Sysco 1Q17 Earnings Call Notes

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Bill Delaney

The restaurant industry not currently experiencing the level of growth

However, the restaurant industry, which represents approximately 60% of the foodservice market, is not currently experiencing the level of growth we’ve seen in recent quarters. Restaurant traffic continues to show year-over-year declines and restaurant spend has decelerated as well. More specifically, recent data from both NPD and NavTrak show weakening overall sales trends. That said, we continue to execute our business plan and key initiatives very well. I’m pleased with our progress to date toward the achievement of our three-year financial goals, and I remain confident in our ability to accomplish our strategic objectives over the long-term.”

We’re seeing some slowness out there

“So if you go back to my comments, I mean basically we’re seeing some slowness out there – softening, I guess, is a better word – in terms of overall growth in the restaurant segment, and ours is off a little bit as well. So it just reinforces the importance of solidifying those customer relationships and getting penetration where there is that opportunity where customers are growing as well as continuing to stay really locked in on retaining our customers and identifying new opportunities as we go along, but I mean the 1.8% to 1.9% is largely the organic growth.”

Traffic has been down

“Well, I think the challenges are what I’d referenced. You’ve got several quarters in a row now where traffic is actually down, and while the spend is up, it’s not rising at the same rate it was rising. So there is clearly a softening out there. I mean whether it’s because of the election or relative pricing between grocery store and restaurants, I’ll let others kind of critique that. Look, I think there’s ebbs and flows in any cycles of economies, and I think we’re going through that right now”

Don’t see the deflation reversing

“So, I think right now they’re managing it pretty well and the deflation is helping them. At some point, I guess it could become more acute if we were to see the deflation reverse, but as I think as Joel pointed out, we don’t see that happening here, at least not in this calendar year.”