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Sysco's Cutting Edge Solutions to Help Foodservice Operators

Zacks Equity Research
·4 min read

Sysco Corporation SYY is making robust efforts to manage its business and aid foodservice operators amid the coronavirus pandemic. To this end, the company is launching 10 fascinating menu concepts only for its customers nationally, with the help of the Cutting Edge Solutions platform.

These exclusively crafted products are likely to aid foodservice operators to keep up with the new dining trends while keeping them ahead of their competitors amid the pandemic. The platform will help them to increase dining traffic as well as open up new revenue streams amid the crisis.

Further, it will help foodservice operators update their menus in a simple manner. The platform also enables a smooth functioning of back-of-house operations for the foodservice operators. Notably, the Cutting Edge Solutions’ products are curated keeping in mind dining trends like comfort foods, outdoor and patio dining, better-for-you ingredients, takeout-friendly as well as versatility and labor-saving solutions.

The coronavirus outbreak and the resultant disruptions have left a lasting impact on consumer habits as they are now turning to comfort food. Impressively, the newly-launched menu with the Cutting Edge Solutions offers comfort food and a pleasant outdoor dining environment. The platform includes various better-for-you offerings to keep up with the evolving consumer needs for healthier food options. In this regard, it offers plant-based items which can be customized from Sysco Simply brand.

Apart from these, the Cutting Edge Solutions platform also provides labor-saving solutions like sous-vide sirloin steak and prepared dessert options to enhance the foodservice operators’ efficiently and cost savings.

Other Growth Efforts Amid COVID-19

Recently, Sysco launched Foodie Solutions to help foodservice operators amid the coronavirus outbreak. 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 designed to help Sysco’s customers by providing them with long-term operational strategies.

We note that this Zacks Rank #4 (Sell) company 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 due to 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.

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. The company is utilizing its sales team to boost additional businesses and prepare for demand to increase in the food-away-from-home channel. Further, it 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.

We note that shares of the company have slumped 25.9% in the year-to-date period compared with the industry’s decline of 4.8%.

3 Better-Ranked Food Stocks

Flowers Foods FLO, with a Zacks Rank #2 (Buy), has a trailing four-quarter earnings surprise of 8.2%, on average.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

TreeHouse Foods THS, with a Zacks Rank #2, has a long-term earnings growth rate of 7.7%.

Kellogg K, with a Zacks Rank #2, has a long-term earnings growth rate of 6%.

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