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<SEC-DOCUMENT>0000718332-05-000031.txt : 20050524
<SEC-HEADER>0000718332-05-000031.hdr.sgml : 20050524
<ACCEPTANCE-DATETIME>20050524172307
ACCESSION NUMBER:		0000718332-05-000031
CONFORMED SUBMISSION TYPE:	DEF 14A
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20040527
FILED AS OF DATE:		20050524
DATE AS OF CHANGE:		20050524
EFFECTIVENESS DATE:		20050524

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			PIZZA INN INC /MO/
		CENTRAL INDEX KEY:			0000718332
		STANDARD INDUSTRIAL CLASSIFICATION:	WHOLESALE-GROCERIES & RELATED PRODUCTS [5140]
		IRS NUMBER:				470654575
		STATE OF INCORPORATION:			MO
		FISCAL YEAR END:			0626

	FILING VALUES:
		FORM TYPE:		DEF 14A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-12919
		FILM NUMBER:		05854998

	BUSINESS ADDRESS:	
		STREET 1:		5050 QUORUM DR STE 500
		CITY:			DALLAS
		STATE:			TX
		ZIP:			75240
		BUSINESS PHONE:		2147019955

	MAIL ADDRESS:	
		STREET 1:		5050 QUORUM DR STE 500
		STREET 2:		5050 QUORUM DR STE 500
		CITY:			DALLAS
		STATE:			TX
		ZIP:			75240

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	PANTERAS CORP
		DATE OF NAME CHANGE:	19901126

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	CONCEPT DEVELOPMENT INC
		DATE OF NAME CHANGE:	19870212
</SEC-HEADER>
<DOCUMENT>
<TYPE>DEF 14A
<SEQUENCE>1
<FILENAME>doc1.txt
<TEXT>


                            SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
                                (AMENDMENT NO. 2)

FILED  BY  REGISTRANT     [X]
FILED  BY  A  PARTY  OTHER  THAN  THE  REGISTRANT     [  ]
CHECK  THE  APPROPRIATE  BOX:
     [  ]     PRELIMINARY  PROXY  STATEMENT
     [  ]     CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE
              14A-B(E)(2))
     [X]      DEFINITIVE  PROXY  STATEMENT
     [  ]     DEFINITIVE  ADDITIONAL  MATERIALS
     [  ]     SOLICITING  MATERIAL  PURSUANT  TO  240.14A-11(C)  OR  240.14A-12


<PAGE>


                                 PIZZA INN, INC.
                 (NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

PAYMENT  OF  FILING  FEE  (CHECK  THE  APPROPRIATE  BOX):
[X]     NO  FEE  REQUIRED.

[ ]     FEE COMPUTED ON TABLE BELOW PER EXCHANGE ACT RULES 14A-6(I)(1) AND 0-11.
     1)  TITLE  OF EACH CLASS OF SECURITIES TO WHICH TRANSACTION APPLIES:
     2)  AGGREGATE  NUMBER  OF  SECURITIES  TO  WHICH  TRANSACTION  APPLIES:
     3)  PER UNIT PRICE OR OTHER UNDERLYING VALUE OF TRANSACTION COMPUTED
         PURSUANT TO EXCHANGE ACT RULE 0-11 (SET FOR THE AMOUNT ON WHICH THE
         FILING FEE IS CALCULATED AND  STATE  HOW  IT  WAS  DETERMINED):
     4)  PROPOSED  MAXIMUM  AGGREGATE  VALUE  OF  TRANSACTION:
     5)  TOTAL  FEE  PAID:

[ ]      FEE  PAID PREVIOUSLY WITH PRELIMINARY MATERIALS.

[ ]     CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY EXCHANGE ACT
        RULE 0-11(A)(2)  AND  IDENTIFY  THE  FILING  FOR  WHICH THE OFFSETTING
        FEE WAS PAID PREVIOUSLY. IDENTIFY THE PREVIOUS FILING BY  REGISTRATION
        STATEMENT NUMBER, OR THE  FORM  OR  SCHEDULE  AND  THE  DATE  OF  ITS
        FILING.

     1)  AMOUNT PREVIOUSLY PAID:
     2) FORM, SCHEDULE OR REGISTRATION STATEMENT NO:
     3)  FILING  PARTY:
     4)  DATE  FILED:
<PAGE>

<PAGE>







EXPLANATORY  NOTE:  This  Amendment No. 2 to the Proxy Statement on Schedule 14A
filed  November  10,  2004 by Pizza Inn, Inc. with the Commission (the "Original
Proxy  Statement") supersedes and replaces the Original Proxy Statement and that
certain  Amendment No. 1 to the Original Proxy Statement filed November 12, 2004
by  Pizza  Inn,  Inc.  with  the  Commission.


                                 PIZZA INN, INC.
                              3551  PLANO  PARKWAY
                           THE  COLONY,  TEXAS  75056
                               (469)  384-5000

                  NOTICE  OF  ANNUAL  MEETING  OF  SHAREHOLDERS

                          TO  BE  HELD  JUNE  23,  2005

To  our  Shareholders:

     The 2004 Annual Meeting of Shareholders of Pizza Inn, Inc.  (the "Company")
will be held at the Company's corporate offices, 3551 Plano Parkway, The Colony,
Texas  75056,  on  Thursday,  June 23, 2005, at 10:00 a.m., Dallas time, for the
following  purposes:

1.     To  elect  four  Class  I  directors;

2. To consider and vote upon a proposal to approve the adoption of a stock award
plan  for  non-employee  directors  as  a  successor  plan  to  the 1993 Outside
Directors  Stock  Award  Plan  that  expired  in  2003;

3.     To  consider  and vote upon a proposal to approve the adoption of a stock
award  plan  for  employees as a successor plan to the 1993 Employee Stock Award
Plan  that  expired  in  2003;

4.     To  consider  and  vote  upon  a proposal to amend the Company's Restated
Articles  of  Incorporation  to  declassify  the  board  of  directors;  and

5.     To  transact  such other business as may properly come before the meeting
or  any  postponements  or  adjournments  thereof.

These  items  are  more fully described in the proxy statement, which is part of
this  notice.  We have not received notice of other matters that may be properly
presented  at the annual meeting.  A copy of the Company's Annual Report for the
fiscal  year  ended  June  27,  2004  is  also  enclosed.  Except  as  expressly
incorporated  by reference herein, such Annual Report does not constitute a part
of  the  materials  used  for  the  solicitation  of  proxies.

Please read the enclosed proxy statement carefully.  Complete, date and sign the
proxy,  and  mail  it  in  the  stamped  envelope enclosed for your convenience.

Only shareholders of record at the close of business on May 1, 2005 are entitled
to notice of, and to vote at, this meeting and any postponements or adjournments
thereof.

                                       By  Order  of  the  Board  of  Directors,


                                       Rod  J.  McDonald
The  Colony,  Texas                    Corporate  Secretary
June  6,  2005

     WHETHER  OR  NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE COMPLETE,
DATE,  AND SIGN THE ENCLOSED PROXY, AND MAIL IT IN THE STAMPED ENVELOPE ENCLOSED
FOR  YOUR CONVENIENCE.  THE ENCLOSED PROXY IS REVOCABLE AT ANY TIME PRIOR TO ITS
USE.

                             YOUR VOTE IS IMPORTANT.

<PAGE>
                                 PIZZA INN, INC.
                              3551  PLANO  PARKWAY
                          THE  COLONY,  TEXAS  75056
                                (469)  384-5000

                            PROXY  STATEMENT  FOR  THE
                        ANNUAL  MEETING  OF  SHAREHOLDERS

                           TO  BE  HELD  JUNE  23,  2005

     Pizza  Inn,  Inc.,  a  Missouri  corporation (the "Company"), is soliciting
proxies to be voted at the Annual Meeting of Shareholders (the "Annual Meeting")
to  be  held at the Company's corporate offices, 3551 Plano Parkway, The Colony,
Texas  75056, on Thursday, June 23, 2005, at 10:00 a.m., Dallas time, and at any
postponements  or  adjournments  thereof.  This Proxy Statement and the enclosed
form  of  proxy  are  first  being  sent  or  made  available  to  the Company's
shareholders  on  or  about  June  6,  2005.

     If  the  proxy is signed and returned before the Annual Meeting, it will be
voted  in  accordance  with the directions on the proxy or, if no directions are
made, by the proxies named therein in their discretion. A shareholder may revoke
a  proxy  at  any  time  before  it is voted by execution of a subsequent proxy,
voting the shares in person at the Annual Meeting or by giving written notice to
Pizza  Inn,  Inc.,  c/o  Securities  Transfer  Corporation, Transfer Agent, 2591
Dallas Parkway, Suite 102, Frisco, Texas 75034 at any time prior to the close of
the  polls at the Annual Meeting stating that the proxy has been revoked. If you
hold  shares  through  a  bank  or brokerage firm, you must contact that firm to
revoke  any  prior voting instructions. The Company must receive the notice or a
new  proxy  card  before  the  vote  is  taken  at  the  Annual  Meeting.

                           OUTSTANDING  CAPITAL  STOCK

     The record date for shareholders entitled to notice of, and to vote at, the
Annual  Meeting  is  May  1, 2005.  At the close of business on that date, there
were  10,091,294  outstanding  shares  of  common stock, $.01 par value ("Common
Stock").  No  other class of securities of the Company is entitled to notice of,
or  to  vote  at,  the  Annual  Meeting.

                      ACTION  TO  BE  TAKEN  AT  THE  MEETING

     The  accompanying  proxy, unless the shareholder otherwise specifies in the
proxy,  will  be  voted:

1.     FOR  the  election of the four Class I director nominees named herein, to
serve  for  a  term  of two years each (or one year if the proposal to amend the
Company's  Restated  Articles  of  Incorporation  is  adopted)  or  until  their
respective  successors  are  elected  and  qualified;

2.     FOR  the  approval of the adoption of a stock award plan for non-employee
directors  as  a  successor  plan to the 1993 Outside Directors Stock Award Plan
that  expired  in  2003;

3.  FOR  the  approval  of  the  adoption  of  an incentive stock award plan for
employees as a successor plan to the 1993 Employee Stock Award Plan that expired
in  2003;

4.  FOR  the  amendment  of  the Company's Restated Articles of Incorporation to
declassify  the  board  of  directors;  and

5.  In  the discretion of the proxy holders, as to the transaction of such other
business  as  may  properly  come  before  the  meeting  or any postponements or
adjournments  thereof.

     The  Board  of Directors is not presently aware of any other business to be
brought  before  the  Annual  Meeting.

                                QUORUM AND VOTING

     A  majority  of  the  outstanding  shares  entitled  to  vote at the Annual
Meeting,  represented  in  person  or by proxy, shall constitute a quorum at the
Annual  Meeting.  If a quorum is not present, in person or by proxy, the meeting
may  be  postponed  or  adjourned  from time to time until a quorum is obtained.
Each  outstanding  share  entitled to vote under the provisions of the Company's
Restated  Articles of Incorporation shall be entitled to one vote on each matter
submitted  to  a vote at the Annual Meeting.  Cumulative voting for the election
of  directors is not permitted.  Thus, a shareholder is not entitled to cumulate
his  votes  and  cast them all for any single nominee or to spread his votes, so
cumulated,  among  more  than  one  nominee.  The  election of each nominee as a
director requires the affirmative vote of the holders of record of a majority of
the  outstanding  shares  entitled  to  vote  on  the  election of directors and
represented  in  person  or  by proxy at the Annual Meeting at which a quorum is
present.

     Shares  represented by a shareholder who, or a proxy that, directs that the
shares  abstain  from  voting  or  that  a  vote  be withheld on the election of
directors  or any other matter, shall be deemed to be represented at the meeting
for  quorum  purposes as to such manner, but shall be treated, and have the same
effect, as a vote against the nominees for election as directors or against such
other  matter, as applicable. Broker non-votes shall be deemed to be represented
at  the  meeting  for  quorum  purposes, but shall be treated, and have the same
effect,  as  a  vote against the nominees for election as directors and shall be
treated  as  shares  that  are  not  entitled to vote on, and have the effect of
neither  a  vote  for  nor a vote against, each other matter. Shares as to which
voting  instructions  are given as to at least one of the matters to be voted on
shall  also  be deemed to be so represented. If the proxy states how shares will
be voted in the absence of instructions by the shareholder, such shares shall be
deemed  to  be  represented  at  the  meeting.

     The  enclosed  proxy,  if  properly executed and returned, will be voted as
directed  or  stated  on the proxy or, in the absence of such direction, for the
election  of  the  nominees as directors and each other matter on the proxy.  If
any  other  matters properly come before the meeting, the enclosed proxy will be
voted  by  the  proxy  holders  in  accordance with their best judgment in their
discretion.  The Board believes that all the nominees will be available to serve
as  directors.  If  any  nominee  is  unable to serve or for good cause will not
serve,  the  Board may recommend a substitute nominee, or the Board may fill the
vacancy later.  The shares represented by all valid proxies may be voted for the
election  of  a  substitute  if  one  is  nominated.

                                  PROPOSAL ONE:

                              ELECTION OF DIRECTORS

     The  Company's  Restated  Articles of Incorporation and Bylaws provide that
the Board of Directors shall be divided into two Classes.  The terms of the four
incumbent  Class  I  directors  expire  at  the  Annual  Meeting.  The Board has
nominated  four  candidates  for election at the Annual Meeting, two of whom are
incumbent  Class  I  directors.  If  elected,  each  director nominee shall hold
office  for  a two-year term, subject to the proposed amendment to the Company's
Restated  Articles  of  Incorporation,  which would change the term as described
herein,  or  until  his  successor  shall have been elected and qualified.  Each
nominee  of  the  Board has expressed his intention to serve the entire term for
which  election is sought and has agreed to serve for a term of one year only if
the shareholders approve Proposal Four, to declassify the Board.  If any nominee
is unable or unwilling to serve at the time the election occurs, the proxies may
be voted for the election of another nominee to be designated by the Board.  THE
BOARD  OF  DIRECTORS  RECOMMENDS  A VOTE FOR EACH OF THE FOUR NOMINEE DIRECTORS.

On  October  20,  2004,  the Board of Directors approved a proposal to amend the
Company's  Restated  Articles  of  Incorporation  to  delete  Section  8.2,  the
provision that divides the Board into two classes of directors.  The amended and
substituted  Section  8.2  would  provide for one class of directors.  Under the
amendment,  if approved by the shareholders, the four director nominees proposed
in  this  proxy,  if  elected, will hold office until the 2005 annual meeting of
shareholders  (expected  to  be  held  in December 2005), at which time they, or
their  successors,  would be subject to election as members of a single class of
seven  directors.  Those  directors currently referred to as Class II directors,
who were elected at the 2003 annual meeting of shareholders to hold office until
the  2005  annual meeting of shareholders, will complete their terms at the 2005
annual  meeting  of shareholders, at which time they, or their successors, would
be subject to election as members of a single class of seven directors.  Members
of  the single class, or their successors, would be subject to re-election every
year.  The proposal to amend the Restated Articles of Incorporation requires the
approval of holders of a majority of the shares present in person or represented
by  proxy  and  entitled  to  vote.

     If  the  proposed  amendment  is  not approved by the shareholders, the two
classes  of  directors will continue, and the four Class I nominees, if elected,
will  serve  two-year  terms.

     Following is the biographical information, as of April 1, 2005, of the four
nominee  directors,  and the three directors whose terms of office will continue
after  the  Annual Meeting, the class to which each director has been or will be
elected,  and  the  year  in  which  each  director  was  first  elected.


                                     NOMINEES

     Bobby L. Clairday, 61, is an Area Developer of Pizza Inn restaurants and he
is President, a Director and sole shareholder of Clairday Food Services, Inc., a
Pizza  Inn franchisee operating Pizza Inn restaurants in Arkansas.  Mr. Clairday
is  also sole shareholder of Advance Food Services, Inc., a franchisee operating
Pizza  Inn  restaurants in Arkansas.  From 1990 until his election as a Director
of  the  Company  in  January 1993, Mr. Clairday was an ex-officio member of the
Board  of  Directors,  serving as a representative of the Company's franchisees.
He  has served as the President of the Pizza Inn Franchisee Association and as a
member  of  various  committees  and  associations affiliated with the Pizza Inn
restaurant  system.  Mr.  Clairday has been a franchisee of the Company for over
twenty  years  and  a  Class  I  Director  for  over  nine  years.

     John D. Harkey, Jr., 44, has served as Chief Executive Officer and Chairman
of  Consolidated Restaurant Companies, Inc., as Chief Executive Officer and Vice
Chairman  of  Consolidated  Restaurant Operations, Inc., and has been manager of
the  investment firm Cracken, Harkey, Street & Hartnett since 1997. From 1992 to
1998,  Mr.  Harkey  was  a  partner with the law firm Cracken & Harkey, LLP. Mr.
Harkey  was  founder  and  managing director of Capstone Capital Corporation and
Capstone  Partners,  Inc.  from 1989 until 1992. He has been a director of Total
Entertainment  Restaurant  Corporation  since  1999.

     Timothy P. Taft, 47, was appointed President and Chief Executive Officer in
March  2005.  Prior  to  joining  the  Company, Mr. Taft served as President and
Chief  Operating  Officer of Whataburger, Inc. from October 2000 through October
2005.  Prior  to  that,  he  served  in various senior management positions with
Whataburger, Inc. beginning in 1994.  Before joining Whataburger, Inc., Mr. Taft
was  Vice  President  of  The  Marketing Continuum, a marketing services agency.

     Mark E. Schwarz, 44, is the Chairman, Chief Executive Officer and Portfolio
Manager  of  Newcastle Capital Management, L.P., a private investment management
firm  he founded in 1993 that is the general partner of Newcastle Partners, L.P.
Mr. Schwarz was appointed Chairman of the Board of the Company in February 2004.
Mr.  Schwarz  is  also  Chairman  of  the  Board  and Chief Executive Officer of
Hallmark  Financial  Services,  Inc.,  Chairman of the Board of Bell Industries,
Inc., Chairman of the Board of New Century Equity Holdings Corp., and a director
of  Nashua  Corporation, S L Industries, Inc. and Web Financial Corporation. Mr.
Schwarz was appointed a Director in December 2002 to fill a vacant Class I Board
seat.

                             CONTINUING  DIRECTORS

     Robert  B.  Page,  45,  is  a franchisee of Shoney's, Inc., a family dining
restaurant  chain.  From  November 2000 until September 2002, Mr. Page was Chief
Operations  Officer of Gordon Biersch Brewery Restaurant Inc., a group of casual
dining  restaurants.  From 1993 through 2000 he worked for Romacorp, Inc., which
owns  Tony  Roma's,  a  chain  of  casual dining restaurants, where he was Chief
Executive  Officer  and a board member from 1998 through 2000, and President and
Chief Operations Officer from 1993 through 1998. Mr. Page was elected a Class II
Director  of  the  Company  in February 2004, and was appointed as the Company's
Acting  Chief  Executive Officer in January 2005, a position he held until March
2005.

     Ramon  D. Phillips, 71, is the former Chairman of the Board, President, and
Chief  Executive  Officer  of  Hallmark  Financial  Services,  Inc., a financial
services company.  He served as Chairman, President, and Chief Executive Officer
of  Hallmark from 1989 through 2000, and as Chairman through August 2001.  Prior
to  Hallmark,  Mr.  Phillips  had over fifteen years experience in the franchise
restaurant  industry,  serving  as  Controller  for Kentucky Fried Chicken, Inc.
(1969-1974)  and  as  Executive  Vice  President and Chief Financial Officer for
Pizza  Inn,  Inc. (1974-1989).  He was elected a Director of the Company in 1990
and  served  through  2002.  He  served  as an Advisory Director in 2002 and was
re-elected  as  a  Class  II  Director  in  February  2004.

     Steven  J.  Pully,  45,  is  the President of Newcastle Capital Management,
L.P.,  the  general partner of Newcastle Partners, L.P.  Mr. Pully has also been
Chief  Executive  Officer  and  a  director of New Century Equity Holdings Corp.
since June 2004, and was Chief Executive Officer of Pinnacle Frames and Accents,
Inc.  from  January  2003 through June 2004.  Prior to joining Newcastle Capital
Management, L.P. in late 2001, from May 2000 to December 2001, he was a managing
director  in  the  mergers  and  acquisitions  department  of  Banc  of  America
Securities,  Inc.  and  from  January  1997  to  May 2000 he was a member of the
investment  banking department of Bear Stearns where he became a senior managing
director  in  1999.  Prior to becoming an investment banker, Mr. Pully practiced
securities  and  corporate law at the law firm of Baker & Botts.  Mr. Pully is a
CPA,  a  CFA, and a member of the Texas Bar.  Mr. Pully was appointed a Director
in  December  2002  to  fill  a  vacant  Class  II  Board  seat.



               INFORMATION REGARDING THE BOARD AND ITS COMMITTEES

     The  business of the Company is managed under the direction of the Board of
Directors.  Each director is expected to make reasonable efforts to attend board
meetings,  meetings  of  committees  of  which such director is a member and the
Annual  Meeting  of Shareholders.  The Board of Directors intends to comply with
the  corporate  governance  guidelines  set  forth  by  The  Nasdaq Stock Market
("Nasdaq")  listing  standards  and  Securities  and Exchange Commission ("SEC")
rules  adopted  to  implement  provisions of the Sarbanes-Oxley Act of 2002 (the
"Sarbanes-Oxley Act").  The Board has six committees: an Executive Committee, an
Audit Committee, a Compensation Committee, a Finance Committee, a Nominating and
Governance  Committee  and  a  Strategic  Planning  Committee.  The charters for
certain Board committees, including the Nominating and Governance Committee, may
be  viewed  at  http://www.pizzainn.com.
                -----------------------

     The  Board  met  nine  times  during  the  last fiscal year.  All directors
attended  75%  or  more  of the Board meetings and meetings of the committees on
which  they  served  and  all  seven  directors attended the prior year's annual
meeting.  Below  is a table that provides membership and meeting information for
each  of  the  Board  committees  during  fiscal  year  2004:





                                                         Nominating    Strategic
Name           Executive Audit Compensation Finance    & Governance     Planning
- --------------------------------------------------------------------------------
Mr.  Schwarz       X*
Mr.  Clairday
Mr.  Page                 X2       X2          X*               X2           X**
Mr.  Parker       X1
Mr.  Phillips     X       X*       X          X                X            X**
Mr.  Powell               X
Mr.  Pully                         X*         X                X*

Number of Meetings
 in Fiscal 2004   10      9        5          3                1            143
- -------------------------------------------------------------------------------
1  -  Mr. Parker was replaced by Mr. Page as a member of the Executive Committee
in  December  2004.
2  -  Mr. Page  resigned  his membership on these committees effective as of his
appointment  as  Acting  Chief  Executive  Officer  on   January  4,  2005.
3  -  Includes  five  meetings  with  the  Company's  management  team.
*   Committee  Chairman
**  Committee  Co-Chairman


     Independent  directors  meet at least twice annually apart from other Board
members  and  management  representatives.  Each  of  the  Company's  current
directors,  other  than  Mr.  Clairday,  Mr.  Page  and  Mr.  Parker, qualify as
"independent"  in  accordance  with  published  Nasdaq listing requirements.  On
January  4,  2005 the Board appointed Mr. Page as Acting Chief Executive Officer
of  the  Company.  Mr. Page served in that capacity until the appointment of Mr.
Taft  as  President  and  CEO  on March 31, 2005.  According to published Nasdaq
listing  requirements  during  his  term as Acting CEO and for a period of three
years  thereafter,  Mr.  Page  will  not  qualify  as  an  independent director.

     Below  is  a  description  of  each  committee  of  the Board.  Each of the
committees has authority to engage legal counsel or other experts or consultants
as  it  deems  appropriate  to  carry  out  its responsibilities.  The Board has
determined  that  each  member  of  each committee meets the applicable laws and
regulations  regarding  "independence"  when  applicable and that each member is
free  of  any  relationship that would interfere with his individual exercise of
independent  judgment.

     Executive  Committee.  This  committee  will consider issues as directed by
     --------------------
the  Chairman  of  the  Board.  It  also may exercise the authority of the Board
between  Board  meetings,  except  to  the  extent  that the Board has delegated
authority  to  another  committee  or  to other persons, and except as otherwise
limited  by  Missouri  law.

     Audit  Committee.  The  Company  has a separately designated standing audit
     ----------------
committee  established  in accordance with Section 3(a)(58)(A) of the Securities
Exchange  Act of 1934.  The responsibilities of this committee include reviewing
the financial reports and other financial information provided by the Company to
any  governmental body or the public; the Company's systems of internal controls
regarding  finance,  accounting, legal compliance and ethics that management and
the  Board  have  established;  the Company's auditing, accounting and financial
reporting  processes  generally;  and such other functions as the Board may from
time  to  time assign to the committee.  In performing its duties, the committee
seeks  to  maintain  an  effective  working  relationship  with  the  Board, the
independent  accountant  and management of the Company.  The specific duties and
functions  of  the Audit Committee are set forth in the Audit Committee Charter.
The  Charter is reviewed annually and updated as necessary to reflect changes in
regulatory  requirements,  authoritative  guidelines,  and  evolving  practices.

     Management  is responsible for the preparation, presentation, and integrity
of  the  Company's  financial  statements,  accounting  and  financial reporting
principles,  internal controls and procedures designed to ensure compliance with
accounting  standards,  applicable  laws,  and  regulations.  The  Company's
independent  auditor,  BDO  Seidman  LLP,  is  responsible  for  performing  an
independent  audit  of  the  consolidated financial statements and expressing an
opinion  on the conformity of those financial statements with generally accepted
accounting  principles.

     Compensation Committee.  The primary responsibilities of this committee are
     ----------------------
to (a) review and recommend to the Board the compensation of the Chief Executive
Officer  and  other  officers  of  the  Company, (b) review executive bonus plan
allocations,  (c)  oversee and advise the Board on the adoption of policies that
govern  the  Company's  compensation  programs,  (d)  oversee  the  Company's
administration of its equity-based compensation and other benefit plans, and (e)
approve  grants  of stock options to officers and employees of the Company under
its  stock  plans.  The  Compensation  Committee's  role  includes producing the
report  on  executive  compensation  required by SEC rules and regulations.  The
specific duties and functions of the Compensation Committee are set forth in its
charter.  This  charter is reviewed annually and updated as necessary to reflect
changes  in  regulatory  requirements,  authoritative  guidelines  and  evolving
practices.

     Finance  Committee.  The  primary responsibilities of this committee are to
     ------------------
(a) monitor present and future capital requirements and opportunities pertaining
to  the  Company's business and (b) review and provide guidance to the Board and
management  about  all  proposals  concerning  major  financial  policies of the
Company.  The  Finance  Committee's  role  includes  designating  officers  and
employees  who  can  execute  documents  and act on behalf of the Company in the
ordinary  course  of  business under previously approved banking, borrowing, and
other  financing  arrangements.

     Nominating  and Governance Committee.  The primary responsibilities of this
     ------------------------------------
committee  are  to  (a) recommend the slate of director nominees for election to
the  Board,  (b)  identify  and recommend candidates to fill vacancies occurring
between  annual  shareholder  meetings  and  (c) review, evaluate, and recommend
changes  to  the  Company's  corporate governance practices.  The Nominating and
Governance Committee's role includes periodic review of the compensation paid to
non-employee  directors  for  annual  retainers  and  meeting  fees  and  making
recommendations to the Board for any adjustments.  The specific responsibilities
and  functions  of  the Nominating and Governance Committee are set forth in its
Charter.

     From time to time the Nominating and Governance Committee reviews the Board
to  assess  the  skills  and  characteristics  required  of Board members in the
context  of  the  current  composition  of  the Board.  This assessment includes
issues  of  diversity  in numerous factors, understanding of and achievements in
the  restaurant  industry,  board  service,  business,  finance,  marketing  and
community  involvement.  These  factors, and any other qualifications considered
useful  by  the Nominating and Governance Committee, are reviewed in the context
of  an assessment of the perceived needs of the Board at a particular point.  As
a result, the priorities and emphasis of the Nominating and Governance Committee
and  of  the  Board may change from time to time to take into account changes in
business and other trends, and the portfolio of skills and experience of current
and  prospective Board members.  Therefore, while focused on the achievement and
the ability of potential candidates to make a positive contribution with respect
to  such  factors,  the  Nominating and Governance Committee has not established
specific  minimum  criteria  or  qualifications  that  a  nominee  must possess.

     Consideration  of  new Board nominee candidates typically involves a series
of  internal  discussions,  review  of  information  concerning  candidates  and
interviews  with  selected candidates.  In general, candidates for nomination to
the  Board  are  suggested by Board members or by employees.  In determining the
slate  of  nominees  for  the 2004 annual meeting, the Nominating and Governance
Committee  considered  a  number  of  candidates  recommended  by  shareholders,
directors  and  others.  Mr.  Harkey  and  Mr. Taft were both recommended to the
Nominating  and  Governance  Committee  for  nomination  to  the  Board  by
non-management  directors  who  are  also  shareholders,  and  were nominated as
candidates for election to the Board by the Nominating and Governance Committee.
In  2004  the  Company  did  not employ a search firm or pay fees to other third
parties  in connection with seeking or evaluating Board nominee candidates.  The
Nominating  and  Governance  Committee  will  consider  director  candidates
recommended  by shareholders.  The Nominating and Governance Committee evaluates
candidates  proposed  by  shareholders  using  the  same  criteria  as for other
candidates.  The name of any recommended candidate for director, together with a
brief  biographical sketch, a document indicating the candidate's willingness to
serve  if  elected  and evidence of the nominating person's ownership of Company
stock  should be sent to the Corporate Secretary of the Company using one of the
methods  set  forth  in  "Communications from Shareholders to the Board," below.

     Strategic  Planning Committee.  This committee was constituted on April 21,
     -----------------------------
2004  specifically  to  work  with the Company's senior management to create and
implement  a  strategic  plan for the Company.  The Strategic Planning Committee
and  Company  management assembled and analyzed data pertaining to the Company's
business plan, competitive environment and objectives and other factors relevant
to  the  Company's  concepts,  products  and  services, ultimately preparing and
recommending  plans,  timetables,  strategies,  options  and  procedures for the
Company's  long-term  growth  and  success.  The Strategic Planning Committee is
currently  inactive;  however, it is subject to reformation from time to time as
the  Board  may  deem  necessary.

     Communications  from  Shareholders  to  the  Board

     The Board recommends that shareholders initiate any communications with the
Board in writing and send them in care of the Corporate Secretary.  Shareholders
can send communications by e-mail to corporate_secretary@pizzainn.com, by fax to
                                     --------------------------------
(469)  384-5061  or  by mail to Corporate Secretary, Pizza Inn, Inc., 3551 Plano
Parkway,  The  Colony,  TX 75056.  This centralized process assists the Board in
reviewing and responding appropriately to shareholder communications.  The names
of  specific  intended  Board members should be noted in the communication.  The
Board has instructed the Corporate Secretary to forward such correspondence only
to the intended recipients; however, the Board has also instructed the Corporate
Secretary, prior to forwarding any correspondence, to review such correspondence
and,  in  his  discretion,  not to forward certain items if they are deemed of a
commercial  or  frivolous  nature  or  otherwise  inappropriate  for the Board's
consideration.  In such cases, that correspondence may be forwarded elsewhere in
the  Company  for  review  and  possible  response.



Director  Compensation

     During  fiscal  year  2004,  each  non-employee  director  received  as
compensation  for  serving  on  the  Board  and  committees  of  the  Board:

     An  annual  retainer  of  $17,000;

     An  annual  retainer  of  $6,000  for  the  Chairman  of  the  Board;  and

     A  per  meeting fee of $1,000 for Board meetings and $250 fee for committee
meetings.

     While  Acting  CEO  of  the  Company, Mr. Page received no compensation for
serving  as  a  director, except that he, like all directors of the Company, was
eligible  to  receive  reimbursement of any expenses incurred in attending Board
and  committee  meetings.  Mr.  Parker  has  received  the  standard  director's
compensation  effective  as  of December 14, 2004, the day after his last day of
employment  by  the Company. Previously Mr. Parker was not paid for serving as a
member  of  the  Board.

     Members of the Strategic Planning Committee received a per diem fee of $500
for  each  day  they  were  directly  engaged  in  the  discharge  of  committee
responsibilities.  As  of  the  date  of  this  proxy  statement, the Company is
withholding  Board  fees  otherwise  due  to  Mr.  Clairday and offsetting those
amounts  against  the  Advance  Foods  Debt  (defined below), and the Company is
actively  pursuing  with  Mr. Clairday alternative methods to pay the Company in
full.

     In  addition  to  annual  and  meeting fees, each non-employee director was
eligible  to  receive stock option awards under the 1993 Outside Directors Stock
Award  Plan  (the  "1993  Plan") until the 1993 Plan's expiration on October 13,
2003.  Under  the  1993  Plan, eligible directors would receive, as of the first
day  of  the  Company's fiscal year, options for Common Stock equal to twice the
number  of  shares of Common Stock purchased during the preceding fiscal year or
purchased by exercise of previously granted options during the first ten days of
the  current fiscal year.  On the first day of the first fiscal year immediately
following  the  day  on  which  a non-employee director first became eligible to
participate in the 1993 Plan, that director would receive options to acquire two
shares  of Common Stock for each share of Common Stock owned by such director on
the  first  day  of  the fiscal year.  Stock options granted under the 1993 Plan
have an exercise price equal to the market price of the Common Stock on the date
of  grant  and are first exercisable one year after grant.  For shares of Common
Stock purchased during fiscal 2004 or thereafter, each eligible director will be
entitled  to  options  for  no  more  than  40,000 shares per fiscal year if the
Directors  Plan  (defined  below)  is  approved.

     Since  the  beginning  of  fiscal year 2004, stock options for 5,000 shares
were  granted  to  Mr. Schwarz pursuant to the 1993 Plan at an exercise price of
$2.15  per  share.

     Expiration of the 1993 Plan does not affect vesting, exercise or expiration
of options previously granted pursuant to such Plan; however, no further options
may  be  granted.

     The  Board  expects  to grant stock option awards to non-employee directors
beginning  in  calendar  year  2005  if  the  shareholders approve Proposal Two,
"Adoption  of  a  Non-Employee  Directors  Stock  Option  Award  Plan."




                               EXECUTIVE OFFICERS

     The  following  table  sets forth certain information, as of April 1, 2005,
regarding  the  Company's  executive  officers:

                                                                       Executive
                                                                         Officer
Name                  Age     Position                                     Since
- ----                  ---     --------                                     -----
Timothy P. Taft       47      President  and  Chief  Executive  Officer     2005
Ward T. Olgreen       46      Senior Vice President of Franchise Operations
                              and Concept Development                       1995
Shawn M. Preator      35      Chief  Financial  Officer  and  Vice
                              President  of  Distribution                   1999
Rod J. McDonald       44      Secretary and General Counsel                 2004

Danny K. Meisenheimer 45      Vice  President  of  Marketing                2003

                 BIOGRAPHIES OF NON-DIRECTOR EXECUTIVE OFFICERS

     Ward T. Olgreen was appointed Senior Vice President of Franchise Operations
and  Concept  Development  in  December 2002. He was appointed Vice President of
Concept  Development  in  February  1999  and  Senior  Vice President of Concept
Development  in July 2000. He joined the Company in September 1991 and served in
a variety of operational positions until his appointment in January 1995 as Vice
President  of  International  Operations and Brand R&D. Mr. Olgreen was a Branch
Manager  for  GCS  Service,  Inc., a restaurant equipment service provider, from
June  1986  through  July  1991.

     Shawn  M.  Preator was appointed Chief Financial Officer and Vice President
of  Distribution  in  October 2002.  He was elected Vice President in June 2000.
He  was  elected  Controller,  Treasurer, and Assistant Secretary in April 1999.
Previously, Mr. Preator had been Assistant Controller for the Company since July
1998.  Prior  to joining the Company, Mr. Preator was a Senior Financial Analyst
at LSG/Sky Chefs, Inc., an international airline caterer, from September 1996 to
July  1998.  Prior to September 1996, Mr. Preator worked for the accounting firm
Ernst  &  Young  LLP  in  its  audit  department.  Mr.  Preator  is  a  CPA.

     Rod  J.  McDonald  was appointed Corporate Secretary and General Counsel in
August  2004.  Mr.  McDonald  joined the Company in September 1997 and served as
Assistant  General  Counsel  of  the  Company  until  his appointment as General
Counsel.  Prior  to  joining  the  Company,  he was Vice President and Assistant
General  Counsel  for TCBY Enterprises, Inc. He served as Acting Chief Executive
Officer  of  the  Company  in  December  2004  and  January  2005.

     Danny  K. Meisenheimer was appointed Vice President of Marketing in January
2003  after  joining the Company in December 2002. Prior to joining the Company,
Mr.  Meisenheimer  served  as  Vice President of Marketing for Furr's Restaurant
Group,  Inc.  since  1995.  Mr.  Meisenheimer joined the Marketing Department of
Furr's  in  1991.






           SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS,
                              AND EXECUTIVE OFFICERS

     The  following  table  sets forth certain information, as of April 1, 2005,
with  respect  to  the  beneficial ownership of Common Stock by: (a) each person
known  to  the Company to be a beneficial owner of more than five percent of the
outstanding  Common  Stock;  (b)  each director, nominee director, and executive
officer  named in the section entitled "Summary Compensation Table;" and (c) all
such  directors  and  executive  officers  as  a  group (13 persons).  Except as
otherwise indicated, each of the persons named in the table below is believed by
the  Company  to  possess  sole  voting and investment power with respect to the
shares of Common Stock beneficially owned by such person.  Information as to the
beneficial  ownership of Common Stock by directors and executive officers of the
Company  has  been furnished by the respective directors and executive officers.



    Name                             Shares                              Percent
 and Address of                   Beneficially                          of Class
                                                                         -------
Beneficial Owner                     Owned
- ----------------                      -----

Newcastle Partners,  L.P.(a)
Newcastle Capital Management, L.P.
Newcastle Capital Group, L.L.C.
300  Crescent  Court,  Ste.  1110
Dallas,  TX  75201                 3,627,130                              35.94%

Ronald  W.  Parker  (b)
7108 Round Hill Road
McKinney,  TX  75070                 851,821                               8.44%

Farnam  Street  Partners,  L.P. (c)
Farnam  Street  Capital,  Inc.
3033 Excelsior Boulevard,
Suite 300
Minneapolis,  MN  55416              630,262                               5.25%

Mark  E.  Schwarz  (a)(d)          3,647,130                              36.14%
Robert  B.  Page                          -0-                                -0-
Bobby  L.  Clairday (e)               48,900                       Less than  1%
Ramon  D.  Phillips (f)               11,590                       Less than  1%
Butler  E.  Powell  (d)               32,500                       Less than  1%
Steven  J.  Pully   (a)                8,929                       Less than  1%
John D. Harkey, Jr.                       -0-                                -0-
Timothy P. Taft (d)                   50,000                       Less than  1%
Ward  T.  Olgreen   (d)              137,675                               1.68%
Shawn  M.  Preator  (d)               54,349                       Less than  1%
Danny K. Meisenheimer                    922                       Less than  1%
B. Keith Clark (g)                     4,000                       Less than  1%

 All  Directors  and               4,855,588                              48.12%
   Executive  Officers  as  a  Group


(a)     Newcastle  Capital  Management, L.P. is the general partner of Newcastle
Partners,  L.P.,  Newcastle  Capital  Group,  L.L.C.  is  the general partner of
Newcastle  Capital  Management,  L.P., and Mr. Schwarz is the managing member of
Newcastle  Capital  Group,  L.L.C.  Accordingly,  each  of  Newcastle  Capital
Management,  L.P.,  Newcastle  Capital  Group, L.L.C. and Mark E. Schwarz may be
deemed  to  beneficially  own  the  shares of Common Stock beneficially owned by
Newcastle  Partners,  L.P.  In  addition,  Newcastle  Partners,  L.P., Newcastle
Capital  Management,  L.P., Newcastle Capital Group, L.L.C., Mr. Schwarz and Mr.
Pully  are  members  of  a  Section  13d  reporting  group  and may be deemed to
beneficially own shares of Common Stock owned by the other members of the group.
Newcastle  Partners, L.P., Mr. Schwarz and Mr. Pully also directly own shares of
Common  Stock.  Mr. Pully disclaims beneficial ownership of the shares of Common
Stock  beneficially owned by Newcastle Partners, L.P.  Mr. Schwarz directly owns
20,000  shares  of  Common  Stock,  including  options  to acquire 5,000 shares.

(b)     Mr.  Parker  was  President  and  Chief Executive Officer of the Company
until  December  13, 2004.  He is an incumbent director who was not nominated to
stand  for  re-election.

(c)     Farnam  Street  Capital,  Inc.  is  the general partner of Farnam Street
Partners, L.P.  Together Farnam Street Capital, Inc. and Farnam Street Partners,
L.P. beneficially own all of the shares shown.  Mr. Raymond E. Cabillot is Chief
Executive  Officer  and  Chief Financial Officer of Farnam Street Capital, Inc.,
and  Mr. Peter O. Haeg is President and Secretary of Farnam Street Capital, Inc.
Accordingly,  each of Farnam Street Partners, L.P., Farnam Street Capital, Inc.,
Mr. Cabillot and Mr. Haeg may be deemed to beneficially own the shares of Common
Stock  beneficially  owned  by  Farnam  Street  Capital,  Inc. and Farnam Street
Partners,  L.P.  In  addition,  Farnam  Street  Partners,  L.P.,  Farnam  Street
Capital,  Inc., Mr. Cabillot and Mr. Haeg are members of a Section 13d reporting
group  and  may  be  deemed  to beneficially own shares of Common Stock owned by
other  members  of  the  group.

(d)     Includes  vested  options and options vesting within 60 days of February
1, 2005 under the Company's stock option plans, as follows: 5,000 shares for Mr.
Schwarz; 20,000 shares for Mr. Powell; 50,000 shares for Mr. Taft; 66,500 shares
for  Mr.  Olgreen;  and  44,500  shares  for  Mr.  Preator.

(e)     Mr.  Clairday  shares voting and investment power for 18,200 shares with
his  wife.

(f)     Mr.  Phillips  shares  voting and investment power for 5,333 shares with
the  other  shareholders  of  Wholesale  Software  International,  Inc.

(g)     Mr.  Clark  was  Senior Vice President, Secretary and General Counsel of
the  Company  until  July  7,  2004.

                             AUDIT COMMITTEE REPORT

     The  Audit Committee of the Board is responsible for providing independent,
objective oversight of the Company's accounting functions and internal controls.
The  Audit Committee is currently composed of two independent directors and acts
under  a  written  charter  adopted and approved by the Board on April 15, 2003.
The Audit Committee reviews its Charter on an annual basis.  Each of the members
is  independent  as defined by Nasdaq's listing standards and as required by the
Sarbanes-Oxley  Act.  After  a  full  review  and analysis, the Board positively
reaffirmed  that  each  member  is  independent  within  the  meaning  of  Rule
4200(a)(14) of the listing standards of the Nasdaq and the rules and regulations
of  the  SEC,  as  such  requirements are defined as of the mailing date of this
proxy  statement.  The  Board  annually  reviews  the  Nasdaq listing standards'
definition  of  independence  for  audit  committee  members and makes an annual
determination  of  the  independence  of  Audit  Committee  members.

     On  January  18, 2005, the Company notified Nasdaq that, due to one vacancy
on the Audit Committee that resulted from the resignation of Robert B. Page as a
member,  the  Company  failed  to  comply  with  the audit committee composition
requirements  under  Marketplace Rule 4350(d)(2)(A), and would be relying on the
cure  period  provided  under  Marketplace  Rule  4350(d)(4).  As  previously
disclosed,  Mr.  Page  resigned  in  connection  with  and  effective  as of his
appointment  on  January  4,  2004  as the Acting Chief Executive Officer of the
Company.

     On  January  18,  2005,  the  Company  received  notice  from  Nasdaq that,
consistent with Marketplace Rule 4350(d)(4), the Company will be provided a cure
period  until  the  earlier of the Company's next annual shareholders meeting or
January  4,  2006  in  order  to  regain  compliance  with  the  audit committee
requirements  and  that the Company would be included in a list of non-compliant
Nasdaq  companies  at  www.nasdaq.com on or after January 25, 2005.  The Company
proposes  to appoint Mr. Harkey to the Audit Committee, assuming his election as
a  director  at  the  Annual  Meeting,  to  regain  compliance with Nasdaq audit
committee  requirements.  The  Company  believes  that  Mr.  Harkey  will  be
independent  within  the  meaning  of  Rule  4200(a)(14)  of  the Nasdaq listing
standards  and  the  rules  and  regulations  of  the  SEC.

     The Board of Directors has determined that at least one member of the Audit
Committee, Mr. Phillips, is an "audit committee financial expert," as defined by
SEC  rules  and  regulations.  This  designation  results  from  a  disclosure
requirement  of  the  SEC  related to Mr. Phillips' experience and understanding
with  respect to certain accounting and auditing matters.  The SEC believes this
designation  does not impose upon Mr. Phillips any duty, obligation or liability
that  is  greater  than  is  generally  imposed  on him as a member of the Audit
Committee  and  the  Board,  and  that  his  designation  as  an audit committee
financial  expert  pursuant  to  this  SEC requirement does not affect the duty,
obligation or liability of any other member of the Audit Committee or the Board.
For  an  overview of Mr. Phillips' relevant experience, see the section entitled
"Continuing  Directors"  above.

     The  Audit Committee reviewed and discussed the Company's audited financial
statements  with management.  It also discussed with BDO Seidman LLP the matters
required  to  be  discussed  by  Statement  on  Auditing  Standards  No.  61,
"Communications  with  Audit  Committees",  as  amended by Statement on Auditing
Standards  No.  90.  In  addition,  BDO  Seidman  LLP also provided to the Audit
Committee  the  written  disclosures  and  the  letter  required by Independence
Standards  Board  Standard  No.  1,  "Independence  Discussions  with  Audit
Committees,"  and  the  Committee  discussed  with  BDO  Seidman LLP that firm's
independence.

     The  Audit  Committee is responsible for recommending to the Board that the
Company's  financial  statements  be  included  in  the Company's annual report.
Based  on  the  discussions  with  BDO  Seidman  LLP  concerning  the audit, the
financial  statement  review,  and  other  such  matters  deemed  relevant  and
appropriate  by the AuditCommittee, the Audit Committee recommended to the Board
that the June 27, 2004 audited financial statements be included in the Company's
2004  Annual  Report  on  Form  10-K.

     In  accordance  with the rules of the SEC, the foregoing information, which
is  required  by paragraphs (a) and (b) of Regulation S-K Item 306, shall not be
deemed  to be "soliciting material", or to be "filed" with the SEC or subject to
the  SEC's  Regulation  14A,  other  than  as  provided  in that Item, or to the
liabilities  of  Section  18 of the Securities Exchange Act of 1934, as amended,
except to the extent that the Company specifically requests that the information
be  treated  as soliciting material or specifically incorporates it by reference
into  a  document  filed  under  the  Securities Act of 1933, as amended, or the
Securities  Exchange  Act  of  1934,  as  amended.

Submitted  by  the  Audit  Committee:  Ramon  D.  Phillips,  Chairman
                                       Butler  E.  Powell


                        FEES PAID TO INDEPENDENT AUDITORS

     The  Audit  Committee  has  selected  BDO  Seidman  LLP  certified  public
accountants  as the independent auditors of the Company for fiscal year 2005.  A
representative of BDO Seidman LLP will be present at the Annual Meeting, will be
available  to  respond  to appropriate questions and will have an opportunity to
make  a  statement.

     For  fiscal  2004,  the Audit Committee selected BDO Seidman LLP to replace
PricewaterhouseCoopers  LLP, which was the Company's independent auditor for the
fiscal year ending June 29, 2003. The decision to change accountants was made by
vote  of  the  Audit  Committee, and the dismissal of PricewaterhouseCoopers LLP
became  effective  on  October 8, 2003. During fiscal years 2002 and 2003, there
were  no  disagreements  between  the  Company's  senior  management  and
PricewaterhouseCoopers  LLP's senior audit personnel on any matter of accounting
principles  or  practices,  financial statement disclosure, or auditing scope or
procedure  such  that  would have caused PricewaterhouseCoopers LLP to have made
reference  to  the  subject  matter of such disagreements in connection with its
audit  report.  The  Company  does  not  anticipate  that  a  representative  of
PricewaterhouseCoopers  LLP  will  be present at the Annual Meeting, nor does it
anticipate that any such representative will be available to make a statement or
to  answer  questions.

     The  following  table  shows the fees the Company paid or accrued for audit
and  other  services  provided  by PricewaterhouseCoopers LLP in fiscal 2003 and
2004  and  BDO  Seidman  LLP  in  fiscal  2004.


                         PRICEWATERHOUSECOOPERS                     BDO  SEIDMAN
                            2003           2004                            2004
- --------------------------------------------------------------------------------
Audit  Fees          $    129,540            --                       $   74,718
Audit-Related Fees   $     13,656            --                       $      --
Tax  Fees            $     13,345        $  9,300                     $      950
All  Other  Fees     $     35,579        $ 12,500                     $    3,050
                     -----------------------------------------------------------
Total                $    192,120        $ 21,800                     $   78,718


     Audit  Fees.  This  category  represents  aggregate  fees  billed  by
PricewaterhouseCoopers  LLP  and  BDO  Seidman  LLP  for  professional  services
rendered  for  the  audit  of  the Company's annual financial statements for the
years  ended  June  29, 2003 and June 27, 2004, respectively, and the reviews of
the  financial  statements included in the Company's Forms 10-Q for those years.


     Audit-Related  Fees.  These  fees consist of assurance and related services
that  are  reasonably  related  to the performance of the audit or review of the
Company's  financial  statements.  This  category  includes  fees related to the
performance  of  audits  and  attest  services  not  required  by  statute  or
regulations, audits of the Company's benefits plans and accounting consultations
regarding  the  application  of  generally  accepted  accounting  principles  to
proposed  transactions.

     Tax  Fees.  These fees consist of fees billed by PricewaterhouseCoopers LLP
for  fiscal  years  2003  and  2004  for  tax return preparation and foreign tax
analysis,  and  for  a  change  in tax accounting method, and fees billed by BDO
Seidman  LLP  for  tax  services  during  fiscal  2004.

     All Other Fees. Fees paid to PricewaterhouseCoopers LLP and BDO Seidman LLP
in 2003 and 2004 generally include services pertaining to the question of change
of  control  of the Board and the Company following the election of directors at
the  Company's  2003 Annual Meeting of Shareholders, consultation on a potential
business  opportunity  and  for  review  by  PricewaterhouseCoopers,  LLP of the
Company's  franchise  offering circular. Fees paid to PricewaterhouseCoopers LLP
in  fiscal  2004  also include services related to the transfer of audit-related
materials  from  PricewaterhouseCoopers  LLP  to  BDO  Seidman  LLP.

     In  considering  and authorizing these payments to the independent auditors
for  services  unrelated  to performance of the audit of the Company's financial
statements,  the  Committee  has  determined  that the cost segregation analysis
services,  tax  return preparation, foreign tax analysis and calculation, review
of  the  Company's franchise offering circular and transfer of materials related
to  the  audit  engagement  undertaken  by  the  independent  auditors  are  not
inconsistent  with  the  independent  auditor's  performance  of  the  audit and
financial  statement  review  functions  and are compatible with maintaining the
independent  auditor's  independence.

     Policy  of  the  Audit  Committee for Pre-Approval of Audit and Permissible
     Non-Audit  Services  of  the  Independent  Auditor

     The  Audit  Committee  is  responsible for appointing, setting compensation
for,  and  overseeing  the work of, the independent auditor.  In accordance with
Audit  Committee policy and the requirements of law, all services to be provided
by  BDO  Seidman  LLP  are  pre-approved  by  the Audit Committee.  Pre-approval
applies  to  audit  services,  audit-related  services,  tax  services and other
services.  In  some  cases, pre-approval is provided by the full Audit Committee
for  up to a year, and relates to a particular defined task or scope of work and
is  subject  to  a  specific  budget.  In other cases, the Chairman of the Audit
Committee  has  the  delegated authority from the Audit Committee to pre-approve
additional  services,  and  such pre-approvals are then communicated to the full
Audit  Committee.

                           SUMMARY COMPENSATION TABLE

     The  following  table  sets  forth  the  annual  compensation  of the Chief
Executive  Officer and the other four most highly compensated executive officers
of the Company for the fiscal years ended June 27, 2004, June 29, 2003, and June
30,  2002  (designated  as  years  2004,  2003,  and  2002,  respectively).


<TABLE>
<CAPTION>

                             Annual Compensation
                            ------------------------
                                                                                                           Long-Term
                                                                                                        Compensation
                                                                                                              Awards
                                                                                                   ------------------

                                                                                                     Securities Under-
Name                                                                                Other Annual         lying Options
(and Principal Position)                Year           Salary ($)     Bonus ($)   Compensation ($) (b)   (# of shares)
- -------------------------------  ------------------  ---------------  ----------  ---------------------  -------------
<S>                              <C>                 <C>              <C>         <C>                    <C>
Ronald W. Parker. (a) . . . . .                2004  $       550,000  $  275,000  $             176,084              0
(President and Chief  . . . . .                2003  $       537,755  $  275,000  $             179,910              0
Executive Officer). . . . . . .                2002  $       507,885  $  277,300  $             287,863              0

B. Keith Clark (c) (Senior. . . . .            2004  $       195,000  $   26,500  $               5,961              0
Vice President, Secretary,. . .                2003  $       186,035  $   53,325  $               2,993              0
and General Counsel). . . . . .                2002  $       161,884  $   42,500  $                   0              0

Ward T. Olgreen . . . . . . . .                2004  $       168,000  $   33,600  $               7,539              0
(Senior Vice President. . . . .                2003  $       160,904  $   34,700  $               3,769              0
of Franchise Operations and . .                2002  $       147,596  $   32,250  $                   0              0
Concept Development)

Shawn M. Preator. . . . . . . .                2004  $       150,000  $   30,000  $               5,961              0
(Chief Financial Officer and. .                2003  $       139,650  $   42,750  $               3,042              0
Vice President of Distribution)                2002  $       107,923  $   21,000  $                   0              0

Danny K. Meisenheimer . . . . .                2004  $       136,102  $   27,000  $                   0              0
Vice President of . . . . . . .            2003 (d)  $        65,244  $   13,000  $                   0              0
Marketing

</TABLE>

(a)     Mr.  Parker  was  President  and  Chief Executive Officer of the Company
until  December  13,  2004.

(b)     Includes  for  Mr. Parker, a payment of $150,000 for life and disability
insurance  benefits,  secondary  medical  benefits  and  supplemental retirement
benefits  (which includes the payment of related taxes) in 2004, and payments of
$165,266  for  such  benefits  in  2003  and  2002.

(c)     Mr.  Clark  was  Senior Vice President, Secretary and General Counsel of
the  Company  until  July  7,  2004.

(d)     Includes  compensation  for Mr. Meisenheimer from his employment date of
December  31,  2002.

                 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                       AND  FISCAL  YEAR-END  OPTION  VALUES

     The  following  table  sets  forth  information  regarding  stock  options
exercised  during fiscal year 2004 and unexercised stock options held at the end
of  fiscal  year  2004  by  the  Chief Executive Officer and the other four most
highly compensated executive officers of the Company.  The closing bid price for
the  Company's  Common  Stock,  as  reported  by  the  National  Association  of
Securities  Dealers  Automated  Quotation System, was $---2.82 on June 25, 2004,
the  last  trading  day  of  the  Company's  fiscal  year.



<TABLE>
<CAPTION>



                                                                                         Value  of
                                                              Number of                Unexercised
                                                              Unexercised             In-the-Money
                                                              Options at                Options at
                         Shares                             Fiscal Year End            Fiscal Year
                       Acquired on    Value Realized           (Exercisable/      End (Exercisable/
Name                   Exercise (#)        ($)                 Unexercisable) (#)    Unexercisable)
- ---------------------  ------------  ----------------  ------------------  -------------------
<S>                    <C>           <C>               <C>                 <C>                  <C>

Ronald W. Parker.(a).       --             --                 62,500  (e)                   $     0
                                                                   0  (u)                   $     0

B. Keith Clark.(b). .   30,000          22,800                61,500  (e)                   $     0
                                                                   0  (u)                   $     0

Ward. T. Olgreen. . .       --            --                  76,500  (e)                   $24,600
                                                                   0  (u)                   $     0

Shawn M. Preator. . .       --            --                  44,500  (e)                   $24,600
                                                                   0  (u)                   $     0

Danny K. Meisenheimer       --            --                       0  (e)                   $     0
                                                                   0  (u)                   $     0


</TABLE>

                                                              0     (u)
0

(e)     Denotes  exercisable  options.
(u)     Denotes  unexercisable  options.

(a)   Mr.  Parker was President and Chief Executive Officer of the Company until
December  13,  2004.
(b)   Mr.  Clark was Senior Vice President, Secretary and General Counsel of the
Company  until  July  7,  2004.

                        OPTION GRANTS IN LAST FISCAL YEAR

     The  following table sets forth information regarding stock options granted
during fiscal year 2004, pursuant to the Company's 1993 Stock Award Plan, to the
Chief  Executive  Officer  and  the other four most highly compensated executive
officers  of  the  Company.







<TABLE>
<CAPTION>


                        Individual Grants
                                                                          Potential Realizable Value at
                                                                          Assumed Annual Rates of Stock
                                                                          Price Appreciation for Option
                                                                                                   Term

                                                     % of Total Options
                                                          Granted to   Exercise
                                    Options              Employees in    Price    Expiration
Name                                Granted              Fiscal Year   ($/Share)     Date     5%   10%
- -----------------------  ------------------------------  ------------  ---------  ----------  --   ----
<S>  <C>                             <C>                      <C>        <C>         <C>      <C>   <C>
Ronald W. Parker                       0                       -        $ -            -       $-   $ -

B. Keith Clark                         0                       -        $ -            -       $-   $ -

Ward T. Olgreen                        0                       -        $ -            -       $-   $ -

Shawn M. Preator                       0                       -        $ -            -       $-   $ -

Danny K. Meisenheimer                  0                       -        $ -            -       $-   $ -

</TABLE>


         COMPENSATION  COMMITTEE  REPORT  ON  EXECUTIVE  COMPENSATION

     The  Compensation Committee of the Board of Directors has been historically
comprised  of  three  independent,  non-employee directors.  On January 4, 2004,
Robert  B.  Page  submitted  his  resignation as a member effective as of and in
connection with his appointment as the Company's Acting Chief Executive Officer,
leaving  the  Compensation  Committee  currently  comprised of two members.  The
Compensation Committee is responsible for establishing the level of compensation
of  the  executive  officers  of  the  Company  and  will  be  responsible  for
administering  the  2005  Non-Employee  Director Stock Option Award Plan and the
2005  Employee  Stock  Award  Plan  if  approved  by  the  shareholders.

     The  Compensation Committee and the Board have adopted a charter to conform
to  the  Compensation  Committee's  responsibilities  under  the  revised Nasdaq
standards, new rules adopted by the SEC and the provisions of the Sarbanes-Oxley
Act.

     Compensation  Philosophy  and  Practice

     In  its  administration  and periodic review of executive compensation, the
Compensation  Committee  believes  in  aligning  the  interests of the executive
officers  with  those  of  the  Company's  shareholders. To accomplish this, the
Compensation  Committee  seeks  to structure and maintain a compensation program
that  is directly and materially linked to operating performance and enhancement
of  shareholder  value.

     Tax  Deductibility  under  Section  162(m)

     As  noted,  the  Company's  compensation policy is primarily based upon the
practice  of  pay-for-performance.  Section  162(m) of the Internal Revenue Code
imposes  a  limitation on the deductibility of nonperformance-based compensation
in  excess  of $1 million paid to the Chief Executive Officer and the other most
highly  compensated  executive  officers  of  the  Company.  The  Compensation
Committee  currently  believes  that  the  Company should be able to continue to
manage  its  executive compensation program for these officers so as to preserve
the  related  federal  income  tax  deductions.



CHIEF  EXECUTIVE  OFFICER

     The  compensation  of  Ronald  W.  Parker as Chief Executive Officer of the
Company  was  based  on  his  employment  agreement,  which  was entered into on
December  16,  2002. Mr. Parker's employment with the Company was terminated for
cause  on  December  13,  2004.

     Mr.  Parker's employment agreement had been approved by the then members of
the  Board  of  Directors  of  the  Company  and  the  Compensation Committee as
constituted  on December 16, 2002.  The employment agreement provided for a term
through  December  31,  2007.  Under  his  employment  agreement,  Mr.  Parker's
compensation  was  to  be determined by the Compensation Committee, the Board or
the  Stock  Award  Plan  Committee  (whose  function  has  been  assumed  by the
Compensation  Committee),  based  on  the  recommendations  of  the Compensation
Committee.  The  Compensation  Committee's  recommendations  with respect to Mr.
Parker's  compensation,  however,  were  subject  to  other  provisions  in  his
employment  agreement,  including the provisions that provided that Mr. Parker's
total  annual compensation could not be reduced to less than an annual salary of
$550,000  and a mandatory minimum annual bonus equal to $275,000.  Additionally,
Mr.  Parker  was  entitled  to  receive  under  his employment agreement certain
defined  benefits,  which,  in fiscal 2004, totaled approximately $176,084.  The
bonus  program established in Mr. Parker's employment agreement was based on the
Company's  performance  in  the  areas  of revenue growth, net income, new store
openings, store sales, Company stock price, store closings and Company expenses,
subject  to  payment  of  the  minimum  bonus  described  above.

     The  Compensation Committee that was comprised of Messrs. Pully (Chairman),
Page  and  Phillips  reviewed  the  compensation of Mr. Parker and evaluated Mr.
Parker's  compensation  by  comparing  it to the compensation of chief executive
officers  in  the  restaurant  industry and by considering the Company's current
structure  and performance, among other things.  As a result of this review, the
Compensation  Committee  believes  that  the  total  amount  of  Mr.  Parker's
compensation  was well in excess of the compensation of chief executive officers
at  comparable companies and also excessive based upon the Company's performance
for  the  last  completed fiscal year.  The Compensation Committee also believes
that  the compensation of the Chief Executive Officer, as well as other officers
and  employees  of  the  Company,  should  be  more  directly tied to individual
performance  and  the  performance  of  the  Company.

     The  Executive  Committee and the Compensation Committee authorized payment
to Mr. Page of an annualized salary of $250,000 for his services as Acting Chief
Executive Officer.  Mr. Page was the Acting Chief Executive Officer from January
4,  2005  through March 31, 2005.  Mr. Page did not have an employment contract.
In  establishing  Mr.  Page's  compensation,  the  Compensation  Committee  and
Executive  Committee  considered  Mr.  Page's  qualifications  and  experience,
compensation  of  chief  executives  at similar companies in the quick serve and
casual dining restaurant segments and the nature and complexity of the issues to
be  encountered  by  Mr. Page during his term as Acting Chief Executive Officer.
Mr.  Page  was  not  paid  a  bonus.

     On  March  31,  2005,  the  Company  and  Timothy  P.  Taft entered into an
Executive  Compensation  Agreement  approved  by the Executive Committee and the
Compensation  Committee.  The  agreement  provides  for a term through March 31,
2007,  with  a  salary  in  the  first  12 months of $1.00.  Mr. Taft's bonuses,
benefits  and salary in the second 12 months of the agreement are established by
the  Compensation  Committee  or  the Board, subject to certain minimum amounts.
Mr.  Taft  was  also  granted 500,000 options to acquire shares of Common Stock.
See  "Executive  Employment  Contracts"  below  for  more  detail.

     In  structuring Mr. Taft's employment agreement, the Compensation Committee
and  Executive  Committee  sought  to  offer a competitive and fair compensation
package tied to Mr. Taft's experience and qualifications while also aligning his
interests  with  those  of the Company's shareholders.  A significant portion of
Mr. Taft's compensation is materially and directly linked to Company performance
as  a  result of the granting of options to him.  The options vest in increments
from  2005  through  2008.  The  Compensation Committee believes that Mr. Taft's
salary  in  the  second  12 months, bonus amounts and benefits are comparable to
those  offered  to  chief  executive  officers at similar companies in the quick
serve  and  casual  dining  restaurant  segments.

OTHER  EXECUTIVE  OFFICERS

     Subject  to existing employment agreements, salaries of the other executive
officers  are  reviewed  annually  and  adjusted based on competitive practices,
changes in level of responsibilities and individual performance measured against
goals.

STOCK  OPTIONS

     The  Company  established  the  1993  Employee  Stock Award Plan ("Employee
Option  Plan")  for  the purpose of aligning employee and shareholder interests.
Under  the Employee Option Plan, stock options were granted from time to time to
certain  executive  officers,  as  well  as  other  employees,  based upon their
relative  positions  and  responsibilities,  as  well as historical and expected
contributions to Company growth.  During fiscal years 2003 and 2004, the Company
did  not  grant  stock  options  to  employees.

     The  term  of  the  Employee  Option  Plan  expired  on  October  13, 2003.
Expiration does not affect vesting, exercise or expiration of options previously
granted  pursuant  to  the Plan.  Upon expiration of the Employee Option Plan no
further  option  grants  can  be  made.

     On  March  31,  2005, the Company and Mr. Taft entered into a Non-Qualified
Stock  Option  Award  Agreement  as  a  part of Mr. Taft's employment agreement,
pursuant  to  which  Mr.  Taft  was awarded options for 500,000 shares of Common
Stock  at  an  exercise  price  of  $2.50  per  share.

     The  Board  expects  to  grant  additional  stock option awards to eligible
employees  beginning  in calendar year 2005 if the shareholders approve Proposal
Three  "Adoption  of  an  Employee  Stock  Option  Award  Plan."

Submitted  by  the  Compensation  Committee:  Steven  J.  Pully,  Chairman
                                              Ramon  D.  Phillips

                         EXECUTIVE EMPLOYMENT CONTRACTS

     Ronald W. Parker, Ward T. Olgreen and Shawn M. Preator each entered into an
employment  agreement  with  the  Company  on December 16, 2002.  The agreements
provided  for  terms  extending  through  December  31,  2007 for Mr. Parker and
December  31,  2005  for  Mr.  Olgreen  and  Mr.  Preator, and provided that the
respective  executive's compensation be determined each year by the Compensation
Committee subject to certain minimum amounts.  The agreements also provided that
each  executive  may  be  terminated  with  or  without  cause.

     Mr.  Parker's  agreement provided that his compensation would be determined
each  year  by  the  Compensation  Committee,  the Board or the Stock Award Plan
Committee,  provided that he would receive an annual salary of not less than his
then  current  salary  of  $550,000 and a bonus of not less than $275,000, based
upon certain criteria defined in the agreement. The agreement also provided that
Mr.  Parker  could  terminate  the  agreement  within  12 months of a "change of
control"  of  the  Company,  as  defined  in the agreement, and that he could be
terminated  with  or  without  cause. Mr. Parker's employment was terminated for
cause  by  the  Board  on  December  13,  2004.

     On  April  22,  2005,  Mr.  Preator  and  Mr.  Olgreen each entered into an
Executive  Compensation  Agreement  with  the  Company, replacing the employment
agreements  executed on December 16, 2002.  The agreements executed on April 22,
2005  each  provided  for  a  term  through  December  31,  2005.  Mr. Preator's
agreement  provides  for  salary of not less than his current salary of $150,000
and  a  bonus  of  not  less than $30,000.  Mr. Olgreen's agreement provides for
salary  of  not less than his current salary of $168,000 and a bonus of not less
than  $33,600.  Under  the  agreements  each executive may be terminated with or
without  cause and each executive may terminate his employment for any reason or
no  reason  at  all.

     Under  the agreements executed on April 22, 2005, if the Company terminates
Mr.  Olgreen's or Mr. Preator's employment without cause, he will be entitled to
a  lump  sum  payment equal to six months of the executive's then current annual
salary  plus  a  lump  sum  payment  equal  to  any  unpaid bonus the respective
executive would have been entitled to receive had he worked through December 31,
2005.  Upon  such  a  termination  each would receive for a period of six months
following  the  date  of  termination  of  employment,  all of the medical, life
insurance  and  other  benefits  then  currently  provided  to  the  respective
executive,  and a lump sum payment of the value of any accrued vacation days and
any unpaid "extra days" as defined in the Company's employee policy manual, that
the  executive  would  have been entitled to receive if the executive had worked
through December 31, 2005.  If the Company terminates Mr. Olgreen or Mr. Preator
for  cause  the  Company  shall pay the respective executive salary plus accrued
bonus,  accrued  vacation  days and any unpaid "extra days" due to the executive
through  the  date of termination.  If Mr. Preator or Mr. Olgreen terminates his
employment  with  or  without  any reason through December 31, 2005, the Company
will  pay  to  the  executive  a  lump  sum  payment  equal to six months of the
executive's  then  current  annual  salary  plus a lump sum payment equal to any
unpaid  bonus  the  executive  would have been entitled to receive had he worked
through  December  31,  2005.  Upon such a termination each would also receive a
lump sum payment of the value of any accrued vacation days and any unpaid "extra
days"  as  defined  in  the Company's employee policy manual, that the executive
would have been entitled to receive if the executive had worked through December
31,  2005.

     Timothy  P.  Taft  entered into an employment agreement with the Company on
March  31,  2005.  The  agreement  is  for a term that currently extends through
March  31,  2007,  and  provides  for  a salary in the first 12 months of $1.00.
Salary  in the second 12 months is determined by the Board, subject to a minimum
amount  of  $300,000,  and  bonuses  are determined by the Board, subject in the
second  12  months to a minimum amount of $200,000.  The agreement also provides
for  a grant of 500,000 non-qualified stock options, with 50,000 of such options
vesting immediately and the remainder vesting over three years.  Mr. Taft may be
terminated  with  or  without cause, with the definition of cause including, but
not limited to, breach of a monetary obligation to the Company, violation of the
compensation  agreement,  fraud against the Company and failure to substantially
perform  required  duties,  each  as  described  in  the  agreement.

     If  the  Company terminates Mr. Taft's employment for cause, or if Mr. Taft
terminates  his  employment voluntarily, he will be entitled to a payment in the
amount  of  any  unpaid  salary  accrued  through  the  date of termination, any
unreimbursed  expenses  properly  incurred  prior to the date of termination and
rights  granted  to  him  under  any  executive  benefit  plan.  If  the Company
terminates  Mr.  Taft's employment without cause, he will be entitled to payment
of  the  amounts  described above, and, either (a) during the first 12 months of
the  agreement  an  amount  equal  to  $25,000  for  each full month he has been
employed or (b) commencing on the first anniversary of his employment, an amount
equal  to  12  months  of  his  then base salary.  If the Company terminates Mr.
Taft's  employment  within six months of a change of control he will be entitled
to receive payment of all amounts payable under the agreement for termination or
resignation  with  or  without  cause, plus all then unvested stock options will
become  immediately exercisable and remain exercisable for 90 days following the
date  of termination of employment.  Mr. Taft may terminate his agreement at any
time  within  six  months  after  a "change of control" of the Company occurs or
following  a  change of control for "good reason", as those terms are defined in
the  agreement.

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     On October 6, 1999, the Company loaned Ronald W. Parker, the Company's then
President and Chief Operating Officer, approximately $560,000 to acquire 200,000
shares  of  Common Stock through the exercise of vested stock options previously
granted  to  him  by the Company. On July 7, 2000, the Company loaned Mr. Parker
approximately  $302,000  to acquire an additional 200,000 shares of Common Stock
through  the  exercise  of vested stock options previously granted to him by the
Company.  The interest rate on the loans was the same floating interest rate the
Company  was  paying  on its credit facility with Wells Fargo. As collateral for
the loans, Mr. Parker granted the Company (i) a first lien on 100,000 previously
purchased  shares  of  Common Stock and certain real property, and (ii) a second
lien  on  certain  additional  real  property.  After the July 7, 2000 loan, the
principal  amount outstanding was approximately $862,000. The Board of Directors
approved each loan, with the specific terms and collateral being approved by the
Compensation  Committee.


     On  October 30, 2000, Mr. Parker paid the Company approximately $165,000 of
the  principal  amount  of  the  loans, and on June 10, 2004 Mr. Parker paid the
remaining  principal  balance  and  accrued  interest  in  full. The Company has
released  all  liens on the shares of common stock and the real property pledged
by  Mr.  Parker  as  collateral  for  the  loans.  The  Company currently has no
outstanding  loans  to  its  officers  or  directors.

     Bobby  L.  Clairday  is  President  and  sole  shareholder of Clairday Food
Services,  Inc.  and is sole shareholder of Advance Food Services, Inc., both of
which  are franchisees of the Company.  Mr. Clairday also holds area development
rights  in  his  own  name.  Mr.  Clairday  currently operates 11 restaurants in
Arkansas,  either  individually  or  through  the  corporations noted above.  As
franchisees,  the  two  corporations purchase a majority of their food and other
supplies  from  the  Company's  distribution  division.  In  fiscal  year  2004,
purchases  by  these  franchisees  made up 4.4% of the Company's food and supply
sales.  Royalty  payments  by Mr. Clairday and such franchisees were 3.2% of the
Company's  royalty revenues, and license fees and area development fees from Mr.
Clairday  and such franchisees made up 6.3% of the Company's franchise revenues.

     As  of  October  1,  2004  Advance  Food  Services,  Inc. and Clairday Food
Services,  Inc.  collectively owed the Company approximately $946,329, primarily
for royalties and purchases of products from the Company's distribution division
("Clairday Debt").  Of the total amount of the Clairday Debt outstanding on that
date, approximately $556,434 represents normal and customary 30-day purchase and
payment  cycles  for  these  franchisees.  The  balance  of  the  Clairday Debt,
approximately  $335,318,  represents  amounts  incurred  by  Advance Foods, Inc.
during  a  period in 1996 and 1997 following Mr. Clairday's sale of that company
to unrelated third parties and prior to his reacquisition of the company in 1997
("Advance Foods Debt").  The Company carries the Advance Foods Debt on its books
as  past  due trade receivables, with no interest accrual. Mr. Clairday has made
limited  payments  toward  reduction  of the Advance Foods Debt, and the Company
has on occasion set off certain payments due Mr. Clairday or Advance Foods, Inc.
against  the  Advance  Foods  Debt, reducing the balance owed.  The last payment
made  by Mr. Clairday toward the Advance Foods Debt was $5,232 in June 2000, and
the  last  set-off  applied  by  the  Company against the Advance Foods Debt was
$1,167 in April 2001.  No payment or set off was applied during fiscal 2004.  At
June  27,  2004,  the  amount of the Advance Foods Debt was $335,318.  As of the
date  of  this  proxy statement, the Company is withholding Board fees otherwise
due to Mr. Clairday and offsetting those amounts against the Advance Foods Debt,
and  the  Company  is actively pursuing with Mr. Clairday alternative methods to
pay  the  Company  in  full.


             SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Section  16(a)  of the Securities Exchange Act of 1934 ("Act") requires the
Company's executive officers and directors and the persons who own more than ten
percent of the Common Stock to file initial reports of ownership of Common Stock
and  reports of changes of ownership with the Securities and Exchange Commission
and  the  National  Association  of  Securities Dealers, Inc. and to furnish the
Company  with  copies  of  such  reports.  The Company believes that, during the
preceding  fiscal  year  and  prior fiscal years, all of the Company's executive
officers,  directors  and  holders of more than 10% of Common Stock timely filed
all reports required by Section 16(a) of the Act, except as previously disclosed
and  except for the following filings made on behalf of the following directors:
For  Mr.  Schwarz,  a  Form  4  Statement  of Changes in Beneficial Ownership of
Securities  reflecting  the purchase of 7,500 shares of Common Stock on June 30,
2003  was  not  timely  filed.  A  filing  was  made  on July 14, 2003.  For Mr.
Phillips,  a  Form  4 Statement of Changes in Beneficial Ownership of Securities
reflecting  the  sale  of  5,290 shares of Common Stock on April 2, 2004 was not
timely  filed.  A  filing  was  made  on  April  13,  2004.

                                  PROPOSAL TWO:

           ADOPTION OF NON-EMPLOYEE DIRECTORS STOCK OPTION AWARD PLAN

     There  will  be  presented  to  the  meeting  a  proposal to adopt the 2005
Non-Employee  Directors  Stock  Option  Award  Plan (the "Directors Plan").  The
Directors  Plan  will replace the 1993 Outside Directors Stock Award Plan, which
expired  by  its  terms  on  October  13,  2003.  The  Board  believes  that  an
equity-based  incentive  plan  is  an  integral  component  of  an  attractive
compensation program that will attract, retain and reward qualified non-employee
directors,  to  the  benefit of the Company and its shareholders.  The Board has
approved  the  Directors  Plan  and  directed  that  it  be  submitted  to  the
shareholders  for approval.  The proposal to approve the Directors Plan requires
the  approval  of  holders  of  a  majority  of  the shares present in person or
represented  by  proxy  and  entitled  to  vote.

Description  of  the  Proposed  Directors  Plan

     Administration.  The  Directors  Plan  is  administered by the Compensation
Committee,  which  is  comprised  of  two  directors who are not employed by the
Company  and  who  satisfy the "independence" requirements under rules issued by
Nasdaq.

     Eligibility.  All  non-employee  directors  of  the  Company ("Non-Employee
Directors")  are  eligible to participate in the Directors Plan.  A Non-Employee
Director  is a member of the Company's Board of Directors who is not an employee
of  the  Company.

     Shares Subject to the Directors Plan.  The total number of shares of Common
Stock  that  may  be  issued  to Non-Employee Directors under the Directors Plan
shall  not  exceed  500,000,  subject to adjustment as provided in the Directors
Plan.  Awards  granted under the Directors Plan that expire or terminate without
being  exercised  may  be  regranted.

     Awards  and  Limitations.  Under  the  Directors Plan, unless and until the
Compensation  Committee  determines otherwise and in addition to any other award
that  may  be  granted  to  the Non-Employee Directors, an option to acquire two
shares  of  Common  Stock  shall be granted to each Non-Employee Director on the
first  day  of each fiscal year for each share of Common Stock purchased by such
Non-Employee  Director  during  each preceding fiscal year, with up to a maximum
award  of  40,000  options.

     Exercise  Price.  The  exercise  price  for  any  option  granted under the
Directors Plan may not be less than the fair market value of the Common Stock on
the  date  of  grant.  Fair market value is defined in the Directors Plan as the
closing  price  for  the Common Stock on Nasdaq on the date of the option award.
The  fair  market  value  of  the  Common  Stock  was  $2.75  on  April 1, 2005.

     Terms  of  Option  Awards.  For  all  awards  under the Directors Plan, the
minimum vesting period is six months after grant and the maximum exercise period
is  ten years after grant.  Payment for shares purchased pursuant to exercise of
an  option  award  must be made at the time of exercise in cash or other payment
method  approved  by  the  Compensation  Committee.

     Term  of  the Directors Plan.  The Directors Plan terminates ten years from
the  date of approval by the Company's shareholders, or such earlier date as the
Board  may  determine  and  no  awards  may  be  granted  thereafter.

     Option  Exercise  and  Transfer.  Awards  granted pursuant to the Directors
Plan may not be transferred other than as provided in the Directors Plan and may
only  be  exercised  by  the  participant, or, in the event of his death, by his
heirs  or  estate.  Upon  the  death  (or permanent disability) of a participant
while  serving as a Non-Employee Director, any outstanding unvested award (other
than  any  unvested  award that the participant would have been able to exercise
within  the  following  12  months if no termination of service had occurred) is
immediately  forfeited  and  any outstanding unvested award that the participant
would  have  been  able  to  exercise  within  the  following  12  months  if no
termination of service had occurred and any outstanding unexercised vested award
may be exercised by the participant's heirs, estate or guardian within 12 months
following  the  participant's  death (or commencement of such disability), after
which  any  unexercised  option  award terminates.  If a Non-Employee Director's
service  as  a member of the Board terminates for any reason other than death or
disability,  all  unvested  and  all unexercised vested option awards terminate;
however,  the  Compensation Committee may allow 30 days within which to exercise
vested  options.  In  the  event  of  a  "change  of control" of the Company, as
defined  in  the  Directors  Plan,  all  outstanding  option  awards will become
immediately  vested  and  exercisable.

     Plan  Amendment  and  Modification.  The  Board  may amend or terminate the
Directors  Plan,  subject  to  certain  restrictions in the Directors Plan.  For
example,  shareholder approval is required for any amendment that would increase
the total number of shares as to which awards may be granted under the Directors
Plan  or  modify  the  class  of persons eligible to receive awards or otherwise
require  shareholder  approval under applicable law or regulation.  In addition,
neither  the  Board  nor the Compensation Committee may amend the Directors Plan
regarding  the  amount,  pricing  and timing of awards other than to comply with
changes  in the Internal Revenue Code, the Employment Retirement Income Security
Act  of  1974,  or  the  rules  thereunder.  Modification,  or  amendment of the
Directors  Plan may not, without the consent of a participant, affect his or her
rights  under  a  previously  granted  award.  The  Directors  Plan provides for
automatic  adjustments  to  prevent dilution or enlargement of the participant's
rights in the event of a stock split, stock dividend or similar transaction.  No
adjustments  or  reduction of the exercise price of any outstanding award may be
made  in  the  event  of  a  decline in the price of the Common Stock, either by
reducing  the  exercise  price of outstanding awards or by canceling outstanding
awards  in  connection  with  regranting incentives at a lower price to the same
participant.

     Federal  Income Tax Consequences Under the Directors Plan.  The only awards
that  may  be  granted  under  the Directors Plan are nonqualified options.  The
following is a brief summary of certain federal income tax consequences relating
to the transactions described under the Directors Plan as set forth below.  This
summary  does  not purport to address all aspects of federal income taxation and
does  not describe state, local or foreign tax consequences.  This discussion is
based  upon  provisions  of  the  Internal Revenue Code of 1986, as amended (the
"Code")  and  the  treasury  regulations  issued  thereunder  (the  "Treasury
Regulations"),  and  judicial  and administrative interpretations under the Code
and  Treasury  Regulations,  all  as in effect as of the date hereof, and all of
which  are  subject  to  change  (possibly  on a retroactive basis) or different
interpretation.

     Nonqualified Stock Options.  Nonqualified stock option awards granted under
the  Directors  Plan  do  not  qualify as "incentive stock options" and will not
qualify  for  any  special  tax  benefits  to  the  participant.  A  participant
generally  will  not  recognize  any taxable income at the time the nonqualified
option  award  is  granted.  However,  upon  its  exercise, the participant will
recognize ordinary income for federal tax purposes measured by the excess of the
then  fair  market  value  of  the  Common  Stock  over  the  exercise  price.

     A participant's basis for determination of gain or loss upon the subsequent
disposition  of Common Stock acquired upon the exercise of a nonqualified option
award  will  be  the  amount paid for such Common Stock plus any ordinary income
recognized as a result of the exercise of such option award. Upon disposition of
any  Common  Stock  acquired  pursuant  to the exercise of a nonqualified option
award,  the difference between the sale price and the participant's basis in the
Common  Stock  will  be treated as short-term or long-term capital gain or loss,
depending  on  how  long  the  participant  has  held  the  Common  Stock.

     In  general,  there  will be no federal income tax deduction allowed to the
Company  upon  the grant or termination of a nonqualified option award or a sale
of  disposition of the Common Stock acquired upon the exercise of a nonqualified
option  award.  However,  upon  the exercise of a nonqualified option award, the
Company will be entitled to a deduction for federal income tax purposes equal to
the  amount  of ordinary income that a participant is required to recognize as a
result  of the exercise, provided that, among other things, the income meets the
test of reasonableness, is an ordinary and necessary business expense, is not an
"excess parachute payment" within the meaning of Section 280G of the Code and is
not  disallowed  by  the $1 million limitation on certain executive compensation
under  Section  162(m)  of  the  Code.

     Withholding.  Any  ordinary  income  realized  by  the participant upon the
exercise  of  a  nonqualified option award is subject to withholding of federal,
state  and local income tax and to withholding of the Participant's share of tax
under  the  Federal  Insurance  Contribution  Act  ("FICA")  and  the  Federal
Unemployment  Tax  Act  ("FUTA").

     To  satisfy  federal,  state and local income tax withholding requirements,
the  Company  will  require  that the participant remit to the Company an amount
sufficient  to  satisfy  the  withholding  requirements.

     Withholding  does  not  represent  an  increase  in the participant's total
income  tax  obligation,  since  it  is  fully  credited  toward  his or her tax
liability  for  the  year.  Additionally,  withholding  does  not  affect  the
participant's  basis  in any Common Stock.  Compensation income realized and tax
withheld  will be reflected on Forms W-2 supplied by the Company to employees by
January  31  of  the  succeeding  year.

      New  Plan  Benefits.  The  following  table  sets forth information, as of
April  1,  2005,  concerning the benefits or amounts that will be received by or
allocated  to  the  non-employee  directors  and all non-employee directors as a
group  under  the  Directors  Plan,  to  the extent such benefits or amounts are
determinable  as  of  April  1,  2005:


NAME  AND  POSITION     NUMBER  OF  UNITS(1)     DOLLAR  VALUE(4)
- -------------------     -----------------        -------------
Mark E. Schwarz, Director   25,000(2)                   0
Steven J. Pully, Director   17,858(3)                   0


(1)     The  awards  under the Directors Plan and the shares underlying any such
award  may  be  subject  to certain vesting, exercise, acceleration and/or other
rights,  restrictions  and conditions, at various exercise prices, in each case,
as  determined  by  the  Compensation  Committee.

(2)     On  November 3, 2004, the Compensation Committee awarded Mark E. Schwarz
an  option  to  purchase  25,000  shares of Common Stock at an exercise price of
$2.85  per  share  under the terms of the 2005 Directors Plan as a result of Mr.
Schwarz's  purchase  of  12,500 shares of Common Stock in the open market in the
fiscal  year  ended June 27, 2004.  The option will vest on November 3, 2005 and
will  expire on November 3, 2010.  The fair market value of the Common Stock was
$2.75  on  April  1,  2005.

(3)     On  November 3, 2004, the Compensation Committee awarded Steven J. Pully
an  option  to  purchase  17,858  shares of Common Stock at an exercise price of
$2.85  under  the  terms  of  the 2005 Directors Plan as a result of Mr. Pully's
purchase  of  8,929 shares of Common Stock in the open market in the fiscal year
ended  June  27, 2004.  The option will vest on November 3, 2005 and will expire
on  November  3,  2010.  The  fair market value of the Common Stock was $2.75 on
April  1,  2005.

(4)     For  purposes  of  determining  values  for this proxy statement for the
proposed  option  grants,  the dollar value is calculated as of April 1, 2005, a
date  selected  only  as being a recent reasonably practicable date.  The dollar
values  shown  reflect  the  differences between the value of the options at the
exercise price of $2.85 and the $2.75 market value of the options at the closing
price  for  the  Common  Stock  on  April  1,  2005.

     THE  BOARD  OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS APPROVE THE DIRECTORS
PLAN.


                                 PROPOSAL THREE:

                 APPROVAL OF AN EMPLOYEE STOCK OPTION AWARD PLAN

     There  will  be  presented  to  the  meeting  a  proposal to adopt the 2005
Employee  Stock Option Award Plan (the "Employee Plan").  The Employee Plan will
replace  the  1993  Employee  Stock  Award  Plan,  which expired by its terms on
October 13, 2003.  The Board believes that an equity-based incentive plan can be
an  integral  component of an attractive compensation program that will attract,
retain  and  reward  qualified  employees  to the benefit of the Company and its
shareholders.  The  Board has approved the Employee Plan and directed that it be
submitted  to  the  shareholders  for  approval.  The  proposal  to  approve the
Employee  Plan  requires  the  approval  of  holders of a majority of the shares
present  in  person  or  represented  by  proxy  and  entitled  to  vote.

     Description  of  the  Proposed  Employee  Plan

     Administration.  The  Employee  Plan  is  administered  by the Compensation
Committee,  which  is  comprised  of  two  directors who are not employed by the
Company,  who are not eligible to receive awards under the Employee Plan and who
satisfy  the  "independence"  requirements  under  rules  issued  by  Nasdaq.

     Eligibility.  All  full-time  employees of the Company or any subsidiary or
affiliate  of  the  Company  who  are not on probationary status ("Employees" or
"Participants")  are  eligible to participate in the Employee Plan. As of May 1,
2005,  there  were  approximately 150 individuals eligible to participate in the
Employee  Plan.

     Shares  Subject to the Employee Plan.  The total number of shares of Common
Stock  that  may  be  issued or transferred to Employees under the Employee Plan
shall  not  exceed  1,000,000, subject to adjustment as provided in the Employee
Plan.  Awards  granted  under the Employee Plan that expire or terminate without
being  exercised  may  be  regranted.

     Exercise  Price.  The  exercise  price  for  any  option  granted under the
Employee  Plan may not be less than the fair market value of the Common Stock on
the  date  of  grant.  Fair  market value is defined in the Employee Plan as the
closing  price  for  the Common Stock on Nasdaq on the date of the option award.
The  fair  market  value  of  the  Common  Stock  was  $2.75  on  April 1, 2005.

     Terms  of  Option  Awards.  For  all  awards  under  the Employee Plan, the
minimum  vesting  period  and the maximum exercise period will be determined for
each  option  grant by the Compensation Committee.  Payment for shares purchased
pursuant  to exercise of an option award must be made at the time of exercise in
cash  or  other  payment  method  approved  by  the  Compensation  Committee.

     Term of the Employee Plan.  The Employee Plan terminates ten years from the
date  of  approval by the Company's shareholders or such other date as the Board
may  determine,  and  no  awards  may  be  granted  thereafter.

     Option Exercise and Transfer.  Awards granted pursuant to the Employee Plan
may  not be transferred other than as provided in the Employee Plan and may only
be  exercised by the participant, or, in the event of his death, by his heirs or
estate.  Upon  the  death (or permanent disability) of an Employee, any unvested
award  (other  than any unvested award that the participant would have been able
to  exercise  within  the  following  12 months if no termination of service had
occurred)  is  immediately forfeited and any unvested award that the participant
would  have  been  able  to  exercise  within  the  following  12  months  if no
termination of service had occurred and any outstanding unexercised vested award
may be exercised by the participant's heirs, estate or guardian within 12 months
following  the  participant's  death (or commencement of such disability), after
which  any  unexercised  option  award  terminates.  If an Employee's employment
terminates  for  any reason other than death or disability, all unvested and all
exercised  vested  option  awards terminate, but under certain circumstances the
Employee  may have thirty (30) days within which to exercise vested options.  In
the  event  of  a "change of control" of the Company, as defined in the Employee
Plan,  all  outstanding  option  awards  will  become  immediately  vested  and
exercisable.

     Plan  Amendment  and  Modification.  The  Board  may amend or terminate the
Employee  Plan,  subject  to  certain  restrictions  in  the Employee Plan.  For
example,  shareholder  approval  is  required for any amendment that would:  (i)
increase  the total number of shares as to which awards may be granted under the
Employee  Plan,  (ii) modify the class of persons eligible to receive awards, or
(iii) otherwise require shareholder approval under applicable law or regulation.
In  addition,  neither  the  Board nor the Committee may amend the Employee Plan
regarding  the  amount,  pricing  and timing of awards other than to comply with
changes  in the Internal Revenue Code, the Employment Retirement Income Security
Act of 1974, or the rules thereunder. Modification, or amendment of the Employee
Plan  may  not,  without  the consent of a participant, affect his or her rights
under  a  previously  granted  award.  The  Employee Plan provides for automatic
adjustments  to  prevent  dilution or enlargement of the Participant's rights in
the  event  of  a  stock  split,  stock  dividend,  or  similar transaction.  No
adjustments  or  reduction of the exercise price of any outstanding award may be
made  in  the  event  of  a  decline in the price of the Common Stock, either by
reducing  the  exercise  price of outstanding awards or by canceling outstanding
awards  in  connection  with  regranting incentives at a lower price to the same
Participant.

     Federal  Income  Tax  Consequences  Under the Employee Plan.  Option awards
under the Employee Plan are treated as incentive options ("ISO") or nonqualified
options.  The  following  is  a  brief  summary  of  certain  federal income tax
consequences  relating  to the transactions described under the Employee Plan as
set  forth  below.  This  summary  does  not  purport  to address all aspects of
federal  income  taxation  and  does  not  describe  state, local or foreign tax
consequences.  This  discussion  is  based  upon  provisions of the Code and the
Treasury  Regulations, and judicial and administrative interpretations under the
Code  and  Treasury Regulations, all as in effect as of the date hereof, and all
of  which  are  subject to change (possibly on a retroactive basis) or different
interpretation.

     Incentive  Stock  Options.  The  grant  of  an  ISO  does  not  result  in
recognizable income for the grantee.  The exercise of an ISO would not result in
recognizable  income  for the grantee if the grantee (i) does not dispose of the
Common  Stock within two (2) years after the date of grant or one (1) year after
the  transfer of Common Stock upon exercise (the "holding periods"), and (ii) is
an  employee  of  the Company from the date of grant and through and until three
(3)  months  before the exercise date.  If these requirements are met, the basis
of  the Common Stock upon later disposition would be the option price.  Any gain
will  be  taxed  to  the Participant as long-term capital gain.  However, to the
extent  that  the  fair market value (determined as of the date of grant) of the
Common  Stock  with  respect to which the Participant's ISOs are exercisable for
the  first  time during any year exceeds $100,000, the ISOs for the Common Stock
over $100,000 will be treated as nonqualified options, and not ISOs, for federal
tax  purposes,  and  the  Participant  will recognize income as if the ISOs were
nonqualified  options.

     The  excess  of the market value on the exercise date over the option price
may  be  deemed as a tax preference for purposes of the alternative minimum tax,
which may produce significant tax repercussions depending upon the Participant's
particular  tax  status.

     If  the Participant disposes of the Common Stock prior to the expiration of
either  of  the holding periods, and the amount received for the Common Stock is
greater  than  the  fair  market value of the Common Stock on the exercise date,
then  the  difference between the ISO's exercise price and the fair market value
of  the  Common Stock at the time of exercise will be treated as ordinary income
for  the  tax  year in which the disposition occurs.  The Participant's basis in
the  Common  Stock will be increased by an amount equal to the amount treated as
ordinary  income  as  a  result  of  the disposition.  Any gain in excess of the
increased  basis in the Common Stock would be taxable as long-term or short-term
capital  gain.  However,  if  the  price  received  for Common Stock acquired by
exercise of an ISO is less than the fair market value of the Common Stock on the
exercise  date  and  the  disposition  is a transaction in which the Participant
sustains  a  loss which otherwise would be recognizable under the Code, then the
amount  of ordinary income that the Participant will recognize is the excess, if
any,  of  the  amount  realized  on the disposition of the Common Stock over the
basis  of  the  Common  Stock.

     In  general,  there  will be no federal income tax deduction allowed to the
Company  upon  the  grant  of  an  ISO,  and  the  Company will be entitled to a
deduction  to  the  extent  a  Participant  recognizes  ordinary  income  in the
circumstances  described  above,  provided  that, among other things, the income
meets the test of reasonableness, is an ordinary and necessary business expense,
is  not  an "excess parachute payment" within the meaning of Section 280G of the
Code  and  is  not  disallowed by the $1 million limitation on certain executive
compensation  under  Section  162(m)  of  the  Code.

     Nonqualified Stock Options.  Nonqualified stock option awards granted under
the  Employee  Plan  do  not  qualify  as "incentive stock options" and will not
qualify  for  any  special  tax  benefits  to  the  Participant.  A  Participant
generally  will  not  recognize  any taxable income at the time the nonqualified
option  award  is  granted.  However,  upon  its  exercise, the Participant will
recognize ordinary income for federal tax purposes measured by the excess of the
then  fair  market  value  of  the  Common  Stock  over  the  exercise  price.

     A Participant's basis for determination of gain or loss upon the subsequent
disposition  of Common Stock acquired upon the exercise of a nonqualified option
award  will  be  the  amount paid for such Common Stock plus any ordinary income
recognized  as  a result of the exercise of such option award.  Upon disposition
of  any  Common Stock acquired pursuant to the exercise of a nonqualified option
award,  the difference between the sale price and the Participant's basis in the
Common  Stock  will  be treated as short-term or long-term capital gain or loss,
depending  on  how  long  the  Participant  has  held  the  Common  Stock.

     In  general,  there  will be no federal income tax deduction allowed to the
Company  upon  the grant or termination of a nonqualified option award or a sale
of  disposition of the Common Stock acquired upon the exercise of a nonqualified
option  award.  However,  upon  the exercise of a nonqualified option award, the
Company will be entitled to a deduction for federal income tax purposes equal to
the  amount  of ordinary income that a Participant is required to recognize as a
result  of the exercise, provided that, among other things, the income meets the
test of reasonableness, is an ordinary and necessary business expense, is not an
"excess parachute payment" within the meaning of Section 280G of the Code and is
not  disallowed  by  the $1 million limitation on certain executive compensation
under  Section  162(m)  of  the  Code.

     Withholding.  Any  ordinary  income  realized  by  the Participant upon the
exercise  of  an  ISO  or nonqualified option award is subject to withholding of
federal,  state  and  local  income  tax and to withholding of the Participant's
share  of  tax  under  FICA  and  FUTA.

     To  satisfy  federal,  state and local income tax withholding requirements,
the  Company  will  require  that the Participant remit to the Company an amount
sufficient  to  satisfy  the  withholding  requirements.

     Withholding  does  not  represent  an  increase  in the Participant's total
income  tax  obligation,  since  it  is  fully  credited  toward  his or her tax
liability  for  the  year.  Additionally,  withholding  does  not  affect  the
Participant's  basis  in any Common Stock.  Compensation income realized and tax
withheld  will be reflected on Forms W-2 supplied by the Company to employees by
January  31  of  the  succeeding  year.

     Special  Withholding  Rules  for  Incentive  Options  Exercised  During the
Holding  Period.  According  to Internal Revenue Service ("IRS") Notice 2002-47,
2002-28 I.R.B. 97, the IRS' current position is that it will not (1) assess FICA
or  FUTA  taxes upon the exercise of an ISO or the disposition of stock acquired
by  an  employee  pursuant to the exercise of an ISO, and (2) will not treat the
exercise of an ISO, or the disposition of stock acquired by an employee pursuant
to  the  exercise  of  an  ISO,  as  subject  to federal income tax withholding.
However,  to the extent that a Participant recognizes ordinary income due to the
sale  of  Common Stock acquired by the exercise of an ISO, the Participant still
must  include compensation in income relating to the disposition of Common Stock
acquired by the exercise of an ISO.  In addition, we must report on Form W-2 any
payment  to an employee (or former employee) that is at least $600 in a calendar
year,  even  if  the  payment  is not subject to federal income tax withholding.

     THE  BOARD  OF  DIRECTORS RECOMMENDS THAT SHAREHOLDERS APPROVE THE EMPLOYEE
PLAN.


                                 PROPOSAL FOUR:

                           APPROVAL OF AN AMENDMENT TO
                THE COMPANY'S RESTATED ARTICLES OF INCORPORATION
                      TO DECLASSIFY THE BOARD OF DIRECTORS

     On  October  20,  2004, the Board of Directors approved a proposal to amend
the  Company's  Restated  Articles of Incorporation to delete Section 8.2, which
currently  provides  that  the  Board  be divided into two classes of Directors,
Class  I and Class II, with each class elected for a term expiring at the annual
meeting  of  the  Company's shareholders held in the second year following their
election.  The  amended  and substituted Section 8.2 would provide for one class
of  Directors beginning with the slate of Directors proposed to the shareholders
at  the  annual  meeting  of the Company's shareholders in 2005.  Members of the
single  class would be subject to re-election every year.  The proposal to amend
the  Restated  Articles  of  Incorporation requires the approval of holders of a
majority of the shares present in person or represented by proxy and entitled to
vote. The text of the existing and proposed versions of Section 8.2 is set forth
below.

Current  Section  8.2  of  the  Company's  Restated  Articles  of Incorporation.
- -------------------------------------------------------------------------------

8.2     The  directors shall be divided into two (2) classes with respect to the
time  for  which  they  severally  hold office, designated Class I and Class II.
Class  I shall be composed of four (4) directors who shall hold office until the
1994  Annual  meeting and until their respective successors shall be elected and
shall  qualify.  Class  II shall be composed of three (3) directors (the initial
members of this class being designated in the Plan), who shall hold office until
the  annual  meeting  of  the  shareholders  in  1993 and until their respective
successors  shall  be elected and shall qualify.  Upon expiration of the initial
terms  of the office of directors as classified above, their successors shall be
elected  for  a  term  expiring  at  the  annual  meeting  of  the Corporation's
shareholders  held in the second year following the year of their election.  Any
director elected to fill any vacancy on the Board of Directors shall hold office
for  the  remainder  of  the  full  term of the class of directors in which such
vacancy  occurs.

     Section  8.2  as amended to reflect the changes discussed above in Proposal
     ---------------------------------------------------------------------------
Four.
 ---

     8.2     Beginning  with  the Company's 2004 annual meeting of shareholders,
if  the  shareholders  vote  to amend the Restated Articles to so provide, there
shall  be  one  (1)  class  of  directors, who shall be elected annually.  Those
directors  currently  referred  to  as  Class I Directors, who are nominated for
election  at  the  2004  annual  meeting  of shareholders, if elected, will hold
office  until  the  2005  annual meeting of shareholders, at which time they, or
their successors, must be nominated for election as members of a single class of
directors. Those directors currently referred to as Class II Directors, who were
elected at the 2003 annual meeting of shareholders to hold office until the 2005
annual  meeting  of  shareholders,  will complete their terms at the 2005 annual
meeting  of  shareholders,  at  which  time  they,  or their successors, must be
nominated  for  election as members of a single class of directors. Any director
elected  to fill any vacancy on the Board of Directors shall hold office for the
remainder  of  the  full  term of the director whose position such newly elected
director  fills.

     If  Proposal  Four  is  not  approved  by  the shareholders, directors will
continue  to  be elected by class, with the members of each class holding office
for a term to expire at the annual meeting of the Company's shareholders held in
the  second  year  following  the  year  of  their  election.

     Background.  Classified  boards  of  directors  have been widely adopted by
companies  and  have  a long history in corporate law.  Proponents of classified
boards  assert that they promote the independence of directors in that directors
elected  for multi-year terms are less subject to outside influence.  Proponents
of  classified boards also believe that they provide continuity and stability in
the  management of the business and affairs of a company since a majority of the
directors  will  have  prior experience as directors of the company.  Proponents
further  assert  that  classified  boards  may  enhance  stockholder  value  by
motivating an entity seeking control of a target company with a classified board
to initiate arms-length discussions with the board of the target company because
the  entity  would  be  unable to replace the entire board in a single election.

     Some  investors have, however, come to view classified boards as having the
effect  of insulating directors from accountability to a company's shareholders.
A classified board, for example, limits the ability of stockholders to elect all
directors  on an annual basis and thereby exercise influence over a company, and
may  discourage proxy contests in which shareholders have an opportunity to vote
for  a  competing  slate of director nominees.  The election of directors is the
primary  means  for  shareholders  to  influence  the  business and affairs of a
company  and  to  hold  directors  accountable  for  implementation of policies.

     Management  and the Board of Directors agree that one class of directors to
be  annually  elected  is consistent with good governance practices and provides
greater  accountability  of  the  Board  to  the  Company's  shareholders.

     THE  BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS APPROVE THIS AMENDMENT
TO  THE  RESTATED  ARTICLES  OF  INCORPORATION.

             INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON

     Our  non-employee  directors  may  benefit  from  the  Directors  Plan  as
non-employee  directors may be eligible to participate in the Directors Plan and
may  receive  benefits and awards under the Directors Plan. Certain non-employee
directors have already received awards under the Directors Plan that are subject
to  shareholder  approval  of the Directors Plan.  These awards are described in
this Proxy Statement under the caption "New Plan Benefits" in Proposal Two.  Our
employees,  including  our  employee directors, our executive officers and their
associates,  may  have  a  substantial  interest  in,  and may benefit from, the
Employee  Plan  as  such  persons may be eligible to participate in the Employee
Plan  and  may  receive  benefits  and  awards  under  the  Employee  Plan.

     The  Board  of  Directors, in approving the Directors Plan and the Employee
Plan,  may  have  different  and/or  conflicting  interests  than  or  with  the
shareholders of the Company. In addition, the Board of Directors, management and
employees  of the Company, and shareholders affiliated with the Company may have
different  and/or  conflicting  interests  than  or with the shareholders of the
Company  that  are not affiliated with the Company in any capacity other than in
their capacity as a shareholder of the Company, including interests arising from
ownership  of securities of the Company under the Directors Plan or the Employee
Plan that are not shared on a pro rata basis by all shareholders of the Company.


                              SHAREHOLDER PROPOSALS
                           FOR THE 2005 ANNUAL MEETING

     If  a  shareholder  wishes  to  present a proposal at the Annual Meeting of
Shareholders  tentatively  scheduled for December 14, 2005, the shareholder must
deliver  his or her proposal to the Company at its principal executive offices a
reasonable  time before the Company begins to print and mail its proxy materials
for  such  Annual  Meeting  in order to have that proposal included in the proxy
materials  of  the  Company  for  such  Annual  Meeting  of  Shareholders.  If a
shareholder  wishes  to  present  a  proposal  at  the  2005  Annual  Meeting of
Shareholders  outside the processes of Rule 14a-8 of the Securities Exchange Act
of  1934,  as amended, the shareholder must notify the Company in writing of his
or  her intent to make such presentation no later than 50 calendar days nor more
than  75 calendar days prior to the 2005 Annual Meeting (provided, however, that
in  the  event that less than 65 calendar days notice or prior public disclosure
of  the  date  of  the  meeting  is given or made to shareholders, notice by the
shareholder to be timely must be so received no later than the close of business
on  the  15th calendar day following the day on which such notice of the date of
the  meeting  was  mailed  or  such  public disclosure was made, whichever first
occurs)  and  otherwise  in accordance with the advance notice provisions in the
Company's  bylaws or the Company may have the right to determine  and declare to
the  meeting  that such proposal was not properly  brought before the meeting in
accordance  with  the  bylaws  of  the Company and/or exercise its discretionary
voting  authority  when  such  proposal  is  presented  at the Annual Meeting of
Shareholders,  without  including  any  discussion of that proposal in the proxy
materials  for  the  Annual  Meeting.

     To  be  in  proper  form, a shareholder's notice must include the specified
information  concerning  the  proposal  or nominee as described in the Company's
Bylaws.  A  shareholder  who  wishes  to  submit  a  proposal  or  nomination is
encouraged  to  seek independent counsel with regard to the Company's Bylaws and
SEC  requirements.  The Company may not consider any proposal or nomination that
does not meet its Bylaw requirements and the SEC's requirements for submitting a
proposal  or  nomination.  Notices  of  intention  to  present  proposals at the
Company's  2005  Annual  Meeting  of  Shareholders  should  be  addressed to the
Corporate  Secretary, Pizza Inn, Inc., 3551 Plano Parkway, The Colony, TX 75056,
or  by  fax to (469) 384-5061, or by e-mail to corporate_secretary@pizzainn.com.
                                               --------------------------------
The  Company  reserves  the  right  to  reject, rule out of order, or take other
appropriate  action with respect to any proposal that does not comply with these
and  other  applicable  requirements.

                             STOCK PERFORMANCE GRAPH

     The following graph compares the cumulative annual total shareholder return
(change  in  share price plus reinvestment of any dividends) on the Common Stock
versus  two  indexes for the past five fiscal years.  The graph assumes $100 was
invested on the last trading day of the fiscal year ending June 28, 1998.  Prior
to the first quarter of fiscal year 1998 and subsequent to the second quarter of
fiscal  year  2001,  the  Company did not pay cash dividends on its Common Stock
during  the applicable period.  The Dow Jones Equity Market Index is a published
broad  equity  market index.  The Dow Jones Entertainment and Leisure Restaurant
Index  is  compiled  by  Dow  Jones and Company, Inc., and is comprised of seven
public  companies,  weighted  for  the  market  capitalization  of each company,
engaged  in  restaurant  or  related  businesses (CKE Restaurants, Inc., Brinker
International, Inc., Cracker Barrel Old Country Store, Inc., Darden Restaurants,
Inc.,  McDonald's  Corporation,  Tricon  Global  Restaurants,  Inc., and Wendy's
International,  Inc.).


<TABLE>
<CAPTION>



PIZZA INN INC NEW
<S>                        <C>                      <C>        <C>        <C>        <C>        <C>
                           Cumulative Total Return
                                         6/27/1999  6/25/2000  6/24/2001  6/30/2002  6/29/2003  6/27/2004



PIZZA INN, INC. . . . . .                   100.00     107.90      69.33      40.89      68.69      90.09
DOW JONES US TOTAL MARKET                   100.00     113.03      96.50      79.46      80.51      96.13
DOW JONES US RESTAURANTS.                   100.00      79.06      81.09      96.18      86.50     106.18

</TABLE>

                                  MISCELLANEOUS

The accompanying proxy is being solicited on behalf of the Company.  The cost of
solicitation  has  been  or  will  be borne by the Company.  Proxies may also be
solicited  by  directors,  officers and employees of the Company in person or by
telephone,  telefax,  or  email  without compensation for those activities other
than  reimbursement  for  out-of-pocket expenses.  Arrangements may also be made
with  brokerage  houses  and other custodians, nominees, and fiduciaries for the
forwarding  of  solicitation materials to the beneficial owners of stock held of
record  by  such  persons  and  the  Company  may  reimburse them for reasonable
out-of-pocket  expenses  of  such  solicitation.

     A  COPY  OF  THE  COMPANY'S  ANNUAL REPORT ON FORM 10-K EXCLUDING EXHIBITS,
DATED  SEPTEMBER  24,  2004,  IS BEING FURNISHED TO SHAREHOLDERS WITH THIS PROXY
STATEMENT.  COPIES  OF  SUCH EXHIBITS WILL BE FURNISHED UPON WRITTEN REQUEST AND
UPON  REIMBURSEMENT  OF  THE  COMPANY'S  REASONABLE EXPENSES FOR FURNISHING SUCH
EXHIBITS.  REQUESTS  SHOULD BE ADDRESSED TO PIZZA INN, INC., 3551 PLANO PARKWAY,
THE  COLONY,  TEXAS  75056,  ATTENTION:  CORPORATE  SECRETARY.




This  Proxy,  when properly executed, will be voted by the Proxies in the manner
designated  below.  If  this Proxy is returned signed but without a clear voting
designation,  the  Proxies  will  vote  FOR  Item 1, Item 2, Item 3, and Item 4.


                                                            Please  mark  Your
                                                            votes  as  indicated
                                                              IN  THIS  EXAMPLE.
                                                                     [X]

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1, ITEM 2, ITEM 3, AND ITEM 4.
Item  1.     ELECTION  OF  CLASS  I  DIRECTORS.     Nominees: Bobby L. Clairday,
                                                             John D. Harkey, Jr.
                                                                 Timothy P. Taft
                                                               Mark  E.  Schwarz
                                                              (or any substitute
                                                           nominee or substitute
                                                         nominees, if any of the
                                                            foregoing persons is
                                                     unable to serve or for good
                                                       cause will not serve)

            WITHHELD
     FOR     FOR  ALL     WITHHELD  FOR: (Write that nominee's name in the space
                                          provided  below).
     [  ]     [   ]       ------------------------------------------------------


Item  2.     ADOPTION  OF  A  NON-EMPLOYEE  DIRECTORS  STOCK  OPTION AWARD PLAN.

     FOR     AGAINST          ABSTAIN
     [  ]     [   ]              [  ]


Item  3.     ADOPTION  OF  AN  EMPLOYEE  INCENTIVE  STOCK  OPTION  AWARD  PLAN.
     FOR     AGAINST          ABSTAIN
     [  ]     [   ]              [  ]

Item  4.     AMENDMENT  OF  THE RESTATED ARTICLES OF INCORPORATION TO DECLASSIFY
                    THE  BOARD  OF  DIRECTORS.
     FOR     AGAINST          ABSTAIN
     [  ]     [   ]              [  ]


If  you  plan  to  attend  the  Annual         WILL
Meeting,  please  mark the  WILL             ATTEND
ATTEND  block.                                 [  ]


                                                               Date     ,  2005

                                   _____________________________________________
                                   Signature

                                   _____________________________________________
                                   Signature  if  held  jointly

                                   NOTE:  Please  sign  as  name appears hereon.
                                   Joint  owners  should  each  sign.  When
                                   signing as attorney, executor, administrator,
                                   trustee, or guardian, please give full title.

                              FOLD AND DETACH HERE
PROXY
     (1)     THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
                                 PIZZA INN, INC.
                               3551 PLANO PARKWAY
                             THE COLONY, TEXAS 75056
                 ANNUAL MEETING OF SHAREHOLDERS ON JUNE 23, 2005

<PAGE>
     The  undersigned,  revoking  all  proxies heretofore given, hereby appoints
Kevin  A.  Kleiner  and  Shawn  M. Preator, or either of them, as proxies of the
undersigned,  with  full  power  of  substitution and resubstitution, to vote on
behalf of the undersigned the shares of Pizza Inn, Inc. (the "Company") that the
undersigned is entitled to vote at the Annual Meeting of Shareholders to be held
at  10:00  a.m.,  Dallas  time,  on  Thursday,  June  23, 2005, at the Company's
corporate  offices,  3551  Plano  Parkway,  The  Colony, Texas 75056, and at all
adjournments  thereof,  as fully as the undersigned would be entitled to vote if
personally  present,  as  specified on the reverse side of this card and on such
other  matters  as  may  properly  come  before  the meeting or any adjournments
thereof. In their discretion, the Proxies are authorized to vote upon such other
business  as  may  properly  come  before  the  meeting.

<PAGE>


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-1
<SEQUENCE>2
<FILENAME>doc2.txt
<TEXT>


                                 PIZZA INN, INC
                           2005 NONEMPLOYEE DIRECTORS
                             STOCK OPTION AWARD PLAN

     The  name  of  the  plan  is the PIZZA INN, INC. 2005 NONEMPLOYEE DIRECTORS
STOCK  OPTION  AWARD  PLAN  ("Plan").
                              ----

     1.     Purpose.  The  purpose  of  the  Plan is to advance the interests of
Pizza  Inn, Inc., a Missouri corporation ("Company") by attracting and retaining
                                           -------
the  services  of  experienced  and  knowledgeable  non-employee  directors
("Directors"  or  "Participants")  for  the  benefit  of  the  Company  and  its
                   ------------
shareholders  and to provide additional incentive for such directors to continue
to  work  for  the  best  interests  of the Company and its shareholders through
continuing  ownership  of  the  Company's  stock.

     2.     Definitions

     2.1     "Award"  means  a stock option granted to a Participant pursuant to
this  Plan.

2.2     "Award  Agreement"  means  a written agreement between a Participant and
the  Company  that  sets  out  the  terms  of  the  grant  of  an  Award.

2.3     "Board"  means  the  Board  of  Directors  of  the  Company.

2.4     "Change of Control" means any circumstances in which any person or group
that  does  not include Mark E. Schwarz, Newcastle Partners L.P. or any of their
respective  affiliates  becomes  the beneficial owner of securities representing
more  than  50%  of  the  combined  voting  power  of  the Company's outstanding
securities  entitled to vote on the election of directors (for which purpose the
terms  "person," "group" and "beneficial owner" have the same meaning as used in
Section  13(d)  of the Securities Exchange Act of 1934 and the rules promulgated
thereunder, and the term "affiliate" has the same meaning as defined in Rule 405
promulgated  under  the  Securities  Act  of  1933).

     2.5     "Code"  means the Internal Revenue Code of 1986, as such is amended
from  time to time, and any reference to a section of the Code shall include any
successor  provision  of  the  Code.

     2.6     "Committee"  means  the Compensation Committee of the Board, or any
Board committee constituted and appointed by the Board from among its members to
administer  this  Plan  pursuant  to  its  terms.

2.7     "Date  of Grant" means the effective date on which an Award is made to a
Participant  as  set forth in the applicable Award Agreement; provided, however,
that  solely  for  purposes  of Section 16 of the Exchange Act and the rules and
regulations  promulgated  thereunder, the Date of Grant of an Award shall be the
date  of  shareholder  approval  of  the  Plan  if  such  date is later than the
effective  date  of  such  Award  as  set  forth  in  the  Award  Agreement.

2.8     "Director"  means  a  member  of  the  Board.

2.9     "Disability"  means  a  disability  as  construed  under the appropriate
provisions  of  the  long-term  disability  plan  maintained  for the benefit of
Employees  of the Company who are regularly employed on a salaried basis, unless
the  Committee  adopts  another  meaning.

2.10     "Employee" means common law employee (as defined in accordance with the
Regulations  and  Revenue  Rulings  then applicable under Section 3401(c) of the
Code)  of  the  Company  or  any  subsidiary  or  affiliate  of  the  Company.

2.11     "Exchange  Act"  means  the Securities Exchange Act of 1934, as amended
from  time  to  time,  and  any reference to a section of the Exchange Act shall
include  any  successor  provisions  of  the  Exchange  Act.

2.12     "Fair  Market  Value"  means,  as it relates to the Shares, the closing
price  of  a  Share on Nasdaq on the day on which an Award is granted, provided,
however,  that in the event that the foregoing definition of "Fair Market Value"
does  not  comply  with  the  definition  of  "fair market value" provided under
Section  409A  of  the Code (or the guidance and regulations issued thereunder),
the  definition  of  "fair market value" under Section 409A of the Code shall be
used  for  purposes  of  the  Plan  and  any  Awards  granted  under  the  Plan.

     2.13     "Nonqualified  Stock  Option"  means  a nonqualified stock option,
granted  pursuant  to this Plan, which is not an "incentive stock option" within
the  meaning  of  Section  422  of  the  Code.

2.14     "Outside  Director"  or  "Non-Employee Director" each means a member of
the  Board  who  is  not  otherwise  an  Employee  of the Company, and otherwise
satisfying  the  requirements  of  this  Plan  pertaining  to  Directors.

2.15     "Option"  means  the  right  to acquire a share of the Company's common
stock  at prices and on dates established by the Committee pursuant to the terms
of  this  Plan  and  documents  evidencing  the  Award.

2.16     "Participants"  means  those Directors to whom Awards have been granted
from  time  to  time  and  any  authorized  transferee  of  such  Awards.

2.17     "Plan"  means  the  2005 Non-Employee Director Stock Option Award Plan.

2.18     "Plan  Year"  means  a 12-month period, commensurate with the Company's
fiscal  year,  used  for calculating Director eligibility and participation, and
for  determining  Award  dates.  From  time  to  time,  the  Board may determine
beginning and end dates for a Plan Year other than those of the Company's fiscal
year.

2.19     "1993  Plan"  means  the  Pizza  Inn 1993 Outside Directors Stock Award
Plan,  which  expired,  without  renewal  or  extension,  on  October  13, 2003.

2.20     "Share" means one share of the Company's common stock, $0.01 par value,
or  the  number  and  types of shares of stock or other securities that shall be
substituted  or  adjusted  for  such  shares  as  provided  herein.

2.21     "Termination  of  Service"  occurs when a Participant who is an Outside
Director  of  the  Company or a subsidiary shall cease to serve as a director of
the  Company and its subsidiaries for any reason.  Except as may be necessary or
desirable  to  comply  with  applicable  federal or state law, a "Termination of
Service"  shall  not  be  deemed  to  have occurred when a Participant who is an
Outside  Director  becomes  an  Employee.

3.     Effective  Date.  This  Plan  was approved by the Board of the Company on
October  20, 2004 and will become effective on June 23, 2005 ("Effective Date"),
                                                               --------------
subject  to approval by the affirmative vote of the holders of a majority of the
votes  cast  at  the 2004 Annual Meeting of Shareholders; however, the Committee
may  grant Awards under the Plan prior to the time of shareholder approval.  Any
such  Award  granted prior to such shareholder approval shall be made subject to
such  shareholder  approval.

     4.     Administration.  Subject  to  the terms of this Section 4, this Plan
                                                            ---------
shall be administered by the Committee. The Committee has the authority to grant
Awards  to  Directors  and  is  responsible  for  the general administration and
interpretation  of  this  Plan.  At any time there is no Committee to administer
the  Plan, any references in this Plan to the Committee shall be deemed to refer
to  the  Board.

     4.1     Delegation.  The  Committee  may  delegate  to  one  or more of its
             ----------
members  such  administrative duties as it may deem advisable and the Committee,
or  any person to whom it has delegated duties, may employ one or more qualified
persons  to  render  advice  with respect to any responsibility the Committee or
such  person  may  have  under  this  Plan.  The Committee may employ attorneys,
consultants,  accountants,  or other persons and the Committee, the Company, and
its  officers and directors shall be entitled to rely upon the advice, opinions,
or  valuations  of  any such persons.  All actions taken and all interpretations
and  determinations  made  by  the  Committee  in  good faith shall be final and
binding  upon  all persons who have received grants under the Plan, the Company,
and  all other interested persons.  No member or agent of the Committee shall be
personally  liable for any action, determination, or interpretation made in good
faith with respect to the Plan and all members and agents of the Committee shall
be  fully protected by the Company in respect of any such action, determination,
or  interpretation.

The  Committee  may  delegate  the  administration  of the Plan to an officer or
officers  of  the  Company,  and such administrator(s) may have the authority to
execute  and  distribute agreements or other documents evidencing or relating to
Awards;  to  maintain  records  relating  to  the  grant,  vesting,  exercise,
forfeiture,  or  expiration  of  Awards;  to  process or oversee the issuance of
Shares  upon  the  exercise, vesting and/or settlement of an Award; to interpret
the  terms  of  Awards;  and  to  take  such  other actions as the Committee may
specify, provided that in no instance shall any such administrator be authorized
to  grant  Awards  under  the  Plan.

     4.2     Committee  Powers.  Subject  to  the  express  provisions  and
             -----------------
limitations  set  forth  in  this  Plan,  the  Committee shall be authorized and
empowered  to  do  all things necessary or desirable, in its sole discretion, in
connection  with the administration of this Plan, including, without limitation,
the  following:

(a)     to  prescribe, amend, and rescind rules and regulations relating to this
Plan  and  to  define  terms  not  otherwise  defined  herein;

(b)     to  determine  which persons are Participants, to which Participants, if
any, Awards shall be granted hereunder and the timing of any such Awards, and to
grant  Awards;

(c)     to  grant  Awards to Participants and determine the terms and conditions
thereof,  including  the  number of Shares subject to Awards and the exercise or
purchase  price  of such Shares (subject to limitations provided herein) and the
circumstances  under  which Awards become exercisable or vested or are forfeited
or  expire;

(d)     to  prescribe  and  amend the terms of the agreements or other documents
evidencing  Awards  made  under  this  Plan  (which  may  not  be  identical);

(e)     to  interpret  and  construe  this Plan, any rules and regulations under
this  Plan,  and the terms and conditions of any Award granted hereunder, and to
make  exceptions to any such provisions in good faith and for the benefit of the
Company;  and

(f)     to  make  all other determinations deemed necessary or advisable for the
administration  of  this  Plan.

     4.3     Limitations  on  the  Committee.  The  Committee  may not (i) grant
             -------------------------------
Awards  at  a price below Fair Market Value, (ii) reprice or reduce the exercise
price of an Option without shareholder approval, or (iii) offer reload grants or
grant  Awards  conditional upon delivery of shares to satisfy the exercise price
and/or  tax  withholding  obligation  under  another  Award.

5.     Eligibility.  Each Director who is not an Employee is an Outside Director
and is eligible to participate in the Plan. The Board has reserved discretion to
determine  that  one or more Directors will not be eligible for a specified Plan
Year  or  for  an  indefinite  period.

     6.     Shares  Subject  to  the Plan.  Subject to adjustment as provided in
Section 13, the maximum number of Shares that may be awarded and delivered under
  --------
the Plan pursuant to Awards is 500,000 subject to legal availability.  Shares to
be issued may be made available from authorized but unissued Shares, Shares held
by  the  Company in its treasury, or Shares purchased by the Company on the open
market  or  otherwise.  During  the  term  of this Plan, the Company will at all
times  reserve  and keep available the number of Shares that shall be sufficient
to  satisfy  the  requirements of this Plan.  To the extent that any Award under
this Plan shall be forfeited, shall expire, or be canceled, in whole or in part,
then  the  number  of  Shares  covered  by  the  Award so forfeited, expired, or
canceled  may  again  be  awarded  pursuant  to  the  provisions  of  this Plan.

     7.     Limitations  on  Awards.   Unless and until the Committee determines
otherwise  and  in addition to any other Option granted to Outside Directors, an
Option  to  acquire  two (2) Shares shall be granted to each Outside Director on
the  first  day  of  each  Plan  Year  for every one (1) Share purchased by such
Outside  Director  during  the  preceding  Plan  Year,  up to a maximum award of
40,000.  Purchases  shall  include,  without  limitation,  purchases on the open
market as well as purchases by exercise of Awards granted under this Plan or the
1993  Plan.  In  addition,  purchases  in  the preceding Plan Year shall include
exercises of previously granted Awards during the first ten (10) days of the new
Plan  Year  if  such  Outside Director's Options first become exercisable during
that  period.  Awards  shall  be the sole benefit available to Outside Directors
under  this  Plan.

     8.     Vesting,  Forfeiture  and Restrictions.  All Awards shall be subject
to a minimum six (6) month vesting period; provided, however, that the Committee
may  impose  a longer vesting period or other restrictions on any Award, subject
in  any  case  to the terms of the Plan.  An Award vesting period shall lapse in
accordance  with  a  schedule  established by the Committee and set forth in the
Award  Agreement  for  the Award, except as otherwise provided below.  Each such
schedule  may  provide for pro rata vesting over several periods or full vesting
at  the  end  of  a single period, and may include any other conditions upon the
vesting  of  the  Awards as the Committee shall determine.  Any unvested Options
shall  become  100%  vested  upon  a  Change  of  Control.  Except  as otherwise
expressly  provided  in  the  Participant's  Award  Agreement  or this Plan, all
unvested  Options  shall be forfeited on the date of a Participant's Termination
of  Service  and  all vested Options will be subject to forfeiture in accordance
with  the  following  terms:

(a)     Death.  If a Participant suffers a Termination of Service as a result of
        -----
his  or  her death, then all Awards that were vested and unexercised on the date
of  death,  or  that the Participant would have been able to exercise within the
following  twelve  (12)  months  if  no  Termination  of  Service  had  occurred
(regardless  of whether such Awards were vested as of the date of death), may be
exercised  within the twelve (12) month period following the Participant's death
by his or her estate or by the person who acquires the exercise right by bequest
or  inheritance.  If a Participant suffers a Termination of Service prior to the
date  of  death,  and the Awards were both vested and exercisable at the time of
the  Participant's  death,  the Award may be exercised at any time within twelve
(12)  months  following  the  date  of death by the Participant's estate or by a
person  who  acquires the right to exercise the Award by bequest or inheritance,
but  only  to  the extent of that the Award was vested and exercisable as of the
date  of  the  Termination  of  Service.

(b)     Disability.  If  a  Participant  suffers  a  Termination of Service as a
        ----------
result  of the Participant's Disability, then the Participant may, within twelve
(12)  months  after the Termination of Service, exercise all vested Awards he or
she  could  have  exercised at the date of such Termination of Service, or would
have  been  able  to  exercise within the twelve (12) month period following the
Termination  of  Service had the Termination of Service not occurred (regardless
of  whether such Awards were vested as of the date of Termination of Service due
to  Disability),  provided,  however,  that no such Award may be exercised after
expiration  of  the  term  specified  in  the  Award  Agreement.

(c)     Termination  of  the  Relationship  for  Other  Reasons.  Termination of
        -------------------------------------------------------
Service  for any other reason other than as set forth in paragraph 8(a) and 8(b)
above,  including  not  being  nominated  for re-election, not being re-elected,
retirement,  resignation,  or  discharge,  will  result  in  forfeiture  of  all
unexercised  vested  Awards  as  of  5  p.m.  on  the date of the Termination of
Service,  unless  otherwise specified in the Award Agreement.  The Committee may
waive  the  forfeiture  in  whole  or  in  part. Where forfeiture is waived, the
Participant  may,  within thirty (30) days after the date of such Termination of
Service,  exercise  all Awards he or she could have exercised at the date of the
Termination  of  Service,  or would have been able to exercise within the thirty
(30)  day  period  following  the  Termination of Service had the Termination of
Service  not  occurred  (regardless if such Awards were vested as of the date of
Termination  of  Service).

9.     Terms  and  Conditions of Option Awards.  Each grant of an Award shall be
authorized by the Committee and shall be evidenced by an Award Agreement between
the Company and the Participant setting forth the Award being granted, the total
number  of  Shares subject to the Award (determined in accordance with the terms
of Section 7 of the Plan), the Exercise Price, the Date of Grant, and such other
   ---------
terms,  provisions,  limitations,  and performance objectives as are approved by
the Committee, provided that such terms and conditions are not inconsistent with
the Plan and do not cause the Award to be subject to the requirements of Section
409A  of the Code and the regulations and other guidance issued thereunder.  The
minimum  vesting  period  is  six (6) months, and the term of an Award may be no
more  than  ten  (10)  years  from the date of grant.  No Award may be exercised
after  expiration  of  its  term.

     10.     Exercise  Price.  The  Committee  will determine the exercise price
for  the  Shares  underlying  each  Award  at the time the Award is granted. The
exercise  price  for Shares under an Award may not be less than 100% of the Fair
Market  Value of the common stock of the Company on the Date of Grant.  No Award
may  be  repriced, replaced, regranted through cancellation, or modified without
shareholder  approval  (except  in  connection  with  a  change in the Company's
capitalization),  if  the  effect  would be to reduce the exercise price for the
Shares  subject  to  an  Award.

     11.     Exercise  of  Award;  Form  of Consideration.  Subject to the other
provisions of this Plan, the Committee may, in its sole discretion, provide that
an  Award  may not be exercised in whole or in part for any period or periods of
time  or  beyond any date specified in the Award Agreement.  Payment may be made
by  cash,  check,  or  by broker assisted same day sale.  The Option holder must
also pay the Company, at the time of purchase, the amount of federal, state, and
local  withholding  taxes  the  Company  is  required  to  withhold.

     12.     Nontransferability  of  Awards.  Unless otherwise determined by the
Committee,  Awards  granted  under  this Plan are not transferable other than by
will  or  the  laws  of  descent  and distribution and may be exercised during a
Participant's  lifetime  only  by  the  Participant.

     13.     Adjustments  Upon  Changes  in  Capitalization,  Merger, or Sale of
Assets   In  the  event  that the Company's stock changes by reason of any stock
split,  dividend,  combination, reclassification, or other similar change in the
Company's  capital  structure  effected  without  the  receipt of consideration,
appropriate  adjustments shall be made in the number and class of Shares subject
to  this  Plan,  the number and class of Shares subject to any Award outstanding
under  this  Plan,  and  the  exercise  price  for  Shares  subject  to any such
outstanding  Award.

     In  the event of a liquidation or dissolution, any unexercised Awards shall
terminate.  In  the event of a Change of Control, the Board or the Committee, in
its  discretion,  may provide for the assumption, substitution, or adjustment of
each  outstanding  Award.

     14.     No  Condition  of  Service.  The granting of Awards under this Plan
shall impose no obligation on the Company, or any of its officers, directors, or
employees,  to  continue  the  service  of  a Participant and shall not waive or
modify  the  right  to  terminate  services  of  any  such  Participant.

     15.     Securities Laws.  The Company has no obligation to register Options
granted  under  the  Plan.  If  Awards  granted  have  not been registered, upon
issuance  of  Awards  to  an  Outside  Director and upon issuance of Shares upon
exercise of an Award, the Participant shall represent and warrant to the Company
that the Shares are being acquired for investment purposes and shall acknowledge
transfer  restrictions  under  applicable  securities  laws.

     16.     Federal  Income  Tax  Consequences.  The  only  Options that may be
granted  under  the  Plan  are  Nonqualified  Stock  Options.

     Non-Qualified  Options.  A  Participant  generally  will  not recognize any
taxable income at the time the Award is granted. However, upon its exercise, the
Participant  will recognize ordinary income for federal tax purposes measured by
the  excess of the then fair market value of the Shares over the exercise price.
The  income  realized  by  the  Participant  will be subject to income and other
employee  withholding  taxes.

The  Participant's  basis  for determination of gain or loss upon the subsequent
disposition  of Shares acquired upon the exercise of an Award will be the amount
paid  for  such  Shares  plus  any ordinary income recognized as a result of the
exercise  of such Award. Upon disposition of any Shares acquired pursuant to the
exercise  of  an  Award,  the  difference  between  the  sale  price  and  the
Participant's  basis in the Shares will be treated as a capital gain or loss and
generally  will  be  characterized  as long-term gain or loss if the Shares have
been  held  for  more  than  one  year  at  disposition.

     In  general,  there  will be no federal income tax deduction allowed to the
Company  upon  the  grant or termination of an Award or a sale of disposition of
Shares  acquired upon the exercise of an Award. However, upon the exercise of an
Award  the  Company  will  be  entitled  to  a  deduction for federal income tax
purposes  equal  to the amount of ordinary income that a Participant is required
to  recognize  as  a  result of the exercise, provided that the deduction is not
otherwise  disallowed  under  the  Code.

     17.     Expiration.  Unless  it  is  terminated  sooner,  the  Plan  will
terminate  ten  (10)  years from the Effective Date, or such earlier date as the
Board may determine. The expiration of the Committee's authority to grant Awards
under  the  Plan  will  not affect the operation of the terms of the Plan or the
Company's  and  Participant's  rights  and  obligations  with  respect to Awards
granted  on  or  prior  to  the  expiration  date  of  the  Plan.

     18.     Amendment.  The  Board  may  at any time terminate the Plan or make
any  modification  that  it deems advisable; provided, however, that shareholder
approval  will  be  required  for any amendment that will (i) increase the total
number  of  Shares as to which Awards may be granted under the Plan, (ii) modify
the  class  of  persons  eligible  to receive Awards, or (iii) otherwise require
shareholder  approval  under  applicable law or regulation. In addition, neither
the  Board  nor the Committee will amend the Plan regarding the amount, pricing,
and  timing  of  Awards  other  than  to  comply  with  changes in the Code, the
Employment  Retirement  Income  Security  Act  of 1974, or the rules thereunder.
Modification,  or  amendment  of  the  Plan will not, without the consent of the
Participant,  affect  his  or  her  rights  under  a  previously  granted Award.

19.     Miscellaneous.

     19.1     Impact on Other Benefits.  At no time shall the value of any Award
              ------------------------
be  includable  as  compensation  or  earnings for purposes of any other benefit
plan,  if  any,  offered  to  Directors  by  the  Company.

19.2     Funding  of  Plan.  Insofar as it provides for Awards the Plan shall be
         -----------------
unfunded.  Although  bookkeeping  accounts  may  be  established with respect to
Participants  who  are granted Awards under this Plan, any such accounts will be
used  merely  as a bookkeeping convenience. The Company shall not be required to
segregate  any  assets  that may at any time be represented by Awards, nor shall
this  Plan be construed as providing for such segregation, nor shall the Company
or  the  Committee  be deemed to be a trustee of Shares to be awarded under this
Plan.

19.3     Governing  Law.  This  Plan  and  any  agreements  or  other  documents
         --------------
hereunder  shall be interpreted and construed in accordance with the laws of the
State of Missouri and applicable federal law. The Committee may provide that any
dispute  as  to any Award shall be presented and determined in such forum as the
Committee  may  specify, including through binding arbitration. Any reference in
this  Plan  or  in  the  agreement  or  other document evidencing any Award to a
provision  of  law  or  to  a  rule or regulation shall be deemed to include any
successor  law,  rule,  or  regulation  of  similar  effect  or  applicability.

19.4     Liability of Company.  The Company shall not be liable to a Participant
         --------------------
or  other  persons  as to (a) the non-issuance of Shares as to which the Company
has  been  unable  to  obtain  from  any regulatory body having jurisdiction the
authority deemed by the Company's counsel to be necessary to the lawful issuance
of any Shares hereunder; and (b) any tax consequence expected, but not realized,
by  any  Participant or other person due to the receipt, exercise, or settlement
of  any  Award  granted  pursuant  to  this  Plan.

19.5     Compliance  with  Laws  and  Regulations.  This  Plan,  the  grant  and
         ----------------------------------------
exercise  of  Awards  hereunder,  and  the obligation of the Company to issue or
deliver  Shares  under  such Awards, shall be subject to all applicable federal,
state,  and  local  laws,  rules,  and regulations, and to such approvals by any
governmental  or regulatory agency as may be required. To the extent the Company
is  unable,  or  the Committee deems it infeasible, to obtain authority from any
regulatory  body having jurisdiction, which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares under this
Plan, the Company shall be relieved of any liability with respect to the failure
to issue or sell such Shares as to which such requisite authority shall not have
been  obtained.  No  Option  shall  be exercisable and no Shares shall be issued
and/or  transferable  under any other Award unless a registration statement with
respect  to  the  Shares underlying such Options is effective and current or the
Company  or  its  counsel  has determined that such registration is unnecessary.


Adopted  by  the  Board  of  Directors  of  Pizza Inn, Inc. on October 20, 2004.


/s/  Mark.  E.  Schwarz                         /s/  Steven  J.  Pully
- -----------------------                              -----------------
Chairman  of  the Board                         Chairman, Compensation Committee





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-2
<SEQUENCE>3
<FILENAME>doc3.txt
<TEXT>
                                 PIZZA INN, INC
                                  2005 EMPLOYEE
                             STOCK OPTION AWARD PLAN

     The  name  of  the  plan  is the PIZZA INN, INC. 2005 EMPLOYEE STOCK OPTION
AWARD  PLAN  ("Plan").
               ----

     1.     Purpose.  The  purpose  of  the  Plan is to advance the interests of
Pizza  Inn, Inc., a Missouri corporation ("Company") by attracting and retaining
                                           -------
the  services  of  experienced  and  knowledgeable  Employees  ("Employees"  or
                                                                 ---------
"Participants")  for  the  benefit  of  the  Company and its shareholders and to
        -----
provide additional incentive for such Employees to continue to work for the best
interests  of  the  Company and its shareholders through continuing ownership of
the  Company's  stock.

     2.     Definitions.

     2.1     "Award"  means  a stock option granted to a Participant pursuant to
this  Plan.

2.2     "Award  Agreement"  means  a written agreement between a Participant and
the  Company  that  sets  out  the  terms  of  the  grant  of  an  Award.

2.3     "Board"  means  the  Board  of  Directors  of  the  Company.

2.4     "Change of Control" means any circumstances in which any person or group
that  does  not include Mark E. Schwarz, Newcastle Partners L.P. or any of their
respective  affiliates  becomes  the beneficial owner of securities representing
more  than  50%  of  the  combined  voting  power  of  the Company's outstanding
securities  entitled to vote on the election of directors (for which purpose the
terms  "person," "group" and "beneficial owner" have the same meaning as used in
Section  13(d)  of the Securities Exchange Act of 1934 and the rules promulgated
thereunder, and the term "affiliate" has the same meaning as defined in Rule 405
promulgated  under  the  Securities  Act  of  1933).

2.5     "Code"  means the Internal Revenue Code of 1986, as such is amended from
time  to  time,  and  any  reference  to a section of the Code shall include any
successor  provision  of  the  Code.

     2.6     "Committee"  means  the Compensation Committee of the Board, or any
Board committee constituted and appointed by the Board from among its members to
administer  this  Plan  pursuant  to  its  terms.

2.7     "Date  of Grant" means the effective date on which an Award is made to a
Participant  as  set forth in the applicable Award Agreement; provided, however,
that  solely  for  purposes  of Section 16 of the Exchange Act and the rules and
regulations  promulgated  thereunder, the Date of Grant of an Award shall be the
date  of  shareholder  approval  of  the  Plan  if  such  date is later than the
effective  date  of  such  Award  as  set  forth  in  the  Award  Agreement.

2.8     "Director"  means  a  member  of  the  Board.

2.9     "Disability"  means  a  disability  as  construed  under the appropriate
provisions  of  the  long-term  disability  plan  maintained  for the benefit of
Employees  of the Company who are regularly employed on a salaried basis, unless
the  Committee  adopts  another  meaning.

2.10     "Employee" means common law employee (as defined in accordance with the
Regulations  and  Revenue  Rulings  then applicable under Section 3401(c) of the
Code)  of  the  Company  or  any  subsidiary  or  affiliate  of  the  Company.

2.11     "Exchange  Act"  means  the Securities Exchange Act of 1934, as amended
from  time  to  time,  and  any reference to a section of the Exchange Act shall
include  any  successor  provisions  of  the  Exchange  Act.

2.12     "Fair  Market  Value"  means,  as it relates to the Shares, the closing
price  of  a  Share on Nasdaq on the day on which an Award is granted, provided,
however,  that in the event that the foregoing definition of "Fair Market Value"
does  not  comply  with  the  definition  of  "fair market value" provided under
Section  409A  of  the Code (or the guidance and regulations issued thereunder),
the  definition  of  "fair  market  value"  under Section 409A shall be used for
purposes  of  the  Plan  and  any  Awards  granted  under  the  Plan.

2.13     "Incentive  Stock  Option"  means  an  incentive  stock  option granted
pursuant  to  this  Plan,  and  within  the  meaning of Section 422 of the Code.

2.14     "Non-Qualified Stock Option" means a non-qualified stock option granted
pursuant  to  this  Plan,  which  is  not an "incentive stock option" within the
meaning  of  Section  422  of  the  Code.

2.15     "Option"  means  the  right  to acquire a share of the Company's common
stock  at prices and on dates established by the Committee pursuant to the terms
of  this  Plan  and  documents  evidencing  the  Award.

2.16     "Participants"  means  those Employees to whom Awards have been granted
from  time  to  time  and  any  authorized  transferee  of  such  Awards.

2.17     "Plan" means the Pizza Inn, Inc. 2005 Employee Stock Option Award Plan.

2.18     "Plan  Year"  means  a 12-month period, commensurate with the Company's
fiscal  year,  used  for calculating Employee eligibility and participation, and
for  determining  Award  dates.  From  time  to  time,  the  Board may determine
beginning and end dates for a Plan Year other than those of the Company's fiscal
year.

2.19     "Share" means one share of the Company's common stock, $0.01 par value,
or  the  number  and  types of shares of stock or other securities that shall be
substituted  or  adjusted  for  such  shares  as  provided  herein.

2.20     "Termination  of  Service" occurs when a Participant who is an Employee
of the Company, its operating divisions, affiliates, or a subsidiary shall cease
to  be  employed  by  the  Company  or  such  operating  division, affiliate, or
subsidiary  for any reason.  Notwithstanding the foregoing, an Employee shall be
treated  as  continuing  to be employed by the Company, its operating divisions,
affiliates, or a subsidiary if the Employee is on military leave, sick leave, or
other bona fide leave of absence and if the period of such leave does not exceed
three  (3) months, or, if the leave of absence exceeds three (3) months, so long
as  the  Employee's  right  to  reemployment  with  the  Company,  its operating
divisions,  affiliates,  or  a  subsidiary  is  provided either by statute or by
contract.

3.     Effective  Date.  This  Plan  was approved by the Board of the Company on
October  20, 2004 and will become effective on June 23, 2005 ("Effective Date"),
                                                               --------------
subject  to approval by the affirmative vote of the holders of a majority of the
votes  cast  at  the 2004 Annual Meeting of Shareholders; however, the Committee
may  grant Awards under the Plan prior to the time of shareholder approval.  Any
such  Award  granted prior to such shareholder approval shall be made subject to
such  shareholder  approval.

     4.     Administration.  Subject  to  the terms of this Section 4, this Plan
                                                            ---------
shall be administered by the Committee. The Committee has the authority to grant
Awards  to  Employees  and  is  responsible  for  the general administration and
interpretation  of  this  Plan.  At any time there is no Committee to administer
the  Plan, any references in this Plan to the Committee shall be deemed to refer
to  the  Board.

     4.1     Delegation.  The  Committee  may  delegate  to  one  or more of its
             ----------
members  such  administrative duties as it may deem advisable and the Committee,
or  any person to whom it has delegated duties, may employ one or more qualified
persons  to  render  advice  with respect to any responsibility the Committee or
such  person  may  have  under  this  Plan.  The Committee may employ attorneys,
consultants,  accountants,  or other persons and the Committee, the Company, and
its  officers and Employees shall be entitled to rely upon the advice, opinions,
or  valuations  of  any such persons.  All actions taken and all interpretations
and  determinations  made  by  the  Committee  in  good faith shall be final and
binding  upon  all persons who have received grants under the Plan, the Company,
and  all other interested persons.  No member or agent of the Committee shall be
personally  liable for any action, determination, or interpretation made in good
faith with respect to the Plan and all members and agents of the Committee shall
be  fully protected by the Company in respect of any such action, determination,
or  interpretation.

The  Committee  may  delegate  the  administration  of the Plan to an officer or
officers  of  the  Company,  and such administrator(s) may have the authority to
execute  and  distribute agreements or other documents evidencing or relating to
Awards;  to  maintain  records  relating  to  the  grant,  vesting,  exercise,
forfeiture,  or  expiration  of  Awards;  to  process or oversee the issuance of
Shares  upon  the  exercise, vesting and/or settlement of an Award; to interpret
the  terms  of  Awards;  and  to  take  such  other actions as the Committee may
specify, provided that in no instance shall any such administrator be authorized
to  grant  Awards  under  the  Plan.

     4.2     Committee  Powers.  Subject  to  the  express  provisions  and
             -----------------
limitations  set  forth  in  this  Plan,  the  Committee shall be authorized and
empowered  to  do  all things necessary or desirable, in its sole discretion, in
connection  with the administration of this Plan, including, without limitation,
the  following:

(a)     to  prescribe, amend, and rescind rules and regulations relating to this
Plan  and  to  define  terms  not  otherwise  defined  herein;

(b)     to  determine  which persons are Participants, to which Participants, if
any, Awards shall be granted hereunder and the timing of any such Awards, and to
     grant  Awards;

(c)     to  grant  Awards to Participants and determine the terms and conditions
thereof,  including  the  number of Shares subject to Awards and the exercise or
purchase  price  of such Shares (subject to limitations provided herein) and the
circumstances  under  which Awards become exercisable or vested or are forfeited
or  expire;

(d)     to  prescribe  and  amend the terms of the agreements or other documents
evidencing  Awards  made  under  this  Plan  (which  may  not  be  identical);

(e)     to  interpret  and  construe  this Plan, any rules and regulations under
this  Plan,  and the terms and conditions of any Award granted hereunder, and to
make  exceptions to any such provisions in good faith and for the benefit of the
Company;  and

(f)     to  make  all other determinations deemed necessary or advisable for the
administration  of  this  Plan.

     4.3     Limitations  on  the  Committee.  The  Committee  may not (i) grant
             -------------------------------
Awards  at  a price below Fair Market Value, (ii) reprice or reduce the exercise
price of an Option without shareholder approval, or (iii) offer reload grants or
grant  Awards  conditional upon delivery of shares to satisfy the exercise price
and/or  tax  withholding  obligation  under  another  Award.

5.     Eligibility.  Each  Employee  who  is  employed  full  time and is not on
probationary  status,  as  defined  from  time to time in the Company's employee
handbook, at the time of the Award Grant is eligible to participate in the Plan.
The  Board  has reserved discretion to determine that one or more Employees will
not  be  eligible  for  a  specified  Plan  Year  or  for  an indefinite period.

     6.     Shares  Subject  to  the Plan.  Subject to adjustment as provided in
Section 13, the maximum number of Shares that may be awarded and delivered under
  --------
the Plan pursuant to Awards is 1,000,000 subject to legal availability, of which
100%  may  be  awarded  and delivered under the Plan as Incentive Stock Options.
Shares  to  be issued may be made available from authorized but unissued Shares,
Shares  held  by the Company in its treasury, or Shares purchased by the Company
on the open market or otherwise.  During the term of this Plan, the Company will
at  all  times  reserve  and  keep  available the number of Shares that shall be
sufficient  to  satisfy  the  requirements of this Plan.  To the extent that any
Award under this Plan shall be forfeited, shall expire, or be canceled, in whole
or  in  part,  then  the  number  of  Shares  covered by the Award so forfeited,
expired,  or  canceled  may  again be awarded pursuant to the provisions of this
Plan;  provided, however, that such forfeited, expired or cancelled shares shall
not  increase  the  maximum  number of Shares described in this Section 6 as the
maximum  number  of  Shares  that  may  be delivered pursuant to Incentive Stock
Options.

     7.     Limitations on Awards.  Each Participant will be eligible to receive
Awards,  singly  or in the aggregate, in any amount determined by the Committee,
subject  to  the  requirements  of  this Plan.  Awards shall be the sole benefit
available  to  Employees  under  this  Plan.

     8.     Vesting,  Forfeiture, and Restrictions.  All Awards shall be subject
to  minimum  vesting  periods  and maximum exercise periods as the Committee may
determine  from  time to time, subject in any case to the terms of the Plan.  An
Award  vesting  period  shall lapse in accordance with a schedule established by
the  Committee  and  set  forth  in the Award Agreement for the Award, except as
otherwise  provided  below.  Each such schedule may provide for pro rata vesting
over  several  periods  or  full  vesting at the end of a single period, and may
include  any  other  conditions upon the vesting of the Awards, as the Committee
shall determine.  Any unvested Options shall become 100% vested upon a Change of
Control.  Except  as  otherwise  expressly  provided  in the Participant's Award
Agreement or this Plan, all unvested Options shall be forfeited on the date of a
Participant's  Termination  of Service and all vested Options will be subject to
forfeiture  in  accordance  with  the  following  terms:

(a)     Death.  If a Participant suffers a Termination of Service as a result of
        -----
his  or  her death, then all Awards that were vested and unexercised on the date
of  death,  or  that the Participant would have been able to exercise within the
following  twelve  (12)  months  if  no  Termination  of  Service  had  occurred
(regardless  of whether such Awards were vested as of the date of death), may be
exercised  within the twelve (12) month period following the Participant's death
by his or her estate or by the person who acquires the exercise right by bequest
or  inheritance.  If a Participant suffers a Termination of Service prior to the
date  of  death,  and the Awards were both vested and exercisable at the time of
the  Participant's  death,  the Award may be exercised at any time within twelve
(12)  months  following  the  date  of death by the Participant's estate or by a
person  who  acquires the right to exercise the Award by bequest or inheritance,
but  only  to  the extent of that the Award was vested and exercisable as of the
date  of  the  Termination  of  Service.

(b)     Disability.  If  a  Participant  suffers  a  Termination of Service as a
        ----------
result  of the Participant's Disability, then the Participant may, within twelve
(12)  months  after the Termination of Service, exercise all vested Awards he or
she  could  have  exercised at the date of such Termination of Service, or would
have  been  able  to  exercise within the twelve (12) month period following the
Termination  of  Service had the Termination of Service not occurred (regardless
of  whether such Awards were vested as of the date of Termination of Service due
to  Disability),  provided,  however,  that no such Award may be exercised after
expiration  of  the  term  specified  in  the  Award  Agreement.

(c)     Termination  of  the  Relationship  for  Other  Reasons.  Termination of
        -------------------------------------------------------
Service for any reason other than as set forth in paragraph 8(a) and 8(b) above,
including,  but  not  limited  to,  retirement,  resignation, or discharge, will
result  in  forfeiture of all unexercised vested Awards as of 5 p.m. on the date
of  the  Termination  of  Service,  unless  otherwise  specified  in  the  Award
Agreement.  The  Committee  may  waive the forfeiture in whole or in part. Where
forfeiture  is  waived,  the  Participant may, within thirty (30) days after the
date  of  such  Termination of Service, exercise all Awards he or she could have
exercised  at the date of the Termination of Service, or would have been able to
exercise  within the thirty (30) day period following the Termination of Service
had  the  Termination  of  Service  not occurred (regardless if such Awards were
vested  as  of  the  date  of  Termination  of  Service).

9.     Terms  and  Conditions of Option Awards.  Each grant of an Award shall be
authorized by the Committee and shall be evidenced by an Award Agreement between
the Company and the Participant setting forth the Award being granted, the total
number  of  Shares subject to the Award (determined in accordance with the terms
of Section 7 of the Plan), the Exercise Price, the Date of Grant, and such other
   ---------
terms,  provisions,  limitations,  and performance objectives as are approved by
the Committee, provided that such terms and conditions are not inconsistent with
the Plan and do not cause the Award to be subject to the requirements of Section
409A  of  the  Code  and  regulations and other guidance issued thereunder.  Any
Award granted pursuant to this Plan must be granted within ten (10) years of the
date  of  the  adoption  of  this  Plan.

     10.     Exercise  Price.  The  Committee  will determine the exercise price
for  the  Shares  underlying  each  Award  at the time the Award is granted. The
exercise  price  for Shares under an Award may not be less than 100% of the Fair
Market  Value of the common stock of the Company on the Date of Grant; provided,
however,  if  an Incentive Stock Option is granted to an Employee who owns or is
deemed to own (by reason of the attribution rules of Section 424(d) of the Code)
more than ten percent (10%) of the combined voting power of all classes of stock
of  the  Company  (or  any parent or subsidiary), the exercise price shall be at
least 110% of the Fair Market Value of the Shares of stock on the Date of Grant.
No  Award may be repriced, replaced, regranted through cancellation, or modified
without  shareholder  approval  (except  in  connection  with  a  change  in the
Company's  capitalization),  if the effect would be to reduce the exercise price
for  the  Shares  subject  to  an  Award.

     11.     Exercise  of  Award;  Form  of Consideration.  Subject to the other
provisions of this Plan, the Committee may, in its sole discretion, provide that
an  Award  may not be exercised in whole or in part for any period or periods of
time  or  beyond any date specified in the Award Agreement.  Payment may be made
by  cash,  check,  or  by broker assisted same day sale.  The Option holder must
also pay the Company, at the time of purchase, the amount of federal, state, and
local  withholding  taxes  the  Company  is  required  to  withhold.

12     Maximum  ISO Grants.  The Committee may not grant Incentive Stock Options
("ISO")  under  the  Plan  to any Employee which would permit the aggregate Fair
Market  Value  (determined  on  the  Date  of Grant) of the Shares of stock with
respect  to  which Incentive Stock Options (under this and any other plan of the
Company  and  its  subsidiaries)  are  exercisable  for  the  first time by such
Employee  during any calendar year to exceed $100,000.  To the extent any Option
granted  under this Plan that is designated as an Incentive Stock Option exceeds
this  limit  or  otherwise  fails  to qualify as an Incentive Stock Option, such
Option  (or any such portion thereof) shall no longer be treated as an Incentive
Stock  Option and shall, instead, be treated as a nonqualified stock option.  In
such  case,  the  Committee  shall  designate  which  stock  will  be treated as
Incentive  Stock  Option  stock  by  causing  the  issuance  of a separate stock
certificate  and  identifying  such stock as Incentive Stock Option stock on the
Company's  stock  transfer  records.

     13.     Nontransferability  of  Awards.  Unless otherwise determined by the
Committee,  Awards  granted  under  this Plan are not transferable other than by
will  or  the  laws  of  descent  and distribution and may be exercised during a
Participant's  lifetime  only  by  the  Participant.

     14.     Disqualifying  Disposition of Incentive Stock Option.  If Shares of
stock  acquired  upon  exercise  of  an  Incentive  Option  are disposed of by a
Participant  prior  to  the  expiration of either two (2) years from the Date of
Grant of such Option or one (1) year from the transfer of Shares of stock to the
Participant  pursuant  to  the  exercise  of  such  Option,  or  in  any  other
disqualifying  disposition  within  the meaning of Section 422 of the Code, such
Participant  shall  notify  the Company in writing of the date and terms of such
disposition.  A  disqualifying disposition by a Participant shall not affect the
status  of  any other Option granted under the Plan as an Incentive Stock Option
within  the  meaning  of  Section  422  of  the  Code.

     15.     Adjustments  Upon  Changes  in  Capitalization,  Merger, or Sale of
Assets.  In  the  event  that the Company's stock changes by reason of any stock
split,  dividend,  combination, reclassification, or other similar change in the
Company's  capital  structure  effected  without  the  receipt of consideration,
appropriate  adjustments shall be made in the number and class of Shares subject
to  this  Plan,  the number and class of Shares subject to any Award outstanding
under  this  Plan,  and  the  exercise  price  for  Shares  subject  to any such
outstanding  Award.

     In  the event of a liquidation or dissolution, any unexercised Awards shall
terminate.  In  the event of a Change of Control, the Board or the Committee, in
its  discretion,  may provide for the assumption, substitution, or adjustment of
each  outstanding  Award.

     16.     No  Condition  of  Service.  The granting of Awards under this Plan
shall impose no obligation on the Company, or any of its officers, Employees, or
employees,  to  continue  the  service  of  a Participant and shall not waive or
modify  the  right  to  terminate  services  of  any  such  Participant.

     17.     Securities Laws.  The Company has no obligation to register Options
granted  under  the  Plan.  If  Awards  granted  have  not been registered, upon
issuance  of  Awards to an Employee and upon issuance of Shares upon exercise of
an  Award,  the  Employee  shall  represent  and warrant to the Company that the
Shares are being acquired for investment purposes and shall acknowledge transfer
restrictions  under  applicable  securities  laws.

     18.     Federal Income Tax Consequences.  Options that may be granted under
the  Plan  include  Incentive  Stock  Options  and  Non-Qualified  Options.

(a)     Incentive  Stock  Options. The grant of an ISO does not result in income
for the grantee or a deduction for the Company. The exercise of an ISO would not
result  in  income  for  the  grantee if the grantee (i) does not dispose of the
shares  within  two  (2) years after the date of grant or one (1) year after the
transfer  of  shares  upon exercise, and (ii) is an employee of the Company from
the  date  of  grant  and through and until three (3) months before the exercise
date.  If  these  requirements  are  met,  the  basis  of  the shares upon later
disposition would be the option price. Any gain will be taxed to the Employee as
long-term capital gain and the Company would not be entitled to a deduction. The
excess of the market value on the exercise date over the option price is an item
of  tax  preference,  potentially  subject  to  the  alternative  minimum  tax.

          If  the  Employee  disposes  of  the shares prior to the expiration of
either of the holding periods, and the amount received for the shares is greater
than  the  fair  market  value  of  the  shares  on  the exercise date, then the
difference  between  the  ISO's  exercise price and the fair market value of the
shares  at  the  time of exercise will be treated as ordinary income for the tax
year in which the disposition occurs.  Any gain in excess of the ordinary income
portion  would  be  taxable  as  long-term  or  short-term  capital  gain

(b)     Non-Qualified  Stock  Options.     A  Participant  generally  will  not
recognize any taxable income at the time the Award is granted. However, upon its
exercise,  the  Participant  will  recognize  ordinary  income  for  federal tax
purposes measured by the excess of the then fair market value of the Shares over
the  exercise  price.  The income realized by the Participant will be subject to
income  and  other  employee  withholding  taxes.

     The  Participant's  basis  for  determination  of  gain  or  loss  upon the
subsequent  disposition of Shares acquired upon the exercise of an Award will be
the  amount paid for such Shares plus any ordinary income recognized as a result
of  the exercise of such Award. Upon disposition of any Shares acquired pursuant
to  the  exercise  of  an  Award,  the difference between the sale price and the
Participant's  basis in the Shares will be treated as a capital gain or loss and
generally  will  be  characterized  as long-term gain or loss if the Shares have
been  held  for  more  than  one  year  at  disposition.

     In  general,  there  will be no federal income tax deduction allowed to the
Company  upon  the  grant or termination of an Award or a sale of disposition of
Shares  acquired upon the exercise of an Award. However, upon the exercise of an
Award  the  Company  will  be  entitled  to  a  deduction for federal income tax
purposes  equal  to the amount of ordinary income that a Participant is required
to  recognize  as  a  result of the exercise, provided that the deduction is not
otherwise  disallowed  under  the  Code.

     19.     Expiration.  Unless  it  is  terminated  sooner,  the  Plan  will
terminate  ten  (10)  years from the Effective Date, or such earlier date as the
Board may determine. The expiration of the Committee's authority to grant Awards
under  the  Plan  will  not affect the operation of the terms of the Plan or the
Company's  and  Participant's  rights  and  obligations  with  respect to Awards
granted  on  or  prior  to  the  expiration  date  of  the  Plan.

     20.     Amendment.  The  Board  may  at any time terminate the Plan or make
any  modification  that  it deems advisable; provided, however, that shareholder
approval  will  be  required  for any amendment that will (i) increase the total
number  of  Shares as to which Awards may be granted under the Plan, (ii) modify
the  class  of  persons  eligible  to receive Awards, or (iii) otherwise require
shareholder  approval  under  applicable law or regulation. In addition, neither
the  Board  nor the Committee will amend the Plan regarding the amount, pricing,
and  timing  of  Awards  other  than  to  comply  with  changes in the Code, the
Employment  Retirement  Income  Security  Act  of 1974, or the rules thereunder.
Modification,  or  amendment  of  the  Plan will not, without the consent of the
Participant,  affect  his  or  her  rights  under  a  previously  granted Award.

21.     Miscellaneous.

     21.1     Impact on Other Benefits.  At no time shall the value of any Award
              ------------------------
be  includable  as  compensation  or  earnings for purposes of any other benefit
plan,  if  any,  offered  to  Employees  by  the  Company.

21.2     Funding  of  Plan.  Insofar as it provides for Awards the Plan shall be
         -----------------
unfunded.  Although  bookkeeping  accounts  may  be  established with respect to
Participants  who  are granted Awards under this Plan, any such accounts will be
used  merely  as a bookkeeping convenience. The Company shall not be required to
segregate  any  assets  that may at any time be represented by Awards, nor shall
this  Plan be construed as providing for such segregation, nor shall the Company
or  the  Committee  be deemed to be a trustee of Shares to be awarded under this
Plan.

21.3     Governing  Law.  This  Plan  and  any  agreements  or  other  documents
         --------------
hereunder  shall be interpreted and construed in accordance with the laws of the
State of Missouri and applicable federal law. The Committee may provide that any
dispute  as  to any Award shall be presented and determined in such forum as the
Committee  may  specify, including through binding arbitration. Any reference in
this  Plan  or  in  the  agreement  or  other document evidencing any Award to a
provision  of  law  or  to  a  rule or regulation shall be deemed to include any
successor  law,  rule,  or  regulation  of  similar  effect  or  applicability.

21.4     Liability of Company.  The Company shall not be liable to a Participant
         --------------------
or  other  persons  as to (a) the non-issuance of Shares as to which the Company
has  been  unable  to  obtain  from  any regulatory body having jurisdiction the
authority deemed by the Company's counsel to be necessary to the lawful issuance
of any Shares hereunder; and (b) any tax consequence expected, but not realized,
by  any  Participant or other person due to the receipt, exercise, or settlement
of  any  Award  granted  pursuant  to  this  Plan.

21.5     Compliance  with  Laws  and  Regulations.  This  Plan,  the  grant  and
         ----------------------------------------
exercise  of  Awards  hereunder,  and  the obligation of the Company to issue or
deliver  Shares  under  such Awards, shall be subject to all applicable federal,
state,  and  local  laws,  rules,  and regulations, and to such approvals by any
governmental  or regulatory agency as may be required. To the extent the Company
is  unable,  or  the Committee deems it infeasible, to obtain authority from any
regulatory  body having jurisdiction, which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares under this
Plan, the Company shall be relieved of any liability with respect to the failure
to issue or sell such Shares as to which such requisite authority shall not have
been  obtained.  No  Option  shall  be exercisable and no Shares shall be issued
and/or  transferable  under any other Award unless a registration statement with
respect  to  the  Shares underlying such Options is effective and current or the
Company  or  its  counsel  has determined that such registration is unnecessary.


Adopted  by  the  Board  of  Directors  of  Pizza  Inn,  Inc.  on
October  20,  2004.



/s/  Mark  E.  Schwarz                         /s/  Steven  J.  Pully
- ----------------------                         ----------------------
Chairman  of  the Board                         Chairman, Compensation Committee




<PAGE>
                              STOCK AWARD AGREEMENT
                         UNDER THE 2004 PIZZA INN, INC.
                      EMPLOYEES INCENTIVE STOCK OPTION PLAN



                              TERMS AND CONDITIONS

Award  Date:

Participant:

Plan  Year  to  Which  Award  Relates:

Number  of  Options  Granted:

Exercise  Price:

Vesting  Schedule:

     The  Options  are  not  transferable.  The  Shares  that may be issued upon
exercise  of Options may not be transferred, sold, offered for sale or otherwise
distributed  except (i) in conjunction with an effective registration statement,
or  (ii)  in  compliance with Rule 144, (iii) in compliance with Company's stock
option  exercise  policy,  as  amended from time to time, or (iv) pursuant to an
opinion  of  counsel satisfactory to the Company that such transfer, sale, offer
or  distribution  is  exempt  from  the  registration  provisions  of applicable
securities  laws.  The  Company  has  no  obligation to register the Stock or to
include  the  Stock  in  any  future  registration  statement.

     By  execution below, Pizza Inn, Inc. and the Participant accept and approve
the  foregoing  Terms  and conditions, subject to all provisions of the Plan and
all  rules  and  regulations  thereunder.

     Unless  otherwise  defined in this Stock Award Agreement, capitalized terms
and words shall have the meaning ascribed to them in the 2004 Employee Incentive
Stock  Option  Plan,  the terms and conditions of which are incorporated herein.

     IN  WITNESS  WHEREOF, the parties have signed this Stock Award Agreement as
of  the  Award  Date  set  forth  above.



                              For  Pizza  Inn,  Inc.



                              Participant






</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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