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Sysco Rolls Out Foodie Solutions to Aid Foodservice Demand

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Zacks Equity Research
·4 min read
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While the coronavirus-led increased stay-at-home trend is boosting the retail business for several food companies, the same is marring their foodservice operations. As social distancing is the key to curb the spread of COVID-19 people are avoiding dining out. Sysco Corporation SYY launched Foodie Solutions in an attempt to aid foodservice operators.

Foodie Solutions’ toolkits are aimed at helping foodservice operators in driving traffic and enhancing sales to stay afloat amid the coronavirus crisis. Apart from this, Foodie Solutions is also designed to help Sysco’s customers by providing them with long-term operational strategies.

The toolkit consists of various features like Virtual Kitchens which lists recommendations for serving customers via online platforms and phone calls. Also, Foodie Solutions offers a manual for pre-made meals as well as signature dishes of foodservice operators. Moreover, Family Style Meal Kits and Patio Dining solutions are also available in the toolkit. Apart from these, content related to takeout and delivery, meal prep kits as well as bar services among others is available.

Efforts to Enhance Growth Amid COVID-19

Sysco is bearing the brunt of coronavirus-related hurdles. This was also witnessed in fourth-quarter fiscal 2020, with the top and the bottom line deteriorating year over year. Sales declined in the U.S. Foodservice and International Foodservice segments on account of temporary closures amid the pandemic. Lower volumes in the food-away-from-home channel have been a deterrent. Increased social distancing had a considerable adverse impact on the company’s restaurant, education and hospitality customer segments.

Nevertheless, the company is making robust efforts to manage its business amid the pandemic. To this end, it is utilizing its sales team to boost additional businesses and also prepare for the return of demand in the food-away-from-home channel. Further, the company is helping its restaurant partners to reshape business, per the current environment, by offering solutions related to contactless menus, curbside/takeout, along with safety and sanitation. Encouragingly, management expects fiscal 2021 sales to be stronger than the fiscal 2020 level despite the current scenario. This also makes the company optimistic about its profitability in fiscal 2021.

As a significant chunk of the business has been hurt by reduced away-from-home sales amid the coronavirus crisis, the company has turned its distribution model to areas it didn’t essentially cater to before the pandemic. These include grocers, retailers and supply-chain contracts. Incidentally, the company is working with some of the best retailers to address customers’ needs through supply-chain as well as labor service deals. Apart from these, Sysco is shifting sales to national and regional retailers that will cater to the growing demand at retail stores.

We note that shares of this Zacks Rank #4 (Sell) company have slumped 26% in the year-to-date period compared with the industry’s decline of 2.8%.

3 Better-Ranked Food Stocks

TreeHouse Foods THS, with a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 7.7%.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Hain Celestial HAIN, with a Zacks Rank #2, has a trailing four-quarter earnings surprise of 15.7%, on average.

B&G Foods BGS, with a Zacks Rank #2, has a trailing four-quarter earnings surprise of 6.9%, on average.

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The Hain Celestial Group, Inc. (HAIN) : Free Stock Analysis Report
Sysco Corporation (SYY) : Free Stock Analysis Report
TreeHouse Foods, Inc. (THS) : Free Stock Analysis Report
BG Foods, Inc. (BGS) : Free Stock Analysis Report
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