Sysco said it has not seen any impact on its business from the potential recession. / Photo courtesy of Sysco.
At least one big company sees no signs of a recession.
Sysco, a giant wide-area distributor, said Tuesday it did not see a potential recession impacting its business, calling the restaurant industry “resilient.”
“We don’t see recession fears having a negative impact on our performance,” CEO Kevin Hourican told analysts on Tuesday, according to records from financial services site Sentio.
“At this time, the recession has no impact on our income statement,” he added.
But the company isn’t ignoring a potential recession either. “We are closely monitoring macroeconomic conditions for signs of a slowdown,” Mr. Horikan said.
He specifically called out the non-profit sector, including colleges and universities, hospitals, etc., which could be improved in the coming months. “We’re seeing continued strength as the tailwinds from the nonprofit sector continue,” said Hourican.
Sysco’s revenue increased 16.2% in the company’s fiscal first quarter, which ended October 1, compared with the same period last year. Earnings he rose 17.4% to his $3.5 billion. U.S. food service volumes increased 7.3% compared to the same quarter last year.
The comment from Sysco is worth noting. Because the company is a giant supplier of food and other goods to restaurants and non-profit providers. The Houston-based company is one of the first to see signs of a recession, given its scope.
“We are completely diversified,” said Hourican. “We cover every element of the out-of-home food sector, from the finest white tablecloth restaurants to QSR and everything in between. I don’t see any change.”
Hourican’s comments did not say that a recession was necessarily approaching. But they contrast at least somewhat with comments from McDonald’s executives who expect a recession in the coming months.
Some executives have suggested that low-income restaurant-goers are changing their eating habits, shifting their spending from expensive concepts to cheaper options like McDonald’s. Domino’s Pizza, on the other hand, has shown that consumers may turn their backs on delivery given the overall cost.
As for Sysco, which is a broad distributor, it says it is prepared to take steps to cut costs should the economy go south. But Hourican says the company has no plans to cut its workforce. Comments also suggest that the company is blaming the early layoffs on current distribution industry staffing issues.
“We are not going to cut headcount in our supply chain,” said Hourican. “As an example, we are not looking to reduce drivers. Through COVID, it has been proven that cost-cutting efforts in the early days of COVID were extreme, resulting in an industry labor shortage scenario that was very difficult to get out of. And we’re still digging in.”
The company also believes it can improve its market share if the economy goes south. “If the recession starts to affect the overall strength, we have an opportunity to take a share,” Mr. Horikan said.
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