J&J Snack anticipates growth for Oreo churros, Pillsbury pies

by Eric Schroeder
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Oreo churros and Pillsbury mini pies, J&J Snack Foods
J&J Snack Foods' Oreo churros and Pillsbury pies have been well received but have yet to become a big driver of growth at retail.

PENNSAUKEN, N.J. — Despite initial strong reception to the launch of its Oreo churros and Pillsbury pies, J&J Snack Foods Corp. said the products have yet to become a meaningful driver of growth at retail. Gerald Shreiber, president and chief executive officer, expects that to change, though.

Gerald Schreiber, J&J Snack Foods Corp.
Gerald Shreiber, president and c.e.o. of J&J Snack Foods Corp.

“It’s kind of like going to a concert, right, and the main act it takes a long time for them to come on, and there’s a lot of applause,” Mr. Shreiber said during an April 26 conference call. “We think we’re going to see this type of sales growth in our third and fourth quarter, particularly in the fourth quarter with Oreo churros.

“The Pillsbury pies, the license pies is moving along at a little bit slower pace, but the season for that, generally speaking, starts in the fall, which should affect us with our August and September channels with the grocers. But we still have a high degree of enthusiasm and confidence in both of those products.”

On the other end of the spectrum, Dennis Moore, chief financial officer, said J&J Snack Foods made inroads with a major chain and expects to see funnel cakes in 4,000 to 5,000 retailers in the next 60 to 90 days. Mr. Shreiber said J&J Snack Foods has been told that the funnel cakes are going to be a permanent menu item, and the company is gearing up to meet the demand.

J&J Snack Foods funnel cakes
 J&J Snack Foods has been told that its funnel cakes are going to be a permanent menu item.

Menu fatigue has played a role in keeping J&J Snack Foods soft pretzel business in check in recent quarters, but Mr. Shreiber said the company was able to turn its performance around a bit in restaurants in the second quarter.

“Keep in mind, in the restaurant segment we were on a fast track, increasing 15% to 18% every quarter, and then it came to, not a screaming halt, but it slowed and then it declined 10% consecutively in two quarters,” he said. “We’re working on menu items and different items to regenerate that early success, but we believe that menu fatigue has slowed, and hopefully we’ll be the beneficiary of that going forward. We still have unbelievable market share and … it’s up to use to continue to grow our product presence.”

Finally, ICEE has been a driver on the beverage side of J&J Snack Foods business, with Slush Puppie and Parrot Ice growing at a moderate rate.

J&J Snack Foods Slush Puppie and Parrot Ice slushes
Slush Puppie and Parrot Ice have been growing at a moderate rate.

“The Slush Puppie, we have some really good things coming up through the remainder of the year,” said Daniel Fachner, president of ICEE. “And on the arrot Ice side, we use that as more of our higher end, maybe the smoothie end or the adult beverages. Both of those have done well for us, and we’ll continue to put emphasis behind them.”

Net income at J&J Snack Foods in the second quarter ended March 26 was $15,588,000, equal to 84c per share on the common stock, up 6% from $14,637,000, or 78c per share, in the same period a year ago. Net sales increased 2% to $229,710,000 from $225,008,000.

Sales of products to retail supermarkets decreased $1,833,000, or 6%, to $26,700,000 in the second quarter. Soft pretzel sales for the second quarter were down 10% to $9,735,000. About one quarter of the pretzel sales decline was due to the discontinuance of SuperPretzel Bavarian Soft Pretzel Bread and lower sales to one customer accounted for roughly 90% of the balance of the decline. Handheld sales to retail supermarket customers decreased 25% to $3,433,000 in the quarter. Roughly half of the handhelds sales decline in the quarter was lower sales of previously existing products, and half resulted from increased trade spending to introduce Pillsbury mini dessert pies, the company said.

J&J Snack Foods pretzels
Soft pretzel sales were down in the second quarter, and one quarter of the decline was due to the discontinuance of SuperPretzel Bavarian Soft Pretzel Bread.

Sales to food service customers increased $3,461,000, or 2%, in the second quarter to $148,723,000. Soft pretzel sales to the food service market increased 4% to $42,834,000 in the second quarter with sales increases and decreases in the second quarter spread among customers, J&J Snack Foods said. Soft pretzel sales to restaurant chains were marginally lower compared to last year’s quarter; for the prior two quarters, soft pretzel sales to restaurant chains were down about 10% compared to the prior year.

Churro sales to food service customers decreased 6% to $13,697,000 in the second quarter with about 55% of the decline coming from lower sales to one customer. Meanwhile, sales of bakery products decreased $367,000, or about half of 1% in the second quarter to $70,424,000. Sales of handhelds increased $2,134,000, or 42%, in the quarter with 90% of the increase coming from sales to one customer. Sales of funnel cake increased $1,087,000, or 48%, in the quarter, primarily due to increased sales to school food service. 
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