Jim Tarangelo: Sure. So I’ve worked with John and Tom, obviously in implementing our growth oriented strategy right over the years and it’s working right. You see what growth can do in the first quarter and we’re producing great results. So yes, the strategy is very consistent as I transition into this role. I think over the next year or so is really about execution, continuing to drive the underlying levers that we’ve discussed. I think it’s sort of back to the basics in terms of operational discipline now that COVID and the supply chain disruption is behind us. So there are some opportunities, I think with food and labor, middle of the P&L without disrupting the high quality service that we deliver to our clients. So that’s really the focus for me. I am fully committed and very confident in the outlook we provided for this year and committed to the 2026 targets the company has established.
Harold Antor: Thank you.
Operator: Our next question comes from Faiza Alwy with Deutsche Bank. Your line is open.
Faiza Alwy: Yes. Hi, thanks and good morning. I wanted to follow-up around supply chain, so we talked a little bit about inflation and product costs improving, but you made a comment around how the current landscape presents significant opportunities. So wanted to hear a little bit more around your supply chain initiative beyond just inflation decelerating.
John Zillmer: Yes. As you know, we have a very robust supply chain organization that includes not only the core contract food service business, but also Avendra and a number of different GPOs in the Avendra family focused on different verticals and different businesses, both domestically and internationally. And we continue to be very interested in expanding the size and scope of the GPOs both organically through new sales efforts, by taking on new customers, as well as extending geographies that we serve in the GPO arena. And so it is an important component of our future growth and our future profitability. It’s a terrific organization. Autumn Bayles who runs that organization having taken over for John Orobono last year when he passed away is doing a terrific job, has really integrated very efficiently and effectively into the leadership of that role.
And so we’re very pleased with the overall performance. They are hyper focused on optimizing for our frontline managers through the right products, the right services, the right partners. They’re very focused on sustainability and all those efforts that we have from an ESG perspective as well. And so we’re committed to it. We believe that we can continue to accelerate the growth of the supply chain, profitability, and that will be an important part of our long-term margin improvement going forward.
Faiza Alwy: Great. Thank you for that. And I just wanted to clarify or follow-up around comments you made on pricing. I think you said that as inflation moderates, pricing will moderate as well. Are you starting to get any pushback around pricing or just curious, sort of how you’re anticipating pricing going forward to the extent inflation moderates? Should we assume that it’s really just moderation and incremental pricing, or are you starting to see some sort of, do you have to give back on pricing, I guess is the question.
John Zillmer: Yes. No, we wouldn’t be giving back on pricing, but we’ll see the rate of increase in price may moderate to more closely align with inflation expectations. So as you think about last year, for example, we had outsized pricing because of the very high inflation rate. That’s kind of what drove our pricing lag, if you will. We were pursuing very aggressive price increases to recover cost increases that were beyond the norm. I think this industry is likely to go back to a much more normalized pricing model, which is really inflation recovery and without any significant future spikes, I think you’ll just see pricing kind of moderate to around the level of inflation, somewhere in that range.
Faiza Alwy: Great. Thank you so much.
Operator: Our last question comes from Ian Zaffino with Oppenheimer. Your line is open.
Ian Zaffino: Hi, great. Thank you very much. Congratulations, Jim. Welcome aboard. Very happy to see these numbers here. So question, I guess, would be, on this new environment, how does this impact your ability to win new business, to get new outsourcing versus competitive wins? How are we seeing this now, I guess as you’re getting more confidence in the business, we’re seeing inflation coming down. Pricing seems to be good. It seems like your sales force is really tip top. So how do we think about that now going forward as far as what will be the big drivers of growth in those buckets and how to think about the environment, either accelerating or decelerating, et cetera. Thanks.
Jim Tarangelo: Yes, I think the overall environment, as we talked about still is a tremendous opportunity for us, right? There’s a significant portion, it’s a very large market that continues to have a significant portion that is currently in sourced. So the strategy going forward remains focused on debt new, and like I said, driving the levers that we talked about previously. I think with the supply chain disruption behind us and COVID behind us. It just makes driving those levers sort of more important and brings us toward the underlying strategy that we’ve outlined.
John Zillmer: Yes. I think I’ll just add a couple of comments. First of all, we believe that achieving the net new numbers is important for the long-term success of the organization. We’ve resourced the company, we’ve rebuilt the organization, we’ve rebuilt the sales and growth culture, and those things are in place and are sustainable and will continue to drive our longer — our long-term performance. So the model really is around retention of our existing customers and maintaining retention at that, call it 96% range, net new of 4% to 5% a year, and then cost recovery through inflationary pricing recovery going forward. And that all translates into a very sustainable long-term value creating growth model. And we’re absolutely committed to it.
The marketplace certainly can support it. The range and the scope of opportunities available to us are literally limitless, both from a geographic perspective as well as a conversion perspective. So plenty of self op conversion left in all the markets and we’re going to be competing very aggressively to continue the growth of the organization. So we love the business model. We’ve built an organization that can now take advantage of it, is focused on it, is compensated on it, and we’re delivering on those results.
Ian Zaffino: Okay. Thank you very much. That’s great color.
John Zillmer: Thank you.
Operator: I will now turn the call back over to Mr. Zillmer for any closing remarks.
John Zillmer: Well, first of all, I would like to say thank you for all of the team members at Aramark who have produced terrific results in the first quarter. Thank you for all your hard work and efforts. Really proud of the work that the team has done and also like to thank all of the investment community for their support of the organization. And we’re looking forward to a good 2024. Thank you very much for your time and attention this morning.
Operator: Thank you for participating. This concludes today’s conference. You may now disconnect.
