Performance Food Group Company (NYSE:PFGC) Q2 2023 Earnings Call Transcript

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Peter Saleh: I want to come back to the conversation on the Foodservice and the restaurant space. George, you mentioned that pizza has slowed in the past year, yet fine dining is still doing pretty well. Do you feel like this is the lower-income consumer kind of pulling back? Just any — there’s been a lot of conversation and concern around that in the industry. Just wondering your thoughts on the consumer in that environment.

George Holm: That’s a hard one. QSR appears to be doing quite well. We do very little of it but it appears to be doing quite well. I think with pizza, I think that as there’s been more options for the consumer. They’ve consumed less pizza. I think there was — or the term pizza fatigue but there was — they did so well through the COVID period of time. So I probably don’t have a real good answer for you on that. I guess, the way to put it is lower end consumer, we do a lot of value store business out of Vistar and that business is doing well and we’d probably be doing a lot better, if there was more product availability. So that is a sign that people are kind of going down the chain a little bit. So I would guess, I would call it mixed.

Peter Saleh: Appreciate that. And just a housekeeping question here. I think you mentioned Foodservice inflation was about 9.6%. And — can you give us that number, what it was last year at this time and maybe on a 3-year basis, that would be helpful.

George Holm: Yes. We don’t have that number. We can get it and have Bill get that to you. But I would want to comment that, that was what we did last quarter and that we have seen a pretty significant deceleration in the last 5 weeks since the end of that quarter in food service.

Operator: We’ll take our next question from Fred Wightman with Wolfe Research.

Fred Wightman: I just wanted to come back to some of the cost benefits that you guys highlighted from the lower temporary workers. And over time, if we go back and look at some of the prior disclosures that you’ve provided about some of those onetime costs. Were those numbers only the temporary labor force or was that the combination of the temp labor force and the higher over time?

Patrick Hatcher: Yes. Thanks, Fred. This is Patrick. Those comments, those prior comments are really around the temp labor force and we were just highlighting because they’re unusual.

Fred Wightman: Okay. And then as we just think about the sequencing of those potential benefits going forward. If we look in 4Q of last year, you guys have started highlighting year-over-year benefits from lower temp workers. So how does that sort of piece together with the ability for some of these lower costs to offset some of those inventory gains or the headwinds from lower inventory gains that you’re facing here for the rest of the year?

Patrick Hatcher: Yes. I think the best way to think about it is, I think we have said that a lot of that temp labor has come out of the system. What we’re focusing mostly now on is the overtime, that we still have in the system which is, again, just a function of us being able to hire enough workers and retain those workers. The productivity improvement that we’re still really looking to see the biggest benefit from is the efficiency that you gain once you had an employee in their role for a little bit of time and they really start to generate some good efficiencies in that role. So that’s the next step and that’s what we’re looking towards.

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