That’s my first point. The second point is, again, ROIC cuts both ways. In SYGMA, which is mostly the bigger customers, they were down on volume year-on-year. However, given the supply chain efficiencies and productivity that we’re driving and pruning the customer side of the house, we were able to double — more than double the business on profit, 140% increase there. So that gives you a little bit of color on how we think about productivity as well as some of the other side of ROIC.
Jake Bartlett: Great. And I just had a quick follow-up on the comments on the local business on the independent side. Kevin, you mentioned that the industry was robust. Are you seeing generally positive traffic in your — at your local customers? I’m wondering whether just local traffic has improved in this latest quarter versus the prior quarters?
Kevin Hourican: Yeah. Independent traffic, especially in December was robust. That’s my most concise way of describing it. Really healthy, strong. I’d tell you we’re strong across food away from home, but independents, in particular, very strong in December.
Jake Bartlett: Great. I appreciate it. Thank you.
Kevin Hourican: Thank you.
Kenny Cheung: Thank you.
Operator: The next question comes from Brian Harbour with Morgan Stanley.
Brian Harbour: Thanks. Yeah, good morning guys. You’ve discussed this, but maybe I’ll ask it in a slightly different way. On operating leverage, you expect it for the full year. Do you expect a little bit less in the second half, maybe as a consequence of ramping up hiring? Or are some of the cost out sort of an offset to that? How do you think about that in the second half versus the first half?
Kevin Hourican: Yeah. So you are correct in terms of the second half dynamic and let me explain what that means. So, in the first half of fiscal year 2023, if you recall, we had snapback and [indiscernible] time in the first half of last year. But also recall, throughout the back half of last year, fiscal year 2023, those costs subsided, it became zero towards the back half. Also supply chain, productivity, turnover, retention, labor standards, all of those things that we’re driving the value that we’re seeing today, that started really towards the back half of last year. So, said differently, Brian, we are lapping a more challenging comparison from a comp standpoint. With that said, we are also investing in our business and our stride is operating leverage here for the full year.
Brian Harbour: Okay. Thanks. That makes sense. Maybe just on international. I know that’s not as big for you, but it is pretty material, right? I think we’ve seen sort of some varying performance in international markets just restaurant companies have said. Could you comment on how you see that in the second half also kind of how you see the inflationary trend over the next couple of quarters in that business?
Kevin Hourican: Yes, this is Kevin. I’ll start, Brian. I appreciate the question on international. I’ll talk about just what we’re seeing in international, and Kenny can address the inflation part of the question at the end. Yes, the headline here is we’re very pleased with international performance. Rewind tape, I’ve been here four plus years now. COVID had a very negative impact on international. The shutdowns were earlier. They were deeper, they were longer. They were more punitive and it was a rough go, especially in Europe. We’re out of that now. We are clear of that, and we are very pleased with our performance. International is a tailwind for Sysco from a growth perspective and from a profitability improvement contribution perspective.
I’ll just call out three examples from a color commentary to give it some texture. Canada is doing incredibly well. Local performance in Canada, greater than 6% case growth. Local performance Canada, greater than 6% case growth, and that’s our largest international business. Why is that happening? We’re deploying the Sysco play in an even greater way, bringing advanced digital tools to the country, bringing the Recipe for Growth to the country and leveraging an extremely talented team north of the border. So, Canada is doing extremely well. Great Britain, our second largest international country. We’ve always had a very good robust and mature CMU business and we were underpenetrated in local. We are meaningfully focused on winning local from a leadership perspective in country, and we are revamping our supply chain and our systems capabilities in Great Britain to be able to better serve local customers in that country, and we’re moving them up the profitability curve as a result of increasing penetration with local.
And last but not least, let me talk about France. France has been a problem child for my tenure at Sysco, mostly self-inflicted. I have been very transparent about that over time. And we have turned the corner in France, upward, onward, and better. We’re off to a really good start in the first half of the year in France. We have a strong leadership team in place in France, and they’re really beginning to — like I’ve said a second ago, run the Sysco play. We’ve deployed strategic sourcing, AKA PJM, which is our strategic sourcing capability. We’re working on introducing Sysco brand product in France, and we’re working to increase the product range available and each of those things is working and France is contributing positively this year to our P&L in a way that is beneficial to the overall company.
So, those are just some color commentary points and I toss to Kenny for any comments on inflation.
Kenny Cheung: Yes. Brian. So if you think about the — earlier in the year, the inflation for international was roughly over 10% and this very quarter that we just had was roughly 6.5%. So we are seeing inflation subsiding a bit throughout the quarter. With that said though, we are excited given the one global operating model that we’re operating in right now, and that is driving dividends. It extends our size, extends our scale, leverage capabilities, tools and best practices. So as Kevin talked about, a lot of that playbook under the one umbrella of global operating model is really creating dividend. So yes, while inflation is pressured, we are seeing the ops us through future sourcing local case growth, technology play, overall, one global operating model. So yes, we are still very optimistic and bullish about the international market as a growth engine for us. As you can see in Q2, we were up 10% on topline and 30% on operating income.
Operator: This does conclude today’s question-and-answer session and today’s program. Thank you for your participation. You may disconnect at any time.
