Nathan’s Famous profits heat up, as beef costs drop

Nathan’s Famous reported that its net income rose by nearly 54 percent in the quarter that ended June 26, as the cost of beef declined.

The Jericho-based frankfurter maker reported quarterly profits of nearly $3.6 million, up from $2.3 million a year earlier. The company had earnings per diluted share of 85 cents in the most recent quarter, up from 50 cents during the same period in 2015.

Nathan’s Famous, which sells 500 million hot dogs a year at 53,000 stores and eateries around the world, reported a nearly 11 percent annual decline in its expenses, to $20.6 million in the most recent quarter. The decline is due to the falling cost of beef, chief executive Eric Gatoff said.

Those expenses do not include quarterly interest expenses of nearly $3.7 million, which fell almost 1 percent from a year earlier. The interest expenses stem from the company’s March 2015 issuance of $135 million in bonds to fund a $25-per-share special dividend.

Nathan’s Famous reported Friday that its total revenues dipped by 4 percent annually, to $29.4 million in the most recent quarter.

The company collected $6.8 million in license royalties during the quarter, up 4.4 percent annually. The increase was largely due to growing sales of packaged hot dogs, “as a result of the ongoing sales, marketing and promotional strategies tied to lower beef costs,” Nathan’s Famous reported.

Sales to the food service industry fell almost 7 percent, to $16.3 million, as a 2.7 percent increase in sales volume was “more than offset” by lower selling prices, the company said.

At the five restaurants owned by Nathan’s Famous, sales dropped by almost 9 percent, to $4.8 million, mainly because spring rain showers and unseasonably cool temperatures hit sales at the two Coney Island eateries, the company reported.

Founded 100 years ago as a Coney Island stand selling 5-cent hot dogs, Nathan’s Famous has reported fivefold growth over the last decade in sales at retail stores and venues such as Regal Cinemas, Auntie Anne’s pretzel stands and baseball stadiums. In 2014, it signed an agreement with meat company John Morrell & Co., a division of Smithfield Foods. Morrell now manufactures, sells and markets Nathan’s hot dogs for retail stores and food-service venues. The Morrell agreement is a “game changer” for Nathan’s Famous, with Morrell spending millions on marketing, Gatoff has said.

The company’s stock closed up 1 percent at $47.35.

By Maura McDermott

maura.mcdermott@newsday.commauramcdermott

Maura McDermott covers health care and other business news on Long Island.