WESTERVILLE, OHIO — The success of Lancaster Colony Corp.’s licensing partnerships with Texas Roadhouse, Buffalo Wild Wings and Chick-fil-A is likely to bring in a wave of private label competitors, but at least to this point, the Westerville-based company is holding them off, said David Ciesinski, president and chief executive officer of Lancaster.

Speaking with analysts during an April 30 conference call to discuss third-quarter results, Ciesinski said Lancaster continues to pick up momentum in both the frozen rolls and licensed sauces categories.

“If you go into the (frozen) roll category, it’s us and it’s Rhodes,” Ciesinski said. “The newest news in the category is that we’re bringing in Texas Roadhouse, but here’s what’s interesting: That’s actually growing the category. It’s not cannibalizing the category. We’re bringing consumers from the other parts of the store with other brands, and we’re bringing them into frozen to buy that.”

Ciesinski said private label has not been a strong competitor in the category yet.

“I wouldn’t say some of our big retailers have tried to focus on private label items,” he said. “I won’t name their names, but they’re not performing particularly well, so we continue to believe that we’re set up there to continue to perform.”

In the frozen dinner roll category, third-quarter combined sales of the company’s Sister Schubert’s brand and licensed Texas Roadhouse brand increased 11.6%, resulting in a market share increase of 520 basis points to a category leading 60.9%, Ciesinski said. In the frozen garlic bread category, the company’s New York Bakery brand increased 6.8%, adding 180 basis points of market share and boosting its share of the category to 43.9%, he said.

Lancaster CEO says Texas Roadhouse mini rolls are bringing consumers in from other categories.

Source: T. Marzetti Co.

Meanwhile, Lancaster continues to build its presence in the licensed sauces space, and Ciesinski said retailers seeking to introduce private label items to compete with Chick-fil-A and Buffalo Wild Wings sauces “haven’t performed particularly well.”

Two areas where private label has had an impact are refrigerated dressings and croutons, but overall, Ciesinski said Lancaster is well positioned across its portfolio.

“Private label still isn’t the biggest opportunity or obstacle for us — it comes down to relevant new items and executing our plan.”

For the quarter ended March 31, net income totaled $41.12 million, equal to $1.49 per share on the common stock, up 45% from $28.35 million, or $1.03 per share, a year earlier. Last year’s results included $12.14 million in restructuring and impairment charges.

Net sales for the third quarter fell 2.9% to $457.84 million from $471.45 million a year ago, reflecting a 2.6% decrease to $241.5 million in the retail segment and a 3.2% decrease to $216.3 million in the foodservice segment. Excluding prior-year sales from exited perimeter-of-the-store bakery product lines, including Flatout and Angelic Bakehouse, retail net sales were down 0.7%, Lancaster said.

During the call Ciesinski said Lancaster plans to close its sauce and dressing production plant in Milpitas, Calif., later this fall. The facility closing is part of the company’s “ongoing strategic initiative to better optimize our manufacturing network,” he said. The facility closing will affect 78 employees and Lancaster will record restructuring and impairment charges related to the closing of about $6 million in the fourth quarter.