Josh Long: Yeah. That’s helpful. And curious on the capacity investments you made. You called out the new distribution center in Virginia, and then also some investments that you’re making on the last mile delivery. Just curious if you could contextualize the capital allocation plan for systems investments going forward and kind of how to think about — how we could think about that from kind of a distribution center perspective, maybe on the Foodservice side or additional investments on that last mile delivery. It seems like maybe that’s a little bit easier to roll out across the system, but just curious if you could share some commentary there.
Patrick Hatcher: Yeah. Josh, on the Foodservice side, and again, we’ll just — we keep saying that our number one priority is to continue to build capacity into the system. And really the focus is on that Foodservice segment where we’re building the most capacity. And we are really excited about the project that we just launched in Virginia, right there in Richmond. It’s a very nice facility. It’s going to do extremely well. When they opened, they got right out of the gate and have performed very well. I think we’re going to see a lot more type of projects like that where they’re — they bring a lot more efficiency to the system. They’re the right size for really growing the business. And then on the last mile side, that’s — it’s a thing we’ve been doing for a while and we continue to invest behind it.
Obviously, we’re really going to be focusing on getting to one day distribution across the country. But we’ve made a lot of progress there, so we’ll continue to focus on that as well.
Josh Long: That’s helpful. Thank you. And then one follow up for me. As we think back to say 2Q of fiscal 2023 period, can you remind us how trends performed through the quarter? Just curious if we think about restaurants, there was perhaps easier comparison, there are quotes, comparisons from a comp perspective as we go through the prior year quarter. But just curious how that trend played out from a case growth perspective on your side.
Patrick Hatcher: So just to confirm is cutting out just a little bit. Are you asking about how the trends were in the prior quarter for Foodservice for case growth?
Josh Long: That’s right. Yeah. In the prior quarter of last year. So just trying to contextualize 2Q of 2023 as we start to lap that going forward.
George Holm: Are you talking about the quarter that we’re in now and last year?
Josh Long: That’s correct.
George Holm: When I look at our histories, it looks fairly consistent to me. Obviously, the holiday period other than the holiday weeks themselves are really strong. I — as I sit here today, I think that the quarter’s going to look a lot like the quarter we just left.
Josh Long: Understood. Thank you so much.
Operator: And we have our next question from William Reuter with Bank of America.
William Reuter: So the first is with regard to increased automation, you mentioned in Vistar, you were talking about that. How are you thinking about additional investments going forward in automation in your facilities? And I guess how does that compare your CapEx this year? How’s it going to compare to last year’s $270 million?
Patrick Hatcher: Yeah. We’re actually looking at automation, definitely Vistar, but we’re actually looking at automation across all three segments. There’s a lot of opportunities for us to look at ways to make the buildings more efficient. And that could just be automation, but also could be simply just technology. But we are looking at different multi shuttle, various other automations that we can put into our buildings that just make that picker’s job that much more efficient. When you talk Vistar, it’s a little different. They’re doing more automation for this the pick and pack facilities and we continue to expand those. And I’m sorry, I forgot the last part of your question.
William Reuter: It was, how does — how do you expect CapEx this year to be relative to last year’s $270 million?
Patrick Hatcher: Yeah. I mean, we don’t provide a number on that, but what I can tell you is, as we’ve said, that’s a number one priority for us to continue investing capacity. And we are looking at things like automation, so we’ll continue to spend appropriately behind it to make sure that we can accomplish those two goals.
William Reuter: I guess, on the automation piece, do you expect that there will be a time when you will have labor savings that you can essentially reduce the number of employees in the different facilities?
Patrick Hatcher: It’s not really automation for labor savings in the sense of less people. It’s definitely automation for labor savings in the sense of making our pickers much more efficient so we can just increase the throughput in the buildings. I would think about it more like that.
George Holm: And the capability to handle more SKUs…
Patrick Hatcher: Right.
George Holm: …is a big part of our automation.
William Reuter: Okay. That’s all for me. Thank you.
Operator: And we have our next question from Peter Saleh with BTIG.
Peter Saleh: Great. Thanks. Just a couple questions. First on the market share gains with the independents that you guys are seeing. Are there any specific categories or regions that you’re seeing some outsized share gains there?
George Holm: If you take — what we look at real close, of course, is our gains in independent foodservice business and the share gains. I mean, they’re not spread equally, but there’s not a huge difference from where our gains are the best to where our gains are the lowest. I guess if I had to pick a part of the country, I would say probably the northeast is where we’ve had some outsized share gain.
Peter Saleh: Got it. Great. And then just on the labor productivity, George, that you mentioned, not back to pre-pandemic levels or just not back to, I guess, acceptable levels, I think is what you had mentioned. What do you think it’s going to take to kind of drive that labor productivity higher? Is it just less turnover, more tenure, better training, and do you see benefits on that productivity in FY 2024 or is that more of a next year FY 2025 type of benefit?
George Holm: Well, our productivity and our accuracy has improved as our turnover has gone down. And as people have climbed kind of that learning curve, it’s a fairly easy job to learn, but it takes a while to get real good at it. And we’re still climbing that learning curve at in totality. We have companies that are doing much better than they did even in 2019, and we have companies that are struggling to get there, and it’s just a reflection of the labor market labor and the nature of the work.
