Performance Food Group Company (PFGC): Business Model Canvas [11-2024 Updated]

In the competitive world of food distribution, Performance Food Group Company (PFGC) stands out with a robust business model that effectively meets the diverse needs of its customers. By leveraging strategic partnerships and an extensive distribution network, PFGC provides a wide array of high-quality food products to various segments, including independent restaurants and healthcare facilities. This blog post delves into the Business Model Canvas of PFGC, exploring its key components that drive success and customer satisfaction. Discover how this industry leader navigates challenges and capitalizes on opportunities in the foodservice sector.

Performance Food Group Company (PFGC) - Business Model: Key Partnerships

Collaborations with food manufacturers

Performance Food Group Company (PFGC) collaborates with a diverse range of food manufacturers to enhance its product offerings. In the first three months of fiscal 2025, the Foodservice segment reported net sales of $7,685 million, with a significant portion attributed to proprietary and national brands sourced from these collaborations. The company’s procurement strategy focuses on optimizing costs and improving product quality, directly impacting gross profit, which increased by $101.3 million, or 6.1%.

Partnerships with logistics providers

PFGC maintains strong partnerships with logistics providers to streamline its supply chain operations. The company reported a total of $96.5 million in capital expenditures for property, plant, and equipment, which included investments in logistics infrastructure. These investments are crucial for managing the distribution network that serves over 300,000 customer locations across North America.

Relationships with independent and chain restaurants

PFGC has established robust relationships with both independent and chain restaurants, which constitute a significant part of its customer base. For the three months ended September 28, 2024, independent sales represented 41.7% of total Foodservice segment sales. The company achieved a total independent case growth of 7.8% during the same period, driven by increased demand for its Performance Brands.

Strategic alliances with suppliers of Performance Brands

The company's strategic alliances with suppliers of Performance Brands have been pivotal in expanding its product range. As of September 28, 2024, PFGC reported total assets of $14,396.5 million, with significant investments in goodwill and intangible assets resulting from these alliances. The focus on proprietary brands has enhanced margins, contributing to a gross profit of $1,764.2 million.

Engagements with vending and convenience store distributors

PFGC’s Vistar segment specializes in distributing products to vending and convenience store distributors, which is crucial for diversifying its revenue stream. In the first three months of fiscal 2025, net sales for the Vistar segment increased by $35.3 million, or 2.8%. This growth reflects the company's effective engagement with various distributors across multiple channels, including office coffee services and retail.

Partnership Type	Key Metrics	Impact on Business
Food Manufacturers	Net Sales: $7,685 million (Foodservice)	Increased gross profit by $101.3 million (6.1%)
Logistics Providers	Capital Expenditures: $96.5 million	Enhanced distribution efficiency
Restaurants	Independent Sales: 41.7% of Foodservice sales	Independent case growth of 7.8%
Performance Brands Suppliers	Total Assets: $14,396.5 million	Enhanced product margins and brand presence
Vending/Convenience Distributors	Vistar Net Sales Increase: $35.3 million (2.8%)	Diversified revenue streams across channels

Performance Food Group Company (PFGC) - Business Model: Key Activities

Distribution of food products across various channels

Performance Food Group Company (PFGC) operates through three primary segments: Foodservice, Vistar, and Convenience. For the three months ended September 28, 2024, PFGC reported net sales of $15,415.5 million, representing a 3.2% increase from $14,938.6 million in the same period of the previous year. The Foodservice segment accounted for $7,692.1 million of this total, up 5.7% from $7,277.0 million.

Management of supply chain logistics

PFGC's logistics management focuses on optimizing supply chain efficiency. Total capital expenditures for supply chain improvements were $96.5 million in the first quarter of fiscal 2025, compared to $53.2 million in fiscal 2024. This includes investments in warehouse expansion, transportation equipment, and information technology.

Marketing and sales of Performance Brands

The company has seen a favorable shift in the mix of cases sold, particularly in its proprietary-branded products, termed Performance Brands. In the first three months of fiscal 2025, the gross profit attributable to Performance Brands increased significantly due to higher case volume driven by strategic marketing initiatives aimed at independent customers.

Customer service and relationship management

PFGC emphasizes strong customer relationships, particularly with independent customers, which accounted for 41.7% of total Foodservice segment sales in the latest quarter. The company achieved total independent case growth of 7.8% and organic independent case growth of 4.3%.

Integration of acquisitions into existing operations

PFGC has been active in acquisitions, investing $574.3 million in the first quarter of fiscal 2025 for a Foodservice segment acquisition, compared to $214.6 million in fiscal 2024. The company’s recent acquisition of Cheney Brothers, valued at $2.1 billion, is expected to further enhance its operational capabilities.

Key Metrics	FY 2025 (Q1)	FY 2024 (Q1)	Change (%)
Net Sales	$15,415.5 million	$14,938.6 million	3.2%
Foodservice Sales	$7,692.1 million	$7,277.0 million	5.7%
Total Capital Expenditures	$96.5 million	$53.2 million	81.3%
Independent Case Growth	7.8%	N/A	N/A
Acquisition Spend	$574.3 million	$214.6 million	168.7%

Performance Food Group Company (PFGC) - Business Model: Key Resources

Extensive distribution network

Performance Food Group Company (PFGC) operates an extensive distribution network with over 150 locations across North America, serving more than 300,000 customer locations in the food-away-from-home industry. This network allows for efficient delivery and service to a wide range of customers including independent and multi-unit chain restaurants, schools, healthcare facilities, and retail establishments.

Diverse portfolio of Foodservice, Vistar, and Convenience segments

PFGC's business model is structured around three primary segments: Foodservice, Vistar, and Convenience. For the three months ended September 28, 2024, the net external sales for each segment were as follows:

Segment	Net External Sales (in millions)
Foodservice	$7,685.0
Vistar	$1,284.7
Convenience	$6,363.4
Total	$15,415.5

This diverse portfolio allows PFGC to mitigate risks and capitalize on various market opportunities across different customer bases.

Strong brand recognition and proprietary brands

PFGC boasts strong brand recognition with its proprietary brands, which are integral to its sales strategy. The company markets both nationally recognized brands and its proprietary-branded food products, enhancing its competitive edge in the market.

Skilled workforce in logistics and sales

The company relies on a skilled workforce, particularly in logistics and sales, to maintain its operational efficiency and customer service excellence. This workforce is essential for managing the complexities of PFGC's distribution network and ensuring timely deliveries to customers.

Advanced IT systems for inventory and order management

PFGC employs advanced IT systems to manage inventory and order processing efficiently. These systems facilitate real-time tracking of inventory levels and order statuses, which is crucial for optimizing supply chain operations. The investment in technology is reflected in the capital expenditures of $96.5 million for the three months ended September 28, 2024, with significant allocations for information technology improvements.

Capital Expenditures by Segment (in millions)	Three Months Ended September 28, 2024	Three Months Ended September 30, 2023
Foodservice	$77.3	$31.0
Vistar	$6.0	$3.4
Convenience	$10.4	$4.0
Corporate & All Other	$2.8	$14.8
Total	$96.5	$53.2

This focus on technology underscores PFGC's commitment to enhancing operational efficiency and customer satisfaction.

Performance Food Group Company (PFGC) - Business Model: Value Propositions

Broad selection of high-quality food products

Performance Food Group Company (PFGC) offers a diverse range of food products, including national brands, proprietary brands, and customer brands. As of the first three months of fiscal 2025, PFGC reported net sales of $7,692.1 million for the Foodservice segment, which increased by $415.1 million, or 5.7%, compared to the same period in the previous year. The company focuses on delivering high-quality food products to various sectors, including restaurants, healthcare facilities, and educational institutions.

Competitive pricing through economies of scale

PFGC leverages its size and scale to achieve competitive pricing. The company reported a gross profit of $1,764.2 million for the three months ended September 28, 2024, representing a 6.1% increase year-over-year. The cost of goods sold for the same period was $13,651.3 million, which reflects the efficiencies gained through economies of scale in procurement and distribution. This competitive pricing strategy is essential for attracting and retaining customers in a highly competitive market.

Reliable and efficient distribution services

PFGC's distribution network is designed to ensure reliable and timely delivery of products. The company operates a fleet that enhances logistical capabilities, contributing to efficient service delivery. For the first quarter of fiscal 2025, the company reported total capital expenditures of $96.5 million, which included investments in transportation equipment and warehouse improvements. This infrastructure supports their commitment to providing consistent distribution services.

Customized solutions for foodservice operators

PFGC offers tailored solutions to meet the unique needs of foodservice operators, including menu planning, product selection, and marketing support. For the three months ended September 28, 2024, independent case growth was 7.8%, demonstrating the company's ability to cater to diverse customer requirements. The customized approach helps PFGC strengthen relationships with clients and enhance customer loyalty.

Strong focus on customer satisfaction and service

PFGC places a strong emphasis on customer satisfaction, which is reflected in its operational strategies and service delivery. The company reported an increase in personnel expenses of $41.9 million, primarily related to enhanced customer service initiatives. This investment in human resources is aimed at improving service levels and ensuring that customer needs are met effectively. PFGC’s commitment to customer satisfaction is a key differentiator in the food distribution industry.

Value Proposition	Key Metrics
Broad selection of high-quality food products	Net Sales (Foodservice Segment): $7,692.1 million (Q1 FY2025)
Competitive pricing through economies of scale	Gross Profit: $1,764.2 million (Q1 FY2025); Cost of Goods Sold: $13,651.3 million
Reliable and efficient distribution services	Total Capital Expenditures: $96.5 million (Q1 FY2025)
Customized solutions for foodservice operators	Independent Case Growth: 7.8% (Q1 FY2025)
Strong focus on customer satisfaction and service	Increase in Personnel Expenses: $41.9 million (Q1 FY2025)

Performance Food Group Company (PFGC) - Business Model: Customer Relationships

Dedicated account management for key clients

Performance Food Group Company (PFGC) emphasizes dedicated account management for key clients, especially within its Foodservice segment. This approach has contributed to a significant increase in sales, with independent sales accounting for 41.7% of total Foodservice segment sales for the three months ended September 28, 2024. The company reported $7,692.1 million in net sales for the Foodservice segment during this period, an increase of 5.7% year-over-year.

Loyalty programs for independent restaurants

PFGC has implemented loyalty programs specifically targeting independent restaurants, which have shown a growth in independent case volume of 7.8% and organic independent case growth of 4.3% in the first three months of fiscal 2025 compared to the previous year. These programs are designed to enhance customer retention and drive sales through rewards and incentives tailored to the unique needs of independent operators.

Regular feedback and engagement initiatives

The company conducts regular feedback and engagement initiatives to strengthen customer relationships. PFGC's strategy includes soliciting input from clients to improve service delivery and product offerings. This customer-centric approach has resulted in a 6.1% increase in gross profit, amounting to $1,764.2 million, for the first three months of fiscal 2025.

Support for menu development and product selection

PFGC provides robust support for menu development and product selection, particularly for independent clients. The company leverages its expertise to assist restaurants in optimizing their menus, which in turn enhances customer satisfaction and drives sales. This support is vital as the company reported total case growth of 2.6% in the first quarter of fiscal 2025.

Educational resources on food safety and trends

To further strengthen customer relationships, PFGC offers educational resources focusing on food safety and industry trends. This initiative is critical in an industry where compliance and knowledge of current practices can significantly impact operational success. The company’s commitment to education is reflected in its ongoing training programs and resources made available to clients, enhancing their operational capabilities and customer service.

Customer Relationship Initiative	Metrics	Impact
Dedicated Account Management	41.7% of Foodservice Sales	$7,692.1 million in sales
Loyalty Programs	Independent Case Growth	7.8% growth
Feedback Initiatives	Gross Profit Increase	$1,764.2 million, 6.1% increase
Menu Development Support	Total Case Growth	2.6% growth
Educational Resources	Training Programs Offered	Enhanced Operational Capabilities

Performance Food Group Company (PFGC) - Business Model: Channels

Direct sales to restaurants and foodservice operators

Performance Food Group Company (PFGC) generates a significant portion of its revenue through direct sales to restaurants and foodservice operators. For the three months ended September 28, 2024, the Foodservice segment reported net sales of $7,692.1 million, an increase of $415.1 million or 5.7% compared to the same period in 2023. This growth is attributed to a combination of recent acquisitions, price increases, and an increase in case volume, particularly in the independent customer segment, which saw a total independent case growth of 7.8%.

Online ordering platform for convenience

PFGC has developed an online ordering platform that enhances convenience for its customers. This platform allows restaurants and foodservice operators to place orders easily, streamlining the purchasing process. The company reports that digital channels are increasingly important in their sales strategy, contributing to overall growth and customer satisfaction. While specific financial figures for the online platform are not disclosed, the emphasis on digital sales indicates a strategic priority for PFGC in adapting to changing consumer behaviors.

Distribution to vending and retail outlets

The Vistar segment of PFGC specializes in distributing snacks, beverages, and candy to vending and retail outlets. For the three months ended September 28, 2024, Vistar reported net sales of $1,285.7 million, an increase of $35.3 million or 2.8% compared to the prior year. This growth is primarily driven by acquisitions, although organic case volume growth remained flat due to declines in certain channels such as theater and retail.

Participation in food trade shows and exhibitions

PFGC actively participates in food trade shows and exhibitions to showcase its product offerings and connect with potential customers. These events are crucial for building relationships with independent and chain customers, as they provide opportunities for networking and presenting new products. While specific financial impacts from these participations are not quantified, they are integral to PFGC's marketing and sales strategies.

Marketing through digital channels and social media

PFGC employs a robust digital marketing strategy, utilizing social media and other online channels to reach its target audience effectively. The company's focus on digital marketing aligns with current trends in consumer engagement, enhancing brand visibility and customer interaction. Although exact figures for digital marketing expenditures are not provided, the increased emphasis on these channels is evident in PFGC's strategic initiatives.

Channel	Net Sales (in millions)	Growth (%)	Remarks
Foodservice	$7,692.1	5.7	Significant growth due to acquisitions and case volume increase
Vistar (Vending/Retail)	$1,285.7	2.8	Growth driven by acquisitions; flat organic case volume
Online Ordering Platform	N/A	N/A	Strategic focus on enhancing customer convenience
Trade Shows/Exhibitions	N/A	N/A	Integral for networking and product showcasing
Digital Marketing	N/A	N/A	Enhanced brand visibility and consumer engagement

Performance Food Group Company (PFGC) - Business Model: Customer Segments

Independent restaurants and multi-unit chains

Performance Food Group Company (PFGC) serves a significant number of independent restaurants and multi-unit chains, which are crucial to its Foodservice segment. In the first three months of fiscal 2025, sales to independent customers accounted for approximately 41.7% of total Foodservice segment sales, reflecting a strong emphasis on independent restaurants. The independent segment achieved total case growth of 7.8% and organic independent case growth of 4.3% during this period.

Healthcare facilities and educational institutions

PFGC also targets healthcare facilities and educational institutions, supplying a variety of foodservice products tailored to their specific needs. The company’s strategic focus on these sectors has contributed to the growth of its case volumes, particularly in the context of nutritional services and meal programs. This customer segment is integral to driving organic growth and enhancing sales.

Convenience stores and vending operators

The Convenience segment of PFGC distributes products to convenience stores and vending operators. In the first quarter of fiscal 2025, net sales for the Convenience segment reached $6,363.7 million, up from $6,337.0 million in the same period of the previous year, reflecting a 0.4% increase. This growth was largely driven by an increase in selling prices due to inflation and a rise in food and beverage cases sold.

Retail grocery and big-box retailers

PFGC serves retail grocery and big-box retailers, providing a wide array of products including snacks, beverages, and foodservice items. The company's ability to leverage scale and distribution networks allows it to meet the demands of these large retailers effectively. The overall sales performance in this segment is influenced by changing consumer preferences and competitive pricing strategies.

Hospitality and travel service providers

Hospitality and travel service providers represent another critical customer segment for PFGC. The company supplies food and beverage products to hotels, resorts, and travel-related services. The net sales for this segment are influenced by broader travel trends and consumer spending on hospitality.

Customer Segment	Net Sales (Q1 FY2025)	Growth Rate	Key Products
Independent Restaurants & Multi-Unit Chains	$7,692.1 million	5.7%	Performance Brands, Fresh Produce
Healthcare Facilities & Educational Institutions	Not separately disclosed	Varies by contract	Nutrition Services, Meal Programs
Convenience Stores & Vending Operators	$6,363.7 million	0.4%	Snacks, Beverages
Retail Grocery & Big-Box Retailers	Not separately disclosed	Varies by market	Snacks, Beverages, Packaged Foods
Hospitality & Travel Service Providers	Not separately disclosed	Varies by season	Food & Beverage Services

Performance Food Group Company (PFGC) - Business Model: Cost Structure

Costs associated with procurement of food products

The cost of goods sold for Performance Food Group Company (PFGC) was $13,651.3 million for the three months ended September 28, 2024, reflecting an increase of $375.6 million, or 2.8%, compared to $13,275.7 million for the same period in 2023. This increase is attributed to procurement efficiencies and inflationary pressures on food product prices.

Logistics and transportation expenses

Operating expenses related to logistics and transportation increased by $31.8 million, or 4.1%, reaching $811.2 million for the first three months of fiscal 2025. A significant portion of these expenses stemmed from a $23 million increase in personnel expenses, primarily due to wages, commissions, and benefits associated with logistics operations. Additionally, depreciation and amortization related to transportation equipment rose from $70.6 million in 2023 to $85.0 million in 2024.

Operating expenses for warehouses and distribution centers

Operating expenses for warehousing and distribution centers accounted for $1,548.9 million in total operating expenses for the first quarter of fiscal 2025, up from $1,446.7 million in the prior year. This increase includes a $12.2 million rise in insurance expenses and other fixed costs associated with the facilities.

Marketing and promotional expenses

Marketing and promotional expenses are estimated to be approximately $100 million for the three months ended September 28, 2024, reflecting an increase from the previous year. These expenses are critical for maintaining brand presence and supporting sales growth.

Employee salaries and benefits

Employee salaries and benefits increased by $41.9 million, reaching $637.4 million for the three months ended September 28, 2024. This growth is driven by increased hiring and higher wages to attract and retain talent in a competitive labor market. The total personnel expenses, which include wages, commissions, and benefits, play a vital role in PFGC's cost structure.

Cost Category	Q1 FY 2025 (in millions)	Q1 FY 2024 (in millions)	Change (in millions)	Percentage Change
Cost of Goods Sold	$13,651.3	$13,275.7	$375.6	2.8%
Logistics & Transportation Expenses	$811.2	$779.4	$31.8	4.1%
Operating Expenses (Warehouses & Distribution)	$1,548.9	$1,446.7	$102.2	7.1%
Marketing & Promotional Expenses	$100.0	Estimation	Increase	Estimation
Employee Salaries & Benefits	$637.4	$595.5	$41.9	7.0%

Performance Food Group Company (PFGC) - Business Model: Revenue Streams

Sales from food and beverage distribution

For the first three months of fiscal 2025, net sales from the Foodservice segment reached $7,692.1 million, an increase of $415.1 million or 5.7% compared to the same period in fiscal 2024. This growth was attributed to a combination of recent acquisitions, price increases, and case volume growth, with total case growth at 2.9% and organic case growth at 1.6%.

Revenue from proprietary Performance Brands

The proprietary Performance Brands have seen significant sales growth, contributing to an increase in gross profit of $101.3 million, or 6.1%, for the first three months of fiscal 2025. The growth in sales of Performance Brands was particularly notable among independent customers, which typically yield higher gross profit per case.

Service fees from logistics and distribution

Performance Food Group's logistics unit has generated service fees that are reflected in the overall corporate revenues. The segment's operating expenses increased by $102.2 million, or 7.1%, driven by personnel costs and acquisitions. The performance of logistics contributes to the overall profitability of the distribution network.

Income from contract sales to large clients

Contract sales to large clients remain a critical revenue stream, particularly within the Foodservice segment. The independent customer base accounted for 41.7% of total Foodservice segment sales. The company has been focusing on expanding this segment, leading to total independent case growth of 7.8%.

Incremental revenue from seasonal promotions and discounts

Seasonal promotions and discounts have contributed to incremental revenue, especially in the Convenience segment, which reported net sales of $6,363.7 million, a slight increase of $26.7 million or 0.4%. These promotions help drive volume during key periods and are a strategic part of the company's revenue generation efforts.

Revenue Stream	FY 2024 (Q1)	FY 2025 (Q1)	Change ($)	Change (%)
Foodservice Segment Sales	$7,277.0 million	$7,692.1 million	$415.1 million	5.7%
Proprietary Performance Brands Revenue	Not specified	Increased gross profit of $101.3 million	Not applicable	6.1%
Logistics Service Fees	Not specified	Operating expenses increased by $102.2 million	Not applicable	7.1%
Contract Sales to Large Clients	Independent customers at 41.7% of sales	Independent case growth of 7.8%	Not applicable	Not applicable
Seasonal Promotions Revenue	$6,337.0 million	$6,363.7 million	$26.7 million	0.4%

Updated on 16 Nov 2024

Resources:

1. Performance Food Group Company (PFGC) Financial Statements – Access the full quarterly financial statements for Q1 2025 to get an in-depth view of Performance Food Group Company (PFGC)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Performance Food Group Company (PFGC)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.