Of course. All right, we are gonna get started here on the next fireside chat, which I'm thrilled to have Chefs' Warehouse with us. So Jim Leddy is CFO of Chefs' Warehouse, and Lex Carter is also joining us, Director of Treasury. Thanks for making the trip from Ridgefield. Chefs' Warehouse is a food service distributor of specialty foods and center-of-the-plate products. They serve 44,000 customer locations, over 52 DCs now, 3,000 suppliers, and sell over 70,000 SKUs. We forecast just about $3.8 billion in revenue for Chefs' in 2024. Despite being the smallest of the public peers in food service distribution, the company's EBITDA margins are historically the highest among the peers.
Really due in large part to the mix of their business and their disciplined focus on a more profitable, menu-driven, independent restaurant customer base. So, so with that, I would like to talk a lot about the sales force today and, the key factors that really differentiate Chefs' Warehouse, which I think starts with the sales force. I think you're up to about 1,000 reps at this point. But my question, I guess, is: how do you determine the right amount of sales reps, the territory size, the training that goes into that sales force? I mean, this is really, it feels like, what differentiates Chef. So just help us understand how you think about that.
Sure, thanks for the question. You know, we tend to grow a little bit faster than most of the industry. I think, you know, if you take the volatility of the COVID period out of the equation, you know, we tend to grow kinda mid-single, maybe high single digits-
Mm-hmm
... organically. And, you know, the growth of our sales force and how we add salespeople is really kind of aligned with that growth algorithm.
Mm-hmm.
And, you know, our salespeople tend to be culinary trained. They come from the kitchen, they're former chefs, they're consultants to our customers, they speak the language. And, you know, they come out of the kitchen after years, and they want a better life, and they can build a really good business on our platform. And, we supply them with a very diverse global supply chain that, you know, our founders have developed over 40 years, in terms of, you know, 3,000+ artisan suppliers from around the world. You know, bringing that to market. And our go-to-market strategy is really to... our sales force to, you know, build and maintain those relationships, and then our job is to give them a lot of support behind that.
So it's giving them. You know, we'll bring in 150 different types of olive oils to sell to chefs because chefs are competitive, they're creative, and they want a different product than the restaurant across the street. They want to differentiate themselves. So, you know, our business model is a very high touch, flexible distribution model. We deliver, you know, five, six days a week, depending on the customer. And our sales force is really highly educated in the culinary world, and our go-to-market strategy is to bring in the products that chefs want to differentiate themselves and allow them to build a business on our platform. So it's really just kind of the whole ecosystem. They're a big part of it.
Now, you know, I would say that the way we grow our sales force is different in every market. I, you know. I caught the end of George's discussion, and, and-
Yeah
... you know, he talked about all of their markets being really different. Ours is the same.
Yeah.
So, for example, in Florida, we just invested in a very large state-of-the-art facility in southern Florida, that's probably three times the size of our business there, that we'll grow into over the coming years. We've tripled the size of our sales force over the last year or two because we've made that investment. It's a high growth market. We love the demographic. A lot of people moving there with a lot of money, a lot of restaurants opening, and that's our customer base. So we're not gonna triple the size of our sales force in New York.
Right.
You know, New York is where the business was built, and we're more mature there. So it's really different in every market.
That's fair. How about, as you think about the sales force, given how important it is, how much of the sales reps come through acquisitions and really kind of embrace the Chef model and all the different categories it sells, versus how much is hired organically? Like, maybe in Florida, where you're hiring reps, specifically because you have that expansion.
Yeah, I mean, we've done a lot of acquisitions. You know, we're slowing that down now-
Yes
... but we've done a lot of acquisitions historically and actually in the last couple of years. The sales force from an acquisition is a lot of times a very big part of the reason you do the acquisition. You know, a good example is, you know, we've been growing in produce, the produce category. So in Texas, where we have a specialty business that's small and growing, and we built an Allen Brothers protein processing plant in Dallas, and so we're growing the category as we're starting to process for our customers. And then we went and bought this, you know, kind of big produce company, traditional produce company called Hardie's. That's a big investment for us.
Their sales force, you know, produce companies tend to not have as big and diverse a sales force because a lot of it is commoditized and a lot of it comes online.
Mm.
So part of our job there is to take sales leadership, educate their sales force on selling our products, and it doesn't happen overnight. It takes, you know, a lot of time, a lot of training, and we invest in that training. You know, it, for a salesperson to learn that they've been selling one product category for 10, 15, maybe 20 years, for them to start to sell proteins and specialty, it's a big deal. So we have to provide them with a lot of support, and, and you integrate it, and, you provide them with specialists. So we'll have center-of-the-plate specialists ride along with these customers that we want to grow, and they sell produce, too.
We're gonna wanna sell them more proteins. We're gonna sell them specialty products, and so that integration is happening now in Texas, and it's gonna take time. That integration will take... You know, they don't start selling those products overnight. There'll be a lot of training and some investment involved.
As we think about organic growth, almost 9% in the recent quarter, I think it was 8.8%, how much of that in a typical year or quarter is driven by growth in the sales force versus kind of that sales rep really getting more efficient and expanding their base just on their own?
It's kind of all the above.
Yeah.
I guess the best way to frame it is, our organic growth that, you know, kind of tends to average in that, you know, when you want to call it 5%-7% range, you know, that I think it'll decelerate a little bit just based on the comps from last year, through the quarter, but that's kind of our full year guidance-
Yep
... is really a mix of, you know, that, that diversity in the markets and their growth profile. So, for example, in Florida, you know, our young sales force there is going to be focusing on opening new customers. As well as, you know, we've been there for 10 or 15 years, so we'll be penetrating existing customers as well. Whereas in another market, one of our larger markets, San Francisco or L.A. or, you know, a place like New York, you know, our focus is gonna be, the sales force focus is gonna be growing categories and growing penetration. We'll still open new customers because you're constantly fighting the cycle of attrition that exists in the restaurant industry. And you're, you know, constantly, going after new concepts, et cetera.
But it's a little different in every market, and it kind of just aggregates up to that, you know, kind of mid-single-digit profile.
Right.
That's because we have different phases of maturation in each of our markets. When I say maturation, we feel we've reached maturation in a market where we become what we call a true Chefs' Warehouse, and that is where we can buy more products in direct, have all of the categories, and that's why we've done so many acquisitions, is to bring those categories into the markets where we don't have them. Then, whether it's a facility consolidation play or we're collaborating and consolidating, driving the cross-sell of those products, that allows us to drive more relevance with our customers. You know, when you first get into a market, you're really just filling in because they have relationships existing.
And then over time, you bring in the acquisitions, you bring in the other categories, and you can build relevance with your customer, and your goal is to become their primary supplier over time, and that doesn't mean 100%. That means you're gonna be maybe 50 or 60%, because they're never gonna give you 100% of the business. That's just not the way the business works. But that's kind of how we think about that, that organic growth process and the sales force piece in that.
That's really helpful. I guess on that front, so you're in so many different regions now. You've gone into the West Coast, into Florida, and Texas. I mean, when we think about where your sales exposure is, is it fair to assume it's roughly in line with where your distribution capacity is? Is that a simple math, or is it not like that because you have... You know, for example, you have this bigger building in Florida that's yet to be filled up?
Yeah. Yeah, no, we have... You know, so our growth, you know, for example, say we're, you know, we're growing 6%-8% or something-
Yeah
... year-over-year. We're gonna have markets like where we've invested in capacity. Florida is gonna grow, you know, serious double digits.
Right.
Right? Because there's so much white space there. We're bringing in all the categories, we've got a growing sales force, and we've made a lot of investment. And the same thing with Texas. It's gonna grow much faster than the rest of the company.
Right.
You know, our mature markets are gonna grow kind of mid-single digits, you know, through that category growth and through that penetration, and maybe going to the outlying markets. You know, San Francisco is a good example, where, you know, after COVID, downtown San Francisco, the restaurant scene really hasn't come back.
Yeah.
Our growth has been in the outlying markets where people have moved-
Mm
... and where they're living and eating. We've expanded that catchment area, and that's allowed us to continue to grow in Northern California. And so, the growth rates will be different, but, that's just because we're making bigger investments in a high-growth area-
Right
... in capacity expansion, and then our strategies in the more mature markets are a little bit different. It might be facility consolidation, bringing in new categories where, you know, we're not mature-
Right
... and growing that way.
Right. Okay, question on private label. This is a kind of a different question, but a lot of the big broadliners really stress private label and the importance of that to their independent customers. You guys don't really talk about private label per se, but you have a lot of exclusives. So, how should we think about what is really exclusive to chefs that you can offer your customers? And you, as you look at your competitors in more of the specialty distribution, how much of their offering is also exclusive, that makes it hard to compete with?
That's, I mean, that's a good question. I think with the broadliners, you know, their private labels are, you know, they have the scale on the buying end to really generate, you know, their gross profitability through the private label on the back end.
Right.
Our business model is the opposite. We partner with, you know, smaller producers around the world, and in the U.S. I mean, and a lot of times these are companies that might be, you know, between $20 million and $100 million in revenue, and we're either an exclusive distributor or we're distributing 70%-80% of their product-
Right
... because they started with us in the 1990s or the 1980s, and they've kind of built their business in the U.S. on our distribution channel. And those relationships are very strong, and, and we continue to build them. And our private label products or exclusives tend to be higher quality-
Right
... than the actual third-party labels that we'll distribute. So, it's actually good gross profit margin, and sometimes it's good, you know, better gross profit dollars, but we're not getting it on the back end necessarily because we're buying $50 million-
Right
... of the $3.8 billion from this one supplier.
Right.
And it might be an extra virgin olive oil from Turkey or from Spain or something like that. And on the other side of the business, center-of-the-plate, virtually all of our specialty cut protein products, our Allen Brothers brand, is in our box. It's in our label.
Right.
So that's, you know, a huge part of our private label business, because we own the brand, and we own... You know, it comes in our box.
How much of center- of- the- plate today is Allen Brothers?
Well, it's mostly Allen Brothers-
Mostly
... because what we've done is, you know, our Allen Brothers started out as this company in Chicago that was the best cut steaks in the world and shipped around the country to different restaurants and customers.
Right.
What we've done now is, we've created cut shops in our, in our businesses around the country.
Mm-hmm.
We've started moving that Allen Brothers product and cutting and dry aging through the investments in the dry age rooms and replicating that process out to our distribution centers so you can reduce that transfer cost, number one, the logistics cost, and you can be closer to your customer. The closer you are to your customer, the quicker you can do late orders, changes to orders, and that's a value add. We're growing that value add process because it's labor saving for our customers and giving them, you know, a premium protein product.
Okay, so, another question on SKUs. I mean, you mentioned olive oils. That always comes up with Chefs' Warehouse. You have so many SKUs today. How do you balance, you know, saying yes to this customer, "We will get this, you know, SKU. We'll import it from Turkey or wherever," versus, "We've got to manage the cost in the warehouse?" Or is that an easy decision at Chef, or does it get harder as you get more and more SKUs?
There's a lot of battling between sales and operations, and the usual push and pull.
Yeah
... which is a healthy push and pull.
Yeah.
You know, the way we've been dealing with it lately is investments in technology in our supply chain, and really just continuing to bolster the partnership between operations and sales. So we exist because we bring in products that other distributors won't, because they won't sell enough of it to make it profitable. But our business model is, you know, we drive millions of smaller transactions through our warehouses, through our systems, from many suppliers to many small customers, you know, around the country and now around the world with our investment in the Middle East. And so our systems and processes are set up to manage that supply chain and that distribution model, and our goal is to just become more and more efficient in that.
So yeah, we bring in products that, you know, salespeople think they're gonna sell a ton of, and, and they don't. And so we'll structure it with the supplier such that they'll guarantee to take some of it back.
Mm.
We might take a little bit of the risk. And yeah, we throw out, I'm sure, a lot more than Sysco.
Mm.
We build it into the price.
Mm-hmm.
Our gross profit margins are higher because we sell credit and because we bring in products that others won't.
Right. Okay, so another question, maybe on competition, then I want to shift to, like, some numbers and margins and so forth. But we always get questions about how Chef is differentiated from the Big Three. I think we talked a lot about it. But you are hearing some of the bigger broadliners talk about going deeper into these higher service models, these kind of more frequent deliveries, higher cost, higher cost to serve. Is that at all a worry that investors should think about impeding on Chefs', and the niche that you provide to your customers?
Well, I mean, you know, we, our target market is about a $40 billion, $30-$40 billion slice of the $400 billion food away from home industry, right? So upscale casual to higher end independent establishments primarily, whether it's restaurants, country clubs, high-end coffee shops, any place that wants higher-end ingredients because they're serving the top 10% earners' income demographic in the world. And so we, you know, we have less than 10% of that now. So we, we feel that there's a lot of white space in terms of continuing to gain market share, and we gain market share just by growing organically-
Yep.
Because of our differentiation, because of our level of scale that's greater than some of the smaller distributors that we compete against, and we're more flexible than the larger distributors that want to, you know, come into our space. We've been competing against both. You know, think of us in the middle.
Right.
We've been competing against both for a long time, and we've been continuing to grow. So, I think, I think there's still, you know, a lot of change happening. There's still a lot of consolidation that's gonna happen because it's still so fragmented.
Mm-hmm.
The smaller distributors, you know, I think it's harder for them to grow, just the cost of capital. The cost of expanding a warehouse has doubled or tripled before COVID.
Mm.
So it's very expensive to grow, and if you don't have some level of scale and a balance sheet, then I think, you know, a lot of the smaller distributors are probably happy doing what they're doing, until they have an exit. And so I think, you know, do we worry about the bigger broadliners coming in? We already compete against them.
Yeah.
They've been in the restaurant space. You know, 80%-85% of our customer base are what you would call independents. I don't believe they have that percentage.
Mm.
They have a much different customer base as well that we don't operate in.
Right.
So, I think that's the best way to answer it.
Okay, just one follow-up, and just as a reminder, you can submit questions to the app here, but I have one that I'll loop in. But given the cost of the warehouse has gone up so much, are you seeing less capacity across the space being put up by, you know, all these distributors that we don't get to hear from every day?
Well, I think the, you know, the growth of e-commerce and the cold chain has certainly-
Mm
... put a lot of pressure, especially during COVID, on, because of all the home delivery, on warehouse space. It's starting to even out. You're starting to see better deals. We just took some extra space in Houston, as part of our Hardie's deal, and, you know, we were actually kind of quite pleased with the price point. It's stopped kind of rocketing up, and you don't have the Amazon effect anymore. They're decreasing their footprint and not increasing it. So, it really depends. It's very market specific, but, most of our capacity expansion is behind us. We've got a couple of projects finishing this year, and then a couple in the next year or two, but we're not...
You know, I think the big investments are, you know, we're bringing CapEx down from 2% to 1% on average over the next couple of years. So, I think we've made the significant investments that we need to make to put the footprint in, that will allow us to grow into our five-year plan.
Okay. I think that's a good segue to talk about M&A. So I think it's been, if I've counted this right, almost 19 acquisitions over the last four years. So I guess my question is, which one will be most transformative for Chefs as we look at the last four years? Or maybe there's a couple, but.
Um-
and why?
Yeah, I think in the last 18 months, we did about 12 acquisitions. Three of them were fairly big.
Yeah.
You know, so Hardie's, Chef Middle East, and GreenLeaf. Hardie's is a produce company in Texas I talked about earlier. GreenLeaf Specialty Produce is a really good specialty produce and specialty providing company in the San Francisco, Northern California area that serves a customer base very similar to ours. Really good company, really good high EBITDA margin, great management team, and great brands, and we've really been... We've loved them for a long time, and it was great that we could do a deal with them. And so there, it's really about just leveraging them and maybe bringing them down to Southern California or other parts of California, right? Texas, Chef Middle East is just a dynamic market. I know we get a lot of questions about it. You know, "It doesn't make sense.
Why, why'd you do it?" It's a company that's just like us. We have the same supply chain, great management team, and it's a growing market with a dynamic restaurant industry, and we're in the process right now of doubling their space, and we'll finish that at the end of the year, and we're gonna be able to just grow them. So that's a growth story, and they're already a really good EBITDA margin company. Hardie's is an investment. They're a very low EBITDA margin company, good revenue, well-run company, but, you know, what they do is, we bought them for their customer base. You know, kind of call it 70%-80% of their customer base are our customer. There's another percentage of their customer base that's not our customer.
We'll have to figure out what to do with that over time. But they give us routes in the... and customers in the biggest cities that we wanna grow in. And they dilute us initially. So, you know, if we didn't have them in our portfolio, our EBITDA margins would be about 25 basis points higher. So our goal over the next couple of years... and I think to answer your question, I think even though Hardie's is the lowest EBITDA margin-
Yeah
... I think it's gonna be the most transformational because it's gonna supercharge a big market like Texas with four really good cities, big cities, that we're small and we'll be able to really grow in. And as we improve their margins, as we combine the companies, over the next five years, we think that it's gonna give us a really good platform to continue to grow there. So I would, I would say they're all really helpful-
Yeah.
and interesting in their own ways, but, believe it or not, I think we think Hardie's is gonna be the most transformative.
Okay, that's really interesting. So, I'm gonna loop in this question here along these lines. So, I guess this follows up on the Chef Middle East comment, but is there any other areas where there's a business that, you know, is very similar to Chefs' , here in the U.S., and I guess Canada's one particular question coming up, from this group?
There might be one or two. We're kind of taking a pause on M&A, but we still look at everything.
Mm-hmm.
And really, what, you know, we want to do, and one of the reasons we brought Lex on, is to really strengthen our balance sheet as we pivot to this next phase of our growth, which is to harvest the investments that we've made.
Mm-hmm.
You know, we've been, we've gone free cash flow negative for a couple of years to make these investments and grow significantly. You know, we had the working capital impact of that.
Mm-hmm.
We had the CapEx investments, and we invested heavily in M&A.
Mm-hmm.
And now, our goal is to grow organically into this capacity, growth, and footprint that we've put in place and improve some of these lower margin companies that we've acquired through the integration process. And so, you know, we're focused on generating more free cash flow, and you know, Lex is gonna help us execute our capital allocation plan that's aligned with that.
Mm-hmm.
But that's not to say, if you've met Chris Pappas, he looks at everything. You know-
Fair enough.
I think we're taking a breather for right now.
Okay. So as you think about something like Hardie's, which maybe has a lower margin to begin at the beginning, what are the steps to get it, get the margin for, for them? Where... Is it, is it cross-selling and, and bringing in, you know, those higher value cases?
Right.
Is it, you know, the customer base and really kind of culling that to be the right focus, or is it, what, what are the big factors that get that margin, and what is the timeline that we should typically-
Yeah
... except for something like that?
Yeah, it's already started. So, you know, when you have an acquisition like that, you have to be very careful about the change in culture. You know, they're a private company, now they're part of this public company with all these reporting requirements and regulations and everything, and so it's really just getting to know each other. But we've already started that process. So you know, one of the first things we did was bring in our operations team to partner with them, to make their operation and our operation together more efficient. So we're starting to consolidate trucks, consolidate routes.
Mm.
We're driving the commercial integration of our sales teams. We've already racked a couple of their facilities for specialty products. We're starting to sell some of our Allen Brothers proteins. It's in the very early innings, but we've already seen really good results already improving their EBITDA margins. And it's on the cost side, and it's on, you know, the cross-sell and selling more expensive boxes and consolidating operations where we can before we really need a more substantive facility solution, where we'd love to, you know, retrofit a building in Houston and combine the businesses into one building, but that's down the road. So what we're doing is we're doing some interim steps to get a bridge to there.
So we've leased some extra space in Houston, where we'll put the specialty products, some proteins in there, and start to really drive the cross-sell, and at the same time, take out some cost.
Okay. Maybe a good point to talk about capital allocation and maybe the share repurchase in particular, and how you kind of prioritize, you know, what the next couple of years are gonna look like from a capital allocation standpoint.
Yeah, so Jim, Jim touched on it a bit. You know, we announced, you know, pivot to our capital allocation plan, on our Q3 earnings call last year, and, the share repurchase program is, is a key initiative, within that. So kind of taking a step back, as Jim kind of talked about, before, we've made significant investments in growth, in the business over the last four to five years. And, it is, kind of now time to, to take a step back, from that. To give you some perspective, you know, in, 2019, we had top line of, $1.6 billion, and we reported $3.4 billion last year. So it's been some significant growth, you know, in just the last four to five years.
So now we're entering kind of a new phase of the business, where, again, where we expect to start harvesting some of the benefits from these investments we've made. And, again, throttling back M&A, really focusing on, organic growth, the EBITDA expansion, and it allows us to, to pivot a little bit as well. So, kind of with that new phase that we're in, you know, we can move away from that heavy investment period that we were in. Again, throttling back on M&A, focusing on, again, still continuing that organic growth, but at a more moderate pace.
Mm-hmm.
... and that's gonna allow us, you know, to really focus on strengthening the balance sheet, and generating free cash flow. And so as we start to build that cash, we've really prioritized two ways to use that. The first is gonna be de-levering the balance sheet, paying down some debt, and we've already started to do that in the first quarter of this year. With a target of net debt leverage 2.5-3 times adjusted EBITDA that we announced as part of this plan. The second is the share repurchase program that you mentioned. So to your question, we feel that, you know, share repurchase program is well aligned with this phase of the business that we're in.
It allows us to, we feel, you know, confidently achieve these targets we've set out on things like EBITDA expansion, de-levering, while rewarding our shareholders and returning some of this newly created value back to them. Doing so via a share buyback, I think, gives us that flexibility to be kind of nimble on timing and size. You saw us in the market. In the first quarter, we did $5 million of buybacks. So relatively small, and I think that's gonna be how we move forward with this. It's, it's gonna be very opportunistic. It gives us the ability to assess market conditions, make these repurchases, as the market allows, when the price is right, and then, of course, as we have the cash balance to do so.
Perfect. That makes a lot of sense. I guess I feel like I always ask this question, Jim, but as we think about your long-term EBITDA margin target, what are the buckets of expansion, to get to that kind of 6.5-7? I guess, with that in mind, that kind of your core, margin, like outside some of these dilutive acquisitions, is already probably over six, right?
Oh, yeah. Yeah, well over six.
So is it just getting to a more mature stage, or are there really more fundamental buckets that kind of get you there on a steady-state basis?
Yeah. So if you look at us pre-COVID, you know, COVID hit us kind of like a nuclear bomb. We were what you call an epicenter company, right? So if you look at the three or four years before COVID, you know, we had come off a similar period of significant investment and capacity expansion, and we did a very large M&A transaction that kind of increased the size of the company's revenue by about 30%. And then we spent the next couple of years kind of harvesting those investments, growing into it organically, and right-sizing the impact of the acquisition. And during that period, we improved our adjusted EBITDA margins by about 70 or 75 basis points.
And then COVID hit, and we kind of delayed M&A, we delayed some capacity expansion projects because we were just focused on managing cash, making sure we didn't burn any cash, we kept the company strong. And then as the demand came back, we had to build back the company and service our customers and get back to where we kind of got to in 2022, right? And 2023. So coming out of COVID, we kind of re-accelerated those investments that were delayed. So we, you know, we ramped up CapEx to finish these projects. We did the amount of acquisitions that you mentioned, you know, that were many more acquisitions than we normally would do in a two-year period. And so that heavy investment period, we're just coming off of that.
And so the best way to think about it is, we're entering a similar period where we're gonna slow the growth, we're gonna focus on organic growth, you know, kind of in that, call it 6%-10% range.
Mm-hmm.
... which is really what we were growing before COVID.
Right.
And it's kind of our normal growth algorithm. And so by doing that and leveraging this kind of significant overhead and fixed cost base that we've put in place, improving the dilution that Hardie's-
Right
... gives us right now. So if you took Hardie's out of our portfolio right now, we'd already be close to 6%.
Right.
Which is what we did in 2022. So it's really about improving Hardie's and some of the other smaller acquisitions that are in that sub-EBITDA group. And that's really just a series of center-of-the-plate processing companies that we have around the country that we just haven't gotten to yet because COVID delayed everything.
Mm-hmm.
We're starting to get to those now. We've recently did a consolidation in New England of our Foley business, and so we're starting to get to those, and we're focused on Hardie's. And so it's really gonna be two things. It's like kind of that slide we put up at ICR, where we just showed that we have this underperforming set of businesses that we're gonna improve over the next five years. And then we're gonna grow into this this significant capacity that we've created. And we feel pretty good about about growing organically at those levels, you know, depending on the macro, of course, but-
Mm-hmm
... those would be the two biggest levers. And then, you know, underneath that, you know, I heard, you know, Patrick talking about a lot of the, you know, things they're doing in the distribution centers about technology and process improvement. We do the same thing. You know, we have a great operations team that travels around the country to our 50 or so operating companies. And we, you know, we prioritize, we do maybe 10 a year, and they're just implementing things like wearable technology that allows us to get more efficient in our picking and loading processes. We're putting in, you know, systems around item management and logistics management. So a lot of these things are just about incrementally making us better....
You know, it resonated with me.
Yeah
Some of the things that George and Patrick were talking about, because we're doing the same thing, but within our business model.
Right.
Yeah.
And how do you balance that? Is there sometimes a, "Oh, we need to go after this growth," or, you know, balance efficiency with routing or technology here that might impede growth, or is that an internal debate-
Yeah
... you and Chris?
Yeah, all of the operations want to do it all at the same time. So they come to me and they say, "You know, we need this much CapEx," and we say, "Well, no.
Right.
You can do 10 this year, and you can do 10 next year.
Right.
They'd love to do it all at once, but we only... You know, we have limited resources, so, and we have a capital allocation plan that we've got to set to, so.
Right.
It's really just a prioritization discussion.
Okay.
Yeah.
One more on technology. I don't see any more here, but this is last chance, I guess, to get it in, but I guess we're back to talking about technology, which is nice now that we're kind of getting back to normal. But a couple of years ago or several years ago, there was a lot of investment in the online ordering platforms across the space, and it was really going to change the role of the sales rep and open up a lot of time and less administrative drain on their time. Has that played out as you expected, or how has that changed, you know, in terms of, like, the team selling? Is that-
Yeah
... bolstered that, just where are we on that journey?
Yeah, it's a great question. Because once you get them over the fact that it's not going to replace them-
Right
... then they start to buy in. And so the first part was getting the buy-in. And now we, we use it as a tool to enhance the sales rep's capability to understand the customer's behavior. We collect a lot of data from the customer's shopping experience, what they're searching for, but not buying. You know, what are they buying? How price sensitive are they? And we collect that, and we're in the process of arming our sales rep's with that data, so they have more real-time data when they're visiting, we still believe strongly in the relationship piece of it. So even if a customer orders online, they're talking to the sales rep maybe two or three times a day sometimes.
Mm.
And that's because they need help building their menus. They might have issues that they have to resolve with, you know, whatever's going on. So it's really, for us, it's not only an efficiency tool for the customer to have a better ordering experience, maybe crafting their menus, real-time inventory, you know, what they see, but also it's a tool for us to use our data to better understand the customer's behavior.
Mm.
That makes the sales rep's experience better to grow and to penetrate more. So, you know, the efficiencies on the back end, on customer support, they're real, but I think the more powerful piece is just providing the sales rep with data and information to make their selling experience, build their book better.
Perfect. Well, I think we're out of time, but that was really helpful, so thank you so much for taking the time to do this.
Thank you. Thanks for having us.
Yeah.
Appreciate it.