J&J Snack Foods Q2'25 Earnings: Hurt by Theaters & Cost Inflation
- Hardik Shah
- May 6
- 3 min read
TLDR
Soft Sales, Pressured Margins: Net sales fell 1% to $356M with gross margin compressing to 26.9% due to theater weakness, cost inflation (notably chocolate), and lost LTO churro volumes.
Retail and Innovation Bright Spots: Retail segment grew 1.8%, with frozen novelties up double-digits and strong early traction from new Dippin' Dots Sundaes and SuperPretzel updates.
Outlook Optimistic: Management reaffirmed expectations for gross margins to recover into the low 30s in the second half, backed by improving theater traffic and continued pricing actions.
Business Overview
J&J Snack Foods (NASDAQ: JJSF) manufactures and distributes niche snack foods and beverages across three segments:
Food Service: Soft pretzels, churros, handhelds, frozen novelties and bakery items sold through QSRs, amusement parks, theaters, and more.
Retail Supermarkets: Frozen soft pretzels, handhelds, biscuits, novelties (e.g., Dippin’ Dots Sundaes), and pretzel dogs sold in grocery outlets.
Frozen Beverages: ICEE, SLUSH PUPPiE, and machine maintenance services, targeting theaters, convenience stores, and other outlets.
The company’s key brands include SUPERPRETZEL, ICEE, DIPPIN’ DOTS, LUIGI’S Italian Ice, WHOLE FRUIT, HOLA! CHURROS, and THE FUNNEL CAKE FACTORY.
J&J Snack Foods - Q2'25 Earnings
Metric | Q2 2025 | vs. Q2 2024 |
Net Sales | $356.1M | (1%) |
Gross Profit | $95.7M | (12%) |
Gross Margin | 26.9% | Down ~320 bps |
Operating Income | $6.0M | (66%) |
Net Earnings | $4.8M | (64%) |
Adjusted EBITDA | $26.2M | (33%) |
Adjusted EPS | $0.35 | (58%) |
The pressure on margins came largely from theater-related beverage volume softness, input cost inflation (particularly chocolate), and lapping prior year churro LTO sales.
Positive offset came from Retail Supermarket, which grew +1.8%, particularly driven by frozen novelties (+14.7%).
Forward Guidance
Management reiterated expectations for gross margin recovery to the low 30s in H2, driven by:
Theater traffic rebound
Continued pricing realization
Retail seasonality (Frozen Novelties peak)
Innovation impact (Pretzels, Dippin' Dots)
Tariffs pose a ~$4M–$6M annualized risk if not mitigated, but the company is actively managing sourcing and pricing strategies.
Operational Performance
Challenges
Frozen Beverage sales fell 0.9% due to a 7.1% drop in beverage volumes tied to weak movie releases and FX headwinds.
Food Service pretzel sales fell 7.9% and churro sales fell 18.7%, reflecting the conclusion of last year’s strong LTO.
Chocolate inflation compressed gross margins by ~60 bps.
Bright Spots
Retail sales rose 1.8% driven by Frozen Novelties (+14.7%) and Dippin' Dots Sundaes reaching $1M in sales with distribution expanding.
Bavarian Pretzel product innovation launched, alongside a SuperPretzel refresh with better recipe and packaging to align with consumer trends.
"We know that consumers will be pleased with the new SuperPretzel enhancements as well... Bavarian style pretzels are growing rapidly." — CEO Dan Fachner
Market Insights
Theater Industry: Q2 North America box office sales fell ~10%, but summer 2025 is projected to rebound +30% or more with movies like Minecraft (already boosting volumes), How to Train Your Dragon, and Lilo & Stitch.
Consumer Trends: Consumers remain cautious amid macroeconomic pressures but view JJSF's products as affordable treats.
Better-for-You Innovations: Initiatives include high-protein pretzels (~10g protein) and novelties with added electrolytes, probiotics, and antioxidants to align with health trends and GLP-1 user preferences.
"We're optimistic a strong summer lineup will provide tailwinds to the frozen beverage segment." — CEO Dan Fachner
Strategic Initiatives
Pricing Actions: Selective price increases continue in Q3 to offset input costs, with expectations of 80 bps to 1% realization uplift in Q3 alone.
Portfolio Innovation: New product launches in churros, Bavarian pretzels, Dippin' Dots Sundaes, and potential QSR churro placement planned for FY26.
Channel Expansion: Urban Air signed as a major new customer for Dippin’ Dots; expected to become the largest single account.
"Urban Air will become our largest single customer for Dippin' Dots." — CEO Dan Fachner
Capital Allocation
Share Buybacks: Repurchased ~$5M in stock (~39,000 shares at $128 average price) during Q2.
Debt and Liquidity: No long-term debt. $48.5M in cash and ~$213M of borrowing capacity as of quarter-end.
The Bottom Line
J&J Snack Foods navigated a tough Q2 marked by theater softness, input cost inflation, and challenging comps. However, momentum into Q3 looks encouraging, bolstered by blockbuster movie releases, price increases, and strong demand for innovative products like Dippin’ Dots Sundaes and SuperPretzel refreshes. Management remains confident that its diversified portfolio, strategic pricing, and focus on brand-led innovation will drive a strong second half and position the company well for FY25 and beyond.
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