Evaluating the Long-Term Sustainability of Simply Good Foods' Core Brands Amid FY26 Challenges

According to a Business Insider article, Simply Good Foods anticipates gross margins to decline by 100 to 150 basis points in FY26, driven by inflation, tariffs, and reduced distribution for the Atkins brand. Adjusted EBITDA is projected to range between -4% and +1% year-over-year, underscoring the company's focus on cost management amid macroeconomic headwinds. CEO Geoff Tanner emphasized investments in productivity, pricing, and innovation to offset these challenges, signaling a shift toward operational efficiency, as noted in a GuruFocus release.

The company's strategic priorities for FY26 include expanding product availability in physical and online retail channels, leveraging AI-driven demand forecasting, and accelerating marketing campaigns for Quest and OWYN. These initiatives aim to counterbalance the 12% decline in Atkins' retail takeaway, which has been attributed to shifting consumer preferences and reduced shelf space at key retailers.

Core Brands: Quest and OWYN as Growth Engines, Atkins as a Liability

Quest Nutrition and OWYN have emerged as the company's primary growth drivers, with Quest's retail takeaway increasing by 11% and OWYN's by 14% in FY25. These brands benefit from strong consumer alignment with the high-protein, low-carb trend, which is projected to grow at a compound annual rate of 8.5% through 2030, according to a Future Data Stats forecast. Quest's product innovations, such as its 45g Milkshake platform and Overload bars, have resonated with fitness-conscious consumers, while OWYN's plant-based protein shakes have captured a niche in the clean-label segment, as reported in a FoodNavigator article.

Atkins, however, faces an existential challenge. Despite its historical dominance in the low-carb space, the brand has seen declining relevance as consumers shift toward more flexible dietary approaches. Food Navigator notes that Atkins' retail sales fell by 12% in FY25, driven by reduced distribution and waning interest in keto-centric confections. Simply Good Foods' decision to pivot toward global expansion-launching Quest and Atkins in five European markets-reflects an attempt to reinvigorate the brand through regional adaptation, according to a SWOTAnalysis profile.

Market Trends and Competitive Positioning: Navigating a Crowded Space

The high-protein, low-carb market is highly competitive, with players like Beyond Meat, Quest, and Atkins vying for shelf space. A 2025 industry analysis indicates strong consumer interest in protein-fortified foods, which has spurred innovation in plant-based proteins, hybrid meat alternatives, and functional snacks, creating both opportunities and pressures for Simply Good Foods.

Quest's 30.6% retail takeaway growth in Q3 2022-outpacing the 18.9% growth of the active nutrition segment-demonstrates its competitive edge. However, rising input costs have forced the company to implement price increases, which could erode consumer affordability. The integration of OWYN, while boosting revenue, has also introduced margin pressures, with general and administrative expenses rising due to acquisition-related costs.

Long-Term Strategic Initiatives: Diversification and Sustainability

To mitigate overreliance on Quest and Atkins (which account for 65% of revenue), Simply Good Foods is diversifying its portfolio. The company plans to launch 20 new products outside its core brands, including a vegan protein line targeting the plant-based segment, according to the SWOTAnalysis profile. Additionally, a $75M manufacturing expansion and AI-driven automation aim to reduce costs by 25% and improve production throughput.

Sustainability remains a critical but underdeveloped pillar. While the company has not disclosed specific carbon reduction targets, its focus on clean-label ingredients and plant-based innovation aligns with broader ESG trends. However, without concrete metrics, investors may question its commitment to long-term environmental stewardship.

Conclusion: A Tenuous Path to Sustained Growth

Simply Good Foods' FY26 guidance reflects a strategic recalibration to address inflation, brand-specific challenges, and market saturation. Quest and OWYN's strong performance positions the company to capitalize on the high-protein trend, but the decline of Atkins and margin pressures pose significant risks. The success of global expansion, product diversification, and cost management will determine whether the company can transition from a niche player to a sustainable leader in the better-for-you snacking space.

For investors, the key question is whether Simply Good Foods can balance short-term profitability with long-term innovation. While the company's focus on AI, global distribution, and plant-based R&D is promising, execution risks-particularly in maintaining brand relevance and managing input costs-remain high.