Kevin P. Hourican
President and Chief Executive Officer at Sysco
Before I begin our call today, I'd like to take a moment to acknowledge an extraordinary event that happened during our third quarter. As you may have seen on Friday, March 1, a Sysco truck was involved in an accident on the Clark Memorial Bridge in Louisville, Kentucky. After the accident, the Sysco truck was hanging precariously over the Ohio River. A Sysco colleague was inside that truck, staring down at the river, not knowing if for truck would fall into the river before she was rescued. I bring this topic up to take a moment and recognize the Louisville Fire Department for their heroic efforts. I especially want to thank Bryce Carton, the fire fighter that risked his life to rescue our colleague from her truck that day. The heroes of the Louisville Fire Department acted with efficiency, skill and courage to rescue a Sysco family member. We are thankful for their successful efforts and for all that first responders do every day to protect our communities. I want to be very clear, business results matter. But the fact that the Louisville Fire Department saved the life member of our family deserves praise and pause.
Now onto matters of business results and outcomes. I'd like to start with restaurant foot traffic data. Much has been written over the past few weeks as select restaurant names and select food service suppliers have announced their performance results. As you have heard in those communications and observed through credit card transaction data, foot traffic to restaurants is down year-over-year. As we have previously indicated, January restaurant traffic came out of the gate with a slow start, down high single digits to prior year due to a host of factors. February and March foot traffic improved to down low single digits, but still posted a headwind for distributor case volume growth. While the trend of the quarter was one of sequential improvement, we had expected a stronger recovery throughout the quarter.
It is our belief that restaurant menu prices have impacted foot traffic, and this is something that needs to be addressed more broadly by the industry. The industry needs to take actions to improve affordability for end consumers. At Sysco, we will be focused on helping our local restaurant customers by taking the following actions securing the best possible costs from our suppliers in sharing in those savings with our end customers; introducing new and improved Sysco brand alternatives to save restaurants time and money; introducing menu alternatives that bring lower-cost food options to restaurant operators so that they can provide value offerings to their end consumers; and lastly, providing restaurant operators with even more ready now and pre-cut offerings to help them lower their labor costs.
While food costs have moderated year-over-year, restaurants are still facing significantly elevated labor costs. So with restaurant foot traffic data as context, I will segue into Sysco's specific business outcomes with a brief highlight of the quarter on slide five. We were able to convert negative foot traffic for the quarter into positive 2.7% enterprise sales growth with USFS volumes growing 2.9%. Both of these figures were greater than the food-away-from-home industry, which declined year-over-year in case volumes. Sysco's 2.9% case growth, enabled a profitable market share increase for the quarter in the U.S.
As I have stated previously, larger broadline players are winning in the market due to size and scale advantages and Sysco's specialty platform is delivering outsized growth versus the specialty channel. Our local case growth was 0.4% for the quarter, stronger than the overall market. However, it is an area that must improve. We are focused on making the necessary progress. I'll pick more to this topic in a moment. For the quarter, we increased adjusted operating income by 8.4% and adjusted EPS by 6.7%. Both figures were consistent with our expectations for the quarter and are well above the S&P 500 average profit growth for the quarter. As we have said many times, we have levers we can pull in our P&L if and when volume is softer than expected. I am proud of our team for taking strong actions in the quarter to manage expenses and deliver strong gross profit margins. The agility and accountability of the leadership team enabled us to deliver our profit objectives for the quarter despite softer sales and case volumes.
I'd like to pivot now to give you a brief update on our two biggest areas of focus local case growth and overall expense management with supply chain productivity. Starting with local case growth. Earlier this year, I highlighted four actions we are taking to improve our performance as seen on slide eight. I cautioned at the time that these actions would take time to impact the business, but that we are confident in their impact. First, sales force hiring. We plan to hire a net increase of approximately 400 sales professionals by the end of this year, and we are meaningfully on track to hit that hiring target.
The quality of the new hires to date has been strong, and we are actively focused on skills development training for the new cohort. We believe this new sales staff will positively impact our 2025 growth trends. Second focus area: performance management. Our sales consultants have responded to the sales of leadership coaching and have increased their visit frequency to Sysco customers. For the remainder of fiscal 2024 and entering fiscal 2025, we are increasing the focus of our sales staff on prospecting net new customers. In a slower traffic environment, we need to increase the number of customers that we service.
Third focus area, sales compensation. We are two quarters live with an updated compensation model and the feedback from our SEs has been positive. Our top performers are seeing their earnings growth, and our extended team has ample opportunities to increase their earnings. Importantly, retention data for our SEs is at or above historical high watermark levels. Our updated compensation program better aligns the incentives of our sales teams with the P&L of Sysco.
Fourth focus area, total team selling. When a Sysco customer buys from Broadline plus one or more of our specialty businesses, Sysco wins. And the customer wins too. Why? We removed 1 or more competitors from the account, and we are able to get more cases on a Sysco truck. As a result, we can increase delivery frequency, increase sales college coverage, and invest in the customer from a buy more, save more perspective. Sysco's extensive produce, protein and now equipment and supply specialty businesses are unmatched in the industry. We intend to better leverage this competitive differentiation in years to come domestically and internationally. In summary, we are confident in our ability to profitably grow our local business, and we are working on the right things to deliver that growth consistently. This work is a top priority and will receive the necessary focus and attention from our entire team.
Let's transition to our supply chain and overall expense management at Sysco as seen on slide nine. I'm very pleased with the progress we are making on both fronts. Retention is greatly improving, especially within our driver population. This is resulting in better productivity, fewer accidents, reduced product shrink and improved customer service outcomes.
Labor productivity is improving within our warehouse and driver populations.. Both departments delivered the highest productivity rates of the past few years in March. Lastly, our transportation metrics are improving as we have increased pieces per truck, optimized our routing metrics, and improved on-time arrival rates. All told, these supply chain improvements are helping us lower our cost to serve and increase our Net Promoter Scores. Even more impressive is the work we are doing in our global support center to reduce our SG&A expenses as we delivered a year-over-year 5.5% reduction in SG&A in the quarter. We displayed strong discipline and management agility by leading through a softer-than-anticipated customer environment. We plan to stay very focused on expense management and gross profit delivery in the quarters and years to come.
It is important to note that while we are very focused on expense management, we continue to invest where it matters. Our supply chain capacity expansion projects remain on track and the investments and improvement in our customer-facing technology tools continue to advance.
International continues to be a bright spot for Sysco. I recently returned from a trip to Europe, and I'm very pleased with the performance of our International business segment and leadership team. Our newly formed global operating model is having an impact. International top line grew 4.5% and adjusted operating income grew 63.4% in the quarter. Both figures are better and higher than our US business. As I have said, International will be a top and bottom line growth catalyst for years to come at Sysco. More importantly, there are no structural impediments internationally that prevent Sysco from delivering higher EBIT as a percentage of sales in each international country.
Greg Bertrand, our global COO, has identified many examples of best practices that are being shared across the globe to help each country accelerate profit improvement progress. The proof is in the strong profit improvement results that we are delivering. At Sysco, we take a long-term view in running our business. focused upon profitable and disciplined business returns. Despite the softer traffic start to calendar 2024, food-away-from-home is a growth industry as seen on slide number 10, taking share from the grocery channel for 17 of the past 20 years. We believe that is a macro trend that will have staying power for years and decades to come.
Internationally, the food-away-from-home trend is following a similar pattern to the U.S. business. However, it is many years behind from a penetration percentage. This fact will be a tailwind as Europe follows the food-away-from-home percentage growth trajectory, growing sales across all three dayparts. Food-away-from-home is a good business, a stable business, and Sysco has a diversified range of customer types that help us navigate individual segment choppiness, including a strong business in health care, hospitality, education and business and industry.
As I wrap up my prepared remarks, I will echo something I have said previously, I'm very optimistic about the future of Sysco. We are confident in the strategic plan we are executing against, and we have a strong leadership team. Business plans don't always materialize the exact way you draw them up on paper. This past quarter, volume was softer than we anticipated and planned. I am proud of our team for acting with agility and delivering strong bottom line growth for the period despite the lower restaurant traffic. Additionally, we are committed to making progress in local case growth and operations efficiency. These efforts will enable us to deliver solid financial outcomes.
Before I turn it over to Kenny, I welcome you to join us in New York City on May 22 for our next Investor Day. We will go deeper into each component of our business strategy, and Kenny will present a financial algorithm for Sysco to deliver against for the next three years. We look forward to seeing many of you in New York. And with that said, Kenny, over to you.
