J&J Snack Foods Stock

J & J Snack Foods Corp. (J & J) manufactures snack foods and distributes frozen beverages, which it markets nationally to the foodservice and retail supermarket industries.

The company's principal snack food products are soft pretzels marketed primarily under the brand names SUPERPRETZEL, BRAUHAUS, and BAVARIAN BAKERY; frozen novelties marketed primarily under the DIPPIN' DOTS, LUIGI'S, WHOLE FRUIT, ICEE, DOGSTERS, PHILLY SWIRL, and MINUTE MAID brand names; churros marketed primarily under the ¡HOLA! and CALIFORNIA CHURROS brand names; and bakery products sold primarily under the READI-BAKE, COUNTRY HOME, MARY B'S, DADDY RAY'S, and HILL & VALLEY brand names, as well as for private label and contract packing.

J & J is the largest manufacturer of soft pretzels in the United States. Other snack food products include funnel cake sold under THE FUNNEL CAKE FACTORY brand; and handheld products sold under smaller brands. The company's principal frozen beverage products are the ICEE brand frozen carbonated beverage and the SLUSH PUPPIE brand frozen non-carbonated beverage.

The company's Food Service and Frozen Beverages sales are made primarily to foodservice customers, including snack bar and food stand locations in leading chain, department, discount, warehouse club, and convenience stores; malls and shopping centers; fast food and casual dining restaurants; stadiums and sports arenas; leisure and theme parks; movie theatres; independent retailers; and schools, colleges, and other institutions. The company's retail supermarket customers are primarily supermarket chains.

Segments

The company operates through three segments: Food Service, Retail Supermarkets, and Frozen Beverages.

Food Service

The primary products sold by the Food Service segment are soft pretzels, frozen novelties, churros, handheld products, and baked goods. The company's customers in the Food Service segment include snack bars and food stands in chain, department, and discount stores; malls and shopping centers; fast food and casual dining restaurants; stadiums and sports arenas; leisure and theme parks; convenience stores; movie theatres; warehouse club stores; schools, colleges, and other institutions. Within the food service industry, the company's products are purchased by the consumer primarily for consumption at the point-of-sale or for take-away.

Retail Supermarkets

The primary products sold to the retail supermarket channel are soft pretzel products comprising SUPERPRETZEL, frozen novelties, including LUIGI'S Real Italian Ice, MINUTE MAID Juice Bars, and Soft Frozen Lemonade, WHOLE FRUIT frozen fruit bars and sorbet, DOGSTERS ice cream style treats for dogs, PHILLY SWIRL cups and sticks, ICEE Squeeze-Up Tubes, and handheld products. Within the retail supermarket channel, the company's frozen and prepackaged products are purchased by the consumer for consumption at home.

Frozen Beverages

The company sells frozen beverages to the foodservice industry primarily under the names ICEE, SLUSH PUPPIE, and PARROT ICE in the United States, Mexico, and Canada. It also provides repair and maintenance services to customers for customer-owned equipment.

Products

Soft Pretzels

The company's soft pretzels are sold under many brand names; some of which are: SUPERPRETZEL, SUPERPRETZEL BAVARIAN, NEW YORK PRETZEL, AND BRAUHAUS; and to a lesser extent, under private labels.

Soft pretzels are sold in the Food Service and Retail Supermarket segments. Soft pretzel sales amounted to 19% of the company's revenue in fiscal year 2023 (September 30, 2023).

Certain of the company's soft pretzels qualify under USDA regulations as the nutritional equivalent of bread for purposes of the USDA school lunch program, thereby enabling a participating school to obtain partial reimbursement of the cost of the company's soft pretzels from the USDA.

The company's soft pretzels are manufactured according to a proprietary formula. Soft pretzels, ranging in size from one to twenty-four ounces in weight, are shaped and formed by the company's twister machines. These soft pretzel tying machines are automated, high-speed machines for twisting dough into the traditional pretzel shape. Additionally, the company makes soft pretzels, which are extruded or shaped by hand. Soft pretzels, after processing, are primarily quick-frozen in either raw or baked form and packaged for delivery.

The company's principal marketing program in the Food Service segment includes supplying ovens, mobile merchandisers, display cases, warmers, and similar merchandising equipment to the retailer to prepare and promote the sale of soft pretzels. Some of this equipment is proprietary, including combination warmer and display cases that rebake frozen soft pretzels while displaying them, thus eliminating the need for an oven. The company retains ownership of the equipment placed in customer locations, and as a result, customers are not required to make an investment in equipment.

Frozen Novelties

The company's frozen novelties are marketed primarily under the DIPPIN'DOTS, LUIGI'S, WHOLE FRUIT, DOGSTERS, PHILLY SWIRL, ICEE, and MINUTE MAID brand names. Frozen novelties are sold in the Food Service and Retail Supermarkets segments. Frozen novelties sales were 17% of the company's revenue in fiscal year 2023.

The company's school foodservice LUIGI'S and WHOLE FRUIT frozen juice bars and cups are produced in various flavors and contain three to four ounces of 100% juice with no added sugar and 100% of the daily U.S. FDA value of vitamin C.

The company's DIPPIN' DOTS' frozen novelty products are cryogenically frozen beads of ice cream, created using liquid nitrogen at -320 degrees Fahrenheit. Product variations include ice cream (milk and cream based), flavored ice (water based), and frozen yogurt branded YoDots. The product is served to consumers by the cup, or via individual serving packages.

The balance of the company's frozen novelties products are manufactured from water, sweeteners, and fruit juice concentrates in various flavors and packaging, including cups, tubes, sticks, M-paks, and pints. Several of the products contain ice cream and WHOLE FRUIT bars contains pieces of fruit.

Churros

The company's churros are sold primarily under the ¡HOLA! and CALIFORNIA CHURROS brand names. Churros are sold to the Food Service and Retail Supermarkets segments. Churro sales were 7% of the company's sales in fiscal year 2023. Churros are pastries in stick form which the company produces in several sizes according to a proprietary formula. The churros are deep fried, frozen, and packaged. At food service point-of-sale they are reheated and topped with a cinnamon sugar mixture. The company also sells chocolate-filled, fruit-filled and crème-filled churros. It supplies churro merchandising equipment similar to that used for its soft pretzels.

Handheld Products

The company's handheld products are sold primarily under private label names. Handheld products are sold to the Food Service and Retail Supermarket segments. Handheld product sales amounted to 6% of the company's sales in fiscal year 2023.

Bakery Products

The company's bakery products are marketed under the MRS. GOODCOOKIE, READI-BAKE, COUNTRY HOME, MARY B'S, DADDY RAY'S, and HILL & VALLEY brand names, and under private labels. Bakery products include primarily fig and fruit bars, cookies, breads, rolls, crumb, muffins, and donuts. Bakery products are sold to the Food Service segment. Bakery products sales amounted to 26% of the company's sales in fiscal year 2023.

Frozen Beverages

The company markets frozen beverages primarily under the names ICEE, SLUSH PUPPIE, and PARROT ICE, which are sold primarily in the United States, Mexico, and Canada. Frozen beverages are reported in the Frozen Beverages segment.

Frozen beverage sales amounted to 14% of the company's revenue in fiscal year 2023.

Under the company's principal marketing program for frozen carbonated beverages, it installs frozen beverage dispensers for its ICEE brand at customer locations and thereafter services the machines, arranges to supply customers with ingredients required for production of the frozen beverages, and supports customer retail sales efforts with in-store promotions and point-of-sale materials. The company sells frozen non-carbonated beverages under the SLUSH PUPPIE and PARROT ICE brands through a distributor network and through its own distribution network. The company also provides repair and maintenance service to customers for customer-owned equipment and sells equipment in its Frozen Beverages segment. Revenue from equipment sales and repair and maintenance services totaled 9% of the company's sales in fiscal year 2023.

Each new frozen carbonated customer location requires a frozen beverage dispenser supplied by the company or by the customer. Company-supplied frozen carbonated dispensers are purchased from outside vendors or rebuilt by the company.

The company provides managed service and/or products to approximately 132,000 company-owned and customer-owned dispensers.

The company has the rights to market and distribute frozen beverages under the name ICEE and Slush Puppie to the entire continental United States, as well as internationally.

Other Products

Other products sold by the company include funnel cakes sold under the FUNNEL CAKE FACTORY brand name; and smaller amounts of various other food products. These products are sold in the Food Service and Frozen Beverages segments.

Customers

The company sells its products to two principal channels: foodservice and retail supermarkets. The primary products sold to the foodservice channel are soft pretzels, frozen beverages, frozen novelties, churros, handheld products, and baked goods. The primary products sold to the retail supermarket channel are soft pretzels, frozen novelties, and handheld products.

The company has several large customers that account for a significant portion of its sales. The company's top ten customers accounted for 43% of its sales during the year ended September 24, 2023, with its largest customer accounting for 9% of its sales in 2023. Five of the ten customers in 2023 are food distributors who sell the company's product to many end users.

The Food Service and the Frozen Beverages segments sell primarily to foodservice channels. The Retail Supermarkets segment sells primarily to the retail supermarket channel.

The company's customers in the Food Service segment include snack bars and food stands in chain, department and mass merchandising stores, malls and shopping centers, fast food and casual dining restaurants, stadiums and sports arenas, leisure and theme parks, convenience stores, movie theatres, warehouse club stores, schools, colleges and other institutions, and independent retailers. Machines and machine parts are sold to other food and beverage companies. Within the food service industry, the company's products are purchased by the consumer primarily for consumption at the point-of-sale.

The company sells its products to an estimated 85-90% of supermarkets in the United States. Products sold to retail supermarket customers are primarily soft pretzel products, including SUPERPRETZEL and AUNTIE ANNE'S, frozen novelties, including LUIGI'S Real Italian Ice, MINUTE MAID Juice Bars and Soft Frozen Lemonade, WHOLE FRUIT frozen fruit bars, WHOLE FRUIT Sorbet, PHILLY SWIRL cups and sticks, MARY B'S biscuits and dumplings, DADDY RAY'S fig and fruit bars, HILL & VALLEY baked goods, and ICEE Squeeze-Up Tubes. Within the retail supermarket industry, the company's frozen and prepackaged products are purchased by the consumer for consumption at home.

Marketing and Distribution

The company supports its portfolio of brands with national and regional marketing programs. For the Food Service and Frozen Beverages segments' customers, these marketing programs includes providing ovens, mobile merchandisers, display cases, freezers, kiosks, warmers, frozen beverage dispensers, and other merchandising equipment for the individual customer's requirements and point-of-sale materials, as well as participating in trade shows and in-store demonstrations. The company's ongoing advertising and promotional campaigns for its Retail Supermarket segment's products include consumer advertising campaigns across traditional and digital channels, and print/digital media with value added shopper offers and promotions.

The company develops and introduces new products on a routine basis. The company evaluates the success of new product introductions on the basis of sales and profit levels.

The company's products are sold through a network of food brokers, independent sales distributors and the company's own direct sales force. For its snack food products, the company maintains warehouse and distribution facilities in Pennsauken, Bellmawr and Bridgeport, New Jersey; Vernon (Los Angeles), Colton and Lancaster, California; Brooklyn, New York; Scranton and Hatfield, Pennsylvania; Carrollton (Dallas) and Terrell, Texas; Atlanta, Georgia; Moscow Mills (St. Louis), Missouri; Pensacola and Tampa, Florida; Solon, Ohio; Weston, Oregon; Holly Ridge, North Carolina; Rock Island, Illinois; and Paducah, Kentucky. Frozen beverages and machine parts are distributed from 170 company managed warehouse and distribution facilities located in 44 states, Mexico and Canada, which allow the company to directly service its customers in the surrounding areas. The company's products are shipped in frozen and other vehicles from its manufacturing and warehouse facilities on a fleet of its operated tractor-trailers, trucks, and vans, as well as by independent carriers.

Seasonality

The company's sales are seasonal because frozen beverage sales and frozen novelties sales are generally higher during the warmer months.

Trademarks and Patents

The company has a significant trademark portfolio, the most important of which are SUPERPRETZEL, TEXAS TWIST, NEW YORK PRETZEL, BAVARIAN BAKERY, SOFTSTIX, and BRAUHAUS for its pretzel products; DIPPIN' DOTS, SHAPE-UPS, WHOLE FRUIT, PHILLY SWIRL, and LUIGI'S for its frozen novelties; ¡HOLA!, and CALIFORNIA CHURROS for its churros; ICEE, ARCTIC BLAST, SLUSH PUPPIE, and PARROT ICE for its frozen beverages; FUNNEL CAKE FACTORY for its funnel cake products, and MRS. GOODCOOKIE, READI-BAKE, COUNTRY HOME, CAMDEN CREEK, MARY B'S, DADDY RAY'S, and HILL & VALLEY for its bakery products.

The company markets frozen beverages under the trademark ICEE in all of the United States and in Mexico and Canada. Additionally, the company has the international rights to the trademark ICEE.

The company has numerous patents related to the manufacturing and marketing of its products.

Research and Development

The company's total research and development expense was $1.2 million for the fiscal year 2023.

Regulations

As a producer of food products for human consumption, the company's operations are subject to stringent production, packaging, quality, labeling, and distribution standards, including regulations promulgated under the Federal Food, Drug and Cosmetic Act; and the Food Safety Modernization Act.

History

J & J Snack Foods Corp. was founded in 1971. The company was incorporated in 1971 under the laws of the state of New Jersey.