Why This Matters to Distributors: Performance Food Group is moving more cases through its North American distribution network as it wins new customers and integrates acquisitions. But that growth is also increasing miles driven and pushing up fuel, labor, insurance, and freight costs, putting greater pressure on PFG to improve transportation and distribution productivity as it targets another year of growth.
Performance Food Group is entering fiscal 2027 with more customers and cases moving through its distribution network — and higher costs associated with delivering them.
The Richmond, Virginia-based food distributor said fourth-quarter operating expenses increased 6.4% to $1.8 billion, driven partly by higher fuel prices and additional miles driven to support new business. Higher wages and commissions and increased depreciation tied to transportation equipment and facilities under finance leases also contributed to the increase.
For the full fiscal year ended June 27, operating expenses increased 9.1% to $7.2 billion. PFG again cited higher fuel prices and miles driven, along with acquisitions, higher personnel expenses, increased auto and workers’ compensation insurance costs and additional depreciation tied primarily to transportation equipment and facilities under finance leases.
The company disclosed in its annual filing that fuel expense alone increased $57.1 million during fiscal 2026 because of higher fuel prices and additional miles driven to support new business.
The higher distribution costs are coming as PFG continues to add volume and take market share.
Fourth-quarter net sales increased 6.4% to $18.03 billion from $16.94 billion a year earlier. Total case volume increased 3.5%, while organic case volume increased 1.8%. Net income increased 23.4% to $162.3 million from $131.5 million.
For fiscal 2026, sales increased 7.2% to $67.84 billion from $63.30 billion. Total case volume increased 5.1%, while organic case volume increased 2.8%. Net income increased 5.6% to $359.3 million from $340.2 million.
“Our solid execution throughout the year produced a strong finish to fiscal 2026,” President and CEO Scott McPherson said. “Consistent market share gains across our business units translated into strong revenue growth and record-setting EBITDA results.”
The results show the operational demands accompanying that growth.
PFG operates more than 150 locations and delivers food and related products to more than 350,000 customer locations across North America. The company has more than 44,000 employees and operates across foodservice, convenience, and specialty distribution.
As volume increases, PFG must move more product through that physical network while controlling the cost of warehouse labor, transportation, fuel, insurance, and outbound freight.
That challenge is particularly apparent in PFG’s Foodservice business.
Fourth-quarter Foodservice sales increased 6.8% to $9.82 billion from $9.19 billion a year earlier. Total Foodservice case volume increased 4.1%.
Independent restaurant customers produced faster growth. Independent case volume increased 8%, including 5.8% organic growth as PFG added customers and expanded business with existing accounts.
Independent customers represented 43.1% of Foodservice sales during the quarter.
PFG said those customers generate higher gross profit because of the additional services it provides. But the growth also comes with higher servicing costs.
Operating expenses affecting Foodservice increased 9.9%, outpacing the segment’s 6.8% sales growth. PFG attributed the increase primarily to higher personnel expenses, acquisitions, increased fuel expense from higher prices and additional miles driven to support new business, and higher auto and workers’ compensation insurance costs.
Foodservice’s adjusted EBITDA increased 2.2% to $395.5 million, significantly slower than its sales growth.
The numbers highlight a central operational issue for PFG: Winning higher-value independent customers can improve the sales mix, but serving a larger and more fragmented customer base also puts additional demands on the distribution network.
PFG is seeing a similar dynamic in its Convenience business.
Fourth-quarter Convenience sales increased 5.7% to $6.81 billion from $6.44 billion. Case volume increased 3.9%, primarily because of new chain customers.
Operating expenses affecting the business increased 4.8%.
PFG said the increase was driven primarily by higher personnel expenses needed to support the additional case volume and higher fuel expense caused by increased fuel prices and miles driven from new business.
Convenience adjusted EBITDA increased 10.4% to $132.5 million.
The results show how new account wins translate almost immediately into operational requirements. Additional customers mean more cases moving through distribution centers, more delivery activity and greater demands on labor and transportation capacity.
PFG’s Specialty business is encountering another logistics pressure: small-parcel freight.
Fourth-quarter Specialty sales increased 6.6% to $1.34 billion, while case volume increased just 0.8%.
Operating expenses affecting Specialty increased 8.4%, driven partly by higher fuel and personnel expenses and increased outbound freight costs primarily related to small-parcel volume.
Specialty adjusted EBITDA declined 0.5% to $92.7 million.
The segment’s results demonstrate that transportation pressure is not limited to PFG’s traditional foodservice truck routes. Parcel fulfillment is also adding cost as the company’s mix of channels and customers expands.
PFG invested $384.1 million in capital expenditures during fiscal 2026, down $121.9 million from the previous year.
The company’s financial results also show continued additions of transportation equipment and facilities through finance leases. PFG cited those investments as a major reason depreciation and amortization expenses increased.
At the same time, the distributor generated $1.41 billion in operating cash flow, up from $1.21 billion the previous year.
That gives PFG significant capacity to continue investing in its distribution infrastructure as volume grows.
The company’s network has also expanded through acquisitions, including Cheney Brothers, which PFG acquired in October 2024. PFG cited the acquisition as one of the contributors to fiscal 2026 sales growth and higher operating expenses.
The combination of organic customer growth and acquisitions is increasing the amount of business PFG’s distribution infrastructure must support.
That pressure is unlikely to ease as PFG enters its new fiscal year.
The distributor expects fiscal 2027 sales of $72.5 billion to $73 billion, which would represent another increase of $4.7 billion to $5.2 billion from fiscal 2026.
For the fiscal first quarter, PFG expects sales of $17.9 billion to $18.1 billion.
“We enter fiscal 2027 with significant momentum, reflected in the outlook we are providing today,” McPherson said.
For PFG’s distribution operations, that momentum means more product moving through warehouses and more deliveries moving through its transportation network.
The company’s fiscal 2026 results show the trade-off.
PFG is winning business and moving more cases, particularly with independent restaurants and new convenience-store chain customers. But those gains are also producing higher fuel costs, additional miles, higher labor expenses, greater insurance costs and increased investment in transportation equipment and facilities.
That makes logistics productivity more than a cost-control issue.
As PFG pushes toward as much as $73 billion in annual sales, its ability to absorb billions of dollars in additional business without distribution costs increasing at the same pace will become an increasingly important part of its growth strategy.
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