A Recovery in Movie Theatre Traffic Provides a Sweet Treat for Performance Food Group’s Q1 Results

The biggest highlight of no-moat Performance Food Group's, or PFG's, first-quarter results in our view was the 21% organic sales growth in its Vistar segment (topping our 15% estimate), as the recovery in movie theaters accelerated. The food service segment grew sales 26%, in line with our estimate, driven by midteen inflation and an ongoing recovery in traffic post-pandemic. Unlike narrow-moat Sysco, which is driving share gains via new account wins, PFG is focusing on increasing its share of wallet at existing accounts, as it is hesitant to bring on new customers given labor shortages, which is depressing service levels. While we appreciate the rationale, we think this could hurt PFG’s long-term prospects, as many new restaurants are opening in the wake of the pandemic and establishing relationships with other distributors.