Demand Environment
Q: How is the current demand environment affecting Sysco?
A: Restaurant traffic was down year-over-year, starting with a tough January but sequentially improving throughout the quarter. Despite this, Sysco gained share versus the food-away-from-home sector in aggregate, but volumes were less than anticipated. The company is confident in operating in any environment and is focusing on initiatives to improve volume and profit margins. -

Pricing Pressures
Q: Are competitors being more aggressive with pricing amid industry headwinds?
A: There has been an increase in price shopping by restaurant operators seeking value due to rising labor costs. Customers are more aggressively shopping prices across distributors, especially on key commodities. Sysco is focusing on being competitive on price for top items and leveraging strategic pricing tools to respond promptly to customer needs. -

Menu Prices Impact
Q: Should restaurants lower menu prices, and how does this affect Sysco?
A: Sysco believes that restaurants need to lower menu prices to drive foot traffic growth. While food costs have moderated, labor costs at restaurants have not. Sysco is working to lower food costs by negotiating with suppliers and passing on savings to customers, aiming to help restaurants reduce menu prices and stimulate demand. - , -

Sales Force Expansion
Q: How is Sysco approaching sales force expansion, and what is the expected impact?
A: Sysco is increasing its sales force headcount by a net 100 positions by year-end, representing about a 5% growth rate. This investment is currently an expense greater than the immediate revenue contribution but is expected to positively impact fiscal 2025 financial outcomes with a positive return on investment. -

M&A Opportunities
Q: Are there new M&A opportunities due to industry slowdown?
A: Sysco is focused on integrating recent acquisitions like Edward Don and realizing synergies from them. While they have a robust pipeline and are open to accretive opportunities, their current priority is to integrate existing acquisitions and achieve synergy targets. -

Private Label Expansion
Q: What opportunities exist for private label expansion?
A: The primary focus for Sysco's private label growth is on local customers, where they can provide greater value. Expansion on the national side is more complex due to large chains negotiating directly with suppliers. Sysco is working on packaging and brand hierarchy overhauls to accelerate progress with Sysco-branded products, especially within the local segment. -

Elasticity and Affordability
Q: How is Sysco addressing price elasticity and affordability for customers?
A: Sysco is leveraging strategic pricing software to understand customer-level elasticity at the item level. They focus on being competitively priced on key commodities to meet customers' needs for sharp prices while managing less elastic items for profitability. This approach helps provide value to customers and encourages them to choose Sysco. -

Impact on Margins
Q: How are current market conditions affecting Sysco's margins?
A: Despite softer market conditions, Sysco delivered its profit expectations for the quarter. They are improving profitability by leveraging strategic sourcing, increasing Sysco brand penetration in local markets, and enhancing supply chain productivity. The company believes it can operate effectively in any environment and continue to enhance profit margins. - , -

Forward Outlook
Q: What is the outlook for April and beyond?
A: The growth rates from March are carrying into April, with no deceleration observed. Sysco has initiatives in place to improve volume and enhance profit margins. The company remains confident in its guidance and ability to take profitable market share in the upcoming periods. -