155
NET INCOME (LOSS)		$	206	$	(5,989)	$	204
Basic earnings (loss) per common share		$	0.02	$	(0.59)	$	0.02
Diluted earnings (loss) per common share		$	0.02	$	(0.59)	$	0.02
Weighted average common shares outstanding			10,145		10,123		10,105
Weighted average common and
	potentially dilutive common shares outstanding		10,146		10,123		10,142

PIZZA INN, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
					June 24,		June 25,
					2007		2006
ASSETS
CURRENT ASSETS
	Cash and cash equivalents			$	1,879	$	184
	Accounts receivable, less allowance for doubtful
			accounts of $451 and $324, respectively		2,716		2,627
	Accounts receivable - related parties				-		452
	Notes receivable, current portion				8		52
	Inventories				1,518		1,772
	Property held for sale				336		-
	Deferred income tax assets				458		1,145
	Prepaid expenses and other				165		299
			Total current assets		7,080		6,531
LONG-TERM ASSETS
	Property, plant and equipment, net				778		11,921
	Notes receivable				12		20
	Re-acquired development territory, net				239		431
	Deposits and other				85		98
				$	8,194	$	19,001
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
	Accounts payable - trade			$	2,082	$	2,217
	Accrued expenses				1,805		4,791
	Current portion of long-term debt				-		8,044
			Total current liabilities		3,887		15,052
LONG-TERM LIABILITIES
	Deferred gain on sale of property				209		-
	Deferred revenues				314		379
	Other long-term liabilities				7		58
			Total liabilities		4,417		15,489
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
	Common stock, $.01 par value; authorized 26,000,000
		shares; issued 15,120,319 and 15,090,319 shares, respectively;
		outstanding 10,168,494 and 10,138,494 shares, respectively			151		151
	Additional paid-in capital				8,471		8,426
	Retained earnings				14,799		14,593
	Accumulated other comprehensive loss				-		(14)
	Treasury stock at cost
		Shares in treasury: 4,951,825 for both years			(19,644)		(19,644)
			Total shareholders' equity		3,777		3,512
				$	8,194	$	19,001

PIZZA INN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
				Year Ended
				June 24,		June 25,		June 26,
				2007		2006		2005
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income (loss)		$	206	$	(5,989)	$	204
	Adjustments to reconcile net income (loss) to
		cash provided by (used for) operating activities:
		Depreciation and amortization		692		1,214		1,143
		Impairment of long-lived assets & goodwill		48		1,443		-
		Deferred rent expense		(9)		56		-
		Provision for bad debt		96		301		30
		Stock compensation expense		(14)		341		-
		Litigation expense accrual		302		2,800		-
		Gain on sale of assets		(570)		(149)		-
		Deferred income taxes		687		(1,029)		39
		Deferred revenue		196		542		-
	Changes in operating assets and liabilities:
		Notes and accounts receivable		320		884		(256)
		Inventories		254		145		(205)
		Accounts payable - trade		(135)		255		716
		Accrued expenses		(3,520)		7		(735)
		Prepaid expenses and other		76		414		152
		Cash (used for) provided by
		operating activities		(1,371)		1,235		1,088
CASH FLOWS FROM INVESTING ACTIVITIES:
	Proceeds from sale of assets			11,325		589		-
	Capital expenditures			(249)		(2,227)		(753)
		Cash provided by (used for)
		investing activities		11,076		(1,638)		(753)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Deferred financing costs			(25)		-		-
	Change in line of credit, net			-		747		(234)
	Repayments of long-term bank debt			(8,044)		(414)		(415)
	Purchases of treasury stock			-		-		(160)
	Proceeds from exercise of stock options			59		81		30
		Cash (used for) provided by
		financing activities		(8,010)		414		(779)
Net increase in cash and cash equivalents				1,695		11		(444)
Cash and cash equivalents, beginning of year				184		173		617
Cash and cash equivalents, end of year			$	1,879	$	184	$	173