Good morning, everyone. Thank you for joining us. My name is Jeff Bernstein, and I'm the restaurant, and importantly, foodservice distribution analyst here at Barclays. And along with my partner in crime, Brandt Montour, who covers gaming, lodging, and leisure, we wanted to welcome you all to day 2 of Barclays ninth annual Eat, Sleep, Play Conference. On my behalf, we are excited to have 10 restaurant and foodservice distribution companies attending the conference. Just looking back to yesterday, we had Shake Shack, BJ's, First Watch, and Texas Roadhouse. Today, we have US Foods, Jack in the Box, Brinker, Kura Sushi, Dutch Bros, and Wingstop. So that's over a 2-day period. We hope you find it a good use of time. Hope to get a chance to chat with many of you in the halls between meetings.
But at this point, I'd like to introduce our first presenting company, US Foods. So with us this morning from Rosemont, Illinois, we have Dirk Locascio, who's their CFO, and we have their IR team in the audience. By way of background, for those not familiar, US Foods is a leader in the U.S. foodservice distribution industry. They partner with 250,000 or so restaurants and foodservice operators across 70 broadline locations. They also have 85 cash and carry stores. I'm gonna kick it off with a handful of questions, but by all means, if there's any interest from the audience in asking a question, I will open it up towards the end, and we have mic runners who will come around.
But with that said, I wanted to thank you, US Foods, for joining us, and I will join Dirk for some Q&A.
Thanks for having us this morning, Jeff. Glad to be here.
Thank you, Dirk. Happy holiday.
Same to you.
So, similar to yesterday, we have started these conversations talking about just the broader consumer backdrop. You know, your thoughts on the state of the consumer. You know, when you look at macro data, it would seem to imply there's gonna be a softening consumer spending environment. But I'm just wondering, if you looked at your business and ignored all the headlines, how would you size up the health of the consumer, at this point in the year and looking into 2024?
Sure. Well, our core customers, they're a agile group. They adapt to many, many situations, and I would expect them to do those operators to do that no differently this time around. I think one thing to remember is just the resiliency of our business and our industry and those end customers is, you know, if you look at multiple different downturns of past, they tend to be down, you know, very low single digits. I mean, even in the Great Recession, I think our volume was down mid single digits. So very resilient business, very durable.
I think the other thing that is important in our case is sort of with a U.S.-focused, diverse customer base, and especially with our focus on gaining share with independent healthcare and hospitality, we think we're very well positioned, no matter the macro. And we think that we're with our... I use as an example, our 10 quarters in a row of independent share gains, as well as further share gains in healthcare and hospitality. That's the thing that we can control, even though we can't control the macro. So we're gonna adapt. We think we're well positioned for growth, no matter the macro, and that our end customers will adapt as well.
Understood. I know in conversations with you and others, just wondering if you could size up how much you think, because you brought up the macro, how much do you think your success going into 2024 and beyond is really macro-led versus self-help internal initiatives? Because it seems like you, more than others, have, and I know your relatively new CEO says it pretty regularly, that let's focus on what we can control, but we can achieve a lot based on what we can control without or regardless of the macro. Obviously, the macro helps, but how do you think about internally, your initiatives and your growth dependent on macro versus internal?
Well, I think as you just alluded to, and as we talk about a lot, so we use control the controllables a lot. We use that internally and externally, and it's not because we want a cute tagline, as opposed to really keeping our team focusing on the things that within our four walls we can control. That's been a key driver of the momentum that we've built over these last two years. And really, I think shows up in our results and the progress against our long-range plan. And as a result, you know, we've achieved some very good success in this first two years, and we have our outlook out there for next year. We feel very good about our ability to achieve the $1.7 billion.
I think if there was a, you know, sort of a concern out there, it would be if you had a major macro event. But that part we can't control, and the point I come back to is, we're going to continue to execute against our plan, and that is really that balance of profitable share gain and margin expansion. And I think as you've seen show up for quarter after quarter, that's where we're gonna continue to make progress. We have a long runway to go.
Right. And you mentioned the... I think most people are familiar with the $1.7 billion EBITDA promise for the upcoming 2024. I know in the past you've kind of broken out where that growth is coming from. Maybe you can just remind us in terms of, I think you broke the categories of market share versus gross margin versus ops efficiencies, but how do you prioritize those, and what do you think are the leading candidates to drive that sustained growth going into 2024?
Well, you're right. First of all, our focus and our goal for next year is at or near $1.7 billion, and that would be achieving our the in the third year of our Long-range plan. We feel very good about achieving that and the actions we have underway and continuing the momentum in order to achieve that. I'll come back to my comment earlier, that our focus is really a balance of profitable share gain and margin expansion, and that margin expansion comes across both in gross profit improvement and in OpEx improvement. And you've seen really it show up across all three pillars, and that's what makes us feel good about the progress. And even though we know we have plenty of opportunity ahead, we've had the 10 quarters in a row of independent share gains.
We've had continued share gains with healthcare and hospitality. So we're going to continue to focus on outgrowing the markets, especially in those target customer types. And then on gross profits, I think you've seen previously, you had a lot of the narrative on an inflation and deflation as that's moderated. You've really seen the benefit of the long-range initiatives that we've talked a lot about show up with our strong gross profit, strong gross profit gains. Key contributors have been around margin management to align with the environment that we're in, the strategic vendor management, cost of goods work, our inbound logistics work. So a number of things there that we've made very good progress on and continue to have work ahead.
And then in OpEx, you're really seeing that show up more now, just as we're getting past the staffing challenges that we and others were challenged with over the couple of years coming out of COVID. I'll go back to the third quarter commentary as an example. Our within distribution, our distribution cost per case was below where it was a year ago, and our in fact, our delivery productivity was above where it was in 2019, which is encouraging. On the warehouse, we're not quite there yet, but we are continuing to make progress, and we think that those are two areas where our self-help has really come to life. I'll go to delivery for a moment.
The routing work that we've talked a lot about, that is some cleanup coming out of COVID, but I think that's an excellent proof point of the cultural change or evolution over these last four or five years, where we've talked a lot about supply chain having that stronger voice at the table. Supply chain and sales working so closely together got us to the point where our cases per mile in the third quarter were the best in the company's history. And what I like about an initiative like that is, it really starts with the customer at the center, because when you're taking miles out of the system, you typically have better on-time experience with customers. And so when we do things like that, we like it when it's that balance.
Then on the warehouse, we are focusing more on flexible scheduling, where we'll be in half our markets here by the end of this year and the other half into next year. That is where it's focused on retention and better customer- or a better associate experience. In the markets that we've converted, we've seen outsized improvements in, in our retention there. So we feel very good about the things that we're doing, but we know we have a runway ahead. So balance across each of those areas and give us the confidence in our ability to achieve the $1.7 billion.
Is there a particular, because there are so many initiatives, both top line and margin, is there an incremental initiative in 2024 that you're excited about that's kind of we're going to be hearing more about in 2024? Or is there some, one of the components that really has been punching above their weight, do you think carries the torch? Like, what do you think is the, the top driver of the or something you're most excited about going into 2024?
We get that question a lot, and there's not a silver bullet. In distribution, it is... You've heard Dave use this phrase a lot, that it's really about improved execution. And so in our case, we think we have a lot of the right elements of strategy, and it's really about executing more effectively. And so we've shown that over this year. We think we have plenty of opportunity to continue to get better at that. So I'm excited about that. And I think because just doing the things that we do, doing it more effectively, will result in better customer experience, better social experience, more shareholder value creation, just kind of win for all stakeholders. The piece that I think you'll see show up even more next year, you've seen it show this year, is just on the distribution productivity.
As we're past some of the, bigger cost increases post-COVID and, some of these initiatives that we're doing get to more full scale, I think you'll see that show up continued through next year. I think the other piece that will show up more and more is some of the indirect spend work that I've talked about, that we're starting to see some benefits from. We'll see that continue to ramp up next year and even further in, in out years. So, but one thing that I think you should take away is, we think that the continued gains for next year and beyond will continue to be a balance across the, the, pillars of share gains, gross profit improvement, and operating expense leverage.
For those that have been tracking you for a little while, that $1.7 billion number was put out there a couple of years ago, and it is now for the year that begins in 30 days or so. When do you set up the next, or how do you think about the long-term algorithm behind that? Is there a point in time where you would disclose plans for 2025, 2026, 2027? Or how do we think about the algorithm behind that?
Yes. Well, that's where you have to join us for our Investor Day next June. So we will, we'll talk more specifically about our 2024 guidance and some more color on that in our, Q4 earnings call. But then in our Investor Day next year, we will set up more of the algorithm beyond 2024. I think before then, though, the important thing is, we believe we have still significant opportunity for earnings growth, and again, coming across the, the balance of, of each of those areas of share gain and margin expansion. So stay tuned.
Yeah. No, I think the last time you had put out an out-year, it was for long-term, you had done maybe in the 6%-7% growth range. Is there any— I mean, is that a number that needs to get refreshed, or is that a reasonable... I mean, because we've had now the past 3 years kind of reach up to this number, is that a far-fetched idea, or has the industry changed meaningfully, or is that not out of the realm of what the business should be able to generate in future years?
... Well, I don't wanna spoil the Investor Day for next year, but what I'll tell you is we still think there's plenty of growth ahead, and we don't think that where we are in 2024 is by any stretch anywhere near a ceiling there. I think back to the point, though, you made about our current long-range plan being put out at the beginning of 2022, and now we'll be at the near the end of the second year is, I think, really what we've tried to do, is keep ourselves very, very focused on executing against that strategy, progress against those initiatives, improving the execution against those. And I don't expect that to really change over the course of the next year.
As you would expect, you know, we ebb and flow a little bit as things don't always go the way you expect, but we are executing against the plan, and I expect that to be what really drives again to the $1.7 next year.
I feel like, you mentioned Dave as the new CEO. I mean, it's been 11 months now, but you having been the steady state over a much longer period of time, what would you say has been Dave's biggest first-year contribution? Obviously, he comes in different team, different style. Like, what do you think has been his biggest contribution in the first year that gives you that confidence over the next few?
Well, a few things that really stick out. One is, I think Dave, he's very thoughtful. I think as you've seen him on this, the LRP and that, he's not a change for the sake of change, so he took the requisite amount of time upfront to really understand the strategy, understand the business, and you've heard him say, I mean, he had the ability to change the plan, and he didn't. He felt like we were focusing on the right things, but where he really has brought a lot of focus is around the execution. I mean, that's his background. He's done that well in a lot of other places, and he really has brought the organization together, and that increased focus on executing more effectively. It's showing up in supply chain.
I mean, he talked about our safety results in the third quarter. That's a, a personal passion of his, and it's really shown up, and he inspires others and pushes others in a very good, healthy way, and I think you're seeing that show up. So that's—it's not a particular area, but when you do that across the entire baseline, it becomes pretty powerful as we, as we go ahead.
I think I just figured it out while you were talking. LRP is the long-range... Sorry, long-range plan.
Yes.
I was just making sure. Yep. And lastly, from a bigger picture standpoint, before diving into some of the more specifics, I mean, you sit in a lot of these investor meetings today and in weeks and months past, what do you think is the question you get most that you say, "You know what? That's a misunderstanding," or you just think that the street doesn't properly reflect or appreciate a certain aspect of your business?
I would say the main one that we continue to focus is, people oftentimes don't appreciate how resilient our business is, and they will put us in categories with other much more discretionary businesses. I bring people back to, you know, in many. We've looked at multiple inflation-induced recessions in the last 30 or 40 years. They tend to impact overall demand by maybe a point or 2. Even if you look at the Great Recession, as I mentioned, our volume was down mid-single digits, and earnings held up quite well. So it's a resilient business in our case, because we're U.S.-only, that makes it even more resilient, and we serve a very diverse base of customers. So we try to remind people of that.
Then the thing that we believe is a further advantage for us is back to the comments earlier on self-help and the things that we're doing that despite the macro, despite the backdrop and the resiliency of the overall industry, the things that we're doing to drive our overall business. We think position us very well.
I feel like a lot of people look at the food service distribution category as three big players, which there are, but then there are thousands of mom-and-pops who compete-
Mm-hmm.
hard and well. The big three, I feel like it's often talked about as a M&A roll-up type story, tuck-in acquisition. There's so much market share to be had. I feel like the numbers that get touted are sub 40% between the big three in terms of market share. Five, 10 years from now, is there a reason why that can't be materially higher? I feel like 10 years ago it was, "Oh, it's gonna be materially higher," and perhaps it, maybe we're just overly simplistically looking at it from Excel standpoint, and maybe there's a reason why it has to stay at that level. But do you believe there's any reason why we can't be looking at many years from now and that sub 40% is sub 50%? Is it, would that not be a reasonable aspiration or reasonable target?
I think it's very reasonable to assume that we continue to see some continued consolidation in that case. As you pointed out, it still remains very fragmented with the three largest only having roughly 40% of the share. We think that's a lot of opportunity. In our case, with the organic growth focus that we have, especially targeted at the independent healthcare and hospitality, where we think we can make the biggest impact in helping our customers, and they also are the ones where they're relatively profitable for us, so it's attractive on both fronts. Then, as you've heard Dave say, we don't need to do M&A. We don't have any large white space areas, et cetera. We're gonna be opportunistic.
It's the right transactions and the right price for the right value and really focused on local density. So whether it be a Renzi, which we're very happy with in upstate New York, Saladino's that we talked about on our last quarter call, which increases the density in Central California. Those are the kinds of things that fit well, as well as others, where they increase the local density and potentially avoid capital for us going forward. But we're gonna be very thoughtful in how we pursue those.
And I feel like when people think about, you bring up your customer opportunity, I think many people think of the industry as adding new accounts or through M&A. It would seem like the greatest opportunity, in our view, would be with grow share with existing, since your trucks are already stopping there. If you can drop off an extra case with an existing account, that would be a very profitable, piece of business to add. So just wondering if you could frame for everybody what, how, in terms of what you share, your current penetration, how you think about your business between chains and independents? What mix of each of those customers you think you have already, whether there's a broad brush number you can share along those lines, and maybe how the margins compare between them.
Because I know oftentimes, we get lost between how wide of a range the margins could be and why you'd focus on one business versus the other.
Sure. So you're right. We agree that increasing penetration or same-store sales for our existing customers is an opportunity. In the more recent quarters, we've seen with an independent, specifically, that the bulk of the growth has come from net new customers, and to a lesser extent, with existing. But over time, both of those remain a focus for us, and we think it is an opportunity for the reason that you said. And then in healthcare and hospitality, we've seen still the majority coming from net new, but we've seen a little more coming there from same-store penetration increases. And I'll use one example where we've really focused a lot in the last few years, and we've. It's been, in fact, in produce.
So we've done some things around process, around quality of product, et cetera, to increase. And as a result, produce has been our fastest growing category in independents for the last, you know, few quarters and year. And that's an area where proteins and produce, when you do them well, you can gain share in those categories, but they also have some halo effect. So back to the point, that's feedback we've heard from customers, and so therefore, it's an area that we've invested in to make sure we can serve those customers more effectively. And overall, from a profitability and margin perspective with different customer types, you're right. So you do with many independents, you have less share of wallet. There are still some independents where we have a very high share of wallet. It depends.
Compared to, say, healthcare, hospitality chains, you have typically a pretty high share of wallet there. And what we see is, you know, a lot of times if you have a higher share of wallet, you're typically trading off, you know, a little lower margin per case for that density increase there. And so that's how we think of the economics overall, and, you know, what from a experience with the customer, especially with some of our digital capabilities, the more that they consolidate their categories with us and into there, it makes it easier for them to access information to understand their business, et cetera. So, you know, we see it kind of as a win-win for both, and that'll remain a focus for us.
It does seem like you've made a conscious effort. While chains are still an important component within your restaurant focus, more importantly, is the independence, which it seems like you're making a conscious push more towards that. Can you just talk about whether it's the strategy behind that? I know you talk a lot about ramp up and hiring of salespeople, specifically to focus on those independents. Actually, I've heard your peers make similar mentions. So obviously, it's no secret that those are great target accounts. But how do you think about your focus on the independents and the labor additions you're making to go after that business?
Sure. As we've talked a lot about, I've talked a lot about independent healthcare and hospitality are our key focus areas. But as you pointed out, that doesn't mean we're not interested in serving chains. It's about being opportunistic in the right chains for the right fit. And a big reason for our focus on the independent healthcare and hospitality is we think we can make a bigger impact with those customers and really helping them with their business, in addition to them being more profitable for us as well. So again, a win for both. The increases in sales rep hiring for independents is really not a ramp, as opposed to we've been hiring, we're gonna continue to hire.
If I use the last few quarters as an example of 6%-ish independent case growth, as you'd expect, you wanna make sure you keep your route sizes manageable, so we're gonna add sellers in order to continue to support that growth. So I don't expect that to be a ramp as opposed to continued growth there. And on the chains, as you pointed out, it's not that we're not interested in serving chains, it's a matter of what are the right customers and the right locations, and they fit well. And I can think of some chain customers that we have that are really excellent customers and excellent partners, and they fit very well within the routes. Their assortment doesn't look all that different than a lot of independents, and so it's just being thoughtful.
But it is difficult in today's world to really increase the focus on chains, just given the profitability and the impacts on capacity, and we think it's the right call in order to outsize that focus on share gains with the other three.
I feel like, there's not a ton of data that we get on the food service distribution industry. I know you guys get NPD and other third-party data with a lot more granularity, but you often talk about a growth rate relative to the industry. So I know it's been, you know, for your desirable restaurants, it's 1.5 times the restaurant industry. How can we assess that from the outside? Or, or does that 1.5 become greater if the industry is stronger and it becomes a little more challenged, if the industry is weaker? Like, how does that flex? Or how do we validate that in any scenario?
Sure. Well, you will sometimes hear us talk about the one source we use for our internal understanding; it's far more granular. And when we talk externally with the 1.5, that's using Technomic's outlooks for the year. And the reason we do that is because Technomic data is more accessible to investors, to the broader public. And this year, in fact, I think the last Technomic update actually called for both independents and overall restaurants to be negative. It's kind of hard to talk about 1.5-
1.5-
Growing significantly, and they're a negative number. But I think what, what the important part of that is, is we're significantly outgrowing the market. And you see, you know, with independents as an example, if, let's say, it's, you know, flat to down using their data, and we're growing at 6%, I think that's a great proof point of, you know, our differentiated service model, whether it be the technology, the, the people service model, the innovative and unique products, and how it's really coming to life. And then back to the execution point, as we continue to execute more effectively and consistently across markets, we still think there's further opportunity there.
Yep. You know, I feel like, you know, there's a lot of focus on the profitability side of the business. No surprise there. And historically, it was, give us 2% or 3% commodity inflation, and you'd love it. You could pass that through to the customers. It's not too jolting, too high, it's not deflation. The past couple of years have been a whirlwind of tremendous inflation, and then there was concern that you wouldn't be able to pass that through. Seems like you were able to do that pretty effectively. And then it's now been rapid disinflation, not deflation, but disinflation, and yet the past couple of quarters have actually been maybe modest deflation. So it's been all over the map, but I've been impressed by your conversations about that that is too much of a concern.
Not that it's too much of a concern, but investors spend a lot of time focused on tremendous inflation, deflation. You know, it seems like you're proving that it's not as relevant to drive your gross profit in any scenario. So just whether that's factually true and how you can continue to do that, and why investors should not be as concerned by the level of inflation or deflation and your ability to manage through it?
Sure. Well, it's, you know, as you pointed, it's understandable that people were focused as we were seeing significant amounts of inflation and then what would happen as we came out the other side. But I think as you pointed out, what's important is that we're able to manage through effectively, both on the inflation and the disinflation, with significant gross profit per case gains in that environment. And that's really, I think, especially the last few quarters, when you see sequentially very little inflation or deflation, and yet our gross profit has continued to be very strong.
I think that's really shows through the progress of the different long-range plan initiatives that we've done and demonstrates why we believe gross profit is so durable, and why, even from quarter to quarter, it can move around a little bit, but over time, that we have opportunity to continue to grow that. And I think back to your point of, if you have modest inflation, historically, yes, we all like that. It is a modest tailwind. It's not gonna be the thing that drives your overall business. And so that's why we understand it, we spend time on it, we make sure as a distributor, you have to have good processes to manage your way through it. But we're gonna continue to focus on the things within the LRP that are driving our overall outsized gains there.
Having been through this cycle and the volatility, we've had a number of restaurants over the past day or so talk about how 2024 could finally be a year where maybe we return to a level of modest inflation. Is that reasonable, based on what you're seeing and what you're talking to with suppliers, that we could be back to that maybe normal year going into 2024? Or are there certain items that just make that hard to, either hard to forecast or hard to believe it's going to be that stable and low single-digit inflationary environment?
Well, I learned about a year ago that my crystal ball isn't all that great on inflation and deflation. And part of what I think impacts that is that so much of the movement around has been driven by proteins, which just by nature, can be a little more volatile. I think the encouraging part is that grocery has been pretty stable at very modest levels of inflation. And so as we move into the balance of this year and into next year, I would expect that proteins will be what moving around more, as opposed to meaningful changes in grocery. But again, we'll wait and see, and I think the important part is, with our process and that, we're well positioned to manage through, no matter what the environment is.
I feel like, a lot of people listen closely to Walmart and talk about their outlook, because obviously they're a large retailer, and they talk about potential for deflation in certain commodity items. Is that something that you'd be surprised if you were to see on your end? Or what would potentially lead to a period of prolonged deflation in any of those particular commodity items or baskets?
Really, the places where we've seen sort of in the proteins and around the edge in certain commodity categories, where you had spikes in the past year or two, such as eggs or other things, you know, I haven't been surprised as it's moved around. The core, more, grocery type of items, that's where I would be surprised if we see deflation versus something stagnating around maybe, you know, flattish to maybe some modest inflation through there.
Yep. Right, and in terms of the cash usage and the alternatives for that, you know, your leverage levels, I know for a while now it was, "Let's get down to 3 turns," and I think you said you're now at 2.9. I believe the target is 2.5-3. So once you get within a target range, what is the next step? Is it- is there a reason to believe you're more comfortable if that's even lower, or is that, I believe, the right range, and if so, how do you now pivot to other forms of cash usage, whether it's M&A or share purchase or other things?
Yes. So the last, you know, couple of years, we've been very focused on, first of all, making sure we're continuing to invest in the business, where we have the right returns. That will be, continue to be the top focus. I don't expect a meaningful change in the percent of sales that we spend on CapEx, as we, as we look ahead. Still likely in that, you know, 1.3% or so, including the leases, that we have. That has been an important part for us. As you pointed out, now that we're in the range, I wouldn't expect us to do as much debt pay down going forward. Potentially some, but that the reduction in leverage being more from earnings growth.
So then that really means, opportunistic M&A, and as I said earlier, we're not gonna do it for the sake of doing it. So if the right transactions come up, that's fine. Otherwise, I would expect us to likely, you know, lean in a little more to share repurchases as we've made a good progress against our first $500 million authorization with roughly $250 million of it executed through the early part of the fourth quarter. And as we believe, we remain undervalued, we think that's an opportunity for good use of cash.
Right, and the M&A front, I mean, if I look back, you know, a few years, you had a couple of sizable acquisitions. Feels like you have a national footprint, but, you know, they won't be surprised by an acquisition where we say, "Oh, I didn't realize it's not necessarily just geography, but maybe it's segments or whatnot." So when you think about that M&A, and you've done a couple of more recently, much perhaps smaller, transactions, so should we just think of it as more tuck in on different product lines, or are there certain holes in your business that you'd say would be an obvious area that you would focus on if the M&A opportunity came up?
Sure. I would expect the transactions that we've talked about to be more indicative of the types of transactions that we would be looking at in the nearer term, where it's more geographic footprint focus that is increases local density. So whether it be the example of Renzi in Upstate New York and Saladino's in Central California. So it's that local density, and we also look at other opportunities to avoid our own capital usage instead of buying well-run businesses that are out there. And we like that, and those are the types of transactions that, as we've done with these, we expect to fund them out of operating cash flow versus increasing leverage.
We've got about five more minutes, but before I continue down this list, I figured I would see if there's anybody in the audience that had any questions. I'm gonna fill the list for a minute then myself. All right. You know, when we think about margins, you know, because there's only three players, I think people have a pretty good visual in terms of where everyone stands from an EBITDA margin standpoint. And I think that's been a pretty big opportunity that people have often looked at US Foods and compared you to certain competitors and said, "Well, why can't you close that gap?" And whether or not you want to be targeting a certain competitor, seems like a tough thing to do because everybody's moving, has different things.
But what do you see over the next few years without front-running your-- front-running your Investor Day? But is there a reason to believe that you couldn't expand those margins? I think people talk about you guys in the mid-4% range on an EBITDA standpoint. Is there a reason why that couldn't be 5.5% or 6.5%? Or maybe there's just something structural, or you wouldn't want it to get that high, you'd want to reinvest. But how do you think about the margins over the next number of years in terms of the opportunity?
Well, to your point, different competitors take different paths. Our focus has been the balance of profitable volume growth and margin expansion in order to optimize and maximize dollars. That's what I would expect us to continue to do. With that said, we have increased margins. We still see plenty of runway ahead to increase margins, so, we'll talk more, as you pointed out, at the Investor Day, of how we think about multiple years, but we definitely see there's plenty of runway. If I go back in the 3 or 4 years leading up to COVID, we expanded margins around 100 basis points.
These last few years, coming out of COVID, since 2019, it's been harder with the inflation, and on a percentage, it doesn't look like it, but on an EBITDA per case, we're meaningfully above where we were in 2019. So the work we're doing is paying dividends and resulting in that increased profitability, which drives, as you pointed out, the increased cash flow, that then we can, reinvest in these different capital allocation priorities in order to create more shareholder value.
And then, just lastly, I feel like, well, it was a tumultuous period for everybody through COVID, and I know you had a period of time where there was maybe a, an activist shareholder, who I think is still a high single-digit % shareholder in the business. You have a new CEO. There's a couple of new board members. How is that all coming together? Some people just look from the outside and said, "Oh, that sounds like a lot of disruption," or, "You know what? That's actually been fantastic." I mean, how do you think about the synergies and how everyone's kind of working together, if so, for a common goal?
Well, as I look back, having been through the whole thing, I, I don't know that I could have asked for it to play out any better. Meaning, from the situation of... Because we put out the revised long-range plan in the beginning of 2022, when we were, you know, going through that matter, once we had moved to an interim CEO, we had a very focused area for our teams to, to work through. So where, where people can get distracted, we, we weren't distracted. We kept the team very focused on executing against this plan we just put out. So therefore, we're able to do that. When Dave stepped in, as I mentioned earlier, he has looked at the business. We've made some adjustments there. He's brought that increased execution focus.
He's really, you know, kind of, we haven't lost a step. We've continued to move ahead and accelerate in a number of areas. And at the same time, the board members that have come on and the relationships there, if you sat in our board meetings, you wouldn't know who was who. Everybody got to the point where we are one team. We are focused on the same outcome of making US Foods better than it was. So I think we're well-positioned, and we look forward to a bright future for US Foods and value creation for our shareholders.
Well, we look forward to hearing more about that, I guess, in June of 2024 then.
Yes. Stay tuned.
So far, all things sound good. We want to thank Dirk and US Foods for joining us at our conference today, and I hope you have a good day of meetings.
All right. Thanks for having us, Jeff.