Meat+Poultry - February 2023 - 21

As of March 27, 2022, Nathan's Famous
consumer-packaged goods were sold through
more than 65,000 locations in supermarket and
grocery channels in the United States.
Smithfield Foods is Nathan's most
significant licensing partner. The program
with Smithfield includes the sale of Nathan's
portfolio of consumer packaged and certain
bulk packaged Nathan's Famous hot dog
products to US retailers. In fiscal 2022,
royalties earned under this agreement
increased by just 0.5% to $27.9 million,
according to Nathan's.
" This segment of our business sustained us
during fiscal 2021 (which was the 12 months
immediately following the worldwide outbreak
of COVID-19), " Gatoff said. " As people ate at
home due to lock-down orders and restaurant
closures, sales of our products through
supermarkets increased dramatically. At the
outset of fiscal 2022, we expected to give back
some of those gains as restaurants reopened
and the world returned closer to 'normalcy,'
but that did not happen.
" Achieving a small increase in license
royalties during fiscal 2022 following a year of
unprecedented increases due to the pandemic
is a testament to the strength of the Nathan's
Famous brand and the work we have done
over the last several years to build our product
distribution businesses, " Gatoff added.
BRANDED PRODUCT POWER
The pandemic reshaped multiple aspects of
the foodservice industry including operations,
sales and menus among other areas. And
operators continue to face changing business
conditions. Given these factors, more than half
of restaurant operators said it would be a year
or more before business conditions return to
normal, according to the " 2022 State of the
Restaurant Industry " report published by the
National Restaurant Association, Chicago.
Back in 2020, Nathan's Famous Restaurants
were impacted by COVID-19, but not all
were affected in the same way, leading the
company to adopt a more personal approach
to communicating Nathan's re-opening strategy
for franchises.
" Foodservice has begun to bounce back
post-pandemic, experiencing double-digit
growth for the second-straight year, " the
company said. " The return to pre-COVID levels
has been slower for foodservice with travel and
occupancy restrictions early on and now due to
inflation, but consumers continue to indicate a
desire to dine outside of their homes, so steady
growth is anticipated in coming years. "
Nathan's Branded Product Program is the
company's foodservice sales program which
features the bulk sale of Nathan's Famous hot
dogs to the foodservice industry. Under the
branded program, products are sold through
14,000 points of distribution which includes
several large national and regional restaurants,
movie theater and convenience store chains, as
well as thousands of other locations including
ballparks, arenas, amusement parks, college
campuses, hospitals, casinos, resorts and
school systems.
" Through the Branded Product Program, we
do business with all of the major foodservice
distributors in the United States, including
SYSCO, US Foodservice, PFG and McLane, as
well as many regional distributors, " Gatoff said.
During fiscal 2022, most of the company's
customers in the branded product program
reopened providing a much-needed jolt to the
total volume of hot dogs sold in the program
and exceeding pre-pandemic levels, according
to Nathan's. Driving the return to strong sales
were the number of COVID-19 cases stabilizing
due to widespread availability of approved
vaccines and, as a result, loosening of regional
restrictions while adhering to state and
local guidelines.
On a year-over-year basis for fiscal 2022,
Nathan's Famous reported net sales of $66.3
million for the branded program, representing
a 97.3% increase. Operating profit in the
segment was $8.38 million, representing a
31.4% increase; and a 78.3% increase in the unit
volume of products sold.
EXPANSION AMBITIONS
Another piece of Nathan's Famous profitability
puzzle is a combination of master franchise
agreements with overseas companies and
virtual kitchens. Nathan's Famous company
owned and franchised units in operation
consisted of 239 franchised units and four
company owned units (including one seasonal
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