WESTERVILLE, OHIO — Lancaster Colony Corp. expects a first-quarter sales lift from its new Texas Roadhouse frozen dinner rolls to provide a growing contribution to its baked foods business throughout fiscal 2025 and into the following year.
David Ciesinski, president and chief executive officer, announced back in August that Westerville-based Lancaster expanded its steak sauce licensing partnership with Texas Roadhouse to include the restaurant chain’s popular dinner rolls. The frozen dinner rolls made their debut in June via a regional pilot test, followed by a broad rollout with Walmart that kicked off in the fiscal 2025 first quarter.
“During our fiscal first quarter, we were pleased to begin the national launch for Texas Roadhouse dinner rolls,” Ciesinski told analysts in a conference call on first-quarter results. “While it’s early days for this proposition, we are highly encouraged by both the consumer excitement and the sales velocity for these great-tasting rolls. Given the magnitude of the demand for this item, we will be executing a phased expansion for this launch, similar to the one we executed for Chick-fil-A sauce a few years ago.”
In the frozen dinner roll category, first-quarter sales of the company’s Sister Schubert’s brand rose 5.3%. But including the Texas Roadhouse dinner rolls, sales jumped 17.9% and market share climbed 420 basis points to 60%, Ciesinski said.
“This is an item in their restaurants that has a near cult following,” he said. “We had it in a test in three markets — Ohio, Indiana and Kentucky — and it performed well there. But it’s hard to project on how that’s going to work across all retailers. So, during the quarter, we expanded full distribution into all of Walmart. We had one month, September, where we had (Texas Roadhouse dinner rolls in) all Walmart stores, and that’s where we saw the performance of this thing really start to take off.”
Early results show two-time buyers coming back for more, Ciesinski said, noting that the frozen Texas Roadhouse dinner rolls are exhibiting similar potential to successful launches of licensed sauces with restaurant chains Chick-fil-A and Buffalo Wild Wings.
“If we translate the trial we’re seeing today into repeat (purchases), I think this is something that won’t probably get to the size of a Chick-fil-A, but it could rival something like a Buffalo Wild Wings,” he said. “So it remains to be seen. It’s a really powerful item, it’s a great brand, it’s a great platform. We’re able to run it in our own factories. And we’re excited.”
To keep up with demand for the new Texas Roadhouse rolls, Lancaster had to add more production labor plus another factory shift, Ciesinski said.
“All of this just give me a couple of proof points that it has exceeded our expectations in terms of its strength,” he said. “We’re adding the labor, we’re adding the incremental capacity. And then the harder rollout through the rest of retail will begin in Q3 and Q4. So it will be a contributor to this fiscal year, but we believe it will even be a bigger contributor in fiscal year ’26. It’s just a great example of how this licensing strategy is extensible beyond sauces to really anywhere we have an iconic product away from home that consumers want to be able to enjoy every day.”
For the quarter ended Sept. 30, net income totaled $44.7 million, equal to $1.62 per share on the common stock, up from nearly $44 million, or $1.59 per share, a year earlier. Analysts, on average, had forecast earnings per share of $1.70.
Net sales for the first quarter rose 1.1% to $466.6 million from $461.6 million a year ago, reflecting a 1.1% decrease to $239.6 million in the retail segment and a 3.5% increase to $227 million in the foodservice segment. Excluding prior-year sales from exited perimeter-of-the-store bakery product lines, including Flatout and Angelic Bakehouse, retail net sales were up 1.4%, Lancaster said. Operating income dipped 1.6% to $55.9 million, including a 5.7% gain on the retail side and an 8.7% decline on the foodservice side.
“Looking ahead to our fiscal second quarter and the remainder of our fiscal year, we anticipate retail segment sales will continue to benefit from our growing licensing program, driven by new product introductions such as Subway sauces and Texas Roadhouse dinner rolls,” Ciesinski said in the call. “Our newly launched New York Bakery brand gluten-free garlic bread will also add to the retail segment sales. In the foodservice segment, we anticipate continued volume gains from select customers in our mix of national chain accounts. We also believe external factors, including US economic performance and consumer behavior, will likely continue to moderate foodservice industry demand overall.”
Lancaster’s bread and rolls business has shown “relative strength across the whole portfolio,” Ciesinski said in response to an analyst question. “And we think that, based on the strength of the ideas we have, that we should continue to perform relatively well.”
The Sister Schubert’s brand has seen both sales and pound growth, the latter rebounding after Lancaster cycled a weight downsizing of the roll last year, he said.
“The underlying proposition continues to be strong,” he said. “We’re expecting a good performance during the upcoming holidays, Thanksgiving and Christmas, and also some distribution builds on things like our cinnamon rolls.”
Unveiled in late August, the New York Bakery gluten-free frozen bread marks Lancaster’s first-ever gluten-free frozen line for the brand and includes versions of Garlic Texas Toast and Five Cheese Texas Toast.
Scanner sales data show the gluten-free Texas Toast “moving pretty rapidly” as its distribution expanded from just a couple of states to all Walmart stores, Ciesinski said.
In addition, the new product has shown only an incremental impact on Sister Schubert’s sales.
“We are seeing some very modest cannibalism,” Ciesinski said. “But generally, this is bringing new consumers to the category. We also believe this brand platform is going to allow us to expand more readily into areas out west, where the Sister Schubert’s brand just hasn’t traveled quite as well. So we’re optimistic about that.”
New York Bakery Texas Toast recently encountered a bit of a headwind as supply issues at “a very big private label supplier that supplies both Kroger and Walmart” have abated, ending a period where the brand was able to grab some market share, Ciesinski said.
“Now that private label supplier is back online, and we’re seeing that we’re giving back a little bit of that business,” he said. “But overall, our New York Texas Toast proposition continues to be healthy. And we’re excited about that gluten-free item that we’re going to be building distribution on throughout the remainder of the year.”
Food ManufacturersLancaster Colony Corp.Financial Performance
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