Brad Bollner: Gerry, one thing I’d add is as you’re looking at this, you’re reading the P&L and trying to see what inning we’re in. We call that, I think, in the shareholder letter that we are now, our inventory level on the new SKUs, for example, is higher than the inventory level on the old SKUs. As that flows to the P&L, though, that’s still to come, because that product has to get sold through. We get through the old inventory. We start selling the new inventory. At that point, you see it on the top line. Then you start to see the efficiencies on the bottom line – doing less with more inventory, other way around, doing more with less inventory. So all of these things are, we have a line of sight to this progress being made, and then it trickles through the supply chain, and then trickles through the business. So you’ll see those things as we go along, as we talk about these inflection points, just keep that in mind.
Gerry Sweeny: Got you. I should have asked this question earlier, but when you talked about the AI pricing engine, there are several models. One was the pricing and the other two, I think, were market basket and customer retention. And they were going to, I think, be, for lack of a better term, turned on, I think, this year. Just curious if they’re in play and if they’re part of the solution, not only driving sales, but customer retention?
John Moore: So that was part of our initial understanding, of what we could do with that tool. I would not say that we’re driving market basket with the AI tool at this point. It’s certainly in the capability. What I would call out is that we’ve used it, a key part of the pricing engine is to anticipate when we think we might lose a customer, because that is the most critical thing to pricing. So applying, the fact that we have the pricing engine built means, we’ve done more than just optimize pricing. It’s also given us really good feedback on how to retain customers in general, not just related to the price we’re giving them, but I would say that intelligence has driven us towards our focus on in-stock position, and our focus on equipment service levels.
So, we found those to be good predictors of customer turnover. So, we’re leveraging that tool for more than just, hi, what’s the price of this pound of coffee? But that said, we haven’t gotten to the basket driver yet. I would say we’ve found lower hanging fruits that’s pretty valuable on the way there so.
Gerry Sweeny: Got it. Got it. And then just new growth, new products, growth opportunities, obviously, I think you guys are getting to the point where operational efficiencies are coming into play. We’re seeing in the margins, we’re seeing in EBITDA results et cetera, and they’re talking for free cash flow. The next real step is, and I know you’re not done with that side, but next step is maybe new products and adding that to the system, and getting some growth, maybe some thoughts on that?
Brad Bollner: Yes, you bring up a great point, Gerry. I mean, as you know, we’ve been emphasizing both the SHOTT, the innovative syrup line extension that we have in our portfolio, and also the Boyd’s liquid ambient coffee, both of which are beginning to get traction. There’s no question when we talk about driving top line growth, one of the bigger opportunities for us, is really the idea of product penetration and the customers that we have. And that’s where offering products like SHOTT, like the Boyd’s liquid ambient coffee, throughout the rest of this fiscal year, as they begin to gain traction, probably into the next fiscal year, as they continue to grow and come to maturity, those will continue to be points of focus for us.
We do see some positive signs of growth in both right now. And then obviously, we also have an eye to the future. So a future state beyond that, what will the next innovation look like? We’re constantly looking toward a future state, where we’ll be shifting emphasis in months ahead toward new products and new introductions.
Gerry Sweeny: Got it. And staying with this theme on growth, what about adding more routes? Are your routes optimized? Or is there an opportunity there?
John Moore: There may very well be opportunity there longer term. I think right now what we’re looking to, as opposed to adding routes, its adding density to the routes that we have. And I think one of the things we’re looking at how do, we get more value out of the existing infrastructure that we have, there’s still a lot to be gained through that exercise. And I think we are really looking to leverage the assets we have where we have them, and look channel-by-channel for opportunity. So rather than adding routes, I think you would see us optimizing routes, and adding value to the routes that exist at the moment. But we are also, keep in mind, we’ve completely transformed the sales team and fulfillment capability. We’ve added with Tom Bauer’s leadership as the Chief Commercial Officer, we’ve completely restructured that side of the business and established new KPI sets, what we refer to internally as power rankings.
And we’ve created somewhat of a performance-driven culture on that side of the equation. And that’s another piece that we look to in order to grow through new customer acquisition, but at the same time with an eye to establishing density in areas where we already exist.
