George Holm: Yes. Well, it’s very different competitors that we’ve been able to get that business from because we have different competitor sets and the different businesses that we’re in. I would say that there’s no change in our strategy whatsoever. I think we’re comfortable in that mid-single digit to higher as far as independent case growth goes. It’s nicely a little bit of inflation to go along with it. And I think we’ll always be opportunistic in the national account area. There’s somebody that we’re the right geographic fit for, and we feel that it’s a good culture fit, and we can be profitable with it. We’re always going to be looking for that type of business.
Jeffrey Bernstein: Understood. And then just on the mention of M&A and shareholder value creation, how are discussions with targets going? I’m wondering whether the slowing macro that you might be embarking on now for the industry, not necessarily for yourself, but for the industry, whether that helps or hurts in those discussions. Obviously, you have a big opportunity on the West Coast. Just wondering how that plays out in this type of environment versus others.
George Holm: Yes. We’re always very active from an M&A standpoint. We’re always talking to several people. We try to make sure that we’re talking to the people that are a really good fit and that we’re not just spending time on something that isn’t going to materialize. But it is a very important part of what we have gone on for our next fiscal year. And I think probably a big part of the next 3-year numbers that we put out when we get through this 3-year period we projected from our Investor Day. As far as the marketplace and how that affects it, I don’t know that it really affects it that much. I mean the value is either there or it isn’t. I think most of the M&A that we’ve been able to get done is more about it just being the right time for the person that’s selling.
Jeffrey Bernstein: Understood. Just to clarify, so when you guys report your fiscal fourth quarter, is it likely that you will then give a 3-year forward outlook? So fiscal ’25 would be the first year. And I think George, your comment was that M&A would play a bigger part over the next few years than perhaps it has over the past few.
George Holm: Yes. We plan to have an Investor Day that would be 3 years after the last Investor Day and give 3-year numbers at that point. So what we’ll be giving come August will be what we project versus our 3-year projection that we gave before. We’ll tighten that number and then what our guidance would be for fiscal 2025.
Operator: We’ll take our next question from John Heinbockel with Guggenheim.
John Heinbockel: George, I wanted to drill down on the sales force expansion, right? So maybe talk to that maturation. I don’t know how many of those are coming off noncompetes, maybe you have a thought on that. And then is there a rule of thumb, right, when you think about the accounts that they used to call on, can they successfully move over a quarter, a third, 50%, I’m not sure what the number is of the accounts they used to call on. So your visibility into that? And then I guess the last piece of that is, I guess, it sounds like you think because of the sheer size of the sales force that you’ve onboarded that 6% to 7% independent case growth is even in this environment is very achievable.
George Holm: Yes. Well, we have several that are — and it’s geographically widespread that are coming off noncompetes. But I’d tell you, we have every possibility that could happen with that. We have people that come to us and we put them in a different area because they’ll compete. And when the year ends, they don’t want to go back to where they were before because they’re doing so well. We have people that don’t do very well during that year, and we put them back into an area that they know and they do really well. And we have people that don’t do well that year. We put them back where they were, and they don’t do well there. So it really hits all over the board. We like to have kind of a good cadence of bringing people in so that we can train properly.
And we brought a lot more in over a period of time as we were trying to catch up from pandemic times where we weren’t hiring very many. And I would say that it was a success for us. I would say that we hired more people, so we had more people that didn’t make it, but it didn’t affect our turnover numbers. They’ve been very consistent for the last several years. So I think going into this Q4 with 5.5% more people will be good for us. I would hope that we get back up closer to that 6% or 7% number as we get into next fiscal year.
John Heinbockel: Okay. Maybe switching gears, right? So if you look at the onboarding of new business, right, you said all 3 segments are benefiting. How do you size the 3 versus each other? I know C stores can be more lumpy, is that the biggest of the 3? And then how would you assess the 3- to 5-year RFP outlook for C stores, right? Because I would think you should win a disproportionate amount of those that come up, right, given the Foodservice expertise.
George Holm: We better. Yes. I would say Convenience is the bigger one for what we have coming in from a top line standpoint. But I would actually say that the Foodservice is bigger when you look at the amount of gross profit dollars it generates because it doesn’t have that tobacco components. And I’ll give you this number, the business that we brought in this month from a Foodservice standpoint. We’ll add between 1.2% and 1.3% to our total Foodservice growth, that gives you a good feel.
John Heinbockel: That’s just this month.
George Holm: That’s what we brought on this month, yes.
Operator: We’ll take our next question from Andrew Wolf from CL King.
Andrew Wolf: Just wanted to revisit there were some questions around the competitive environment in the industry and Foodservice. I want to kind of parse versus for getting new customers. First of all, in the chain side, in the last, maybe even 5 years, pricing and service, that kind of balance has gotten more rational. Has there been any change there looking for any changes in the competitive environment? Do you think that rationality is still in place, not just with you, I’m sure you are, but just in general in the market?
George Holm: I think it’s rational, yes.
Andrew Wolf: And second, for independents, sometimes when things slow, the distributors start to increase the amount of incentive for switching and switching to lower the switching costs for the independents. How is that trending in year-over-year?
George Holm: I would say it’s trending higher. It’s still not a significant part of the business, though.
Andrew Wolf: Got it. And if I could put a third one, it’s not, it’s more internal in the industry. How are you seeing your competitors trying to hire away your salespeople? I mean, you said your turnover rates are stable. But just in terms of more activity, more conversations to make sure you keep your people and so.
George Holm: Our — we follow our turnover very closely. We follow what they do when they leave us and very, very few go to a competitor. Most either lead the industry or they may go into the manufacturing part of it or it may be a retirement. We look at our turnover, how it impacts the customer. So if somebody retires or is promoted, we do consider that to be turnover.
Operator: We’ll go next to Brian Harbour with Morgan Stanley.
Brian Harbour: Yes. We’ve talked about this a bit, but maybe I’ll kind of ask them more directly. In looking at kind of sales in the third and fourth quarter versus your expectation. I mean it seems like Vistar is the one that’s seen probably more of a downshift and maybe that’s still true in the fourth quarter relative to where you were. Is that kind of a fair characterization? And maybe you’ve seen the Foodservice side rebounding a little bit faster?
George Holm: What you said is very accurate.
Brian Harbour: And also, this is a little more in the weeds, but just at the segment EBITDA level, you had some favorability in sort of the corporate side relative to last year. I know there was a little bit of M&A in that segment. I don’t know if there was any sort of changes in the corporate cost base, but could you just elaborate on that a bit?
Patrick Hatcher: Yes. This is Patrick, Brian. Yes. So one, obviously, the 3 major segments, and as you pointed out, the EBITDA growth wasn’t there. And again, that has a lot to do with January and the softness on the top line that we’ve already discussed with Vistar, but when it comes specifically the corporate — all other segment, as you pointed out, there have been some acquisitions there. These are really small companies that bring some capability to the company. And in some cases, they’re relatively new. So we haven’t comped over their EBITDA. And then in addition to that, there has been some cost savings in the corporate, all other line as well. So that — it’s a combination of some of those smaller companies, some of the acquisitions and then all of those savings.
George Holm: Some of that would be late-coming synergies that existed with Core-Mark and with Reinhart. We’ve been very slow around consolidating some of those functions.
Operator: [Operator Instructions]. We will take our final question from Peter Saleh with BTIG.
Peter Saleh: Great. And I appreciate all the color today. I did want to come back to the conversation around the overall environment, particularly in Foodservice. I think you mentioned QSR was definitely softer and casual dining very soft. So just in your opinion, ex weather and calendar shifts, is the environment really that much softer than it was in the prior quarter? Do you feel like this is really confined to that lower-income consumer? Or are you seeing any evidence that this is kind of migrating up the income stream to — in terms of the softness?
George Holm: Well, it’s definitely softer than the prior quarter, particularly towards the end of that prior quarter. We saw some really, really good activity late in November and the month of December, which was ironic because our best time, and this was not just independent, but it was changed as well. It was just before the worst of times in early January. I think it’s rebounded from there, but I would still say that the market is somewhat soft. I think it does lean more towards the lower end. We certainly see that in QSR. We have a couple QSR that play in the very high end of the QSR area, and they’re doing quite well. It’s — casual dining suffered for years, and it continues — I mean, this has been doing really well, but for the most part, a tough area.
Peter Saleh: Understood. And then just on the Foodservice inflation, I think that you’re expecting some acceleration in that inflation in fourth quarter. Can you just help us what’s driving that? Is that primarily cheese? I see cheese is kind of moved higher here in the month — in April into May. Is that what’s driving there? Or is there something else driving that inflation going forward?
George Holm: Yes. We really over-index when it comes to cheese. So that would be the biggest part of it.
Operator: And there are no further questions at this time. I will turn the call back over to Bill Marshall for any closing remarks.
Bill Marshall: Thank you for joining our call today. If you have any follow-up questions, please contact us in Investor Relations.
Operator: Thank you. And this does conclude today’s program. Thank you for your participation. You may disconnect at any time.
