J&J Snack sees future in funnel cakes

by Monica Watrous
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J&J Snack Foods set to debut its take on funnel cakes in hundreds of restaurant locations this spring.

PENNSAUKEN, N.J. — Funnel cakes may be the next big thing on dessert menus, said Gerald Shreiber, founder, president and chief executive officer of J&J Snack Foods Corp. The Pennsauken-based company is set to debut its take on the classic carnival treat in hundreds of restaurant locations this spring, he said.

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

“Funnel cakes have been in our portfolio for a number of years,” Mr. Shreiber said during a Jan. 26 earnings call with financial analysts. “And like churros, where in the early ‘80s nobody knew what it was and now it's growing at a rapid clip, maybe, just maybe, funnel cakes will be the churros of the ‘20s, if you know what I mean…

“It’s not exactly lightning in a bottle, but maybe it's catching the lightning in a barrel because we do have a major chain that is going to be rolling out funnel cakes… and we could be the beneficiary of that six months from now.”

The company’s sales of funnel cakes in food service surged 58% in the recent quarter, contributing to double-digit earnings growth. For the first quarter ended Dec. 26, 2015, net earnings totaled $12,479,000, equal to 67c per share on the common stock, up 11% from earnings of $11,256,000, or 60c per share, for the prior-year period.

Net sales advanced 5% to $222,850,000 from year-ago sales of $212,752,000.

Operating income advanced 11% to $18,360,000 from $16,610,000.

“Sales to food service customers increased 2% for the quarter, due in large part to increased sales of handhelds, up 19%, churros, up 7%, bakery, up 3%, and funnel cakes, up an amazing 58%,” Mr. Shreiber said. “Soft pretzel sales were down 5% for the quarter, with sales down primarily to warehouse club stores and restaurant chains, as they battle through issues of menu fatigue.

“Sales of products to retail supermarkets were down 5% for the quarter. Soft pretzel sales were down 5% for the quarter, and sales of frozen juice bars and Italian ices were down 1% in the quarter. Handheld sales in the quarter decreased to $3.9 million. ICEE, which includes Arctic Blast, Slush Puppie, and frozen beverages and related product, sales were up 17% in the quarter.”

ICEE J&J Snack foods
ICEE sales were up 17% in the quarter.

As for the frozen handheld business, which has struggled in retail in recent quarters, Mr. Shreiber said the company remains hopeful.

“There are some reasons for us to have some enthusiasm, perhaps subdued,” he said. “We have a major customer now that we have been dealing with for almost two years, and we have a backlog of products that we’re making for them out of one of our handheld plants that’s going to last into early spring. And we’re thinking, we’re cautiously optimistic, that we will be able to use this as a platform for others in the industry.”
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