Even for a kid born well after Coney Island's heyday -- and raised in our nation's capital -- I know the mystique and cachet of the simple, perfect, Nathan's hot dog. The ones I've eaten at " the source" are perhaps the best I've ever had, while those I've bought at the store have few rivals.

Investors in parent Nathan's Famous (NASDAQ:NATH) can be forgiven if their nostalgia and taste for dogs have been tempered somewhat. The stock has lagged the S&P 500 by a considerable margin over the last 10 years. So why was Nathan's one of this morning's biggest percentage gainers, hitting a new 52-week high, on volume well above its recent average?

No, it's not because Takeru Kobayashi decided to move to the U.S. full-time. It's because of signs that business is improving.

The means by which this is happening might surprise anyone who hasen't been watching the company closely. Nathan's is, generally speaking, moving away from the restaurant business and becoming more of a brand and product manager. (Besides its most famous name, it owns Miami Subs and Kenny Rogers Roasters.)

Nathan's retail points are increasingly run by franchisees, which hurts sales from store operations while lowering operating costs. (The company maintains certain key locations, particularly in New York and South Florida.)

On the flip side, branded products, which sell to foodservice operations including casino operator Park Place Entertainment (NYSE:PPE) and theater operator National Amusements, is growing. So is the company's licensing arm, which teams with Specialty Foods to produce and sell its products in exchange for royalty revenues.

(Perhaps also worth watching is another, newer, deal with ConAgra (NYSE:CAG) to market Nathan's-branded frozen French fries.)

These efforts, along with cost-cutting, have helped Nathan's Famous boost profit margins even as revenues have slipped. Market reaction to today's news is clearly positive -- as was the company's own prior reaction. It's already completed most of a million-share buyback announced just over a month ago.

Like a good hot dog? Prefer a steak or even something sans meat? Head on over to our Food discussion board and hash it out. Dave Marino-Nachison can be reached at dmarnach@fool.com.