Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our market risks consist of interest rate risk, foreign currency exchange rate risk, fuel price risk and investment risk. For a discussion on our exposure to market risk, see Part II, Item 7A, “Quantitative and Qualitative Disclosures about Market Risks” in our fiscal 2021 Form 10-K. There have been no significant changes to our market risks since July 3, 2021, except as noted below.

Fuel Price Risk

Due to the nature of our distribution business, we are exposed to potential volatility in fuel prices. The price and availability of diesel fuel fluctuates due to changes in production, seasonality, and other market factors that are generally outside of our control. Increased fuel costs may have a negative impact on our results of operations in three areas. First, the high cost of fuel can negatively impact consumer confidence and discretionary spending and, thus, reduce the frequency and amount spent by consumers for food-away-from-home purchases. Second, the high cost of fuel can increase the price we pay for product purchases, and we may not be able to pass these costs fully to our customers. Third, increased fuel costs impact the costs we incur to deliver product to our customers. Fuel costs related to outbound deliveries represented approximately 0.5% of sales during the first 39 weeks of fiscal 2022 and fiscal 2021.

Our activities to mitigate fuel costs include routing optimization with the goal of reducing miles driven, improving fleet utilization by adjusting idling time and maximum speeds and using fuel surcharges that primarily track with the change in market prices of fuel. We use diesel fuel swap contracts to fix the price of a portion of our projected monthly diesel fuel requirements, typically 80% to 90% of our projected bulk fuel purchases. As of April 2, 2022, we had diesel fuel swaps with a total notional amount of approximately 58 million gallons through July 2023. These swaps are expected to lock in the price of approximately 60% of our projected fuel purchase needs for the remainder of fiscal 2022. Additional swaps have been entered into for hedging activity in fiscal 2023. As of April 2, 2022, we had diesel fuel swaps with a total notional amount of approximately 46 million gallons specific to fiscal 2023, which target 80% of our bulk fuel forecasted purchases during this time period. Our remaining fuel purchase needs will occur at market rates, unless contracted for a fixed price or hedged at a later date.