People apparently went nuts for ICEE’s and SLUSH PUPPiE’s between April and June. Sales of those brands and others within the frozen beverage category rose 23.5% YoY. But people went even more gonzo over J&J’s non-frozen drinks, which rose an astounding 36.7%.

J&J Snack Foods was fortunate enough to have the perfect product catalog for a lockdown. Shut up inside their houses and freaking out, people reached for comfort food and snacks as a sort of therapy. In fact, even two years later, snacks continue to be the most lucrative category of food, a point not lost on any of the major food manufacturers.

Proving that continued popularity was the nearly 10% YoY rise in Super Pretzel sales J&J saw in their third quarter. In fact, retail sales as a whole rose 13.3% in the quarter, but were a crazy 46.1% above third quarter 2019 sales.

The strong sales were needed to fight the now ubiquitous slew of current problems. The same products that give J&J a leg up are the same products that need ingredients which are hard to source these days. So many of their most popular products require oils, flour, and eggs, three commodities heavily affected by lockdowns, war, and climate issues.

Gross profit as a percentage of sales was 28.7%, which is an increase over the previous quarter, but down 1% YoY, showing that the current cost of business is indeed higher than last year. The rise in costs of the above-mentioned ingredients was 9.5%, not an insignificant number. Of course, J&J did raise prices earlier in the quarter, which helped some, but whose full effects may not be seen until the end of the fourth quarter.

Further price increases will be implemented before the end of the company’s fiscal year, a trend we’re seeing among almost all food companies, but of an amount not known at this time.

This tells us that J&J is thinking it will have continued trouble coming from inflation and increased distribution costs. This past quarter, operating expenses were 23.1% of sales, compared with 17.9% a year ago. Distribution costs hit 12.7% this last quarter and were only 8.4% of sales last year. Moving into colder months, an increased demand on baking ingredients for the holidays, and possible energy shortages will not bring any of these problems to rest.

Regardless, J&J Snack Foods is playing things just fine. After all, this most recent quarter was a record-breaker. It was in this period that they acquired Dippin’ Dots, a product that is sure to be a great investment. Couple that with efforts to cut costs through greater efficiency and you have another winning quarter to close the year.