US Foods at Piper Sandler Conference: Strategic Growth Insights

On Wednesday, 10 September 2025, US Foods Holding Corp (NYSE:USFD) presented at the Piper Sandler 4th Annual Growth Frontiers Conference. The company emphasized its strategic commitment to achieving significant growth targets, despite industry challenges. CFO Dirk Locascio outlined plans for expansion in digital initiatives and operational efficiencies, while also addressing potential hurdles in market conditions.

Key Takeaways

• US Foods aims for 10% EBITDA growth and 20% EPS growth, focusing on self-help measures.
• The Pronto delivery service is expected to reach $900 million in sales this year.
• Strong growth is noted in healthcare and hospitality segments, aided by technology investments.
• Digital penetration in independent restaurants is at 78%, with a goal of 95%.
• AI and automation are central to improving operations and customer experience.

Financial Results

• Long-Range Plan: Confidence in achieving 10% EBITDA and 20% EPS growth through controlling controllable factors.
• Gross Margin Improvement: $30 million expected savings from inventory loss initiatives.
• OPEX Productivity: Targeting $60 million savings by 2027 from indirect spending initiatives, with $30 million saved last year.

Operational Updates

• Pronto Expansion: Pronto legacy operates in 44 markets, with penetration in 15 markets, aiming for 20 by year-end.
• Independent Restaurant Growth: Organic growth reached approximately 3% in June and improved sequentially.
• Chain Restaurant Strategy: Strategic exits have impacted growth, but new concepts are being onboarded.
• Automated Warehouse Facilities: The first facility launched in Aurora, Illinois, with plans for expansion in Texas.

Future Outlook

• Restaurant Industry Traffic: Anticipated gradual improvement over time.
• AI Initiatives: Continued development of AI tools for enhancing operations and customer interactions.
• Digital Initiatives: Aiming for 95% digital penetration to streamline customer engagement.

Q&A Highlights

• Performance Food Group: Continued interest in mutual information exchange.
• Pronto Uplift: Notable double-digit case growth with Pronto customers.
• AI Applications: Focus on developing tools like advanced order guides and CRM optimization.

For a detailed understanding, readers are encouraged to refer to the full transcript below.

Full transcript - Piper Sandler 4th Annual Growth Frontiers Conference:

Brian Mullin, Restaurant and Food Distribution Analyst: Okay, thank you everyone. I’m Brian Mullin, the Restaurant and Food Distribution Analyst. Very happy to have Dirk Locascio from US Foods, the CFO. Thanks, Dirk, for being here.

Dirk Locascio, CFO, US Foods: Thanks for having us.

Brian Mullin, Restaurant and Food Distribution Analyst: Just to start, I think you had a press release out this morning for those in the room or on the webcast who didn’t see it. Maybe if you could just say what it was.

Dirk Locascio, CFO, US Foods: Yeah, we just put a press release out this morning, really just reiterating our guidance for the full year and for the long-range plan. We remain more confident today than we were a year ago when we did our Investor Day and our ability to hit our long-range plan earnings algorithm and the 10% EBITDA growth and 20% EPS. I’m going to reiterate that before today.

Brian Mullin, Restaurant and Food Distribution Analyst: Okay, thanks, Dirk. I’m just going to ask a question on M&A, maybe address the Performance Food Group issue, which has been in the news. On your call in late July, you acknowledged there potentially could be interest from the US Foods side. Dirk, maybe I could just ask, with the information you have, what do you think some of the merits of a potential combination might be? What’s behind the desire to even explore this?

Dirk Locascio, CFO, US Foods: Sure. I don’t have anything new to share today other than just reiterate that we do think there’s value for the various stakeholders and therefore remain interested in exchanging information mutually with Performance Food Group and hope at some point they will agree to exchange information mutually as well. We think nonetheless, no matter what happens on that going forward, as I just said, we remain highly confident in US Foods’ future and our ability to continue to generate significant value for stakeholders for a long time to come.

Brian Mullin, Restaurant and Food Distribution Analyst: Okay, thanks, Dirk. Shifting to the business, we’ll start with the restaurant part of the business. On the last call, you talked about expecting to build momentum in independent case growth in the second half of this year. I just wanted to clarify, is that really a function of the comparisons do get a little bit easier, or is it maybe a little more something to it than that and there’s some underlying momentum? I’m asking because you called out 4% new account growth. That’s an attractive number, the best you’ve had in some time. It’s just a sense of the magnitude or the factors behind some of the improvements you’re expecting.

Dirk Locascio, CFO, US Foods: Sure. We do expect improvement in performance just from our core improvements as we continue to mature our sales force, as we continue to drive our differentiation, continue to deploy Pronto, all those things. As we do get later in the year, yes, there are some comps that will help as well. We’re encouraged that organic independent gates growth accelerated through the second quarter, with June finishing at approximately 3% organic growth. July continued at that level. In August, we actually saw some further sequential improvement in our growth rates. We’re encouraged. It’s one thing that although we can’t control the macro, we do continue to focus on gaining share, which we continue to gain in independents as well as healthcare and hospitality. That’s the part we’re going to continue to control.

Brian Mullin, Restaurant and Food Distribution Analyst: Okay, great. You reaffirmed the long-term targets this morning. With that as some context, things are great at US Foods. One area where I think you probably get an ongoing question is just the underlying assumption of the restaurant industry having traffic growth of 2% through the... You know, maybe at US Foods you’re on track this year, you reaffirmed this morning, but can you stay on track even if the restaurant industry doesn’t get the traffic up to that 2% over the next couple of years?

Dirk Locascio, CFO, US Foods: We expect, and we’re, like I said, we’re confident in achieving our long-range plan. I do, and we do expect that traffic will improve over a period of time. In the meantime, the thing when we talk about self-help or control the controllable is not because they’re cute buzzwords we like. It really is how we have the team focused on what we can control. The other thing that I like a lot is our balance of market share gains, a number of things to drive gross profit expansion, and some things to drive sustainable OPEX productivity to offset a portion or most of the cost inflation. It’s that portfolio of things and the continued improvement on as we have new initiatives coming on that we expect to allow us to achieve this long-range plan as well as growth for a long time to come.

Brian Mullin, Restaurant and Food Distribution Analyst: Okay. I wanted to ask on the chain restaurant business. You had a strategic exit in the quarter. I think you called out a 300 basis point drag to chain case growth in the second quarter. Is that now a headwind for the next three quarters? I think you’re also onboarding new business as well. I just wanted to give you a chance to clarify, you know, net-net, what’s the outlook on the chain part?

Dirk Locascio, CFO, US Foods: Sure. You’re right. We do have a line of sight into some new concepts that are coming on board, three primarily to replace that. One came on board in the second quarter, another one in the third quarter, and another in the fourth quarter. We do expect that headwind to get less and less as we go through the year. We continue to focus on optimizing our chain business, and we have a lot of good partnerships still in chain. We’re going to continue with a good base for our business. That is an area where you’re not going to hear us focus on a lot of growth. We’re going to focus our growth efforts a lot on gaining share in the independent, healthcare, and hospitality. Chain does provide a good baseload for the business and optimizes what we’ll continue to do there.

Brian Mullin, Restaurant and Food Distribution Analyst: Okay. I wanted to talk about Pronto. You know, on the most recent earnings call, the Pronto legacy business, it’s basically everywhere across the company now, I believe, or where you want it to be. You did discuss maybe being able to grow that by adding trucks. I just wanted to confirm for everyone that, you know, that’s separate from Pronto penetration is my understanding. Maybe anything you could offer on the opportunity on the legacy side, an example of what that looks like with the trucks, before I have a follow-up on the penetration.

Dirk Locascio, CFO, US Foods: Sure. Yeah. Pronto has two aspects of it. As you pointed out, Brian, there’s Pronto legacy, which we’ve had in market for the last seven or eight years, and that is in 44 markets through the second quarter. What that is, is it’s smaller box trucks that deliver to more dense geographic areas that are harder to get big trucks into and/or operators that have smaller spaces, need more frequent deliveries. That’s been a great win for us. We’ve continued to add not only locations over the years, but adding trucks. We have markets that have had Pronto legacy for seven, eight years, and we continue to add trucks because getting it right as far as the geographies and then filling those trucks up and adding more is important in order to use those assets efficiently. We think there’ll still be a lot of growth opportunity there.

As you pointed out, the newer piece is Pronto penetration. What that is, is it’s allowing our existing broad line deliver customers to have fill-in orders in between on the smaller Pronto trucks in certain geographies. That’s really more of a share wallet focus. In that case, the benefits, we’re typically competing with a specialty provider. When they have their fill-ins, they can not only fill in with those few items, but they have the access to our 10,000 or 12,000 SKUs with us. That one is one we started to slowly roll out last year. We’re in 15 markets now, expect to be in 20 by the end of the year. That is one that we’ve gone slow to go fast because we want to make sure that we’re not cannibalizing our core business as we deploy that.

An important thing to remember there is when we say we’re in a market, it’s going in with one or two trucks to start. This will be an engine for a period of time. That’s why we’ve updated our outlook that we think Pronto, both pieces, will be over $900 million in sales this year. We updated our 2027 estimate from $1 billion to $1.5 billion on our last earnings call. We think Pronto, it’s an excellent differentiator, and it’s an area to be able to serve customers that we couldn’t serve as well before and then better serve our existing customers out there, all leveraging our existing inventory, our existing broad line distribution centers. It’s also a very capital-efficient way to grow. As you can tell, we’re passionate and pretty excited about what this can do for a long time to come.

Brian Mullin, Restaurant and Food Distribution Analyst: That’s great. A follow-up, you touched on 20 markets by the end of the year. You took up the revenue out through 2027. You’ve said before, I think you’re seeing a double-digit uplift in overall case growth with those customers. Obviously, that’s a very powerful stat. Does this continue to roll out across 2026 and 2027? Is that how you build up to the revenue? Would you be done then, or do you think that you want to go slow to go fast and it could be longer?

Dirk Locascio, CFO, US Foods: I would expect that by 2027, we probably will be in many of the markets. That doesn’t mean that we won’t continue to add trucks over time. I would expect that for quite a few years to come, well beyond this long-range plan, Pronto will be a point of discussion and a driver of growth for US Foods. It’s definitely not done at the end of this long-range plan by any stretch.

Brian Mullin, Restaurant and Food Distribution Analyst: Okay. I’m going to pivot over to the cost and the margin side, you know, just starting with gross margins. Maybe a way to ask this, as you look forward over the, you know, the forecasted time period you have between private label penetration, strategic vendor management, you have a new inventory loss initiative, you have overall customer account mix, which is helping. Do all of these areas continue to contribute? Is one more important than the other? I know you like to bounce, but is one more important than the other? Are there any headwinds to consider offsetting all those positives? Any risk you’re monitoring on the ground?

Dirk Locascio, CFO, US Foods: Yeah, really, each of them contribute. As you pointed out, strategic vendor management tends to be among the larger, but all of them contribute to it. That’s what we like. The bulk of those really don’t involve charging the customer anymore. It’s really about continuing to do our core business better and/or partnering with our vendors more effectively to simplify our interactions with them, bring them additional above-market growth, especially with independents, healthcare, and hospitality. In return, we get compensated a little bit more for those. The inventory loss initiative that I talked about on our last earnings call that we expect to generate about $30 million this year, that’s just a great example of just better process discipline and organizational effectiveness where there’s a little bit of technology, but the bulk of it is not. It’s about taking best practices and standardization and doing them more effectively.

That’s why it’s been in our long-range plan. It just was sequenced a little later. That portfolio and things that we continue to pursue is why I have such confidence that we will continue to generate this value for a period of time. Also, when we talk about improvements, whether it’s in gross profit and/or OPEX productivity, we’re looking for sustainable improvements. We’re not focusing on what’s in the quarter, what’s in the next couple of quarters versus what’s something that’s going to make our business better than it was last year and that we continue to build on over time. Thinking of it really as essentially a continuous improvement platform.

Brian Mullin, Restaurant and Food Distribution Analyst: Okay. On the OPEX productivity, it’s been ongoing. It’s been great to see. I wanted to ask on Descartes, I think you’re at 90% of routed miles now. I’m just wondering how long it takes for the benefits to start to show up. Is there an initial lift in the market, and then there’s continuous improvement over time? What you saw in some of the earlier markets, and I think the spirit of the question is, as you get into 2026, is there still a tailwind from this initiative?

Dirk Locascio, CFO, US Foods: Yes, to answer your question, yes, there is. It is, so you’re right, it’s in about 90% of routed miles. It’ll be fully implemented by the end of this year. We’re happy we’re seeing about a 2% improvement in cases per mile. The other thing though that this brings that we like about it is that there is an efficiency play, but when you’re driving fewer miles, it’s translating typically into a better on-time performance for the customer. Service and the improvements in service level, which I can come back to, is not something we talk a lot about, but it is a lens that is critical. We’ve got a lot of things we’re doing to continue to get better and better at that to better serve that customer. This is one where the 2% is a good start. Our expectation is there’s more benefit in years to come.

We’re taking an older system where it was more episodic to do routing, where now you can do more regular dynamic. The machine does more of the work. We want to be thoughtful as we’re working with customers in the local market that are putting this in to sort of only turn the dial so much in the beginning. We’ll continue to get better and learning and using it. This is something that will add value for the next several years.

Brian Mullin, Restaurant and Food Distribution Analyst: Okay, great. Then indirect spending, you’ve called it a $1 billion cost bucket in the past. You’ve been talking about this for some time. I think you’ve already made some good progress against it. I guess just to take a snapshot of where we are now, you know, are you going to be through this opportunity by the end of next year? I know you always look to optimize, but I’m just curious if you’ve gotten through the big part of the opportunity already. As a little bit of a follow-up, we’re sometime away from the Investor Day. AI is a topic that is very relevant for everyone. Is there anything coming on that front that gets you excited? Maybe you could attack it further.

Dirk Locascio, CFO, US Foods: Sure. I’ll start with the indirect. I’m really proud of the work the team has done there. You’re right, it’s a $1 billion bucket that is, we’ve tackled pieces of it, but not holistically. This is the first time we’ve done it holistically. It really is a combination of some talent upgrades, process, and a little bit of technology. The team, you’re right, it’s a $1 billion bucket. Our expectation is to generate at least $60 million of savings by 2027. We did generate $30 million last year. We’re on track for $45 million this year. TBD on sort of whether we’re all the way at that target next year or not. What I would tell you is with the good work the team is doing, I wouldn’t expect when we get through this that we’re done, as opposed to there’s more opportunity to go there.

Brian Mullin, Restaurant and Food Distribution Analyst: Okay.

Dirk Locascio, CFO, US Foods: On the AI piece, if I go to there, the AI, I get pretty excited on this one. This is one where my team, I have the data science team, and we partner quite closely with our tech and digital team on this. It really shows up in a couple of forms. One is as we’re buying new technology, so Descartes, our procurement tools, they have AI embedded within them to improve whether it’s routing, procurement forecasts, et cetera. There are a number of things that we’re developing in-house. The in-house is things like as models get better, we can offer better suggestions and/or substitution products for customers than we could just a year or two ago. When we tell customers when we think their order will be there, we’re continuing to get more and more accurate on that. That’s all powered by AI.

Think of it as kind of the backend of a lot of what we’re helping customers and sellers with on recommendations and marketing and accuracy. It’s all powered by AI. Our first sort of in-house developed GenAI tool was, which I’ve talked about before, is our advanced order guide, which we began to deploy late last year for our local sellers. What this does is it takes, it’s a tool that can read menus, invoices, product boxes. It can break it down into ingredients. It took something that a seller would often do on nights and weekends that would take them several hours per to do and can do it in about 20 minutes now. What it does is it’s intended to make it easier for that seller so that they’re not doing the grunt work.

The machine can do 90% of the work, but the seller still reviews it and they still make their decisions and they can tweak and adjust. It’s geared toward seller ease and efficiency. We’re continuing to deploy that to higher and higher usage. We’re now working on that for our larger national customers. We continue to use AI in sort of our Salesforce sales call optimization within our CRM, adding capabilities within there. I would say we’re challenging ourselves to bring things to market that we think can improve our business and our customer experience in the next 3, 6, 12 months. At the same time, I’m a realist. I know that we are at the early innings of what’s going to come, but I’m excited with the team. The team is doing, we have a very strong partnership.

I talked about the data science and the IT teams, but also with our business teams. Anything we do, it’s not about just, oh, it’s a cool new tool as opposed to, is there a value that’s coming through the supply chain or through the commercial side that is bringing that value? If it’s something that, like I said, we’re bringing for sellers, we have seller feedback early on and we’re doing that so that it’s something that really helps them and allows them to be more efficient and effective.

Brian Mullin, Restaurant and Food Distribution Analyst: Understood. Okay, thank you. Automated warehouse facilities is something you’re doing. Maybe for those who aren’t aware, remind us what you’ve done in Illinois and then in Texas. Talk about what you’re seeing so far. If you could just take a really big step back, you know, how might this evolve and what might the roadmap look like for this over the next five, ten years?

Dirk Locascio, CFO, US Foods: Sure. We just brought to life our first semi-automated warehouse outside of suburban Chicago in Aurora, Illinois. It’s live mid-July for a small number of customers that’ll ramp up over the coming months to more customers. We’re pretty excited. It’s really not about the technology; it has been out there for several decades in retail. For our industry, because that last mile is so important and so expensive, we don’t run near as big of distribution centers as retail does. You haven’t seen as much of it in broadline distribution, but it makes sense now. We’re looking forward to this and really testing out what it means for us. It’s too early to give any early insights. There are some productivity elements to it, but also there’s a customer quality aspect to it where we think the accuracy will be better.

The build of the pallets will be better for the driver, so we’ll make the driver’s life easier. Those are the things that we’ll be looking to prove out. This is a new warehouse, and it’s hard to retrofit these in existing facilities because of the ceiling height differences. Where we do larger scale expansions, we can build the expansion to be able to accommodate this. We talked about one in Texas. We’re just starting to work there. It’s a large scale expansion and we will have automation in that facility as well. We think it provides a lot of opportunity going forward. As we learn more, we’ll share more. Having this, getting our hands on some real-life results from here, will be great.

Brian Mullin, Restaurant and Food Distribution Analyst: Okay, thank you. I wanted to ask about the healthcare business. Case growth has been very impressive. If you kind of start looking at a two-year stack or a three-year stack, case growth adds up to some big numbers. I just wanted to ask two different ways. One, are you seeing same-store traffic growth, whatever the right way to talk about it is, with the existing customers? Are there powerful demand drivers in that industry? I think you’ve been investing in the business development function as well. I’m just wondering if you could touch on that.

Dirk Locascio, CFO, US Foods: Sure.

Brian Mullin, Restaurant and Food Distribution Analyst: Yeah.

Dirk Locascio, CFO, US Foods: Healthcare has been a, it’s an important area for us. To your point, we’ve continued to invest in that area. It’s so restaurant operators, it’s a tough business to be an operator in. Healthcare, it’s a tough operator. They’re just some different challenges that they face. That’s an area where I’m pleased with the strength of the growth there and the work the team has done. To your point, new business, net new business is always going to be the lifeblood of the growth, but we have seen some gains there from same-store sales or penetration as well. It really, our success in that area comes down to sort of the three similar areas or some different aspects as it is in others. It’s our service model and trying to be easier to do business with them, fewer touchpoints.

Technology, we have a Vitals platform that helps them to more effectively manage their inventory or their business, understand retail sales performance, understand patient feeding costs, things like that. We’ve had these multi-decade long partnerships with some large group purchasing organizations that offer attractive economics to customers while also making these one of our more profitable customer types. We really think that it’s a great value proposition we can bring to customers and I expect us to continue to grow at a very healthy rate in healthcare.

Brian Mullin, Restaurant and Food Distribution Analyst: Okay. On the hospitality side, can you talk about what you’re seeing on the lodging customer side, and then maybe remind everyone or talk about your efforts to focus on some of the non-lodging segments and also business development? Are you investing in that area for hospitality too?

Dirk Locascio, CFO, US Foods: Sure. We are investing in business development for both of those. Yes, similar to healthcare, I’d say we’re really investing in sales and business development across all three of our target customer types of independent, healthcare, and hospitality. Within hospitality, as you point out, Brian, our historical sort of stronger suit has been full-service lodging. We’ve increased our focus the last couple of years in recreation. Think of it as large scale venues for sporting events, concert events, theme parks, things like that. That’s an area we were just underpenetrated in, and we’ve seen some good progress in that space. It’s continued to grow at a pretty healthy rate. It doesn’t mean we’re not focusing on growing lodging. We definitely still are, and we have a good base there. It’s bringing those similar value drivers to investors, our service model, our technology, and then the strong economics.

Brian Mullin, Restaurant and Food Distribution Analyst: Okay. I wanted to ask on the specialty business, just talk about the opportunity to grow the business both organically and inorganically over the next few years. On the organic front, I think you’ve had a lot of success on the produce side. At the Investor Day, you talked about seeing similar opportunities with protein. Maybe you could just talk about where you are in those specialty efforts.

Dirk Locascio, CFO, US Foods: Sure. Yeah. You know, different distributors take different approaches. We’ve chosen to invest in the capabilities and just strengthen those things through our broad line. Produce, to your point, we’ve made some investment in people, process, and technology over the last four or five years. We’ve seen quite strong share gains. It’s one of our strongest share gain categories there, bringing better selection, higher quality product to customers over that period of time. Yet the operator doesn’t have to have another delivery from someone else as opposed to they can just buy it through our broad line. Protein, we’ve made some investments in some of our capabilities. We continue to invest. We have a facility that we’re working on right now that brings some more capabilities into market. That is really, we’re just choosing to build or invest versus buy in that case.

We still think that those will be good opportunities for growth. You put around that also, you know, Pronto, again, which just brings some of that specialty service to more and more customers, yet they get the benefit of the broad line and our large assortment.

Brian Mullin, Restaurant and Food Distribution Analyst: Okay. I wanted to ask on digital, maybe just remind us where the business is today. I think you’ve got some goals out through 2027. Talk about that. I’m just curious, is it a concentrated effort to get to a specific target? Does it happen naturally because that’s where the world is going? Maybe remind everyone or talk about what that does for your business.

Dirk Locascio, CFO, US Foods: Sure. It is, we are at about 78% independent restaurant penetration, meaning 78% of our cases are going through digital, about 89% of our overall business. We are working toward 95% as a goal. Some of it is natural. It moves there, and some of it is just having our, making sure all of our sellers are comfortable and different operators get more comfortable using it. It is a little bit of both. People are still a critical part of our business. Our sellers, we are investing meaningfully in our double digits or mid-single digits and our local sellers.

They still are an important part of relationships with customers, so the digital and the technology are really about making it easier to do business with us and making it so that when those sellers are interacting with customers, it is more value add and interaction as opposed to taking an order. On digital, we will continue to invest. Our MOXē platform, which is what we use, has been live now for about three years. When we re-platformed it, one of the things that allowed us to do is release updates about every three or four weeks versus a few times a year. That is heavily informed by customer feedback. We continue to invest meaningfully in that and enhance that.

We will continue to do that over time because we think it is a great way for, from a customer and a seller perspective, to again make us easier to do business with.

Brian Mullin, Restaurant and Food Distribution Analyst: Okay. With that, we are up on time. Thank you, Dirk, for being here. Appreciate it.

Dirk Locascio, CFO, US Foods: All right. Thanks, Brian.

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