Nathan's Famous (NATH -2.02%), known for its premium hot dogs and iconic brand events, reported Q1 fiscal 2026 results on August 8, 2025. The headline was clear: revenue (GAAP) increased to $47.00 million compared with $44.77 million a year ago, driven mainly by its Branded Product Program. Diluted earnings per share (GAAP) dropped from $2.27 to $2.16 as ongoing cost inflation in core inputs, especially beef, weighed on profitability. This quarter showed top-line (GAAP) growth, yet highlighted ongoing margin pressure. Expectations are hard to judge directly due to the lack of published analyst estimates, but the mix of rising sales and falling profits signals a quarter of both progress and challenge for Nathan's.
| Metric | Q1 FY2026(thirteen weeks ended June 29, 2025) | Q1 FY2025(thirteen weeks ended June 30, 2024) | Y/Y Change |
|---|---|---|---|
| EPS – Diluted (GAAP) | $2.16 | $2.27 | (4.8%) |
| Revenue (GAAP) | $47.00 million | $44.77 million | 5.0% |
| Adjusted EBITDA | $13.53 million | $14.28 million | (5.3%) |
| Income from Operations | $12.79 million | $13.74 million | (6.9%) |
| Net Income | $8.93 million | $9.28 million | (3.8%) |
Business Overview and Key Success Factors
Nathan's Famous is a longstanding American food company recognized for its hot dogs, signature Coney Island roots, and globally known eating contest. It has developed a unique business model built on brand value, with products found in supermarkets, foodservice venues, and its own restaurants.
The company operates through four main channels: branded product sales (wholesale and foodservice hot dogs), licensing (brand usage, including packaged retail foods), company-owned restaurants, and franchised outlets. Its recent priorities include leveraging brand equity, diversifying incomes across channels, expanding internationally, and navigating cost inflation. Key factors for success are the mix of high-margin licensing, franchise growth, and cost control, especially as beef and labor prices have risen across the fast-casual dining sector.
Quarter in Review: Growth and Margin Challenges
This period showed a clear uptick in overall sales. The Branded Product Program, Nathan's division that supplies hot dogs to the foodservice industry, delivered 6.2% revenue growth in the prior fiscal year. This was propelled by an 8% rise in average selling price in Q1 FY2026, and steady demand from mass retail outlets. Branded product sales were $29.08 million.
In contrast, high-margin licensing revenue slipped. Licensing income, which mostly comes through a major deal with Smithfield Foods to produce and distribute Nathan's retail packaged hot dogs and sausages, dropped to $12.38 million compared to $12.92 million a year ago, a decrease of 4.2%. Smithfield-specific royalties fell 4.5% to $11.46 million. The nature of licensing means that any weakness here impacts overall profitability, since licensing typically delivers more profit per dollar than other business lines.
Company-owned restaurant performance struggled, with sales at $3.99 million compared to $4.20 million the year before, a 5.1% year-over-year drop (GAAP). Management cited reduced customer traffic, particularly at the two well-known Coney Island locations, and pointed to unfavorable weather as a key factor. Despite opening eight franchised restaurants during the quarter and modest franchise revenue growth (up about 5.2% year-over-year), overall restaurant operations revenue fell by 3.0% year-over-year, reflecting ongoing challenges in drawing diners and coping with labor and commodity cost pressures.
Margin contraction emerged as a key trend, not just in headline net profit, but also in income from operations (down 6.9%) and adjusted EBITDA (non-GAAP, down 5.3%). Input cost inflation, especially beef, remained a major challenge. Even though Nathan's managed to increase its branded product prices, higher input costs offset these pricing gains. On the positive side, interest expense declined by 28.5% in the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025. This partially cushioned the fall in net income. There were no large one-time events or adjustments reported in the quarter.
The company maintained its quarterly dividend, declaring a $0.50 per share payment for the coming payout date of September 5, 2025. This matches the previous quarter's dividend and shows continued prioritization of shareholder returns as part of overall capital allocation.
Outlook and What to Watch
Nathan's Famous did not provide specific forward guidance for revenue, profit, or other major metrics. The company did not outline numeric targets or formal projections for upcoming quarters or for the remainder of fiscal 2026. Therefore, investors and observers are left to watch recent performance trends and company commentary for new signals.
Looking ahead, the key items to monitor revolve around margin recovery in the face of beef cost inflation, the trend in high-margin licensing revenue from Smithfield Foods, and the pace of international franchise growth. The company continues to pay a regular dividend of $0.50 per share each quarter.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
