Are Sysco's U.S. Foodservice Operations Gaining Executional Traction?

Sysco Corporation’s SYY U.S. Foodservice business showed improving execution in the first quarter of fiscal 2026, reflecting steadier operational performance and sequential progress in local volume trends. While overall demand conditions across food-away-from-home remained mixed, internal execution was the key driver behind improved results during the quarter.

U.S. Foodservice sales rose 2.9% year over year to $14.8 billion. Total U.S. Foodservice case volume increased 0.1%, marking a sequential improvement from the fourth quarter. Local case volume within U.S. Foodservice declined 0.2%, though this included an intentional business exit within the FreshPoint business, which negatively impacted local volumes by more than 50 basis points. Excluding this impact, U.S. Foodservice local volumes increased 0.3% during the quarter.

Within local performance, Sysco’s U.S. Broadline local business turned positive, delivering volume growth of 0.4%. This represented a 130-basis-point sequential improvement versus the prior quarter and significantly outpaced the 60-basis-point improvement in industry restaurant traffic during the period, as measured by Black Box. 

Execution improvements were also evident in operating consistency. Sysco witnessed meaningful gains in customer service levels, including improvements in on-time and in-full deliveries. Supply-chain performance strengthened during the quarter, supported by better colleague productivity, reduced product shrink and improved safety outcomes across warehouses and transportation operations. 

Momentum in U.S. Foodservice execution carried into the early part of the second quarter. On its first-quarter earnings call, management stated that October results showed continued progress and indicated expectations for total U.S. local volume to improve by at least 100 basis points more in the second quarter compared with the first.

Sysco’s first-quarter results underscore that its U.S. Foodservice business is benefiting from tighter execution, improved service reliability and sequential volume stabilization, even as broader industry demand remains uneven.

SYY, which currently carries a Zacks Rank #3 (Hold), has seen its shares rise 0.5% in the past year against the industry’s decline of 15.7%.

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The consensus estimate for Mama's Creations’ current fiscal-year sales and earnings implies growth of 39.9% and 44.4%, respectively, from the year-ago figures. MAMA delivered a trailing four-quarter earnings surprise of 133.3%, on average.

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The Zacks Consensus Estimate for United Natural Foods’ current fiscal-year sales and earnings implies growth of 1% and 187.3%, respectively, from the year-ago figures.

McCormick & Company, Incorporated MKC manufactures, markets, and distributes spices, seasoning mixes, condiments and other flavorful products to the food industry. It carries a Zacks Rank #2 (Buy) at present. MKC delivered a trailing four-quarter earnings surprise of 2.2%, on average. 

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This article originally published on Zacks Investment Research (zacks.com).

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