US Foods Holding Stock

US Foods Holding Corp. (US Foods) operates as a manufacturer, processor, marketer, distributor and seller of food and non-food products. The company conducts all of its operations through its wholly owned subsidiary US Foods, Inc. (USF) and its subsidiaries.

The company strives to inspire and empower chefs and foodservice operators to bring great food experiences to consumers. The company operates as one business with standardized business processes, shared systems infrastructure, and an organizational model that optimizes national scale with local execution, allowing the company to manage its business as a single operating segment. The company has centralized activities where scale matters and the company’s local field structure focuses on customer facing activities.

The company supplies approximately 250,000 customer locations nationwide. These customer locations include independent restaurants, chain restaurants, healthcare, hospitality, education and other customers. The company provides fresh, frozen, and dry food products, as well as non-food items, sourced from thousands of suppliers. Approximately 4,000 sales associates manage customer relationships at local, regional, and national levels. The company’s sales associates are supported by sophisticated marketing and category management capabilities, as well as a sales support team that includes world-class chefs and restaurant operations consultants, new business development managers and others that help the company provides more comprehensive service to its customers. The company’s extensive network of over 70 distribution facilities and fleet of over 6,500 trucks, along with approximately 90 cash and carry locations, allow the company to operate efficiently and provide high levels of customer service.

Given the company’s mix of products and services, the company is considered a broadline distributor. The company’s target customer types—independent restaurants, healthcare and hospitality—value foodservice distributors with a broad product offering and value-added services that help them be efficient and effective in running their operations. Sales to the company’s top 50 customers, including group purchasing organizations (‘GPOs’), represented approximately 44% of the company’s net sales in the year ended December 30, 2023 (fiscal year 2023).

The company has entered into contractual relationships with certain GPOs that negotiate pricing, delivery and other terms on behalf of their members. In fiscal year 2023, GPOs accounted for approximately 23% of the company’s net sales. GPOs are primarily consisted of customers in the healthcare, hospitality, education, and government/military industries.

Business Strategy

The company’s GREAT FOOD. MADE EASY. strategy is built on a differentiation focus in product assortment, customer experience and innovation. Through this strategy, the company also serves its customers as consultants and business partners, bringing the company’s customers personalized solutions and tailoring a suite of innovative products and services to fit each customer’s needs.

The GREAT FOOD portion of the company’s strategy is anchored by leading quality and innovation in produce and center-of-the-plate and other innovative products, such as those featured in Scoop, a program that introduces innovative and on-trend products multiple times a year, helping the company’s customers keep their menus fresh and delivering back-of-house convenience to reduce their labor and food costs. A growing part of the company’s Scoop portfolio is the company’s Serve Good program. The Serve Good program features more than 800 products that are sustainably-sourced or contribute to waste reduction. The company’s private brand portfolio is guided by a spirit of innovation and a commitment to delivering superior quality products and value to customers. While the company offers products under a spectrum of private brands, and at different price points, all are designed to deliver quality, performance and value to the company’s customers.

MADE EASY is aimed at providing operators reliability and flexibility in the company’s service model supported by tools and resources to support them in running their businesses. This means on-time and complete orders and customer choice via the omni-channel offering the company has to serve its customers. These offerings are supported with technology and expertise that make it easier to transact with the company and run their businesses. The company’s mobile technology platform provides customers with a personalized digital ordering experience and easy-to-use business analytics tools. The company’s portfolio of value-added services helps customers address key pain points like food waste, back-of-house operations and diner traffic. By delivering the company’s products and services through a differentiated team-based selling approach, the company provides customers access to a diverse team of experts, including chefs, center-of-the-plate and produce specialists and restaurant operations consultants. More than 80% of the company’s sales utilize its digital solutions. Customers utilizing these solutions tend to purchase more products and have stronger commercial relationships with the company.

As noted above, the company’s strategy of making it easier for its customers includes servicing its customers through multiple channels. The company has 90 cash and carry locations to provide more customers with a retail option in between deliveries and to cost effectively serve more price-conscious and smaller customers. The company’s US Foods Direct service more than doubles its product assortment and provides customers with access to thousands of specialty products, which ship directly to them from the supplier. Additionally, US Foods Pronto service allows restaurant operators to receive smaller orders more frequently. All of these channels provide the company’s customers options to shop their way.

The company’s GREAT FOOD. MADE EASY. strategy enables the company to reach more customers and create deeper relationships with existing ones, particularly within the company’s target customer types—independent restaurants, healthcare, and hospitality—and drive increased penetration of the company’s private brand products. Further, this strategy positions the company to make the most of the continued growth in food-away-from-home consumption and consumer preferences for innovative, on-trend flavors. As an enabler of this strategy, the company has invested in embedding continuous improvement in its operations to increase service consistency and efficiency and to engage employees in improving the company’s day-to-day processes.

On July 7, 2023, USF completed the acquisition of Renzi Foodservice (‘Renzi’), a broadline distributor in New York. The acquisition allows US Foods to further expand its reach into central upstate New York.

On December 1, 2023, USF completed the acquisition of Saladino’s Foodservice (‘Saladino’s’), a broadline distributor in California. The acquisition allows US Foods to further expand its reach into California.

Integrating the above acquisitions and realizing synergies from these acquisitions are key priorities for the company.

Products and Brands

The company has a broad assortment of products and brands designed to meet customers’ needs. In many categories, the company offers products under a spectrum of private brands based on price and quality, covering a range of values and qualities.

The company has registered the trademarks US Foods, Food Fanatics, and CHEF’STORE as part of the company’s overall brand strategy and its retail outlets. The company has also registered or applied for trademark protection in the U.S. for the company’s private brands. These trademarks and the company’s private brands are widely recognized within the U.S. foodservice industry.

Government Regulation

The company is subject to various laws and regulations relating to the manufacturing, processing, handling, storage, transportation, sale, advertising and labeling of food products, including the applicable provisions of the Federal Food, Drug and Cosmetic Act; Bioterrorism Act; Food Safety Modernization Act; Federal Meat Inspection Act; Poultry Products Inspection Act; Perishable Agricultural Commodities Act; Country of Origin Labeling Act; regulations issued by the U.S. Food and Drug Administration (‘FDA’) and the U.S. Department of Agriculture (‘USDA’), and other federal, state and local laws and regulations relating to the company’s operations and products that could restrict the sale of certain products or result in enforcement actions by federal, state and local government agencies under applicable standards.

The company’s distribution facilities must be registered with the FDA and are subject to periodic government agency inspections by federal and/or state authorities. The company has a number of processing facilities for certain meat, poultry, seafood and produce products. These units are registered and inspected by the USDA (with respect to meat and poultry) and the FDA (with respect to produce and seafood) as applicable. The company’s CHEF’STORE locations are registered with and inspected by various state and local authorities.

The company also distributes and sells a variety of non-food products, such as food containers, kitchen equipment and cleaning materials, and are subject to various laws and regulations relating to the storage, transportation, distribution, sale, advertising and labeling of those non-food products, including requirements to provide information about the hazards of certain chemicals present in some of the products the company distributes and regulations restricting the sale of products made with certain materials or chemicals.

The company’s customers include several departments of the U.S. federal government, as well as certain state and local governmental entities. These customer relationships subject the company to additional regulations that are applicable to government contractors. For example, as a U.S. federal government contractor, the company is subject to audit by the Office of Federal Contract Compliance Programs.

The U.S. Department of Labor and its agencies, the Employee Benefits Security Administration, the Occupational Safety and Health Administration (‘OSHA’), and the Office of Federal Contract Compliance Programs, regulate the company’s employment practices and standards for workers. The company is also subject to laws that prohibit discrimination in employment based on non-merit categories, including Title VII of the Civil Rights Act and the Americans with Disabilities Act, and other laws relating to accessibility. The company’s workers’ compensation self-insurance is subject to regulation by the jurisdictions in which the company operates.

The company’s facilities are subject to inspections under the Occupational Safety and Health Act related to the company’s compliance with certain manufacturing, health and safety standards to protect its employees from accidents. The company is also subject to the National Labor Relations Act, which governs the process for collective bargaining between employers and employees and protects the rights of both employers and employees in the workplace.

The U.S. Department of Transportation and its agencies, the Surface Transportation Board, the Federal Highway Administration, the Federal Motor Carrier Safety Administration, and the National Highway Traffic Safety Administration, regulate the company’s fleet operations through the regulation of operations, safety, insurance and hazardous materials. The company must comply with the regulations promulgated by the Federal Motor Carrier Safety Administration, including those relating to drug and alcohol testing and hours of service for the company’s drivers.

Because the company is organized under the laws of the state of Delaware and the company’s principal place of business is in the U.S., the company is considered a ‘domestic concern’ under the Foreign Corrupt Practices Act and are covered by its anti-bribery provisions.

History

The company was incorporated in 2007. It was formerly known as USF Holding Corp. and changed its name to US Foods Holding Corp. in 2016.