Q1 2021 Performance Food Group Co Earnings Call
21 earnings conference call.
If you would like to ask a question at the conclusion of the prepared remarks.
Please press the star key followed by the number one on your telephone keypad at any time.
I would now like to turn the call over to Mr., Bill Marshall Vice President Investor Relations for P. F. G. Please go ahead Sir.
Thank you Maria and good morning.
We are here with George home, PMFG, CEO and Jim Hope PMFG CFO, we issued a press release regarding our 2021 fiscal first quarter results. This morning, which can be found in the Investor Relations section of our website at P.F. GE Si dot com during our call today, unless otherwise stated we are comparing results to the same period in our 2025th.
<unk> first quarter.
The results discussed on this call will include GAAP and non-GAAP results adjusted for certain items. The reconciliation of these non-GAAP measures to the corresponding GAAP measures can be found at the back of the earnings release.
Our remarks on this call and in the earnings release contain forward looking statements and projections of future results. Please review the cautionary forward looking statement section in today's earnings release, and our SEC filings for various factors that could cause our actual results to differ materially from our forward looking statements and projections now I'd like to turn the call over to George Thanks Bill.
Good morning, everyone and thank you for joining our call today I'm very pleased with the start to fiscal 2021, our first quarter results came in ahead of our expectations.
The business recovery remains on track and we continue to outpace the food service industry.
We continue to win new business, particularly in the independent restaurant channel, which resulted in year over year gross margin expansion during the quarter means.
Meanwhile, the Reinhard transaction has exceeded our expectations and proven to be a strong cultural and operational fit with the legacy performance foodservice business. This gives us confidence in our ability to bring future reinhart sales growth to be more in line with our legacy proportion performance foodservice business.
Hertz integration into the P.F.T. family, which includes successful technology transition in sales compensation conversions has continued to progress smoothly and our synergy efforts. Similarly remain on track, which should result in roughly 50 million of annualized cost synergies.
Third full fiscal year following the closing.
As a result of all this work we continue to expect long term value creation from REIT or an exciting prospect for the years ahead.
Performance food group the.
He Brown business has also continued to produce good results the past several months.
Well many of Vistars channels have experienced significant disruption the convenience store channel has kept moving forward growing sales year over year.
Keep in mind that we now have fully lapped the brown acquisition. So the sales and earnings growth that they generate is fully organic before we discuss our first quarter results in more detail I'd like to address the current operating environment.
Well it is still very early we're not yet experiencing negative impact from the cooler fall weather.
Fact or weekly sales trends.
Have held steady through September and October.
In the pro forma Reinhart result in the year ago period P of cheese consolidated net sales were down 8.4% in September approximately 8% in October. This is an improvement from a 10.9% decline in the month of August.
Well this has been some modest improvement well there's been some modest improvement in legacy Vistar that business continues to be pressured by handful of channels.
In particular, we continue to expect a very slow recovery at movie theatres office coffee services travel and hospitality well none of us can predict the future we remain extremely well positioned when the segments of the restaurant industry that have performed well during these challenging times with that.
Said factors out of our control do produce a more challenging environment, we believe that our customers and P of Ci operations leaders now have a playbook to adjust and can push through until we eventually get to a level of normalcy for.
For our part we will continue to support our customers and look for opportunities to expand our market share.
During our year end call in August you May recall that we discussed our strong market share gains driven by our sales force investments and business mix I'm pleased to report that these trends continued in the first quarter as well and we're particularly happy with our performance within the independent channel.
For the quarter or independent cases grew 28% compared to a total case volume growth.
8.9%, excluding the contribution from Meinhardt independent organic cases were down just 6.3% during the quarter.
A fantastic outcome given the situation not surprisingly we have been asked about the impact that business trends would have in our margin structure were therefore very pleased to report our first quarter gross margins expanded to 11.6%.
From 11.4% in the year ago period, despite the dilutive impact from faster growth in the convenience store channel, which has lower margins than the rest of our business.
We are pleased with our organization's focus on cost control. We believe we have found the right balance between controlling costs to match demand and equally as important taking care of our customers during the recovery.
We are experiencing higher inbound freight costs due to tightening capacity, particularly in recent weeks, while we feel good about our carrier relationships and our ability to effectively manage this cost item. We would expect some near term cost pressure also as we discussed last quarter, we continue to bring the so.
She gets back from for low sales trends have improved.
In addition to servicing the needs of our core business and value customers.
PFC associates continue to focus on helping the communities we serve over the past few months their generosity.
Has helped our neighbors indeed across the country.
Our newest community relationship is with the American Heart Association as the presenting sponsor for the Richmond Heart walk.
This was important to us because heart related issues affect so many who is a great opportunity support our communities and reinforce our associates that health and wellness our priorities.
Many associates provided support as part of the steering Committee and EPS enthusiastic coaches for P of cheese.
17 teams well it normally would have been only a local Richmond, Virginia event. It became a virtual walk in P 50 associates across the country joined in.
One of our longest standing community partnerships is with feeding America. We know the need continues to grow and during this year's hunger action month campaign not September our associates generously donated online to benefit feeding America network of food banks across the country.
As a company we have probably provide a financial in food donations for many years from our associates food drives and donations from our operating companies throughout the year, we still needed on average more than a million pounds a year and finally PMT is pleased to again be offering a match for donations our associates make to the.
American Red Cross Hurricane and disaster relief efforts.
With wildfires in the west and very active hurricane season in the east our associates are giving generously here to help the communities, where we live where we work and to serve our customers.
In closing let me thank our PFC associates for the work they do every day for our business and the customers and communities. We serve well many organizations are struggling our PSP family has come together to support one another and those around US company morale is strong and the shows through in our business results and in many.
Other intangible ways the sensor organization apart from others and drives us forward as a true industry leader with that I'm going to turn things over to Jim who will give you more tito detail on our first quarter and financial position. Thank.
Thank you George and good morning, everyone, let's start with a quick overview of our results.
For the first quarter of fiscal 2021.
We're very pleased with the progress our company achieved in the first quarter.
While COVID-19 continues to impact our customers and industry, we have seen a continual sequential improvement in our business.
As a reminder, we have now fully lapped the acquisition of BB Brown, but these results do include the acquisition benefit benefit from Reinhart.
Total case volume increased 8.9% in the first quarter compared to the prior year period, driven by the acquisition of Reinhart underlying organic case volume, which excludes reinhart declined to 17.5% in the first fiscal quarter.
[noise] independent cases were up 28% in the quarter, including ride art and were down just 6.3% on an organic basis. Our continued outperformance in the independent channel continues to drive positive mix shift.
Net sales grew 12.9% in the first quarter of fiscal 2000 $21 billion to $7 billion. The acquisition of Reinhart contributed approximately 1.5 billion to net sales in the quarter.
Overall food cost inflation was approximately 1.5% in the first quarter driven by inflation in cheese, and particularly mozzarella and meats.
Gross profit for the first quarter of fiscal 2021 increased 14.6% to 815.5 million as compared to the prior period.
Prior year period gross profit per case was up 25 cents in the first quarter versus the prior year period gross profit margin as a percentage of net sales was 11.6% for the first quarter compared to 11.4% for the prior year period.
Tony gross margin rose in the first quarter of fiscal 2021, due to improved channel and product mix. Despite growth in the lower margin convenient store channel and in an 11.9 million dollar inventory write off which was $5.7 million higher than in the prior year period.
We're very pleased with our gross margin results and believe it speaks to the long term profit potential of our business.
Operating expenses rose by 20.3% in the first quarter compared to the prior year period.
The increase in operating expenses was primarily due to the Reinhart acquisition.
We continue to focus on managing our operating expense to match demand, though we would expect to continue to see our opex increase as we adjust to the business recovery.
In the first quarter, adjusted EBITDA rose, 5.9% compared to the prior year period to $135.2 million.
The diluted loss per share was one cents in the first quarter compared to diluted EPS of 34 cents in the prior year period.
Adjusted diluted earnings per share was 45 cents in the first quarter, let's now turn to first quarter results for our two segments.
Our foodservice segments fiscal first quarter net sales grew 28.1% to 5 billion driven by the acquisition of rider.
Foodservice EBITDA increased 50.2% in the first quarter to $156.2 million.
Net sales for Vistar decreased 13.2% in the first quarter compared to the prior year period to $2 billion.
First quarter EBITDA for Vistar was 11.7 billion, 77.3% decline over the prior year.
I'd like to briefly discuss our liquidity and cash flow profile.
As we mentioned on our last earnings conference call, we had significant working capital gains in fiscal 2020 and expected some of that to reverse in early 2021 well.
Well that was the case I'm very pleased with our organization's continued focus on working capital.
In the first quarter PSG used $132 million in cash from operating activities largely driven by the payment of the eby Brown earnout and investments in working capital.
Looking ahead, we expect to continue using our liquidity to build inventory levels and to keep pace with demand recovery in the marketplace.
With that said, we feel very comfortable with our current cash position and believe it is put our company in a strong position to continue to invest in building our market share and solidify our position in the food distribution industry.
PSG invested $40.8 million in capital expenditures during the first quarter of fiscal 2021.
An increase of $18 million over last year.
We will continue to spend on future growth opportunities, including increased capacity and new lines of business.
We ended the quarter with another strong total liquidity position of nearly $2 billion our liquidity at the end of the fiscal first quarter consisted of about $417 million of cash plus more than $1.5 billion of availability on our ABL facility.
In the near term, we will continue to look for organic market share opportunities and we'll use our liquidity to service our customers.
However, the strength of our balance sheet is also positioned PSG to take advantage of M&A opportunities that may arise over the intermediate term.
As always we intend to be disciplined with our capital allocation and strive to pursue targeted transactions that would enhance shareholder value.
We remain very encouraged by the sequential stabilization or weekly sales trends, even as we start to enter the cooler weather of the fall season, but.
While we expect a slower recovery at Vistar, our organization has adjusted to the operating environment and remains well positioned to strengthen our market share across our businesses.
Still despite our confidence in the resilience of our business remains a good deal of uncertainty for at least the next several months, we hope to be in a position to provide meaningful forward looking guidance as the winter progresses, and our near term visibility improves.
In summary, we feel very good about how our business is positioned and the accomplishments that our organization has made.
Our liquidity and working capital management has been strong we believe it positions us well for the long term.
The strong recovery in our weekly sales has continued into the fall and our Salesforce remains focused on taking market share to build upon our strong position in the food distribution industry.
We do appreciate your interest in performance food group and with that we'd be happy to take your questions.
Thank you the floor is now open for questions again to ask a question at this time simply press Star then the number one on your telephone keypad.
If at any point. Your question has been answered and you wish to remove yourself from the queue press the pound key.
Our first question comes from the line of Edward Kelly of Wells Fargo.
Hi, good morning, guys.
George maybe just starting out.
To provide a little bit more color on current case growth trends I think what you're saying I think certainly sounds encouraging given the weather and rising call. The cases I'm kind of curious as to.
Is there any color by region that sort of gives you a better peek into the next couple of months what are your thoughts generally about any potential sat back and if that were to occur. It does it change the way that you would think about the other side of it.
Turning to your independence make it through any setback.
Any concerns there.
Well.
With the independent we're we're encouraged.
That they've just done so well with takeout curbside and.
Of course were concerned with the weather getting cooler bits.
We haven't seen that affect us, we're continuing to make progress.
Versus the previous year not at the rate we were before but continue to make progress so far as the regional that's pretty simple.
The northeast.
Is still heavily affected Chicago, Wisconsin, and the West Coast and you get outside of those areas and.
Almost all of our companies are running sales increases.
But those are still those areas are still pretty heavily affected.
As we think about the.
The margin performance going forward EBITDA margin this quarter I think really encouraging just given where we are at this point.
There are some really unusual things going on in your mix I think obviously your your independent business and good for you, but you sound a lot of pp.
Your your your C store business has been good.
Do we think about the progression now.
Of the margin performance going forward here.
Well the margin growth, we've had is pretty much all driven by change in mix.
With the independent growing or declining at a much slower rate than than our total business.
But but pretty significant swing in mix in our Vistar channel with.
Convenience having increased dollars.
Unfortunately, a lot of that coming from from the cigarette part of the business, which has very high case costs.
Theater is our low case cost area and.
Thats, all bump and shut down so it has had a pretty big mix change for US also when you when you look at our foodservice business the delta between our.
Inflation rate.
And our.
Average case.
Average cases up about twice the percentages the inflation and Thats just been.
Been driven by strong growth in center of the plate and then within meat and cheese, it's our highest priced.
Most expensive brands in those two categories that have been leading the way with growth.
So just a bit I would call it an unusual quarter, Ed as far as the the delta between case growth and.
And.
And dollar growth.
And just last one for me George you mentioned M&A opportunity any color on limitations here, just given current leverage integration or reinhart.
What's the opportunity sort of like a shaping up out there like and what you're what you're looking for generally.
Well, we would love to be acquisitive always always like to be acquisitive. It's just a real difficult time, we certainly have the capital structure to do it.
You know to two.
Two value accompanied today, it's just it's just really difficult and.
We don't want to spend a great deal of time on that not only to end up where we can't meet.
The needs of the seller.
And R&D.
Our need to make sure that we're we're not overpaying for for the company. So it's just a difficult time.
We certainly feel.
Feel that when we get back to at least some sense of normalcy here that we should be able to get active again.
Great. Thanks, guys.
Thanks, Ed.
Our next question comes from one of Alex Slagle of Jefferies.
Thanks, Good morning.
I wanted to ask about your new business wins and sort of how much you'd added since the start of the crisis.
Any color on the categories and what the pipeline looks like.
Well.
We added some.
Foodservice National account business.
And that was done towards the tail end of last fiscal year we.
We've had some small wins in that area, but nothing significant since then.
Independent we seem to be.
Driven surprisingly bye bye more business per customer.
That has been a great surprise for us, but just people have been really effective.
With their takeout and their curbside and I think what they've done with volumes down they're buying from less distributor. So we're actually seeing.
Penetration growth within our customers and of course, new customers as well that's always kind.
Kind of a lifeline.
In the convenience area, we do have some additional business coming on there.
Some that starts late this.
Quarter.
And then in stay and then next to his next calendar year or fiscal third quarter, we got some additional business coming in so.
That will certainly be helping us.
And really that that's about it I think the biggest thing for US is just continuing to pick up new accounts and then as the core Vistar business comes back online that's going to be a significant contributor.
For us going forward.
Thanks, and then expanding on that on Eby Brown, how should we think about the path going forward.
For gaining access to foodservice sales in the convenience channel I guess sort of pause some of.
This potential progress I imagine.
The crisis, but what are your latest thoughts there.
Well the foodservice business within.
Brown has declined.
It declined quickly with with shelter in place and it just gradually.
Got in a little bit better, but still not not close to last year's number in our foodservice business, we've actually been doing really well in the convenience or part of our business and it is.
A growth area for us today.
Thank you.
Our next question comes from the line of Kelly Bania of BMO capital.
Okay.
Hi, good morning, Thanks for taking our questions.
George.
I'm sure you're aware that two of your largest competitors have.
Identified pretty sizeable permanent fix cost savings and it does feel like you guys are maybe correct me if I'm, just a little bit more managing.
Variable expenses to where volume is.
I was just I was just wondering if you could talk about what you're seeing from the rest of the players in the market a lot of the private players and how they're managing expenses and how you think any of those actions are if at all contributing to your market share gains.
Or how much you attribute to just your customer mix your geographic exposure and just the structure of your business.
Well, our customer mix definitely helps us.
We have a fairly significant piece of business and and that's done well I think what helps US too is that we went into this running about 7% case growth in.
Independent So I think we had good momentum going in is kind of hard to figure.
The different things that contribute the market share numbers that we get really show us running growth and.
Independent in every type of restaurant.
I think our Salesforce is just responded well and has has worked hard.
It's tough to tell with the independent side I think it says a lot that we havent seen people go out of business.
Speaks to the incredible resilience that just it's been amazing the resilience that our industry has.
Obviously, we feel we're gaining share I don't know that it would be any more from independent distributors than it would be from the larger distributors I think it's probably.
Pretty close to whatever percentage people have that seems to be.
Well.
We get it.
I would say.
Across the board, but.
Not real significant in any one competitor.
And I guess, just a follow up any any comments or view that you could share with us your margin.
Maybe EBITDA margins longer term post covert Richard.
The return to normalization, obviously, there's synergy impact from Reinhart, which you talked about three years post closing, but any other factors that.
Can we lead the company to a higher margin structure over time.
Well.
You know a lot of that has to do with mix and the changing mix that we have but if you look at going going through this period of time.
I think weve grown some good share in independent and Thats become a bigger part of our business. So that will help our margins by holding on to that.
And.
When you when you look at the expense part of it I mean, we certainly weren't aggressive but there are areas of our business that we recognize that we will not have the kind of expenses that we've had in the past. So I've said from the from early in this that we're not going to come out of this with expense ratios.
As high as they were before so that should help us when it comes to our EBITDA margins.
Thank you.
Our next question comes from the line of John Glass of Morgan Stanley.
Hey, good morning, Thanks, very much can you George can you, maybe just talk a little bit more about the success you've had in the independent case growth is that really just coming from your core customers in the pizza category and Mexican which have just been strong through this are you seeing a broadening of new customers are adding new there outside of that category I'm trying to understand is this just the category being better in your sort of.
Benefiting from that or if you're actually seeing penetration outside of those categories that.
In in case growth and those independents death.
Definitely a broadening.
We've we've continued to be real aggressive increase in our SKU base.
We've been aggressive with our brand, particularly at the higher end.
And like I said before it's every type of restaurant.
At least the numbers, we get show that we've gained share.
In each type.
That's helpful. And then just on Vistar can you maybe just break down like what what C stores are running down now relative to theaters. This way and we understand some of the dynamics there how different are those channels I understand there is a difference, but how differences or C stores, now, which is a pretty big part of that business versus the rest of it.
Our C store channels grow.
And our Vistar channel is down the CT legacy just I guess I would say.
It's down significantly.
They're in kind of the firestorm of.
What's not performing well today.
It is a company that will do extremely well again.
And.
The areas that that have been seen the significant declines would be anything work related vending office coffee service and anything travel related.
Has been highly affected and.
People gathering in large crowds I mean, we have a significant.
Theater concessions business and also a significant concessions business that.
It was more sports oriented.
Just really in the.
It's just a tough tough time frame for them.
John one right. So scientists reticence business is very good the dollar store business is very good surprisingly retail has been good.
The the impulse buy item.
Retail.
If I could just like we're just one final brief follow up just on freight what do you. What are you seeing in freight rates. What do you think that headwind potentially is in the near term and change the way you've negotiated freight terms inbound freight terms.
With your suppliers that you think you can manage that's we can match the increased cost of increased allowances for example, how we.
Think about freight in the near term, yes, yes, Jim So first we wouldn't change our.
Approach because our approach has helped buffer some of the some of the headwind that perhaps we would have gotten if we manage things differently.
You know I would characterize that as a mild headwind it's tough for the team that manages that they're a very strong and experienced group of folks for us and.
I believe they will be able to work through it as they have in past years.
Our focus has always been.
As much as we can to work on steady relationships same supplier.
Not trying to bid it out not trying to get the last penny.
And that really has helped us we have no intention of changing that.
Okay. Thank you.
Sure.
Our next question comes from the line of John Heinbockel of Guggenheim.
Hey, George I mean, you guys are always growth oriented I'm curious.
When you when you think you may want to pivot even more towards investing in the business.
For the eventual recovery here I guess next summer.
And how satisfied are you with the.
The growth in.
Quality of people you are seeing on the sales force side are you, we'd like to grow that.
Low single digits or better.
Where are we there and then where are you with reinhart in terms of ramping up their sales force yeah well are are.
Our salesforce today, the average sales per sales person is at the highest level. We've we've had no.
And part of that is because we did for low some people that were new that were real new.
We've been starting to bring those people back.
And I I'm, finding the quality of the people to be good I think that we're having higher success rates here of late with new people and we're continuing to invest and were continuing to hire.
I don't think theres going to be this huge increase in capital expenditures here, but but we are definitely more aggressive adding capacity.
We've got.
Some new facilities that were going to be doing.
Matter of fact, I'm visiting a new and today that we are just opening in the convenience side of our business, but our biggest priority is to get more capacity in food service distribution.
So that's the that's the greater priority rather than expanding the sales force and how do you how do you.
Think about structure the salesforce in terms of.
Where you are today.
The idea of adding folks maybe just purely prospect.
For new business as opposed to ongoing relationship is there room to productively kind of tweak the structure works.
It's where you want it to be well.
Well, we've always had business development managers that.
Their primary responsibility is this going out and getting new business.
Not an area that we see ourselves growing as.
Really I think we're set there we've got plenty of people.
Our focus is salespeople salespeople that have a regular customer base that.
They see frequently.
And that they manage.
Okay. Thank you.
Thanks, John.
Our next question comes from the line of William Reuter of Bank of America.
Hi, This is Mary on for Bill Thanks for taking your question.
So first just can you touch on your outlook for food cost inflation.
Yeah. This is Jim we provided in the in the script, we saw around 1.5% inflation don't have any any real reason to see the that average number moving but look.
Look it's unpredictable times, so very difficult to provide outlook I can tell you. We are prepared with great supplier relationships to manage through whatever whatever challenges, we get there and we know how to how to manage the cost.
Great and you mentioned that youve been bringing back a lot of your furloughed associates, but.
Are there any permanent personnel eliminations.
Yes I.
I don't I really couldn't quantify that I wouldnt.
Call it.
Real material, but it it's.
It's certainly going to help us.
Got it Thats all from me. Thank you. Thanks.
Our next question comes from the line of Jeffrey Bernstein of Barclays.
Hi, guys, some secular Jeff priester on for Jeff Bernstein.
Just on your inventory levels I know back in May Hyatt pandemic and March April may be if you see continued to take deliveries and so your inventory levels from maybe a little bit higher than you would otherwise want given me volumes, you're seeing at the time of your inventory levels managed over time and kind of what is your outlook from there.
Or whether you need to still kind of wind down from those levels or what are your now on the build up process.
We're definitely in the build up process.
Just this last week.
We had the highest inbound fill rate.
From our suppliers since shelter in place so that.
That speaks well that our suppliers are recovering and they're starting to you know to be able to fill orders.
Excess inventory that we had proteins that we had to take to the freezer that type of an issue. That's all behind US we've got that products sold and.
And out of the buildings.
I think that you will you will see our inventory levels grow at about the same rate that that our sales growth, but we do feel like that.
We're in a mode now of kind of rebuilding that inventory level.
Gotcha, and then just digging in on the additional penetration to independents do you think you guys are continuing to see a benefit from come from having those inventory levels, maybe it's hard to put pen to make the independence. No you will have the product available for them.
And then also are there any areas that independents may not have purchased from you guys in the past there now purchasing from year to kind of drive that penetration just trying to figure out exactly what it was.
Yeah, we're definitely getting getting new customers and maybe we made too much of having the inventory.
That wasn't a huge period of time certainly our competitors.
Had inventory.
I think that our sales people are just getting additional skews into the accounts and that's a lot of what's driving.
I guess I would say our.
Sales declines not being that bad, but hopefully soon we can talk about sales growth but.
I think it's just the salespeople, adding skews.
Yes, Sir I appreciate it.
[music].
Our next question comes from the line of Rebecca gentlemen of Morningstar.
Good morning, and thanks for the question.
So earlier this week one of your largest competitors talked about.
They're going to be developing specialized products and services to be targeting specific restaurant segments, such as Italian eateries.
Which is obviously a big strongholds for you guys. I was wondering if you could just speak to how.
How are you.
How you.
Plan on defending our positioning there.
Well our salespeople.
The biggest thing.
We take the product real serious.
We're very very serious about.
Product and the price value that it offers and.
I don't I don't really see us doing anything different than what we're doing today.
Okay. Thanks, and also I was wondering if you could speak to.
What percentage of like permanent store closures, you're seeing some of your competitors have talked about high single digits I'm I'm guessing, it's probably lower for you guys I just like to like to hear your thoughts on that.
So a hard number to grab.
I would tell you in most parts of the country, what we look at.
Shows us that it is single digit.
Probably probably fairly high single digit, but its single digit difference between.
Customers, we sold I always say pre shelter in place and customers we sell now.
It's less than 10% of those customers.
Don't buy from US today, now that doesn't necessarily mean, they're closed I mean, there's other reasons that you can lose business when you get to particularly Metro New York.
The northeast.
Chicago, the west coast much higher numbers.
Certainly.
Double digit but.
That's much higher number than than the rest of the country.
Okay, great. Thank you and then lastly.
I was just wondering if you could speak to what percentage of your restaurant sales do you think is eaten off premise.
Which would kind of help give us some color for how much risk there as to you know as we approach limited.
Indoor dining and also.
Other possible.
Restrictions coming to place. Thanks, yes that number like store closures is equally difficult to get too because they are managing that but I can tell you. It's impressive to see how restaurants are managing through indoor versus take.
Takeout and curbside, they've done an amazing job.
Being flexible and agile and being able to handle the shifts in demand and help people want food and we couldn't be more pleased with how our customers are taken care of that.
They know what they're doing they have the great experience, they're just really hardworking folks. So I would expect that number obviously is significantly higher than it was and it may grow.
Sure pleased with other done that.
Okay, great. Thank you.
Again, ladies and gentlemen, if you wish to ask a question simply press Star then the number one on your telephone keypad again that is star one to ask a question.
Our next question comes from the line of Lauren Silverman of Credit Suisse.
Thank you I wanted to ask about the independent case growth your customers tend to be concentrated.
Team he.
Keith Italian.
Better any spoke to the wallet share growth and expense. He is there anyway to quantify the relative impact.
Restaurant comp declines while share net new customer acquisition on independent case growth.
I'm, sorry could you repeat that I didn't I couldn't hear for some reason sorry.
Sure and just better.
Yes.
So regarding the independent case growth Youre testing your customers tend to be more concentrated the team keep that tally in which to perform better as well Walter growth that you spoke to and expansion is skewed. So is there any way to quantify the relative impact of restaurant comp decline, while chair and net new customer acquisition on independent case growth.
All right I think that Thats, probably difficult I mean, our chain business is not actually been that great. We do a lot of casual dining and it's more difficult for them. So that has not been a contributor.
Pizzerias have done well.
Italian restaurants have done surprisingly well Mexican restaurants have done well, but to be able to quantify it is just not something that we do.
Okay, Yeah, I'd agree with I would agree with that Georgia I got to tell you, though we're really pleased with sales growth return a recovery so far.
Really pleased with the investment we made in the sales force and L. its paid off and the Reinhard integration and performance is going exceptionally well that he be integration and performance is going exceptionally well.
Did you have another question yes.
So different.
Any differences in wallet share penetration among new customers that you're bringing into the system relative to cohort that youre, bringing critical that so just trying to see if there is a greater willingness for new customers to buy more from.
A single distributor.
I don't think there's any difference really.
The environment is from a competitive standpoint is just the same as its been for quite a while.
Okay Fair and then just thinking through the supply of independent distributors in the market and recognize there is limited visibility, but would you expect the commensurate level closures among peers that you would expect about independent restaurants.
Not from what I've seen so far no.
I mean, if we get a kind of a second wave of.
Closures of markets I think that could have an impact, but we just we just don't see.
A lot of stress in the industry.
Among our independent distributors, we just don't see it.
Okay and then my final question is there's always turn them off restaurants, so how how elevated at your level closures amongst customers currently relative to historical levels.
I mean, it's certainly greater.
I don't think we could quantify that either I'm not trying to be evasive, but I just don't know how we could quantify that.
We're just not losing accounts at any different rate than we were in the past matter factor there might even be more stability from the standpoint that.
People are just kind of hunker down doing things the way they've they've always done it.
I think what's helped US is just additional skews within our existing customer base.
Not a big difference between how many we lose or how many we gain.
Understood. Thank you very much.
Thanks.
Our next question comes from the line of Peter Slate of VTI gene.
Great. Thanks for taking my question.
I know you guys mentioned you are seeing.
Maybe single digit closures, maybe it's high single digit with maybe a little bit more on on the coast can you provide any more sort of clarity or detail around that.
The types of customers that you think maybe.
Close to any sort of characteristics type of cuisine is it.
Or with.
In terms of restaurants that are maybe a little bit more are slightly higher average guest spend how do you sort of details around that would be helpful. Thank you.
Yes, I would say that we've seen a little higher percentage on the high end.
I think it's difficult if you can't see people to get that kind of price point for a pickup or or a takeout or delivery. It's just not the same experience so that I would say.
And it is certainly more difficult.
If.
If you don't have a good takeout program. If you don't have a good curbside programs, if you've got a small restaurant, even if its at 50% it's hard to get 50% of what you would normally get in there I think thats difficult.
You know and I do believe there's restaurants that are that are closed and had been closed for quite a while that still will open.
When the opportunity is right.
I've talked to people that are just going to shutdown for the winner if things don't change.
But that doesn't mean, they won't come back later.
And then of course, if you've got outdoor dining you've done better.
Less likely to have close your doors, just just all those things that you logically think would happen.
Right that's very helpful.
Can I ask you have you seen.
Or restaurants.
Come online for the first time.
Capacity restrictions and some municipalities are lifted from maybe 25% ceding 50% ceding that Mitch did you see more restaurants just side for the first time to open their doors, one when that level increased yeah.
Yes.
And we have seen people and a good bit of this where it goes from 25% to 50% and they were doing very well with takeout and elected not to open at 50%.
The dining room to continue to do business I think there is every scenario that you could possibly have I think we've seen.
I mean, there are people out there doing extremely well right now and still have not opened their dining rooms.
Excellent. Thank you very much I appreciate it.
And that was our final question I'd like to turn the floor back over to Mr. Bill Marshall for any additional or closing remarks.
Thank you for joining our call today, if you have any follow up questions. Please contact us at Investor Relations.
Thank you ladies and gentlemen, this does conclude today's conference call you may now disconnect.
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