Edward Kelly: Maybe just a quick follow-up. I wanted to ask you about M&A real quick. It looks like you had about a 2.8% benefit in the quarter from M&A IWC comes in, in Q2. So I guess that’s going to ramp. But the guidance, I think, includes a 2% benefit from M&A. So maybe could you just talk about how that layering in. And then from a pipeline standpoint, like how are you — you’ve done a few deals. So how are you thinking about the outlook from here? I did note that — it looks like M&A is kind of below share recall on the priority list on that slide, I think.
Dirk Locascio: Sure. Well, why don’t I start with just the overall M&A and — so yes, IWC will come in until we’ll have a couple of months of overlap, but Renzi will roll off later in the second quarter. So it really will be one-on, one-off over the period and then salad us through most of the rest of the year. So I think overall, we expect it to be pretty similar. And I think as Dave talked about with our organic case growth, we get past some of the January challenges and some of the things that we talked about in our pipeline, and that’s why we feel so good about our — reiterating our guidance on volume outlook.
Dave Flitman: Yes. Ed, on the pipeline, it remains strong. We’ll give a little bit more color on that at Investor Day here coming up on June 5. But I will just reinforce a couple of points that I’ve always said around M&A. First of all, I think it can be an accretive add to the business for the right deals with the right management teams at the right time, but we don’t need to do any of them. And so we’re not going to force anything, and we’re not going to overpay and we haven’t in the three deals that we’ve done. And to your point around share repurchases, look, we’ve done three deals here in less than 12 months. We’ve got some integration work ahead of us. You’ll likely see us take a breath around M&A here for a little bit and lean in harder to share repurchases as the year progresses as we said in the script.
Edward Kelly: Great, thank you.
Dave Flitman: Thank you.
Operator: Your next question comes from the line of Jake Bartlett with Truist Securities. Please go ahead.
Jake Bartlett: Great, thanks for taking the question. My first is on the channels and the organic growth within them. So you’ve given overall case growth in independent organic. But how do the acquisitions impact health care, hospitality and chain? And then building on that case growth accelerated pretty meaningfully. If it’s not acquisitions, what is driving that that pretty strong acceleration? Then I have a follow-up.
Dirk Locascio: So health care and hospitality, the acquisitions had very little impact to either of those from a growth rate perspective. Change did have a much more significant impact, and that’s primarily, as you may remember from our discussions before around Salinas, which have had a stronger chain base of the business. So we talked about 3.7% overall chain growth, but organic was down around 4%. So very similar to what Black Box indicator for the first quarter. So really not too different from a trend there.
Jake Bartlett: Okay. So you said organic was down 4%, just maybe repeat that.
Dirk Locascio: Change down 4%, which was pretty much right in line with the [indiscernible] data what for the quarter.
Jake Bartlett: Got it. Great. And then my other question was just about the size of your sales force. And I believe you’re growing your sales force slower than your two largest peers. And so — just wondering what your thoughts are on how that might impact your share gains going forward? How much of the share gains do you think has been in driven by investments in your sales force? And could that become a headwind as your larger competitors, I believe, are adding to their sales force quicker?
Dirk Locascio: So first of all, I’ll take the second part of your question. No, I don’t think it will be a headwind at all, Jay. We reiterated last call and I’ll say it again, we believe low to mid-single-digit addition to our sales force on an ongoing basis is the right number. We’ve got that built into our algorithm and the productivity around that and the time it takes new hires to ramp. I think I’d point to a couple of things maybe relative to others. First of all, our digital platform and the efficiency gains that, that enables for our sales force and the focus it allows them to have on the customer in selling our great products and penetrating that business and, importantly, helping our customers solve problems. So I would point to MOXe in the advent of that as a real productivity help for our sales force.
And the other one is our team-based selling, which we’ve been at longer than others. And for a very long time, that’s a parcel to how we go to market, and that also affords our territory managers and efficiency gains because of the help and support that they get from the specialists and the restaurant operation consultants, on a day-to-day basis in front of the customer. So we feel really good about it. I don’t think there will be any headwind at all in our ability to drive growth based on our algorithm.
Jake Bartlett: Great, thank you so much.
Dirk Locascio: Thank you.
Operator: Your next question comes from the line of Kelly Bania with BMO Capital Markets. Please go ahead.
Kelly Bania: Hi, good morning. And thanks for taking our questions. And congrats on a good quarter here. Just wanted to ask, you gave some of the figures here on the Pronto initiatives that were interesting. With the numbers that you disclosed here, I’m assuming this is really impacting independents. Is that initiative kind of driving a low to mid-single-digit lift for independents, correct my math if I’m wrong there. But can you just talk a little bit more about how that’s working, if that’s new accounts increased wallet share and how that impacts the P&L?
Dirk Locascio: Yes. So first of all, we’ve been ramping up front over the last 18 to 24 months. And so we’ve progressively gotten increased benefit and felt like it was time to disclose the importance of that business to our total, and that’s while we quantified the $600 million we anticipate this year. But I tried to make that distinction, and let me be clear, up until now, Kelly. Cronto was only focused on attracting new customers. We had not deployed that to our existing customer base until we were confident in the model, and we knew that we had all the bugs worked out of that model. And so now when we go to Pronto penetration, we are offering that to existing customers on their nonstandard routed days. We think that will enable us to continue to penetrate those accounts give our customers less reason to go to specialty and other suppliers to get their needs met.
So we’re excited about not only the ability to continue to attract new customers through onto but now importantly, penetrating our existing customers further. So more to come on that, but we’re really excited about the model and what’s meant so far and where we can take it.
Kelly Bania: Great. Can I just add one more just on the hospitality, if I missed it, I apologize, but can you just help us understand the magnitude of what you expect in terms of new wins coming on over the course of the year? And also just maybe incorporate what the competition looks like for those contracts, the profitability level of those contracts.
Dave Flitman: Good morning, Kelly. So overall, we expect hospitality to meaningfully accelerate sort of some in Q2 and then more in the back half of the year. and that a lot of the — that comes from really visibility to customers that have started to onboard already here in the second quarter and more that we know we’re coming. And so those numbers will show up as we go over time. And it’s the reason we keep talking a lot about independents are core key customers, highly profitable, but also health care, hospitality and other is those are all valuable customers that are attractive, profitable. Our differentiation shows up. And so really, our growth in those three target types and then opportunistically in other customer types are key to growth, and we’re going to continue to be thoughtful. And like I said, that resulted in stronger than the market’s Q1 overall growth rates and some stronger than overall from a target customer-type perspective.
Kelly Bania: Thank you.
Operator: Your next question comes from the line of Jeffrey Bernstein with Barclays. Please go ahead.
Jeffrey Bernstein: Great, thank you very much. My first question, Dave, just on the broader restaurant industry. we’ve talked about how the macro is a little softer than expected at the start of the year. It seems like it’s changed more than independents. But you get a chance to look at all segments. I’m just wondering big picture, to what do you attribute the slowdown? There’s been lots of talk about outsized restaurant industry menu pricing may be hurting and the lower consumer may be feeling incremental pressure just based on your 30,000-foot view, what would you attribute the slowdown? And then I had one follow-up.
Dirk Locascio: Yes. This is why I’m not an economist, Jeff, but I don’t you get perspective, for sure. I think it’s more around the challenges that the consumer has given what’s happened around inflation over the past few years, and they’re thoughtful about how they spend their disposable income. And so I think that’s really driving a lot of the foot traffic challenges we’ve seen. Certainly, our customers have experienced inflation over the same period of time, and those challenges persist. I really think if root of it is a consumer issue. I do think — and I believe this long-term trend will continue. I think independents will win over chains. And I think the foot traffic is certainly reflecting that not that independents don’t have challenges, just the same, they do, but I just think their model is more in line with the big culinary desires and the experiential bank that the consumer is looking for.
So we’re bullish on independents over the long term and whatever short-term bumps in the road there may be, we think they’re going to win.
Jeffrey Bernstein: Understood. And then just my follow-up is on the broader industry. Just the number of doors in America. I feel like through the pandemic, many people talked about losing roughly 10% of the restaurants or at least having them close. I’m just wondering where do you think we stand today relative to that peak pre-COVID? Do you buy into that 10% reduction? And where do you think we are now relative to that? Thank you.
Dave Flitman: Yes. I think that numbers is in line, maybe plus or minus, but there’s been a strong rebound, obviously, from the pandemic and the has there of. But I do still think there’s — while it’s increased quite a bit, I still think the comp total was still down versus prepandemic levels, which obviously keeps things very competitive in the industry and customers increasingly challenged to attract folks into the restaurants, but probably still down a little bit from pre-pandemic levels.
Jeffrey Bernstein: Thank you.
Dave Flitman: Thank you.
Operator: Your next question comes from the line of Mark Carden with UBS. Please go ahead.
Mark Carden: Good morning. Thanks so much for taking the questions. To start, I wanted to touch on CHEF STORE. How is this business performing in the current macro backdrop? Have you guys seen demand pick up much, just given some of the pressure on the lower end?
Dirk Locascio: So we have seen CHEF STORE return to case growth, which has been encouraging. As you remember, we talked about with some of the ERP and related challenges from last year. I would say, so overall, the fact that if the business is back growing, we are encouraged by that. And our focus is to continue to work through and accelerate that growth over time. And we’re continuing to add stores with five stores planned for this year, and it does play a niche in the overall market for — especially that customer base that you’re talking about as well as fillings.
Mark Carden: Great. That’s helpful. And then just on the labor background. Are you guys seeing any impact on California, just given the shift to the $20 minimum wage for QSR workers? And really any related wage pressure that might have caused in the state.
Dirk Locascio: No, not really. Most of our associates are paid well above that. So a pretty limited impact from our perspective. I’d say from an overall customer volume, it’s pretty early to tell and really talk much about what that may do to overall demand more broadly.
Mark Carden: Okay, great. Thanks so much. Good luck.
Dirk Locascio: Thanks, Mark.
Operator: Your next question comes from the line of Peter Saleh with BTIG. Your line is open.
Peter Saleh: Great, thanks. And congrats on a good quarter. I did want to ask about the increase in the private label penetration. Can you just talk a little bit about what drove that this quarter? And how much of that you think is attributable to the change in the sales force compensation that you indicated, I guess, earlier this year?
Dirk Locascio: Yes. I think, Peter, it’s a combination of factors. The compensation being one that I think will be a meaningful one for us going forward. So I’m very excited to see that increase. But as we said, coming out of the pandemic, the manufacturers were challenged to supply those products for us. And it’s just really been over the last couple of quarters that we’ve gotten the confidence of the sales force back to go lean into those products more aggressively than they have over the past few years. And we had a good performance in the fourth quarter. Excited to see us our penetration up over 52% in the first quarter. And as I’ve said before, I don’t really see any near-term ceiling for that, and I feel like the momentum will continue to build on our explicit brands.
Peter Saleh: And then just on the on MOXe, you indicated that your customers are buying, I believe, 10% more. But I suspect you have some customers that have been on the platform longer than others. What’s the — is the behavior of customers that have been on it longer? Are they buying more? Or is that 10% kind of a good figure to use going forward?
Dirk Locascio: Yes. I think that’s roughly a good figure to use going forward. And our goal is to get our customers — the new customer onto that platform immediately, if not sooner, once we get into the account because of all the things that we’ve talked about here in terms of benefits both for the customer and for the productivity of our sales force. And so that’s why we disclosed that figure. I think that’s a solid one to think about going forward.
Peter Saleh: Thank you very much.
Dirk Locascio: Thanks, Peter.
Operator: And your next question comes from Andrew Wolf with CL King. Your line is open.
Andrew Wolf: Thanks. Good morning. Just wanted to start with a point of clarification. Dave, I think you said — or maybe it was Dirk, that cases were flat in January. Just wanted to make sure was that with reference to independent organic cases or total cases? Just what is the reference point when we think about to compare the flat January to…
