Kevin Hourican: Kelly, thank you for the question. You’re correct on the total headcount for our sales force as of today. We did not on today’s call communicate the quantity of headcount adds. It’s a meaningful increase. It’s in our budget for this year. It’s in our guide for the year. It ramps up over time. They all don’t start on one day. So think of it as a drumbeat that just gets louder each week. We’re having success in filling the job. So it’s not something we’re struggling to do. And the reason I said sales professionals instead of just sales consultants is it’s not just sales consultant generalists. We’re adding more protein specialists. We’re adding more produce specialists. We’re adding more Italian specialists. And of course, we’re adding sales consultants as well across the board.
It will have an impact, a very positive impact. What I said in my prepared remarks is think about that more as a 2025 impact, because it takes time for associates to learn the industry, learn the company, learn our tools and systems, learn the selling process. We give them a small territory to start. And then they ramp up that territory size over time. The main benefit, though, is actually the other individual. We’re able to free up more capacity in time for an existing strong performer to have fewer accounts to focus on. And then they can actually grow their business as well by spending more time with our best customers. So we’re bullish on it for the long term. It’s something we will do on an ongoing basis going forward. But it will be a step change upward in the forward facing periods versus the past couple of years.
Kelly Bania: Okay, that’s helpful. Can I just ask about the improving profit profiles for the national accounts and maybe just some color from your perspective on the driving force for that? I’m just curious, how much of that is a Sysco dynamic versus an industry dynamic in terms of competition for the national accounts, if that’s changing or the way that the contracts are being structured in a way that allow you to pass on costs over time? Or maybe just help us understand why that is happening and the magnitude of the profitability for the national contracts versus their historical profitability levels?
Kevin Hourican: Kelly, excellent question. Thank you. I want to be really clear that we’re winning meaningfully in national. These are competitive bid, RFPs, multiyear contracts. We’re not seeing any reduction in the number of people participating in those competitive bids. We’re winning at an increased rate. And we’re not winning at an increased rate, because we’re buying that business. As you just said, the profit profile of that business is actually up versus historical norms. Why are we winning? We’re winning for the following reasons. We have improved our technological integration skills for large national customers. We can more deeply embed our capabilities in tech with that large customers’ text to make it easier for them to do business for Sysco.
What does that mean? New item setup, substitution management, new door openings, new customer onboarding. We have improved greatly our ability to make it easier for that customer to do what they do, which is focus on running their restaurants, take the worry of supply chain off their table. We’ve gotten much better at that. The second is we’ve increased the accountability and capability of our national sales teams. They have the right to make decisions. They are empowered to do so. They are more dedicated to our large national customers. And we funded that internally by taking out cost elsewhere. So our largest customers have more dedicated account and service and they have account reps that are more accountable and can make decisions in order to serve them.
That’s topic two. Topic three, because we’re a global company, we’re a one-stop shop for a large national customer to be able to support their door expansion both domestically and internationally. And that’s now better understood by large customers that you would obviously know who they are. We’re an attractive player and partner of theirs to make it easier for them to grow both domestically and internationally. I want to be really clear, though, that this is not just about restaurants. This is about healthcare. This is about hospitality. This is about education. We have dedicated specific SMEs, subject matter experts, now into each one of those categories. And while that might not be rocket science, that’s reasonably new at Sysco. We’ve increased the skill set and capabilities within each of those dedicated lanes that I just mentioned.
If you’re going to sell to a healthcare account, you need to be an expert in the nutritional guidance from the government to help that end customer receive the reimbursement from the government that they deserve. You need nurse practitioners that are dietary nutritionists and we are increasing the quantity of people that have those skills. And we’re having increased success on new customer acquisition as a result of that. And again, we funded those headcount to internal costs to take out elsewhere. In aggregate, it’s working, it’s winning and we’re really pleased with the performance of our national sales team. Kenny, any additional comment?
Kenny Cheung: Yes. So in general, Kelly, when we think about capital allocation, when growth opportunities avail themselves, which exceeds our hurdle rate, we deploy capital to enhance shareholder values through these opportunities. This is CapEx. This is M&A. And this is, as Kevin mentioned, national sales. Each sales contract goes through a very rigorous process. We make sure that the margins is there and it passes the eye of the IRR and the hurdle rates. We will not grow for the sake of growing. This is all about profitable growth in our portfolio. ROIC cuts both ways. I’ll explain the first way. If you look at my prepared remarks, SYGMA was actually down on the volume and because of productivity, because of discipline, we were actually — it enabled us to double the profit for the portfolio in our business. Again, there is a lot of rigor in the approval process to one of your points in your questions.
Kelly Bania: Thank you.
Kevin Hourican: Thanks, Kelly.
Operator: Thank you. We’ll take our next question from John Heinbockel with Guggenheim Securities. Your line is now open.
John Heinbockel: Kevin, I wanted to start with how do you think the expansion in the sales consultants triangulates with Sysco Your Way? And in particular, is there an opportunity to do maybe many Sysco Your Ways in less dense markets with the expansion of the sales force?
Kevin Hourican: Yes, it’s a good question, John. And I would say it this way. We’re being very strategic about where the headcount adds are happening. It’s not peanut butter spread across the country. It’s high dense trade areas, high growth trade areas, and where things like Sysco Your Way are happening. And that is where the headcount growth will happen. We’re in select geographies with high customer density, with high growth are areas where we will over invest in the new headcount additions, and we expect high yield from that. As it relates to Sysco Your Way, we have a real opportunity to continue to optimize our performance within those neighborhoods. We’re now live in more than 450 neighborhoods worldwide. And we have a big opportunity to increase the number of doors we serve within those neighborhoods.
There’s still tremendous growth potential in those neighborhoods where we don’t serve every customer yet. And then for the customers that we are currently serving, we don’t have produce and protein and Italian on every one of those customers’ truck deliveries, and why wouldn’t they order produce and protein from Sysco when we’re coming literally every day and we have a sales rep. So we are having so much success and this perhaps is where you may have been going with your question in select Sysco Your Way neighborhoods. We’re actually having to split them apart and create two neighborhoods within a geography. In some, we’ve actually had to split into three neighborhoods. And yes, there is headcount dedication that will occur in that regard. And some of the new headcount that we’re hiring this year will in fact be deployed to those neighborhoods.
John Heinbockel: Great. And then one last thing. Can you remind us, you think about the national business, right, so your share of wallet is very high, correct. Maybe speak to is there any opportunity there? And then secondly, I think your share of the national business, right, your overall shares 17%, I think your national share is higher than that. When you think about the upside, right, to national share, where can that go?
