Breakfast boom benefitting Michael Foods

by Monica Watrous
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MINNETONKA, MINN. — More players are entering the breakfast segment, including Taco Bell this month, and Michael Foods Group, Inc. is toasting to the trend. The producer and distributor of egg, potato and dairy products said the breakfast category is growing faster than any other segment in the fast-food space.

“We’re very excited about a couple of the new people who stepped into breakfast and also the broadening of offerings we are seeing,” said Jim Dwyer, chairman and chief executive officer, during a March 21 earnings call with analysts. “We’re seeing people broaden their menu offerings, and we have been bringing a variety of new pre-cooked products to market to help induce and encourage that growth.”

Declining to reveal specific food service customers, Mr. Dwyer said the company works with “virtually everybody” across the breakfast segment and expects more growth in morning meals.

“So we anticipate that between the launch from Taco Bell and a number of broader menu offerings from a number of other customers that we will continue to see breakfast to be a very healthy segment here as we move through the year,” he said.

Michael Foods also is benefitting from the rise in frozen breakfast products in retail, as new entrants such as Tyson Foods take a crack at the day part.

“We have enjoyed the privilege of working with a number of packaged food manufacturers on developing formulations that will work well for their brand concepts,” Mr. Dwyer said. “So I think if you are a breakfast eater… there are a lot more choices than there used to be. It has certainly been helpful to our business.”

Customer wins across the egg and potato businesses, as well as improvements in the cheese and dairy segment, contributed to a solid fiscal 2013 for Michael Foods. For the fiscal year ended Dec. 28, 2013, the company had net earnings of $50,364,000, up 67% from $30,094,000 in fiscal 2012. Net sales for the year increased 5% to $1,948,283,000 from $1,856,054,000.

Fourth-quarter income rose 16% to $15,902,000, which compared with $13,708,000 in the prior-year period. Net sales during the quarter climbed 1.8% to $512,736,000 from $503,620,000 during the fourth quarter a year before.
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