Kevin Hourican, the CEO of Sysco, has seen the often-visceral reaction that many independent restaurant operators had to his company’s plans to buy Jetro Restaurant Depot. And so, in an interview with Restaurant Business, he wasted no time in getting to the point the moment that deal was brought up.
“Let me just hit it right out of the gate: We will absolutely not be raising prices at Restaurant Depot,” he said. “There’s a group out there that’s saying that we have bought Restaurant Depot to try to raise their prices so that a competitive threat to us is eliminated. Couldn’t be further from the truth.”
To Hourican, the reason is simple: Why mess with a good thing? Sysco is buying Restaurant Depot because it is more profitable and, Hourican thinks, the company has enormous growth potential. He also believes there are efficiencies to be gained and benefits to exploit from such a combination that will ultimately be better.
But raising prices on Restaurant Depot’s customers would fundamentally damage that business.
“They are the low-cost leader,” Hourican said. “That is the reason people go to that store. We have zero interest in raising prices, because if we did, it would hurt that business, which would hurt our company. There is absolutely no economic benefit to Sysco in any way, shape or form in doing that.”
(Check out our podcast with Technomic’s David Henkes on the Sysco-Restaurant Depot deal.)
Sysco agreed to acquire Jetro Restaurant Depot in a $29 billion deal earlier this year. It is paying for the cash-and-carry retailer mostly using new debt and company stock. Wall Street remains skeptical, largely because of the debt and the high price for the retailer. The stock fell immediately and has only moderately recovered, still down 8.4% since the announcement.
That’s nothing compared with some independent restaurants that see Sysco, the country’s largest broadline distributor, acquiring the largest cash-and-carry distributor. They fear that the move will threaten the future of an alternative provider of food and other goods that many small restaurants need.
The Independent Restaurant Coalition, a group of independent restaurants, has called on the FTC to block the deal, much like it blocked the proposed merger between Sysco and US Foods a decade ago.
Some experts we’ve spoken with, however, have said that the deal will ultimately benefit consumers. And Sysco, one of the country’s most acquisitive businesses, has kept the identity of many of its more recent acquisitions, such as the equipment distributor Edward Don, when they have a different business model.
(Check out our in-depth look at the Sysco-Restaurant Depot deal.)
Restaurant Depot and Sysco take very different paths toward accomplishing the same goal, selling goods to restaurants. Sysco distributes them. Restaurant Depot operates like a retailer. “They are the Costco for restaurants,” Hourican said.
Sysco’s plan for the retailer is to make it more profitable, by finding synergies, or cost cuts by eliminating repetitive functions.
In reality, Sysco wants more Restaurant Depots. “This deal is about bringing the Restaurant Depot format, which is a gem of a business, to 124-plus net new physical locations,” Hourican said.
That includes places like Spokane, Washington, where Sysco has a distribution facility, but Restaurant Depot does not have a physical location. “It’s an eight-hour drive to their closest store,” he said. Restaurant Depot “would never go to Spokane by themselves. I have a 300,000-square-foot warehouse already in Spokane doing delivery to restaurants. We will leverage Sysco’s warehouse to cost-effectively flow food to an incremental new store in Spokane.”
To be sure, that also means going into smaller markets that may not have the number of independent restaurants to fuel Restaurant Depot locations. Yet Hourican noted his pre-Sysco career in retail. At one point he ran the CVS Health real estate committee, opening 4,000 stores during that time. And Hourican is convinced that Restaurant Depot has growth potential, and he even mentioned expanding into Canada.
“My number one [question] when I was doing due diligence was, ‘Is Restaurant Depot at capacity or saturation?” he said. “If so, we wouldn’t have done the deal. Because a lot of their growth comes from the opportunity to open.”
Hourican’s retail experience also gets to one of the other challenges in the Sysco-Restaurant Depot combination: They really are different businesses. US Foods has found that out with its Chef’Store, which that distributor put on the market in 2024. It’s difficult to operate a business different from the core business.
Hourican, however, noted that Restaurant Depot management will remain with the company, and they have considerable experience. He also noted that they will have the ability to run their stores without a lot of top-down interference.
For instance, one of the potential benefits of the deal is that Restaurant Depot will get access to Sysco branded products, which could give them more options. But the decision of whether to add them will be up to Restaurant Depot and based on the needs of the specific locations.
“They will have access to a much broader catalog of product,” Hourican said. “Think about shopping in the old Sears catalog. They will have access to that full catalog, and they can choose what products they would want to add, test and the like.”
All that said, the reaction has to at least give Hourican some confidence that he’s truly buying a “gem of a company,” as he’s said multiple times. Nothing quite confirms this like the kind of visceral reaction that this deal generated since its announcement.
“We are going to do nothing to hurt the format they love,” he said. “We’re going to bring that format to 125-plus net new locations. If anything, we’re going to help it, because we’re going to add some products to the store that we know restaurants want, that we know restaurants would buy.”
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