Food distributor Sysco drops delivery minimums to help restaurants cope with virus headwinds

  • Sysco has taken steps to help its customers in the restaurant industry weather an uncertain future.
  • "[We are] eliminating those order minimums for our small, medium and large customers, but most particularly for those small companies," CEO Kevin Hourican said in a "Mad Money" interview.
  • "We have the largest salesforce in the industry and we're literally going to go customer by customer by customer to ensure that they know about this news," he said.

As the U.S. restaurant industry braces for the winter months and a surging coronavirus outbreak, food distributor Sysco has taken steps to help its customers weather an uncertain future.

The Houston-based company said Thursday that it is canceling delivery size minimums for restaurants starting Monday. The news comes as some state and local governments put new dining restrictions in place in efforts to mitigate the troubling spread of Covid-19.

Sysco CEO Kevin Hourican told CNBC's Jim Cramer that the relaxed order requirements will be available for small, medium and large customers.

"Sysco is doing more than anyone in our industry to help those small business customers be successful," he said in a "Mad Money" interview. "[We are] eliminating those order minimums for our small, medium and large customers, but most particularly for those small companies."

Sysco, which counts restaurants, hospitals, schools, and hotels among its partners, announced the move as part of its Restaurants Rising campaign. The program pledges to onboard new customers within a day, offer discounts on mobile ordering and menu services and marketing strategies to its partners.

With the new no minimum delivery commitment, Hourican said the company is looking to help restaurants sustain as outdoor dining becomes more difficult, particularly in northern states.

"We're not doing this as an opt-in program," he said. "We have the largest salesforce in the industry and we're literally going to go customer by customer by customer to ensure that they know about this news."

Despite lockdown orders that paralyzed local restaurants earlier this year and the threat of new limitations going into place across the country, Hourican said he is not seeing the daunting rate of bankruptcies that some experts projected would overtake the industry. As many as 40% of restaurants were predicted to be forced into bankruptcy, but Sysco wasn't buying the gloomy forecast and the outcome has been "stronger than we thought," Hourican said.

"We reported recently that less than 10% of our customers are currently closed, and our job through these coming winter months is to help all of them be successful through the services and the food product and expertise that we provide to them," he said.

Sysco shares slipped 0.7% to $68.01 Thursday, falling alongside the major stock averages. The company's stock remains down more than 20% year to date.

Investors who got into the stock at the end of October, however, could have realized a more than 20% gain from a three-month closing low. The stock has enjoyed an uptrend coming off last week's election and positive vaccine news that triggered buying in the reopening stocks.

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