The Simply Good Foods Company (NASDAQ:SMPL) Q2 2023 Earnings Call Transcript

Joe Scalzo: Yeah, so first of all, just a little bit of the history, we — Quest was an e-commerce startup brand, so — it wasn’t — it was part of how the brand grew up. So when we bought the business, we bought a lot of institutional knowledge around e-commerce in a big seat at the table with Amazon. We’ve now — and if you look at the — if you look at the Quest business, our e-commerce plus specialty is around 24% of the business today. So big portion of the business. Atkins has come a long way in a short period of time. It’s about 13% of the Atkins business. So what we’ve learned from our Quest experience is you got to get to catalog, right? You got to get the right items, the right fewer items, so that you bring consumers on the catalog to fewer items, more eyeballs enable you to promote.

And getting the right items also is important to Amazon’s profit mix. So we’re running that playbook. So last year, you saw Atkins spike. We started that catalog rollout with shakes or shake business, had a significant step up. We’re now running that playbook through the rest of the Atkins lineup. And just to give you a little bit of a sense that Atkins average price point on Amazon was somewhere around $10, $11, more like $22, $23, $24 on the Quest. So we got room to go, right. There is — and we need to continue to improve. It pertains to the second half of the year, wrap against much bigger numbers, right. So growth is still good. We still feel really confident about the growth what you start to come at you — going to come up against that 75%, 80% growth that we saw last year.

And so the rates going to come down a little bit. We would expect over the next few years e-commerce Amazon is going to outstrip brick and mortar growth and could become a larger — a larger portion of the business. 20%, that should be a nice target for Atkins to get it there over time.

Pamela Kaufman: Thank you.

Joe Scalzo: You’re welcome.

Operator: Thank you. Our last question comes from Rob Dickerson with Jefferies. Please proceed with your question.

Rob Dickerson: Great. Joe, I just wanted to circle back to the comment you made I guess from Pam’s question on kind of shakes, bars and what’s going on Atkins. So on the bar side, right, I mean clearly you see it, we see it in tracked channels, volumes are still somewhat pressured. And you’re basically just saying, it’s just a bit of the absolute price points to the consumer given pack size is just kind of too high and too big. So like with all hands on deck is like we should be assuming, I guess that we would see maybe some smaller pack size and kind of smaller absolute price point such that velocity would have a higher probability of improving. Is that — just trying to