Kim Peacock was once the purveyor of first-class luxury, but now her Arlington, Texas, company has more than 87,000 pounds of nuts and no idea if her airline customers will ever want them again.
American Airlines supplier GNS Foods in Arlington is now trying to unload dozens of pallets of mixed cashews, pistachios, pecans and almonds after the COVID-19 pandemic forced air carriers to stop serving the first-class perk on flights.
GNS opened a retail store at its factory and started peddling nuts online in hopes of getting rid of them at their wholesale price, even though the company spent the effort to roast, salt and package the nuts.
“We have pallets and pallets of nuts here,” Peacock said. “We didn’t know how long this was going to last. The airlines were in a state of disarray themselves and they didn’t know if they were going to be bringing them back or not.”
There are about 70,000 bags remaining that weigh 1.25 pounds a piece.
First-class nuts have been one of the surprise victims of the global COVID-19 pandemic that has overtaken all aspects of life and sent airlines into a frenzy of how to protect customers and avoid bankruptcy.
American Airlines stopped serving warm nuts and most other food items to passengers in March when the COVID-19 pandemic first started and air travel was on the front lines of battling the spread of the virus. Now flight attendants pass out a paper bag with a small bottled water, pre-packaged snacks and hand sanitizer. High-profit margin alcohol sales are only offered on longer haul flights and only to premium class customers.
American Airlines has had to find ways to unload its excess food, too. The Fort Worth-based carrier has donated about 500,000 pounds of items to food banks nationwide, including several in North Texas.
Of course, American Airlines is facing its own problems as leaders try to maneuver to save the business. Sales were down about 87% in the second quarter at American and the company is facing the potential of cutting 20,000 or more employees in the fall.
That means small suppliers such as GNS Foods, with about 20 employees, are an overlooked casualty as the airline industry fights for survival.
Last year, GNS sold about 12 million pounds of nuts. About 70% of sales were to American Airlines and Chicago-based United Airlines also buys a smaller portion. The company has diversified in recent years by purchasing a candy-making operation and expanding sales to private labels.
But mixed nuts are the bulk of its business, allowing GNS to expand into other areas while keeping consistent business the rest of the year.
“The margins that you make when you sell to the airlines are quite small, but its great year-round business,” Peacock said. “I would take it back in a heartbeat.”
Business came to almost a sudden halt in mid-March, when the COVID-19 pandemic first resulted in international travel restrictions and an immediate drop in airline traffic. At one point in early April, fewer than 90,000 people boarded planes at U.S. airports, 96% fewer than on the comparable day a year earlier.
Until then, GNS had sold bags of nuts to airlines, which put them on airplanes to be warmed and handed out to premium class customers. The nuts are a sign of prestige, along with those wider seats and blankets.
When the airline temporarily stopped serving nuts a few years ago, customers complained and they were quickly brought back.
Now, nuts are an afterthought of the pandemic. But that’s left GNS with a lot of nuts and no customers.
Earlier this month, GNS Foods opened a retail store in Arlington to sell the nuts to the public. At about $6 for a 1.25 pound bag, they are selling for less than they cost GNS wholesale, even though the company has to roast, season and bag the nuts.
“If we can get rid of the product and break-even, our business is going to be smaller, but we have a chance of being profitable going forward,” said Peacock, who started the company in 1990.
GNS Foods is selling both a “first class nut” mix and an Aloha blend sold on flights to Hawaii.
Peacock said the nuts are selling well both in the store and online.
GNS Food brought back all of its employees furloughed earlier in the pandemic and even hired a few extra to handle retail and online sales. They are getting calls from across the country and have even had inquiries from Hong Kong and Canada.
“It’s been a little, no pun intended, nutty around here,” Peacock said.