Welcome to In the Weeds, a newsletter for the independent restaurant community.
Today, I’m shifting away from my regular programming for a brief analysis of what the Sysco and Restaurant Depot deal means for independent restaurants. I did some quick reach-outs to chefs and owners and scoured social media in order to understand the industry's biggest concerns about the deal. There are many.
Do you have your own thoughts to share on the deal? I’d love to hear from you. Feel free to respond to this email.
The store that restaurant folks race to for emergency supplies, and that new owners hit in the early days when the menu is in flux and money is especially tight, could soon be owned by the largest food distributor in the US.
Sysco has struck a deal to buy Jetro Restaurant Depot for about $29 billion. The deal and the eye-popping valuation—that $29 billion represents more than 14 times Restaurant Depot’s operating income—are concerning to many independent restaurants.
“They’re going to find ways of raising prices for small businesses,” James Trees, the chef and owner at Las Vegas restaurants, including Esther’s Kitchen and Al Solito Posto, told me via email.
The agreement was struck at a time when restaurants are facing mounting pressures, including rising inflation and, more recently, fuel charges from food distributors as the war with Iran pushes up diesel prices.
The importance of distributors like Restaurant Depot to the independent restaurant ecosystem cannot be overstated, Erika Polmar, the executive director of the Independent Restaurant Coalition, said.
Restaurant Depot “is where an operator could walk in without a contract, without a minimum order, and without waiting for a delivery window, and know they were getting a fair price because the market demanded it,” she said in an emailed statement. Even restaurants that focus on local sourcing might use Restaurant Depot for basic items like to-go containers. The supplier sells everything from meat and spices to pans and napkins to about 700,000 restaurant operators.
The deal represents the latest move to consolidate food distribution across the country in a bid to increase business with smaller restaurants, a segment growing faster than the overall restaurant industry.
But it’s not a done deal yet. It still needs regulatory approval.
“The FTC has the authority and the precedent to stop this — they blocked Sysco before — and we are calling on them to do it again,” Erika said.
“Sysco buying Restaurant Depot doesn't just reduce competition in food distribution. It removes the competitive check that made Sysco price its own services fairly in the first place,” she said. IRC is urging restaurants to call their representatives and ask for a full FTC review.
Distributors like Sysco want independent restaurant businesses. While these customers typically pay lower prices, those purchases are more profitable. Restaurant Depot offers access to a cash-and-carry model, where goods are paid for in full at the time of purchase and don’t require a long-term contract.
“Cash and carry is a large and growing business, and it is not a business segment that Sysco meaningfully participates in today,” Sysco CEO Kevin Hourican said during an investor call on Monday discussing the deal. “Together, we will become a nationwide omnichannel foodservice provider that grows our business profitably.” Sysco has said it will continue to run Restaurant Depot as a standalone company. (I reached out to Sysco for comment on independent restaurant concerns and will update this story with comment from the company if I hear back.)
Chef JJ Johnson, author, chef, and founder of Field Trip, a fast-casual chain with two New York City Locations, predicts the move will increase pressure toward contracts and subscriptions instead of “cash-and-carry freedom.”
“A merger like this usually means consolidation of power. And in our world, that affects pricing, access, and leverage,” he told me in an email. On LinkedIn, Threads, and Instagram, chefs and restaurant owners echoed this sentiment.
The hardest-hit spots, JJ said, will be new restaurants, culturally specific kitchens (“We shop creatively. We mix sources. If supply tightens or homogenizes, it limits expression.”), and high-volume fast-casual restaurants. At Field Trip, “we use Depot to protect margins when costs spike. Losing that optionality hurts.”
Then there are the diners, who will feel this deal, though not immediately, with price hikes, less diversity, and even fewer independent restaurants overall, JJ predicted.
Even restaurants that don’t use Sysco or Restaurant Depot have concerns.
“I don’t work with either business. It’s hard to see the good in this, though, from a small operator perspective. One company will have a lot of control over the price restaurants pay for goods,” Matthew Adler, the chef at DC’s Cucina Morini and Caruso’s Grocery, texted me when I asked him about the deal. “That doesn’t feel great. Granted, these goods are mostly commodity goods. But it feels like it’s too much power for any one company to wield.”
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—gloria