Nathan's Famous turns Q3 profit
by Meat&Poultry Staff
JERICHO, NY – Nathan's Famous reported earnings of $1.107 million, or 24 cents per share, for the third quarter ended Dec. 29, 2013. This represents an increase of 4.2 percent compared to the year-ago quarter.
Revenues advanced 23.3 percent to $18.53 million compared to $15.025 million in 2012.
Branded Product Program sales for year gained 20.3 percent to $40,256,000. The segment includes sales of Nathan's hot dogs to the foodservice industry. Sales for the year at company owned restaurants declined to $11.54 million from $12.38 million during the comparable year-ago period.
The company said "the decline in sales was due to the following: (1) Our Flagship Coney Island restaurant, which was severely damaged by Super Storm Sandy, reopened on May 20, 2013, losing eight weeks of the spring season during the current fiscal year, compared to the post-Sandy closure of eight weeks in November and December 2012; and (2) The temporary closing of our Yonkers restaurant for redevelopment from December 2012 until reopening in November 2013. We estimate these two factors negatively impacted the sales comparison by approximately $1,606,000."
The company also announced that a new license agreement with John Morrell & Co. will begin in March. The agreement makes John Morrell the exclusive licensee to manufacture and sell Nathan's hot dog, sausage and corned beef products at retail. John Morrell is a subsidiary of Smithfield Foods, Inc.
"As previously disclosed, we believe the financial terms of the John Morrell agreement are more advantageous to us compared to the financial terms of the current SMG agreement," the company said. "These improved terms include royalties of 10.8 percent of net sales, compared to approximately 4.5 percent of net sales under the SMG agreement, and significant minimum annual royalty guarantees. Under the John Morrell Agreement, the minimum guarantee for the first year is $10 Million, and we believe that actual royalties should exceed the minimum. Royalties earned under the SMG agreement over the last 12 months were $5,346,000."