Performance Food Group Co (PFGC) September 10, 2026 Conference Transcript

Good morning, everyone. Thank you for joining us. I hope everyone had a chance to grab breakfast in the room, and hello to everyone out in the webcast. My name is Jeff Bernstein, and I'm the Restaurant and Food Service Distribution Analyst here at Barclays. To be clear, I do have plans to retire at the end of actually this month, after 25-plus years in the role, So I'm officially the outgoing analyst, with the next analyst to be named hopefully shortly. But I did want to welcome all to Day 3 of the 19th Annual Global Consumer Conference. We have had 14 restaurant and food service distribution companies here with us between Tuesday, Wednesday, Thursday. We had BJ's Cheesecake and Kira on Tuesday, Bloom and Dine, First Watch, Restaurant Brands, Wendy's, U.S. Foods, Yum! and Wingstop yesterday. And we are excited to have one company today, which is Performance Food Group. So we hope you have found the conference a good use of time. And at this point, I would love to introduce our final presenting company for the day, at least for me, which is Performance Food Group. So with us this morning from Richmond, Virginia, we have Scott McPherson to my immediate right. He's the CEO. And Patrick Hatcher to his right, who is the CFO. By way of background, for those not familiar, bless you, Performance Food Group is one of the largest food service distributors in North America. They have 150-plus locations. They deliver food and related products to 350,000 or more locations, including independent and chain restaurants, business and industry locations, vending and office coffee service distributors, retailers, convenience stores, and service distribution. So we want to thank Performance Food Group for joining us this morning. I've got a slew of questions on the broader consumer and industry and then lots of specifics on Performance Food Group. So with that said, again, we want to thank Performance Food Group, specifically Scott and Patrick and Bill in the front row. And with that said, we will kick it off. So thank you again.

Very good. Thank you.

So we wanted to start with just a few higher level questions about the consumer since you see presumably a lot of them across the country. If you could start by just providing your thoughts on the state of the food away from home operating environment more broadly.

Yeah, certainly you mentioned the consumer. The consumer's been, I'd say, on a little bit of a roller coaster over the last handful of years when you think about tariffs and inflation and fuel price, but for us, I think the consumer has been very resilient. We have a great vantage point on that. We obviously look at black box when we think about the consumer, and that traffic has been pressured fairly consistently. We look at Cercana data, which is all transaction data, which gives us really good insight, and then obviously we have a great handle on the independent consumer as well. For us, we really focus on the controllables. And, you know, for us, it's been growing share and, you know, really excited to be in all three of our segments, growing share as we actually did this year and have really good momentum. And, you know, as far as the broader food away from home space, you know, I think it's been a bit of an evolution. I mean, food away from home has been growing for a couple of decades. Certainly coming out of COVID, there was some interesting trends. I mean, you saw coming out of COVID, food inflation went kind of crazy. And so, you know, we saw menu prices kind of hold. And so, you know, coming out of COVID, the consumer was flooding to restaurants. And, you know, over time, those menu prices crept up and food away from home got a little pricey. And now I think we've kind of reached that equilibrium. And, you know, I think that's really good for us. And, you know, we're looking forward to the future.

And being that we're at a Staples conference, well, Staples and discretionary now, we're proud to have merged. But there are a lot of Staples peers right on the other side of this wall who would say that food at home is primed to be taking share. We have had a thesis for decades that Food Away From Home, like you said, continues to take share. So I'm just wondering, do you feel like the more recent restaurant industries return to a little bit more aggressive value will allow the food away from home segment to retain the upper hand? How do you believe the restaurant industry is positioned as they do battle food at home?

Sure. Well, I think you hit the key word. I think it's value. I think when you have a pressured consumer, they're looking for value options. And I think about the food away from home space. I think about the independent restaurant, which from our perspective has been outperforming for some time. And I think the reason they've been able to accomplish that is really their flexibility. I mean, they can shift on a dime, whether it be shifting their menu, shifting the menu pricing and the offer that they have. So they can create value. They really understand their customer well. And I think that's how they've been very successful. We see it in the convenience store space as well, where we see shifts in how people are pricing in store and and the food offer that we see in convenience and that we bring to convenience that we think brings great value to the consumer. So, you know, I feel really good about the food away from home space being able to fight for that consumer share wallet.

Right, and as you sit through investor meetings, and you will do lots of those today, but in recent months, what questions do you get from investors that, well, either surprise you that you're getting the question or surprise you that you're not getting the question that perhaps they should be asking?

Patrick, do you want to?

Jeff, why don't you jump in? First of all, I just want to say congratulations on your retirement. It's been a pleasure to work with you. Thank you very much. But just, I think one of the questions we get a lot of times that we, you know, is how we get compared. And, you know, people think of us just as a large food service distributor. But in reality, and we talked a little bit about this at Investor Day, we actually have three distinctive segments. Food service, obviously, by far our largest and most important in the company, but we also have a very large segment in convenience. And in your intro, you talked about how we could cover convenience stores. And then specialty covers a broad array of channels, including theater. And we think it's such a powerful diversification and gives us such a broad footprint in terms of food away from home. Almost, you know, you said it's a Staples conference, but in a sense, you know, we're talking about food away from home. And since we are a staple, or we're similar to one, in that everyone has to eat, right? And, you know, we cover such a broad food away from home category. And then also, our customers are public and private restaurants, public and private convenience stores. So we just think it's a really good diversification story. Very durable.

Yeah, Jeff, one of the things I told you before we started was, you know, as I look back over the last four years and how the company's performed, You know, I think about, you know, this last year, convenience had a great year. The year before that, you know, food service, you know, really outperformed. And the year before that, it was specialty. And I think that just shows, you know, over the course of three years where the consumer's been, you know, pressured, that they tend to shift their behaviors. And we've been able to really capture the best part of that in our three segments.

One question we get a lot, although it has its ups and downs, is around GLP-1s. As people think about the future of food put away from home, it feels like this is a greater risk than we've seen in past diet plans or whatnot, because it is more readily available and it is becoming lower cost, and it just seems like it's gaining more and more traction. How do you see that impact? Are operators asking you for help in changing their menu because of it, or do you think in a couple of years we'll be talking about a different strategy?

You know, I think as GLP-1 started to emerge, you know, it's probably been over a year ago when you started to hear about it actively. You know, I think everybody thought maybe it was a trend. I don't think it's a trend. I think it's a real shift in behavior, and we've seen that across all three of our segments. And, you know, I think about the word I hear the most is protein, you know, probably secondly is around fresh food. But the one thing that folks that are using GLP-1 behaviorally, indulgence hasn't gone away either. And I think that's, you know, one of the things about the independent restaurant is their flexibility. We've seen them already shift to, you know, more protein-focused menus to make sure that they have dessert options on the menu, fresh food. They can adapt portion size really easily. And we see it in the convenience space, too. If you go in convenience stores now, you see whole sections that are protein-focused. So I think, you know, across the food-away-from-home space for decades, food-away-from-home has been adapting to consumer behavior. And really, to me, this is just a shift in consumer behavior. People are not quitting consuming food at all. So, you know, I think it's really good for us. People want to be out, and we're in an industry that can adapt to that change.

Yep. And just lastly, from a high-level perspective, as we wrap up on calendar 26, which is hard to believe, but looking at calendar 27, what are you most excited about as we think of the next year? I mean, clearly, you're relatively new to the CEO role, and next year, calendar year, have a full year. Is there anything in particular that you're most excited about?

Yeah, I think what's most important in any business is just momentum. And, you know, for us to exit this last year and enter fiscal 2027 for us with great top-line momentum across all three segments, with really solid margin momentum. You know, we've talked about our procurement initiative that we have going, how we're shifting mix and convenience by selling food service. You know, so if we're really good about, you know, the top half of the income statement. And then, you know, on the bottom half, we've talked a lot about uses of technology, and, you know, I feel really good about initiatives that we have going on around, you know, fleet utilization, fleet efficiency, and in our warehouse as well. So, you know, I feel great about how the company's positioned for 2027.

You know, we talked about the resilience of the food service model. Like you said, different segments outperforming in different years. like what do you see are the primary differences between yourself and your largest peers and then just as importantly between the whole rest of the industry that is so much more fragmented?

Yeah, I think, you know, the largest peers, we all have differences in how we go to market. You know, certainly I think our investment in our sales organization, the consistency that we've had there from a compensation structure standpoint, and then I think structurally, you know, we give our salespeople, you know, full authority to price product selection I think they would tell you one of our biggest levers is our exclusive brands and we use that across all the food service and it's now spilling into convenience and specialty as well so we think we have really good levers in the in the independent space I look at the the chain space in food service and feel like we've done a great job optimizing that portfolio we talked about some new some new wins in that space that will We'll come on second half of the year, kind of Q3, Q4. So, you know, gaining share there as well. So I think what we've been doing has resonated. And it is a fragmented space. So certainly part of our growth algo will be M&A and has been in the past. And that pipeline remains robust.

And you mentioned M&A, which gets talked about a lot. But when I think about this broader market share, I think investors look at this as a roll-up story where the big keep getting bigger. But I'm just reminded of the fact that the big three still have collective, I mean, as well as you have differences, you're collectively pulling in the same direction and you only have 35%, 37% market share between the three of you. So where do you expect that trend to go over time? I mean, it seems like even if the industry of restaurants was relatively flat, there's just an opportunity for you guys to continue to gain market share. Yeah, you want me to jump in?

Yeah, go ahead, Pat.

Well, you know, it's interesting. you know when we look at how our independent case growth has been going specifically and you know we think there's ample room for market share gains and you know we get this question a lot like you know you guys are going market share where are you taking that from i mean if you look at the industry we talked about the big three but then there's lots of large regionals and even below that there's lots of specialty distributors so we don't really know where the market share gains come from but we have been consistently quarter after quarter generating very consistent market share gains and even as we exited the last quarter the last two quarters really what had us um you know it's a little exciting for us is that we started to see more penetration most of our independent case growth was coming from new account growth but then the last two quarters we actually saw relatively around 100 basis points of that you know growth so i call it 5.8 was total independent case growth about 100 basis points that came from penetration where we're selling more to our current base. And that again shows us taking market share with our current customers and also gaining market share by expanding our customer base.

Yeah, one other add there is just compared to the other three. I mean, we have a lot of white space. Obviously, our acquisition in Florida, we had a lot of white space in Florida. We only had three distribution centers. You know, a couple of those were subscale in Florida. So that really filled out Florida and the Carolinas. And then obviously in the West, we have a lot of white space. That's our fastest scoring region. We continue to look for opportunity in that market. But, you know, beyond just the organic, we certainly have some M&A opportunity and some areas that we can fill in geography.

So first and foremost on the organic side, as we think about your business before M&A, How do you think about the balance of further penetrating existing accounts versus adding new accounts? And maybe just because we talk about it a lot, maybe share your mix of chain versus independent. How do you think about your mix of business between? I mean, we look at all the big chains, but oftentimes we're reminded that they might have mediocre results of some chains, but then the independents are doing so much better. So how do you think about your business?

Yeah, right now our mix is we're a little higher than 40% on independent. That has been growing consistently, and that's where we continue to gain more share. But right now, we're 60-40-ish mix chain and independent. I'm really comfortable with that. I think that's a good blend. Somewhere in that 50-50 space, I would say we're very similar in convenience as well. As I think about penetration, I mean, obviously, that's the most profitable thing to do is to sell more to every unit that we have. When you have a challenging macro, that's tough. And like Patrick just said, it was great to see us have almost 100 basis points of penetration over the last couple of quarters. You know, I think one of the big game changers there over time is going to be technology. And we've invested a lot of time and effort and resources into our sales-facing and customer-facing tools. And I think the AI enablement that we've embedded there now is really important in us being able to gain share within – or share a wallet, essentially, share within a restaurant. And, you know, I think those who have started to come to bear, I think there's a long roadmap there to continue to improve, but I really look for that technology to play a big role. And obviously, at the end of the day, though, it's our investment in our salespeople, and, you know, that's something that we're really proud of.

Right, and then thinking about your different business lines, again, food service distribution to restaurants is the big one. It gets the most attention. Your confidence in that kind of mid-single-digit independent case growth, And then how do you reverse the negative trend with national accounts? Is it things you could do, or is that just the broader macro that's taking its toll?

Yeah, the 6% gets stocked about a lot. That's kind of our internal target has been for decades. You know, the way we've gotten there the last few years, I'd say, has been the hard way. It's just net new accounts, you know, when the same store growth is not there. I'm really proud of the sales organization's ability to continue to gain net new and gain some penetration. and last year we finished at 5.9 and change. I was frustrated. We were like a tick away from getting to 6%. Finished last quarter at 5.8. So certainly internally, that's always our target and something that we continue to strive for. And our salespeople, if you ask them internally, like, what are you shooting for? They always want to grow 6% or more. And that's just culturally how we think about it. The second half of your question, I'm sorry.

Yeah, just more on the national account side. It seems like it's been a challenge for all of the big distributors, and that's tough when it's 60% of your business.

It is, and we had, you know, I'd say over the last couple of years, we did a great job of, what I'd say, optimizing our portfolio. And so we've partnered with some of the more progressive food service players in the space. You know, certainly same-store comps in chain has not been great. It's not been quite as good as independent. You know, but bringing on partners like Jersey Mike's here coming this year who is doing a great job from a same-store-com standpoint, and we have a number of other progressive retail groups in the food service space. So we feel good about the portfolio we have today. If the macro gets better, we feel really good about it.

We're all hoping for that.

Yeah, don't lie.

So when you talk about 5859, I think if you just subtly change it from 6% to mid-single-digit, you'd be able to say, you know...

If you had any same-store, you know, accretion to that, that would be a really good number.

Sure. And then maybe shifting to the convenience segment, which is really where you're differentiated, and we find some investors love that differentiation, and others say, oh, I don't really love convenience. So it depends on who you're talking to. But why do you believe in that channel so much? Obviously, I should just be clear, you came from that channel, so I'm guessing you believe in it and the advantages you think it brings to PFGC.

Yeah, I think when PFG made that acquisition, there were certainly some people that doubted, that weren't sure that that was the right avenue to go. And I think five years later, I don't think there's a lot of doubters. I mean, if you look at the top-line revenue growth, if you look at the EBITDA dollar and percentage growth over five years, and really for that space, it's been more than five years. I think history would say that that segment's performed really well. They're positioned really well in 27 and beyond. I think they've become, you know, one of the leaders in the space. I think a lot of that comes from a couple things. I think the connectivity of PFG or the PFS segment and really bringing food service to convenience is a big driver. I think that's resonated. It's been a key part in us picking up market share, and, you know, that segment's clearly shared over the last few years. And they continue to drive food service performance in that segment, whether it's turnkey solutions or just adding branded items. So they're really starting to differentiate themselves in the food service space and convenience. So have a lot of confidence in their ability to continue to grow, both top line but also from a margin and EBITDA standpoint.

I found it most interesting when the combination happened, and just the, as George used to say, just the opportunity to some of your food service accounts had convenience, and now you can service them, and some of your convenience accounts are moving into food service. Can you just talk about how you try and bring those together, which would seemingly give you a tremendous benefit versus peers?

Yeah, it's really interesting. We are growing food service and convenience at a really great clip, you know, from both avenues. So our broad-line food service, PFS, is growing, you know, high single-digit. He's even had quarters of double-digit growth in the convenience. So they really focus on the convenience stores that have a broader, you know, almost restaurant offer that would be, you know, more expansive than what a traditional Cormar convenience wholesaler would carry. And in those cases, we kind of partnered. So we picked up a lot of chains working together. But then just with your independents, your smaller chains, you know, our regular convenience group has done an incredible job of growing food service. So we kind of hit it at two angles. And one of the things you bring up is really, in my mind, just the food away from home space. You know, the number of times now that we present to customers with all three segments in the room is very frequent. And that's served us really well. We've gained a lot of market share by presenting as, you know, one united force and leveraging two platforms to serve as a customer.

And being the headline every other day is gas prices, I often get the question of just gas prices being so elevated. People think of convenience oftentimes tied with gas stations at times, and is that a meaningful headwind when gas prices are elevated? I feel like I've learned more recently that sometimes the consumer doesn't necessarily fill up their car with a full tank. They just go with smaller amounts at a time to make it more affordable, and therefore they might be in the convenience store more often. How do you think about gas prices' impact on convenience?

Yeah, I agree with what you just said. I think there's a point where as fuel prices rise, people tend to not fill up as much, which means they could return to the store more frequently over the course of a week or over the course of a month. I think there's also an inflection point. Once fuel price gets to a certain point, then you're talking more about pressure on the consumer and discretionary income. So I think there's a balance there. You know, we've grown in convenience by gaining share and growing food service and alternative nicotine, and that's served us very well, and, you know, that continues to be our focus.

I saw a headline yesterday that guest prices are going to come down right after the midterms. So if you're patient for a couple of months, everyone will be happy.

Everybody will be happy in two months? Okay, I'm going to quote you on that.

Yep. And when we think about specialty and Vistar, strong growth acceleration. I'm just wondering if you could talk about what you think of the specific drivers and the new verticals and how they kind of all fit together.

Sure, I'm going to talk about the panel. I'll jump in, Jeff. Yeah, so especially, you know, they've been such a unique business because they always are finding those new verticals. And recently we talked about how now they're getting into grocery, which is great for them. and they've got a couple of great opportunities there. They've also spent the last so many months working with a lot of their key customers and securing those businesses going forward. So we have a lot of excitement about them getting some new business, opening up some new geographies, which is really exciting with their current base. And then we've talked about the e-commerce. And this is really a B2B opportunity, but it's also a B2C opportunity. And when you talk about some of those things, You were mainly talking about food service and convenience, and Scott mentioned we bring all three segments to meet with these customers. Vistar on their e-commerce platform is now distributing small wares to a food service customer of ours. So we're trying to bring all these different solutions to our customers, and it's really working.

Scott, you mentioned AI subtly, and it feels like that's always a topic du jour. Can you talk about how that is infiltrating your business, what you're most excited about over the next few years in terms of how that could really benefit the business?

Yeah, Patrick and I spend a lot of time. You know, we've stood up a group in our organization that is solely focused on that. You know, I'll just hit maybe three or four topics. We talked about our sales-facing technology, so I won't dig too much more into that. But, you know, feel like that will be a big driver for penetration, for new account growth. You know, beyond that, you know, warehouse-wise, We have two technologies that we've signed enterprise agreements with. One of them is, you know, you think about inventory counting. There's really two options. You can have robots on the floor or drones in the air. So we've gone the drone route. About eight months ago, we started testing drone technology. That drone technology now we're expanding to multiple facilities. And like I said, I've signed an agreement that allows us to expand. It doesn't fit in every facility just based on box configuration, but basically what it does is count all your backstocks in the building. It's been incredibly effective. Over time, that will allow us to reduce the number of folks that we have in the buildings counting inventory on a regular basis. And we have one other warehouse technology that we're excited about, and it's really around safety. If you know distribution, you know that workers' comp cost, insurance cost is a big number. So we have another technology called Voxel, and Voxel basically sits on top of your camera system and identifies unsafe behavior in the warehouses. And it's all AI enabled and gives us a daily report that talks about safety behavior. And the performance we've had in the buildings that have tested has been really, you know, impressive. So we started to roll that out across a broader platform and warehouse. You know, trans, I think we've talked a lot about trans routing technology. I think, you know, everybody in the space is using, you know, three or four or five of the big players. We use Descartes and Roadnet. Both of them have AI-enabled tools now that we're training on for all of our routers across the network. So, you know, obviously route optimization is a huge, huge part of cost efficiency. And then the last tool I'll touch on quickly is really more enterprise-facing. So we've partnered with an external company on two, you know, big initiatives that Patrick and I and our whole team are involved in. One of them is around, we'll call it data synthesis. So if you think about, you know, our three segments and you think about how we've grown through acquisition, you know, being able to have all your item set up, all your vendor set up all on one platform and us to be able to look at that data holistically allows us to do a lot of things. And so the second part of that is really around procurement. So it allows us to look at how we procure within the box, how we procure within the segment of the business, and then we can look across all three segments. And then the future beyond that is, you know, how do you think about all the inbound? So as you buy things, getting product into your buildings more efficiently drives cost out of the system. So we're really excited about all the initiatives we have going. It's something that we spend a lot of time on, our board spends a lot of time on, and, you know, it makes me excited for the future of our business.

We look forward to hearing more about that. It seems like this industry is prime for some cost-saving benefits It says distribution is so manual. You mentioned M&A earlier. Of the big three, at least, it seems like you have the greatest opportunity where you don't yet have a national footprint to the same degree that others might, and therefore that would seem like a big opportunity. Can you just talk about whether it's harder or easier today, you think, to get deals done versus several years ago, maybe how you think about the M&A opportunity and valuations and things like that?

Yeah, I would say the M&A pipeline, I mean, we are always active in discussion with a number of people across primarily the food service industry, but we've also acquired in the convenience and specialty industry as well. And so we keep an active pipeline there. Obviously, timing is everything. And certainly, you know, valuations, I would say every deal is different, you know, and obviously for, you know, great assets and a great company, you're going to pay a little more. For one that, you know, needs a little more help, the multiples are obviously going to be smaller. We think that's going to be a key part of our growth algo as we think about the next couple of years and beyond. And as you mentioned, you know, certainly we have white space that acquisition would help us in. And I think today's environment is tough on independent broad line. I mean, you think about what they face today, you know, with technology and the investments you have to make there. I think that there's big decisions for independents to make over the next handful of years. So, you know, I think that brings good opportunity for us.

I would think if I was a small distributor, the idea would be daunting to try and take on some of the things you just talked about, and therefore the gap would be so much wider. Why not join up?

Yeah, there's really two things. To me, it's technology, and then, you know, we think one of our biggest competitive advantages is our brand portfolio. and for an independent to be able to create a brand portfolio is next to impossible. And those two things we feel like give us a competitive advantage. And so that's, to your point, it's going to be tough for the independent down the road, I think.

Brent, I know George is always thought of as kind of a legend in the industry and always having relationships. You're still in regular contact, speaking to George about the opportunities there and how he sees it, kind of a collaboration of minds.

George and I are both early risers, so I usually get the first text about 4 a.m. But, yeah, George and I are very close friends. He's obviously our chairman, and we talk multiple times a week. And I would say 90% of the time it's about relationships and opportunities.

4 a.m.

He is – I don't get up as early as he does.

No, that's great. Maybe just thinking about when you guys do M&A, It seems like you have a different approach. I feel like you're more hands-off and let each individual segment kind of run themselves. How do you think about your strategy versus others and how that might benefit you?

I think you're right. I think we're a little slower out of the gates. I think we really were thoughtful about, you know, I think number one, the biggest asset in any acquisition is the people. And so to really understand their culture, you know, what makes that business work well and not destroy that, disrupt that, harm that in any way. You know, I think secondarily, I think if you just jump right in and take over, you miss some of the value they can bring to the broader company. And, you know, I'll give a great example in Cheney is, you know, we've talked a lot about brands and putting our brands into Cheney. The first brand that has been launched was launched the other way. Cheney had an incredible line of deli meats and soups for sandwiches and whatnot. And we've now launched that across all of PFS. So really, you know, spend the time to be thoughtful about, you know, where's the value in this acquisition to us in the long run. And then I would say over the, you know, the first 12 to 24 months is really where we start to, you know, kind of connect in a broader way and figure out how we extract value. And I think that's worked well for George. It's the same approach I've taken for years in acquisitions. And I think that's one of the reasons that we're looked at as a very favorable acquirer.

You talk about brands, just maybe just a little insight into how you think about your private label, because clearly that is a way of differentiating yourself versus smaller competitor distributors. But how has that business evolved? What's the mix of that kind of way do you see that going?

Yeah, like I said, I think it's one of our most powerful levers that we have today. We have 85 different brand families and about 25,000 brand SKUs across the company. We use those in all three of our segments now. And it's something we continuously develop new brands. You know, we're launching, I think last year, we were 650, 700 new brand items. So it's a brand machine. And, you know, you think about how hard that is to replicate. you know we're about 54 percent of our brand or of our sales to independence are brand cases we'll use we'll kind of reset that with with the cheney and cashway acquisition so that that kind of pulls us back down to 50 overall but it's something that we'll continue to grow and continue to use as a big lever and we talk a lot about from a sales perspective but just from a OPEX perspective as you think about how you can drive those margins.

Maybe just talk about the long-term spend as a percentage of sales or a percentage of total costs and maybe the key self-help initiatives you think you have to further reduce from an expense standpoint.

Yeah, I mean, I think we certainly have a big opportunity in OPEX efficiency. I think we looked at it in our three-year plan and we called out 50 to 60 basis points of margin enhancement over the three years, and that's really a combination of a couple things. It's our procurement initiative, and, you know, really happy with how that's progressed, and I said on the last earnings call that we're really comfortable at the high end of that range, which was $125 million. And the other piece is around, you know, leveraging the technologies I talked about in fleet. You know, I think fleet and fleet utilization is going to be a big lever for us, and then obviously we talked about a couple technologies in the warehouse as well. So all of those contribute to that 50 to 60 basis points of margin enhancement.

And lastly, with our final minute or so, when you talk to restaurants, you have to talk about inflation, and presumably you're selling the products that tend to have the greatest volatility in inflation. Just wondering how you think about the inflation outlook over the next 12 months, where you think relief could come from, what you envision is just the ideal rate of inflation.

I guess I'll wrap this up. So it's interesting. I mean, we even talked about it at the last call that as we went into July, we saw food service inflation dip again, so we were running less than 1%. And that's really being driven by beef has been in the high teens of inflation. It's recently come down into the high single digits. Cheese and poultry for us have been consistently deflationary for many, many months. And, again, consistently is important. and what we don't like to see is spikes going up and down either way. But overall, inflation is actually running a little lower than what we would expect. We were expecting more like in the 2% range, so now it's sub-1%. For the full year, we would expect it still to be in that low single-digit, you know, 1% or 2% range. And then on our other two segments, just real quick, convenience, we expect it to be very... Well, actually, let's start with specialty. We expect that to be mid-single digits, and then convenience a couple points higher than that, which is very typical of them. Great.

Well, I think we've exhausted our time, but we wanted to thank Performance Food Group very much for joining us, specifically Scott and Patrick. Hope everyone gets a chance to see management, and otherwise hope everyone has a great day. Thank you very much.

Thank you, Jeff.