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Sysco's Schnieders Sees Softness in Foodservice

IRVING, Texas - Richard Schnieders, chairman and ceo, Sysco Corp., Houston, in a speech to the Business Council here today, observed that the foodservice industry is going through a soft period and that inflation has been taking a toll.

Schnieders said one area in which North America's largest food distributor wants to grow its revenue is through helping customers design and price menu offerings. "The restaurant business is still showing some weakness," Schnieders was quoted as saying.

"Food inflation has had an impact. The fuel prices have had an impact and of course we've had four record hurricanes in the U.S. Southeast," he added, noting, "Hopefully, you will see some moderation of the inflation. That will be good for our customers and good for us."

Schnieders said he has seen some recent moderation in commodity prices, which he hopes will lead to lower inflation in food prices.

Sysco has been working to grow its consultative services, where it helps customers design efficient menu offerings and price those offering appropriately.

"We are working hard on things like menu development and menu management. That is the core of the restaurateur and hotel business," Schnieders said.

As the price of beef steaks have gone up, Sysco worked to market a line of premium pork products, which are making their ways on to menus across North America.

The company announced earlier this year it expected continued sales weakness in the third quarter of 2004. The company has countered with measures aimed at controlling costs, such as a temporary hiring freeze.

"We think we have our costs right and our organization right, so hopefully we will see some lift in the general economy," Schnieders said.

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