Sysco is expanding its use of artificial intelligence, digital selling tools, and customer loyalty programs as it works to grow in a restaurant market executives say is softening.
On its fiscal second-quarter earnings call, the Houston-based foodservice distributor described how internal technology investments — particularly an AI-powered sales platform known as AI360 — are changing how its sales force identifies opportunities and works with restaurant operators.
CEO Kevin Hourican said AI360, a CRM-style tool that provides data-driven selling prompts to sales representatives, has been live for about four months and is now used weekly by more than 95% of Sysco’s sales organization.
“The math is very clear,” Hourican told analysts. “If you use the tool, you sell more.”
Sysco is expanding the platform with new functionality called “Swap and Save,” which recommends cuisine-specific product substitutions designed to lower customers’ food costs while improving Sysco’s product mix. The recommendations are generated using order history, pricing data and product compatibility models developed by Sysco’s data science team.
The effort comes as restaurant traffic, based on data from Black Box Intelligence cited by Sysco, declined both year over year and from the prior quarter. Despite that backdrop, Sysco reported improving local case volumes, with U.S. local volumes rising 1.2% in the quarter.
Executives attributed the gains to internal distribution initiatives rather than changes in the broader market. Sysco’s digital customer programs — Sysco Your Way and Sysco Perks — were cited as contributors to higher retention and increased purchasing among existing accounts. Hourican said Sysco Your Way “neighborhoods” continue to post mid-single-digit volume growth in their fourth year, while updates to the Perks loyalty program are helping increase share of wallet and reduce customer losses.
Improved employee retention, combined with AI360 adoption and loyalty engagement, is widening the gap between new customer wins and customer losses, the company said.
Beyond sales execution, Sysco said it is applying AI to what executives described as its “price architecture,” particularly for Sysco-branded products sold through digital channels. Hourican said the company is using AI tools to continually adjust pricing to maintain a clear value position compared with national brands as supplier costs change.
Sysco is also expanding its assortment in a lower-priced “value tier,” an area executives acknowledged the distributor has historically underrepresented, to help restaurant operators manage food costs.
On the operations side, Sysco said it is evaluating warehouse material-handling automation and broader uses of AI across departments, including merchandising, human resources, and finance. Hourican noted that many of Sysco’s distribution centers remain manual operations, managing heavy products in cold environments where labor availability and costs remain ongoing concerns. Future facility expansions are viewed as an opportunity for automation investments to generate returns.
Sysco reported second-quarter sales of $21 billion, up 3% from a year earlier, and said it expects local case growth of at least 2.5% in both the third and fourth quarters.
“We are strengthening our performance at Sysco in a softening macro backdrop,” Hourican said.
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