Nathan’s Famous Hot Dogs Sold for $450 Million
The iconic Nathan’s Famous hot dog brand has been sold for $450 million to Smithfield Foods, a major player in the packaged meat industry. This all-cash transaction marks a significant development for the company, which began as a modest 5-cent hot dog stand in Coney Island in 1916.
Nathan’s Famous: A Brief History
Nathan Handwerker established the first Nathan’s hot dog stand in Coney Island with a $300 loan. Over the years, the brand expanded, gaining a reputation for its quality hot dogs. The Handwerker family sold the business to investors in 1987, leading to further growth and franchise development.
The Deal with Smithfield Foods
Smithfield Foods has held the rights to produce Nathan’s products in the U.S., Canada, and select locations in Mexico since 2014. Under the new agreement, Smithfield will acquire all outstanding shares of Nathan’s for $102 each.
Current Financial Climate
Like many in the food industry, Nathan’s has faced inflationary pressures. In its latest quarterly report, the company disclosed a 27% increase in sales costs for branded products compared to the previous year. The average price per pound of hot dogs rose by 20%.
Cultural Significance and Competitive Events
Nathan’s Famous is well-known for its iconic hot dog-eating contest held every July 4 at its original location in Coney Island. This event attracts competitors from around the globe, with American Joey Chestnut holding the title of reigning champion. Chestnut consumed 70.5 hot dogs and buns last year, having won 17 of the last 19 contests. The contest, which began in an informal format in 1916, is now a televised spectacle, drawing a crowd of about 30,000 attendees annually.
Looking Ahead
Smithfield expects to achieve annual savings of approximately $9 million within two years post-acquisition. Eric Gatoff, Nathan’s CEO, praised Smithfield’s commitment to growing the brand while maintaining high-quality standards. The buyout has been approved by Nathan’s board of directors, which controls nearly 30% of the company’s shares, and they will recommend shareholders to support the deal.
