The old days aren’t just a memory for Nathan’s Famous—ask anybody who’s been on the Brooklyn waterfront.
Before there was Mcdonald’s, Carl’s Jr., Burger King, and the other fast-food brands that transformed post-World War II America, there was Nathan’s Famous, founded on Coney Island in the great borough of Brooklyn in 1916 by Nathan and Ida Handwerker. Eighty-nine years later, Nathan’s menu isn’t radically different. While other fast-food brands have ventured into salads, cappuccino, panini sandwiches and low-carbohydrate fare, Nathan’s signature item remains the uncomplicated, almighty American hot dog.
Nathan’s reported company and franchised domestic sales of $156.4 million in the year ended March 27, on comparable sales increases of 6.3% at franchised stores. Independent owner-operators run almost all of Nathan’s 355 restaurants.
Of Nathan’s 255 U.S. units, all but 57 are located in either New York, New Jersey, or Florida, reflecting the brand’s origins, as many New Yorkers end up moving to either of those states.
Around half of Nathan’s restaurant sales involve hot dogs and crinkle-cut fries, even though it sells burgers, chicken sandwiches, and other fare. (Visit the original Nathan’s at Coney Island’s famous Astroland Amusement Park, and you can even slurp down a dozen freshly shucked raw clams.) “Our hot dogs are prepared and served in accordance with procedures which have not varied significantly in more than 89 years,” Nathan’s states in its annual report to shareholders.
But if Nathan’s approach to food hasn’t changed much since the early days, its business has. The company now consists of four brands, including its namesake chain, Miami Subs, Kenny Rogers Roasters, and Arthur Treacher’s. Like other fast-feeders, Nathan’s is looking to leverage the strengths of its concepts by co-branding them under one roof. Nathan’s products are sold in 61 Miami Subs restaurants, while Kenny Rogers chicken is available in 36 Nathan’s and 52 Miami Subs stores.
The cross-pollination boosts sales, but Nathan’s secondary brands are a shadow of what they once were. Miami Subs had 191 restaurants nationally just seven years ago; today there are just 80. Kenny Rogers, founded by former KFC kingpin John Y. Brown in the early ’90s, once had 300 stores; today there is just one in the United States, as the concept is now almost entirely a product for overseas markets.
But Nathan’s isn’t just relying on its secondary brands. Its hot dogs are sold on QVC and in supermarkets across the country. The company is pushing grills and other non-food items as well. Spreading the Nathan’s gospel through vehicles other than hot dog restaurants isn’t just a sidelight for the company, but rather central to what it sees as its mission, according to president Wayne Norbitz. “We concentrate on marketing the brand and implementing a points of distribution strategy,” Norbitz says. “We use alternate means to distribute our products.”
What that means is while other fast-food companies focus on store growth and new product development, Nathan’s worries about how to get its hot dogs into high-profile retail sites that are owned and operated by other people. People like George Steinbrenner. Nathan’s has been the official non-kosher hot dog of the Yankees since 2001, and earlier this year was named the official hot dog of the crosstown Mets.
Nathan’s is also well-known for its annual July 4 hot dog eating contest, held on Coney Island. The contest dates back to 1916, the year of Nathan’s founding. According to the company, a group of immigrants decided to eat as many hot dogs as they could, and the winner would be declared the “most American.”
Ironically, recent winners have been from Japan. Takeru Kobayashi wolfed down 49 Nathan’s hot dogs and buns in 12 minutes this year to take the prize.
With its Coney Island setting and low-budget marketing, the hot dog eating contest seems to capture something essential about the Nathan’s brand. Other chains hire Paris Hilton and B.B. King and spend tens of millions to get their message out on national TV. Nathan’s sets up a table, some chairs, and wheels out hundreds of hot dogs.
The strategy clearly works. But did Nathan’s miss an opportunity to become something bigger? Perhaps.
“For years there was no mission or vision to make Nathan’s a national or even strong regional brand,” Norbitz said.
Unlike Ray Kroc or Harland Sanders, who saw their brands as potential global giants, Nathan Handwerker saw his as a nice family business. He got that. Now it’s up to others to grow the brand.