Sysco is a global leader when it comes to marketing, selling, and distributing food products to clients that include restaurants, lodging establishments, and healthcare and educational facilities. It also serves customers who prepare meals away from home. In addition to food products, the company also distributes equipment and supplies for the hospitality and foodservice industries. With over 320 distribution facilities, Sysco serves more than 650,000 locations in 90+ countries around the world. The company is headquartered in Houston, Texas. It was founded in 1969 by Harry Rosenthal, Herbert Irving, and John F. Baugh. As of 2019, it had 69,000 employees and $60.11 billion in revenues.
|INDUSTRY SECTOR||Food Retail & Distribution|
|TRADING SYMBOL||NYSE: SYY|
Sysco competitors include: US Foods, Jerónimo Martins, United Natural Foods, Performance Food Group, Gordon Food Service, Ben E. Keith Company, Farmer Brothers, McLane Company, SpartanNash, and Reyes Holdings.
How Sysco Makes Money
Sysco is one of the largest food distributors in the world. It has a presence in more than 90 countries in which it operates 320 distribution facilities and serves over 650,000 customer locations globally. In the last financial year, the company made $60.11 billion in revenues. Its revenues came from four primary business segments, namely Broadline, Specialty Companies, International, and SYGMA.
The Broadline division is Sysco’s largest business segment and makes up the company’s primary operations. This segment deals with the distribution of full-line food products and a diverse range of non-food products to both chain and independent restaurant customers. It also serves educational and healthcare facilities as “away-from-home” locations. Sysco’s 320 distribution facilities cater to 650,000 customers worldwide who fall under this segment.
Under this segment, Sysco provides customers with a varied selection of specialty foods and supplies. Sysco offers hands-on support, specialized expertise, and customized delivery schedule for customers in this segment. The products are categorized into Specialty Produce, Specialty Meat and Seafood, European Imports, Guest Supply, and Supplies on the Fly.
In the International segment, Sysco provides robust network support to customers in 90 countries around the world. It has regional offices in Belgium, Panama, Luxembourg, Spain, Sweden, France, Mexico Costa Rica, Ireland, Bahamas, and the United Kingdom. There is a Sysco International Food Group (IFG) export division that provides global delivery services to more than 30 restaurant chains based in the United States. The division also exports products that are Sysco-branded to a number of distributors around the world.
Sysco operates 16 subsidiary companies that distribute full-line food products and a number of non-food products for restaurant chains. The functions are centralized so that the SYGMA division can work closely with the restaurant chains’ corporate purchasing systems.
US Foods is one of the leading foodservice distributors in the United States. It serves about 300,000 customers primarily made up of foodservice operators and restaurants. Besides the foodservice distribution business, the company also offers a number of technology, eCommerce, and business solutions. Headquartered in Rosemont, Illinois, US Foods has a presence in over 60 countries around the world and employs 28,000 people. Its revenue turnover for 2019 was $25.94 billion. The company was established in 1989.
US Foods is the second-largest foodservice distributor after Sysco. Its revenue is 2.5 times less that of Sysco. In 2013, Sysco made a move to acquire the company in a merger that would have seen it have 75% of American foodservice market share. It would have created a monopoly and the merger was called off in 2015. US Foods should now strive to be better and more competitive.
Headquartered in Lisbon, Portugal, Jerónimo Martins offers food distribution services in Portugal, Poland, and Colombia. It also offers special retail services operating drugstores, coffee shops, and chocolate and confectionery stores. Food distribution makes up 95% of the company’s annual revenue. Some of its brands include Biedronka, Hebe (both in Poland), Ara (Colombia), Recheio and Pingo Doce (both in Portugal). Jerónimo Martins operates more than 4,400 locations in the three countries. The company was founded in 1792. As of 2019, it had 115,428 and a revenue turnover of $20.47 billion.
Sysco made three times the revenue Jerónimo Martins made in 2019. But for a company operating in only three countries worldwide to be making about a third of its revenues, Sysco should be worried. Sysco has operations in more than 90 countries around the world. It remains to be seen whether Jerónimo Martins will expand into more markets in the near future.
- United Natural Foods
United Natural Foods was founded in 1996 after the merger of Mountain People’s Warehouse and Cornucopia Natural Foods. The two companies were regional distributors with Mountain People’s Warehouse serving the Western US and the latter operating on the Eastern side. It was the first national distributor for natural products. Over the years, other regional distributors for natural products joined the company and it grew into the largest natural products distributor in the US. United Natural Foods had 19,000 employees and a revenue turnover of $21.38 billion in 2019. It is headquartered in Providence, Rhode Island.
United Natural Foods strictly deals with the distribution of natural, organic, and specialty products. The company is the largest distributor of natural products in America. It also has a presence only in the United States and Canada. It is therefore understandable that its revenue is only a third of what Sysco made in 2019. But its revenue in 2019 doubled from the preceding year after a decade of steady growth. Sysco better watch its back.
Performance Food Group
Performance Food Group was founded in 1885 by James Capers. Headquartered in Richmond, Virginia, the company operates three brands, namely Performance Foodservice, Vistar, and PFG Customized. The Performance Foodservice brand offers delivery services for over 150,000 food and related products. It mostly works with restaurant owners. The Vistar division makes deliveries for snacks, candy, and both hot and cold beverages across the United States. Lastly, the PFG Customized division meets specialized product delivery requirements for restaurants with multiple locations. As of 2019, Performance Food Group had 18,000 employees and $19.74 billion in revenues.
Performance Food Group has had steady growth since 2013. It is pulling up its weight quite well in the industry and has made a number of strategic acquisitions along the way that has given it a boost. But it cannot still stand up to Sysco with less than a third of Sysco’s revenue. Maybe in a few years, it might. At the moment, it has to play in Sysco’s shadows.
Gordon Food Service
Gordon Food Service was established in 1897 by Isaac Van Westenbrugge as a delivery service for egg and butter. Ben Gordon joined the company in 1916 and they registered it as The Gordon-Van Cheese Company in 1933. Ben’s brother, Frank, joined the company in 1937 and it was renamed Gordon Food Service in 1942 after Isaac’s retirement. The company has since grown into one of the largest private foodservice distributors in North America. It primarily serves restaurants, healthcare institutions, and educational institutions among others. In 2019, it earned $14.6 billion in revenues and had 20,000 employees.
Gordon Food Service primarily operates within North America. It is yet to venture into international markets. As a family-owned business, it might not have access to funds needed for such a venture as a public company as Sysco would. But even within the North American market, Sysco still controls the largest market share in the industry.
Ben E. Keith Company
Founded in 1906, the Ben E. Keith Company was originally called the Harkrider-Keith-Cooke Company. In 1931, the company rebranded to its current name. It has its headquarters in Fort Worth, Texas. Ben E. Keith Company operates two divisions- food and beverage divisions. The food division offers full-line food delivery services in 15 states in the United States. The beverages division makes deliveries for Anheuser-Busch products in 62 counties within the state of Texas. These include fine wine and beer brands. The company had 4,000 employees and made $3.7 billion in revenues.
Ben E. Keith Company is really not expected to offer much to Sysco in terms of competition. The company’s food delivery services division only operates in 16 states in the United States. Its beverages division operates in only one state- Texas. It is, therefore, no surprise that Ben E. Keith Company made only a fraction of Sysco’s revenues in 2019.
Farmer Brothers was founded in 1912 by Roy E. Farmer as a roasted coffee beans business in Los Angeles, California. It was incorporated in 1923. The company moved from Los Angeles to its current Northlake, Texas, headquarters in 2015. Since its inception, Farmer Brothers has grown to serving over 60,000 locations and operates more than 115 branches in the US. The company offers foodservice distribution services for coffee, cold brew coffees, tea, other beverages, and culinary products such as spices, extracts, jelly, and baking mixes. It also does distribution for non-food products. Farmer Brothers posted a revenue turnover of $596 million. It has 1,521 employees.
Even though it offers distribution services for other types of products, Farmer Brothers’ primary focus is on coffee products. The company experienced steady growth before stagnating at the $500 million mark at the turn of the 2010 decade. It still has a long way to go to be more competitive to Sysco.
McClane offers grocery and non-food distribution services to discount retailers, convenience stores, casual dining restaurants, quick-serve restaurants, military bases, drug stores, and wholesale clubs. It also distributes beer, wine, and distilled spirits in certain states within the US. The company operates three business divisions- grocery distribution, foodservice distribution, and beverage distribution. Headquartered in Temple, Texas, McLane was founded in 1894 by Robert McLane. Between 1990 and 2003, the company was owned by Walmart before it was sold to Berkshire Hathaway, a holding company. Walmart still remains its biggest client. As of 2019, McLane had 24,000 employees and a revenue turnover of $50.36 billion.
McLane started off as a local merchant and grew into one of the largest international distribution and logistics companies. Its top clients include Walmart, Yum! Brands, and 7-Eleven. Those are some of the leading companies in their respective industries. It is, therefore, no surprise that McLane stacks up better against Sysco compared to other competitors. But it will have to do better to close the gap between itself and Sysco.
SpartanNash was founded in 2013 after a merger between Spartan Stores and Nash Finch Company. It is the largest grocery products distributor to US military commissaries and among the top 5 food distributors in the United States. Headquartered in Grand Rapids, Michigan, the company operates over 155 corporate-owned retail stores in 9 US states. It also offers distribution services to more than 2,100 locations across the US under its brands VG’s, No Frills, Family Fare, Forest Hills Foods, and Dan’s Supermarket among others. In addition to that, SpartanNash has wholesale military distribution services in the District of Columbia, Egypt, Djibouti, Bahrain, Puerto Rico, Cuba, and Europe. It made $8.53 billion in revenues and had 17,200 employees.
SpartanNash is the largest military distributor in the US. Since its inception in 2013, the company has had steady growth over the last seven years. In a few years’ time, it will be a formidable challenger for Sysco’s throne.
Reyes Holdings was founded in 1976 by Jude and Chris Reyes in Spartanburg, South Carolina as a Schlitz beer distributor. The business grew and it acquired another distributor in Savannah, Georgia, within a year. Headquartered in Rosemont, Illinois, the company has operations in 45 states in the US and 19 other countries around the world. It operates four business divisions, namely Reyes Coca-Cola Bottling, Great Lakes Coca-Cola Bottling, Martin Brower, and Reyes Beer Division. Reyes Coca-Cola Bottling offers beverage distribution services in the West Coast while the Great Lakes Coca-Cola Bottling division serves the Midwest. Martin Brower and Reyes Beer divisions are respectively the largest McDonald’s (globally) and beer (United States) distributors. In 2019, Reyes Holdings had 30,000 employees and $30 billion in revenues.
Reyes Holdings made half of what Sysco made in 2019 with operations in just 19 countries besides the US. That is quite commendable given Sysco’s global presence in over 90 countries. Reyes is also the largest beer distributor in the US and the largest McDonald’s distributor in the world.
The top 10 Sysco competitors are: US Foods, Jerónimo Martins, United Natural Foods, Performance Food Group, Gordon Food Service, Ben E. Keith Company, Farmer Brothers, McLane Company, SpartanNash, and Reyes Holdings. Together, they had 277,149 employees among them and $195.316 in revenues. McLane is Sysco’s biggest competitor.
|US Foods||1989||Rosemont, Illinois||28,000|
|Jerónimo Martins||1792||Lisbon, Portugal||115,428|
|United Natural Foods||1996||Providence, Rhode Island||19,000|
|Performance Food Group||1885||Richmond, Virginia||18,000|
|Gordon Food Service||1897||Grand Rapids, Michigan||20,000|
|Ben E. Keith Company||1906||Fort Worth, Texas||4,000|
|Farmer Brothers||1912||Northlake, Texas||1,521|
|McLane Company||1894||Temple, Texas||24,000|
|SpartanNash||2013||Grand Rapids, Michigan||17,200|
|Reyes Holdings||1976||Rosemont, Illinois||30,000|