Sysco CEO Kevin Hourican goes one-on-one with Jim Cramer

>> LAST WEEK WE GOT A SOLID QUARTER FROM CISCO. I ALWAYS HAVE TO SAY THIS. THAT'S THE CISCO WITH A Y. THAT'S THE FOOD DISTRIBUTOR. THEY POSTED A SLIGHT TOP AND BOTTOM LINE. BEAT MANAGEMENT GAVE A VERY BULLISH FORECAST FOR 2027 FISCAL YEAR, THE 12 MONTHS ENDING NEXT JULY. STRANGELY, I THOUGHT THE STOCK ACTUALLY SOLD OFF 2.6% LAST TUESDAY IN RESPONSE. BUT SINCE THEN IT'S MADE ALL THAT BACK. IT DIDN'T MAKE ANY SENSE TO ME. THE WAY I SEE IT, THOUGH, YOU'RE NOW GETTING A PRETTY DARN GOOD QUARTER FOR FREE. PLUS, DON'T FORGET CISCO IS IN THE PROCESS OF ACQUIRING JETRO RESTAURANT DEPOT THAT'S A CASH AND CARRY WHOLESALER FOR RESTAURANTS AND CATERING COMPANIES THAT I LOVE. WHEN I OWN MY IN. WHEN THAT DEAL CLOSES, THEY'LL HAVE A HAMMERLOCK ON THE ENTIRE INDUSTRY. SO LET'S CHECK IN WITH KEVIN HURRICANE. HE'S THE CHAIR AND CEO OF SYSCO CORPORATION. YOU GET A BETTER SENSE OF THE QUARTER AND WHERE THINGS ARE HEADED. WELCOME BACK TO MAD MONEY, JIM. >> THANKS FOR HAVING US ON YOUR SHOW. IT'S GOOD TO BE BACK WITH. >> YOU TODAY. >> AND I AM GLAD YOU'RE HERE. I'VE GOT TO TELL YOU, KEVIN, YOU'VE ACCOMPLISHED SOMETHING THAT I THINK VERY FEW PEOPLE HAVE BEEN ABLE TO DO. YOU'VE TAKEN AN INDUSTRY THAT A LOT OF PEOPLE FEEL DOESN'T HAVE A LOT OF GROWTH. YOU'VE MANAGED TO GROW YEAR AFTER YEAR, AND YOU'VE DONE IT IN A WAY THAT'S VERY PROFITABLE. SO I THINK MAYBE YOU CAN JUST TELL PEOPLE WHY IT'S A GOOD BUSINESS THAT YOU'RE IN. >> SURE. >> YEAH. GREAT QUESTION. LET ME JUST START, AS YOU MENTIONED IN YOUR BRIEF INTRO, THE QUARTER THAT WE JUST POSTED. SO WE'RE PLEASED THAT WE HAD A BEAT ON THE TOP AND THE BOTTOM LINE. AND AS YOU MENTIONED, EVEN MORE BULLISH ABOUT THE YEAR AHEAD WHERE WE GUIDED OUR YEAR. THIS IS ON A 53 WEEK BASIS, 9 TO 11% EARNINGS PER SHARE GROWTH. AND EVEN IF YOU BACK OUT THE 53RD WEEK, THAT IS AT THE VERY HIGH END OF OUR LONG TERM GUIDANCE. SO WE'RE EXCITED ABOUT THE YEAR AHEAD, THE MOMENTUM OF THE BUSINESS CARRYING INTO THE YEAR AHEAD GIVES US THE CONFIDENCE AND TO THE BUSINESS THAT YOU JUST MENTIONED. FIRST, IT'S A REALLY LARGE TOTAL ADDRESSABLE MARKET, $370 BILLION TOTAL ADDRESSABLE MARKET. WE, CISCO, ARE THE LARGEST. WE HAVE 18% SHARE, WHICH MEANS WE OURSELVES HAVE A TREMENDOUS OPPORTUNITY TO INCREASE SHARE PROFITABLY. THAT'S WITH NATIONAL RESTAURANTS. IT'S WITH LOCAL RESTAURANTS, IT'S WITH LARGE HOTELS AND HOSPITALS AND ENTERTAINMENT VENUES. AND OF COURSE, INTERNATIONAL. LAST COMMENT ABOUT, YOU KNOW, THE MOST RECENT QUARTER, WE JUST POSTED OUR 11TH CONSECUTIVE QUARTER OF DOUBLE DIGIT PROFIT GROWTH IN INTERNATIONAL. SO THE SUCCESS THAT YOU REFERENCED IS HAPPENING ON THE GLOBAL SCALE. JUST TWO MORE QUICK THINGS. WE ANNOUNCED ON OUR EARNINGS CALL AN AI TRANSFORMATION OF OUR BUSINESS MODEL, JIM, WHERE WE'RE COMMITTING TO IN THIS YEAR, FISCAL 2027, WHICH WE'VE NOW STARTED $100 MILLION OF OPERATING MARGIN EXPANSION TIED TO DOING OUR WORK MORE EFFICIENTLY WHILE SIMULTANEOUSLY IMPROVING THE CUSTOMER EXPERIENCE. AND AS YOU MENTIONED, RESTAURANT DEPOT, WE'RE CONTINUING THE PLANNING EFFORTS, LOOKING FORWARD TO THE OPPORTUNITY TO CLOSE THAT DEAL IN THE FIRST CALENDAR QUARTER OF 2027. JIM, BACK. >> TO YOU. >> OKAY. I CAN'T WAIT TO CLOSE OUT. I KNOW BOTH COMPANIES WOULD BE TOGETHER, BE REALLY BETTER THAN SEPARATE. I'M WONDERING IF I WERE A, A GENERAL CUSTOMER, WHETHER, WHETHER I COULD SAY TO YOU, LISTEN, I'M ALSO A CISCO CUSTOMER. WILL YOU PUT STUFF ON THE TRUCK? THAT IS ONLY WHEN YOU'RE COMPLETE? NOT NOT YET. WILL YOU BE ABLE TO DO STUFF. CROSS CHAIN CISCO TO RESTAURANT DEPOT, OR IS THEY ALWAYS GOING TO BE SEPARATE? >> WE'RE EXCITED. THEY ARE DIFFERENT CHANNELS. TO BE CRYSTAL CLEAR, THEY ARE DIFFERENT CUSTOMERS. SO TODAY THERE'S A CASH AND CARRY CUSTOMER THINK SMALLER RESTAURANT, FOOD TRUCK, SINGLE RESTAURANT OWNER WITH MAYBE TEN TABLES. THEY'RE DOING THE WORK THEMSELVES. THEY'RE DRIVING TO THE STORE. THEY'RE DOING THE PICKING, THE PACKING, THE SHIPPING. THEY'RE DELIVERING IT BACK TO THEIR OWN RESTAURANT. ON AVERAGE, THEY'RE SAVING ABOUT 15 TO 20%, JIM, BY DOING THAT. AND THAT'S A CHANNEL. THE CISCO CUSTOMER TENDS TO BE A LITTLE BIT OF A LARGER CUSTOMER. THEY SEEK DELIVERY. THEY WANT DELIVERY. THEY WANT AN IN-PERSON SALES REP WHO KNOWS THEIR BUSINESS, WHO HELPS THEM WITH THINGS LIKE MENU OPTIMIZATION AND CULINARY INNOVATION. AND THEY OBVIOUSLY PAY FOR THOSE SERVICES THROUGH THE COST OF THE PRODUCT. THAT'S TODAY. WHAT WE'RE EXCITED ABOUT IN THE FUTURE IS EXACTLY WHAT YOU JUST REFERENCED. WE CAN CREATE THE FIRST NATIONWIDE AND EVENTUALLY INTERNATIONAL MULTI-CHANNEL OPERATOR WITHIN THIS SPACE. I'LL GIVE EXAMPLES TO BRING THAT TO LIFE. YOU COULD BE A DELIVERY PRIMARY CUSTOMER WHO'S GETTING TWO DELIVERIES PER WEEK. THAT'S TO SAY TUESDAY, THURSDAY, SATURDAY NIGHT YOU RUN OUT OF SALMON. YOUR NEXT DELIVERY IS NOT FOR A FEW DAYS. WE CAN LEVERAGE THAT RESTAURANT DEPOT STORE WHO'S OFTENTIMES CLOSER TO THAT RESTAURANT FOR SAME DAY DELIVERY, NEXT DAY DELIVERY OR FIRST THING IN THE MORNING, AND DO IT IN A MORE COST EFFECTIVE WAY FROM OUR WAREHOUSE. THAT MAY BE, YOU KNOW, AN HOUR. >> OR. >> THAT IS TWO HOURS. HAVING BEEN IN BOTH IN THE RESTAURANT AND IN. THAT'S WHAT I WANT. OKAY. I DON'T HAVE THE TIME TO GET AWAY FROM MY OUTFIT BECAUSE THEN THE PLACE FALLS APART. NOW, I DO WANT TO GET BEFORE WE GO TOO FAR, THERE'S SOMETHING THAT A LOT OF PEOPLE DON'T REALIZE BECAUSE PEOPLE FEEL IT'S, IT'S INFLATION TO GO OUT. FOOD AWAY FROM HOME CONTINUES TO GAIN SHARE, WHICH IS ANOTHER GREAT TAILWIND FOR YOU. BUT MOST PEOPLE THINK IT'S GOTTEN TOO EXPENSIVE. THEY FEEL PEOPLE ARE STAYING AT HOME, BUT MAYBE THEY'RE GOING OUT. NO, THE TREND IS RATHER OBVIOUS OF HOW GOOD THIS IS FOR YOU. >> YEAH. ONE OF THE FAVORITE CHARTS I HAVE IS OVER THE PAST 20 YEARS, FOOD AWAY FROM HOMES, SHARE OF WALLET OR SHARE OF SPEND. AND IT'S UP AND TO THE RIGHT IN THE GROCERY CHART IS THE OPPOSITE. AND THE LINE INTERSECTED, YOU KNOW, A FEW YEARS AGO. SO EVERY YEAR, FOOD AWAY FROM HOME TAKES GREATER SPEND. AND THE WHY IS CONVENIENCE. AND IT'S ALSO ABOUT EXPERIENCES. JIM, YOU'VE BEEN IN THE HOSPITALITY, YOU ARE IN THE HOSPITALITY BUSINESS. IT'S ABOUT EXPERIENCES BRINGING PEOPLE TOGETHER OVER FOOD AT A RESTAURANT. IT'S SOMETHING WE ENJOY. IT'S SOMETHING THAT THAT AMERICANS AND AROUND THE WORLD PEOPLE ENJOY. EUROPE IN PARTICULAR IS FOLLOWING THE EXACT SAME TREND, BUT IS ABOUT TEN YEARS BEHIND. SO THERE'S TAILWINDS. THERE'S WINDS AT THE BACK AT THIS FOOD AWAY FROM HOME SEGMENT THAT WE'RE IN. I JUST WANT TO SAY ONE MORE THING ABOUT THIS COMBINATION OF RESTAURANT DEPOT AND SYSCO. SO I GAVE AN EXAMPLE OF A SYSCO DELIVERY CUSTOMER WHO NEEDS SOMETHING. NOW WE CAN LEVERAGE THAT RESTAURANT DEPOT STORE. THE OPPOSITE IS ALSO TRUE. RESTAURANT DEPOT DOES A GREAT JOB SERVING THE SMALLER CUSTOMER. THERE ARE INSTANCES WHERE THOSE CUSTOMERS KIND OF GROW OUT OF DOING THE WORK THEMSELVES. THEY WANT A DELIVERY PARTNER. WE CAN CREATE A LOYALTY PROGRAM, THINK BUY MORE, SAVE MORE AS A CUSTOMER WILL REWARD YOU REGARDLESS OF WHICH FORMAT AND WHICH CHANNEL YOU BUY IN. OUR GOAL IS TO BRING AFFORDABLE FOOD TO MORE COMMUNITIES, AND WE DESIRE TO BRING THAT RESTAURANT DEPOT BUSINESS MODEL TO 100 PLUS 125, PLUS ADDITIONAL COMMUNITIES OVER THE COMING YEARS. >> AND ONE LAST THING I KNOW IT'S THERE. BY THE GRACE OF GOD, IT'S NOT MY RESTAURANT. BUT HOW DO WE TRY TO HOW CAN WE AT LEAST TRY TO HAVE FOOD SAFETY AFTER THESE INCIDENTS THAT WE'VE BEEN HEARING ABOUT? HOW DO WE IMPROVE IT? WHAT CAN WE DO? >> YEAH, IT'S A REALLY UNFORTUNATE THAT WE'VE GOT, YOU KNOW, THE TWO SITUATIONS THAT ARE HAPPENING RIGHT NOW. JUST WANT TO SAY FROM A CISCO PERSPECTIVE, WE TAKE FOOD SAFETY INCREDIBLY SERIOUSLY. IT IS OUR BRAND QUALITY OF THE FOOD WE SELL, THE SAFETY OF THE FOOD WE SELL. WE HAVE A VERY GOOD, ROBUST, STRONG FOOD SAFETY PROGRAM. WE ACTUALLY EXECUTED A RECALL EVEN BEFORE THE SUPPLIER INVOLVED IN THIS SITUATION COMMUNICATED THE RECALL. WE HAVE A VERY ROBUST COMMUNICATION PROTOCOL TO OUR CUSTOMERS. JIM, WE'LL TEXT YOU, WE'LL EMAIL YOU, WE'LL CALL YOU ACTUALLY CALL FIVE TIMES TO MAKE SURE WE CAN GET THROUGH TO THE CUSTOMER TO INFORM THEM OF THESE TYPES OF EVENTS. WE'VE GOT GREAT SUPPLIER PARTNERS IN THIS SPACE. THEY DO GOOD WORK. IT IS A DIFFICULT EPIDEMIOLOGY TO TRY TO TRACE AND TRACK BACK TO ROOT CAUSE. JUST NO INTEREST. LIKE WHENEVER IT'S FOUND ROOT CAUSE ACTIONS ARE TAKEN IMMEDIATELY. WE SHIFT SOURCE SUPPLY TO ALTERNATIVE PLACES. THIS IS AN EXAMPLE, JIM, WHERE SIZE AND SCALE MATTER BECAUSE WE BUY MORE FRESH PRODUCE THAN ANYONE IN THE FOOD AWAY FROM HOME SPACE, WE CAN QUICKLY PIVOT FROM WHO WE BUY FROM GEOGRAPHY, WE BUY FROM THE SAFETY AND QUALITY IS ABSOLUTELY PARAMOUNT IN THE TRUST WITHIN CONSUMERS AND WITH THE RESTAURANT OPERATORS THAT WE SERVE. >> EXCELLENT. AND THEN FOR THE YOUR ACQUISITIONS, AT WHAT POINT WILL ANTITRUST GET IN THE WAY? I KNOW WE HAD THAT U.S. FOOD SITUATION. I THOUGHT IT WOULD BE A GOOD COMBINATION, BUT I KNOW THAT'S NOT THE WAY THE GOVERNMENT FELT AT THE TIME. BUT WHEN PEOPLE JUST SAY, WAIT A SECOND, THESE GUYS ARE TOO POWERFUL, I NEED HELP. AT WHAT POINT COULD THAT OCCUR? >> YEAH, THE DEAL IS IN PROCESS OF BEING REVIEWED AS WE EXPECTED. IT HAS RECEIVED A SECOND REQUEST. OUR EXPECTATION IS THAT THE DEAL WILL CLOSE IN OUR CALENDAR UPCOMING CALENDAR Q1. SO I THINK, YOU KNOW, JANUARY THROUGH MARCH, TIME FRAME WHAT THE GOVERNMENT'S GOING TO SEE WHEN THEY REVIEW THE DEAL ARE THE FACTS THAT WE SEE. THEY'RE COMPLETELY SEPARATE CHANNELS. WE HAVE OUR CASH AND CARRY CUSTOMER WHO'S CHOOSING TO GO TO THE RESTAURANT DEPOT STORE TO BUY THEIR PRODUCT TO SAVE MONEY. WE HAVE A DELIVERY PRIMARY CUSTOMER WHO WANTS DELIVERY, SO THEY'RE DIFFERENT CHANNELS. IN FACT, A JUDGE HAS ALREADY RULED IN A PRIOR CASE THAT THEY ARE SEPARATE CHANNELS. THE SECOND POINT IS OUR COMMITMENT SYSCO'S COMMITMENT TO KEEPING COSTS LOW. I'VE SAID BEFORE, WE ARE NOT GOING TO RAISE PRICES AT RESTAURANT DEPOT LOCATIONS. THE ENTIRE PURPOSE OF THIS DEAL IS TO BRING THAT PHENOMENAL RESTAURANT DEPOT BUSINESS MODEL TO HUNDREDS OF ADDITIONAL LOCATIONS, WHICH CREATES AFFORDABILITY AND CREATES THOUSANDS OF JOBS. SO WE'RE BRINGING AFFORDABLE FOOD TO HUNDREDS OF ADDITIONAL COMMUNITIES, CREATING THOUSANDS OF JOBS. THESE ARE THE FACTS THAT WE BELIEVE THE GOVERNMENT WILL SEE WHEN THEY DO THE REVIEW. AND JIM, WE'RE CONFIDENT THAT THE DEAL WILL GET APPROVED. >> EXCELLENT. THANK YOU. I KNOW THAT THE NUMBERS WILL GO UP WHEN IT HAPPENS, AND MAYBE THE SERVICE WILL GO UP TOO, ALTHOUGH BOTH, I HAVE TO SAY, BOTH ESTABLISHMENTS I VIEWS AND BOTH OF THEM DO A GREAT JOB. I WANT TO THANK KEVIN HARKIN, WHO'S THE CEO AND CHAIR OF SYSCO. KEVIN, IT'S GREAT TO HAVE YOU ON THE SHOW. THANK YOU SO MUCH. >> THANK YOU JEN. HAVE A GREAT DAY. >> OKAY. MAD MONEY IS BACK AFTER THE BREAK. >> COMING UP, HAS A VICTOR EMERGED FROM AMERICA'S DECADES LONG BURGER WARS. CRAMER IS DIGGING INTO THE NUMBERS TO