Dive Brief:
- Food distributor Sysco says its growth initiatives, which include strategies to reduce turnover and boost productivity, are bringing it closer to achieving its goal of growing 1.5 times faster than the market by the end of FY2024.
- President and CEO Kevin Hourican applauded the company’s driver academy, which it launched in 2021, with “having a meaningful impact on reducing turnover for our new hires, improving productivity for our new hires,” during a May 2 earnings call.
- The company has also expanded its program to coach and recognize warehouse workers to transportation staff, an effort that the CEO noted contributed to growing Sysco’s now fully staffed network
Dive Insight:
The cost-cutting and retention efforts have led to sales growth at the company, with Q3 sales up 11.7% YoY to $18.9 billion.
Hourican said the company is on track to hit its FY2023 goal of growing 1.35 times the market rate, adding Q3 was the company’s third consecutive quarter of reaching its targeted growth pace.
The company lowered its turnover rate by 1.3 percentage points during the past quarter, which translated to lower training expenses and improved productivity, Hourican said on the call.
Despite the retention improvements, the Houston-based business has also had to navigate labor challenges. In April, Sysco reached new five-year contract agreements with truck drivers in Indianapolis and Louisville, following strikes earlier in the year. Drivers sought better pay, improved work-life balance and additional vacation time.
In discussing the strikes and labor costs with analysts earlier this month, Hourican said the business didn’t expect to have the kinds of double digit salary gains that restaurant and retail companies have considered. But he also noted that Sysco pays above market wages, highlighting drivers can earn more than $100,000 annually.
“During the unanticipated strikes in the most recent quarter, within 24 hours to 48 hours, we were up to full shipping capacity, able to support our customers and communicate effectively with our customers, which is not an easy task given the amount of business that we do on any given day at Sysco,” Hourican said.
