Sleep-friendly snacking finding a natural ally in hotels
Takeaways
- Nightfood (OTCQB: NGTF), which solves the $50 billion problem of unhealthy nighttime snacking, successfully concluded a retail pilot test in lobby shops of a global hotel chain
- That chain will be rolling Nightfood into their grab-and-go freezers in coming months
- The brand has engaged iDEAL Hospitality Partners to secure additional hotel distribution partnerships
- Nightfood believes hotel distribution will greatly advance supermarket sales in the short and long term
- The hotel news has not yet moved Nightfood's OTC stock
New York, New York--(Newsfile Corp. - September 21, 2021) - PCG Digital -- Nightfood Holdings' (OTCQB: NGTF) pilot sales test in hotel lobby shops, announced six months ago, has reached a successful conclusion, according to the company.
In a recent call with investors, Nightfood CEO Sean Folkson invited attendees to "appreciate the impact hotel distribution is expected to have, not just on sales and profits, but on the category itself … which can elevate us from a middle-of-the-road player into a top seller."
The category Folkson is referring to is that of night snacks, specially formulated to support better sleep.
While the forward-thinking snack company, based in Tarrytown, N.Y., is not revealing which international hotel chain initiated the pilot program, this won't stay secret for long. Nightfood has engaged iDEAL Hospitality Partners to accelerate the national rollout, targeting the 20,000+ hotels with snacks in their lobby shops.
While the testing chain is finalizing their rollout timelines, expected to be Q4 or the first quarter of 2022, the brand expects its snacks to be launched into additional chains in coming months, with an interim target of 7,500 hotel points of distribution by mid-2022.
"When a partner has an innovative product like Nightfood, we want to secure a partnership at the hotel brand level and establish a standard that can be adopted and implemented from the top down," says iDEAL CEO, Jill Dean Rigsbee. "Once the first chain puts the Nightfood in, we believe it will set the standard in the industry. It's our job to make sure all the other chains fall in line and help Nightfood manage that growth."
Changing channels
Nightfood, however, is not focused exclusively on the hospitality market. Folkson's team sees it more as a force multiplier, with the majority of long-term brand growth coming from the more conventional vector of supermarkets.
"There's been tremendous enthusiasm surrounding the hotel test and its potential impact on the company," according to Folkson. "Supermarket category managers are excited about having Nightfood at retail with potentially thousands of hotels supporting that distribution."
There's only so much room in the supermarket freezer aisle, so this channel is highly competitive. Nightfood, like any other mid-tier frozen food purveyor, is going to have its hits and misses. While it's gotten rotated out of a couple chains since initial launch in 2019, Nightfood's same-store unit sales and same-store dollar sales its major accounts continue to grow.
"While the category as a whole is down significantly, compared to the 2020 Covid spike, our [six-month] growth - which seems modest at 6% -- has us outperforming a category which is down over 12%, by almost 20%," Folkson says.
Take before bed
If you've never heard of the nighttime snack segment, that's because it didn't exist before Nightfood created it. Folkson's team was responding to a major consumer market blind spot which looks obvious in retrospect.
Market data suggests that 85% of Americans snack most nights. That means they spend about $1 billion each week to eat 700 million nighttime snacks. And to be honest, most of it is unhealthy. Human beings crave sweets and fats at night, which explains why the most reached-for treats before bed are cookies, chips and ice cream. The empty calories are bad; the potential for disrupting sleep cycles compounds the problem.
Nightfood embraced the challenge, gaining significant market interest with ice cream. Consulting with sleep and nutrition experts, the company formulated a treat with fewer sleep disruption triggers, more relaxation and sleep-supporting ingredients, and higher overall nutritional value. The brand won the 2019 Product of the Year award in the ice cream category in a Kantar survey of over 40,000 consumers and was also named Best New Ice Cream in the 2019 World Dairy Innovation Awards. The American Pregnancy Association recommends Nightfood ice cream for pregnancy cravings.
Sleeping beauty?
It's not only revenues that Nightfood is chasing with its move into hotel sales; it's also operational efficiency. "Launching, operating, and scaling in hotels, project to be much less expensive and much more cash efficient than supermarkets," Folkson told shareholders. "There's no slotting fees, there's no ad spend and there's no need to run price discounts."
Perhaps it was inevitable, but Nightfood appears to be catching investors napping. Even with this new earnings driver coming on the heels of their biggest quarter ever, year-over-year revenue growth of 37% in unit terms and 25% in dollar terms and a debt-free balance sheet, NGTF has languished in over-the-counter trading. While NGTF is well off its all-time lows, it has been trading sideways around $0.25 per share since late 2019.
While Nightfood ice cream is in supermarket freezers across the country, it has apparently not caught on in Greenwich, CT. When that finally happens - or when some clever portfolio manager on a business trip has a late-night hotel snack attack - that could change. Overnight.
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