US Foods CEO advises restaurants to 'simplify menu and operations' upon reopen

Restaurants across the nation are looking to reopen as restrictions lift. However, operations and menu options may need to change as supply chain issues continue for the industry overall. Yahoo Finance's Alexis Christoforous and Brian Sozzi discuss with Pietro Satriano, US Foods CEO.

Video Transcript

ALEXIS CHRISTOFOROUS: As the United States gets back on the road to recovery, we now have 29 states having allowed restaurants to open in some capacity. And now, of course, those establishments need to put food on the table for their customers.

One of the companies helping them to do that is US Foods. We are joined now by the company's CEO, Pietro Satriano. Pietro, good to have you with us. You know, we keep hearing about meat shortages happening and that messing up the supply chain. Curious what you are seeing right now as you try to supply these restaurants with meat?

PIETRO SATRIANO: Good morning, Alexis, and thanks for having me on, if I can. I'd love to take a second to thank our 28,000 associates who every day are doing a great job of performing a vital role in maintaining the country's supply chain.

As you said, especially in pork and beef, there's been a significant reduction in capacity, about 30% to 35%, which is actually a little bit better than it was two weeks ago. So we are seeing some pressure, but we are able to, through a diversified set of suppliers, local and national, able to meet most-- not all, but most of our customers' needs. Obviously that's had an impact on pricing, as you would expect.

BRIAN SOZZI: You know, Pietro, my monthly grocery bill, it just feels like it's more. Cheese, grocery, produce, are you seeing inflation starting to pick up in some of these categories?

PIETRO SATRIANO: We're not. So in terms of-- in terms of the-- where we look at inflation, which is our prices into our distribution center-- I can't comment on the grocery bill, Brian. You know, grocery has been fairly level. Actually, for a while there was some deflation as there was that backing up of some inventory. And where we have seen volatility-- and typically where you do see volatility, the protein, you know, lots of demand-supply interaction. And I think over the course of the next few months, I would expect beef and pork to come more into line with what we've historically seen.

ALEXIS CHRISTOFOROUS: Pietro, what are you hearing from your clients, from these restaurants who are now-- maybe haven't opened at all since this or are now reopening their dine-in experiences? Sort of what are their biggest challenges? What are their needs, and how are you helping them meet those needs?

PIETRO SATRIANO: Yeah, we're staying close to our customers. They're obviously eager to reopen. We've actually set up a recovery team that is monitoring all the regulations in every state to help them understand those regulations. A few weeks ago, we had webinars on the CARES Act to help them apply for loans. Now we've got webinars on how to reopen.

And our advice to them, Alexis, is, first, they need to rebuild trust with-- build trust with consumers. Consumers, depending on the age demographic, might be more or less hesitant about going back out to to dining. And there's a number of ways you can do that-- by setting expectations, what to expect when you arrive there. Do you wait in the car? Do you wear a mask?

The second thing we're advising restaurants to do is to simplify their menu and their operations. You know, the simpler the menu, the more you can practice social distancing. The simpler the menu, the less waste there is if they're going to be operating at a reduced capacity. And the third thing, you know, we're learning every week. Things are changing, and we're advising people to be flexible agile as things change.

ALEXIS CHRISTOFOROUS: What do you-- what are they most concerned about right now? Is it, you know, having enough workers, being able to bring back those they either laid off or furloughed? Is it about being able to meet inventory demand with the supply chain? What's sort of their top concern right now?

PIETRO SATRIANO: I'd say their top concern is how to navigate some of these reopening guidelines and what that means to the economics of their business.

So I'll give you an example. A week or two ago, a number of states announced that they were reopening-- you know, Texas, Georgia. And I know in one state we had a hundred customers say, OK, we're ready. Start delivering to us.

And then the actual guidelines came out which said 25% capacity for the time being, and I think, like, 2/3 of them called us back and said, you know what? We're just going to wait and see what happens and wait until things are-- there fewer guidelines and fewer restrictions. So they're really waiting to see how things unfold, and also they're waiting to see how consumers react.

The third thing is they've really tried to get into different types of businesses-- you know, take out, delivery, grocery pantry kits. We have one customer in San Francisco, their business has literally doubled from pre-COVID days just by putting together these COVID-- sorry, these grocery pantry kits. And we've got a trailer outside their restaurant just for additional capacity. So they're a very ingenious bunch and resilient bunch.

BRIAN SOZZI: Pietro, how-- you mentioned menu changes. How might the menu change at a lot of restaurants? Look, I look at your business. I believe meat and seafood is 35% of your sales. But will you see restaurants take off some of those proteins or use cheaper ones?

PIETRO SATRIANO: I think on a-- again, temporarily because of the shortage in beef and pork, you might see fewer of those. The specials is the part of the menu that gives the restaurant a lot of flexibility to move things in and out on a temporary basis.

Our advice longer term, because of the environment they're now having to operate in, is more about simplifying and reducing the menu so that they can do a great job of that. And just by simplifying the operations, it will give consumers a sense of confidence that things are happening in a way that is safe in the restaurant environment.

ALEXIS CHRISTOFOROUS: All right, we're going to leave it there. Peter Satriano, US Foods CEO, thanks for spending some time with us this morning.

PIETRO SATRIANO: Thanks for having me.