And we have people that come with a great deal of experience, often with a non-compete. But they tend to do well fairly quick. And certainly after a non-compete expires, they tend to do really well. So I would say that we’re probably hiring more people today that are coming in without the direct experience in the industry as a salesperson. So it’s going to be more in that year to two. Now that’s not a big expense that we’d be bringing on because we have that cadence of where we’ve been doing that for a long time. So as long as people are clicking after that period of time, it doesn’t really affect our expense ratios.
Mark Carden: Makes sense. Thanks so much and good luck.
George Holm: Thanks.
Operator: And we have our next question from Kelly Bania with BMO Capital Markets.
Kelly Bania: Good morning. Thanks for taking our questions. I wanted to go back to just the independent customer case growth, which clearly remains strong here, but it sounds like it’s being driven largely by new account growth. Can you just talk a little bit about is that new openings? Is that customers switching to PFG? Just trying to understand a little bit beneath the driver of that new account growth.
George Holm: Well, a good bit of it is new accounts that are opening. There were a lot of vacated — not anywhere near what people expected, but there were a lot of vacated buildings and they’re single purpose buildings, and it’s just taken a little longer for some of them where they’re remodeling and making changes to the box. And I think that’s caused some of the softness at the store level when you’ve got new places opening and people like to go to new places. And I think that’s probably just still — results of going through a pandemic. And then, I’d like to think that we’re always getting new customers that are just switching distribution. But I would say that in today’s world, a lot of it is new accounts, new openings.
Kelly Bania: Okay. That’s helpful. And then maybe just wanted to talk about Convenience a little bit. I think there were two comments in the release. One about a strong pipeline of new business. So I was wondering if you could just talk about what that looked like — what that looks like. Is there a big RFP kind of cycle coming up here, or just where you’re seeing opportunities in new business? And then there was also comment about leveraging the PFG platform and maybe just an update on the extent to which Convenience and Core-Mark are really leveraging PFG platform at this point, and how that could continue to evolve.
George Holm: Okay. We’ve been showing very good growth in our Convenience Foodservice business. And remember some of that’s being delivered at a performance foodservice warehouse. It’s not at out of a Core-Mark warehouse. So we have these, what we call turnkey programs. We have them in several type of cuisines, and some of that is stocked in a Core-Mark company based on the amount of available freezer and cooler that they have. In some instances in that market, it’s only at performance foodservice, in some instances it’s at both. And that’s the way we’re going to go to market, probably for the foreseeable future. We don’t see ourselves adding a lot of freezer and cooler space to those Core-Mark buildings. We’ve seen some slowness and inconvenience, and we think a lot of that has to do with fuel prices, just inflation in general, as customers are getting used to higher price points.
We have not seen coffee and breakfast come fully back from the pandemic at this point. And the — if you look at the Core-Mark business, it actually had a very good quarter. Not big case growth. We have a very large customer that’s gone through some changes and is experienced some pretty good declines. So that’s had an impact. But without those inventory gains, if we would’ve to take those and equalize them the two years, Core-Mark would’ve had a double-digit increase in EBITDA. They’re doing very well, and they’ve actually done the best job of our businesses as far as getting productivity in warehousing and transportation back to pre-COVID numbers. We have not been able to do that yet in our Foodservice business or our Vistar business.
Kelly Bania: Thank you.
George Holm: Yeah. Thanks Kelly.
Operator: And our next question comes from Brian Harbour with Morgan Stanley.
Brian Harbour: Yes. Thank you. Good morning, guys. Just to follow up on one of your earlier comments, George, I think in the Foodservice business you had a little bit shy of 7% growth in operating expenses. At this point, is that mostly driven by what you mentioned, which is just more salespeople? Or could you talk about some of the puts and takes in other buckets of operating expense?
George Holm: Yeah. I would say there’s three things there. The first would be the increased Salesforce. It’s unusual for us to be between 8% and 10% more salespeople. So that’s been an expense. Productivity, although improved. It’s not back to pre-COVID levels or I guess what we would call acceptable levels. And then the mix of business that’s different. National count comes with lower operating expenses, particularly on the sales side, but just lower operating expenses from bigger deliveries tend to have a little bit better density. And that mix is just more cost that it takes to handle an independent customer. But as far as our expense ratios in general go, we feel real good about it.
Brian Harbour: Okay. Thanks. And just also on the C-store side, in the past you’ve sometimes talked about kind of the growth in food in that channel versus the declines in tobacco, or are you willing to talk about what that was this quarter? And is this softness kind of primarily a function of fuel prices, like you mentioned, or do you think that there’s other specific areas of C-store products that people have pulled back on?
George Holm: Well, I think it is two things. Obviously the inflation and the cost of fuel have an impact. But I also think it’s that morning day part that has not really come back to pre-COVID levels. And – but we’ve made some changes to our business where we’re going to be better prepared for both coffee and breakfast. I just think that as we get deeper into this fiscal year, that those two areas will continue to improve. Tobacco, I mean, it’s been running — actually, I might turn it to Pat. I don’t pay that close attention to it, but I think it’s been running about 4% to 6% declines in cartons. Is that about right?
Patrick Hatcher: Yeah. That’s right around that area.
George Holm: Yeah.
Brian Harbour: Thank you.
Operator: And we have our next question from Alex Slagle with Jefferies.
Alexander Slagle: Thanks. Good morning. Just expanding on some of the previous questions and the case growth in Foodservice and Convenience and just trying to get an idea how — I mean, how this decline compares to the previous quarters and just how to think about this as we look ahead? I mean, I’m not sure if this trend has been steady here into the early 2Q. And then just any commentary on the new business pipeline in Convenience, just expected timing of when maybe these customers might come online?
George Holm: Yeah. We’ll see some business that will come online this fiscal year in Convenience. So far in this quarter, it really looks like last quarter in really each part of the business. I think I’ll turn that to Pat to comment on it as well, but that’s what it looks like to me at this point.
