Earlier this week, the country’s largest broadline distribution provider, Sysco, said that it had a deal to buy the country’s largest “cash-and-carry” distributor, Jetro Restaurant Depot, for $29 billion.
People have feelings about it. Wall Street didn’t much like it, trashing the stock largely over the debt that Sysco will need to fund the purchase. The Independent Restaurant Coalition, a group of local restaurant operators, called on the FTC to block the sale. And judging by the numerous comments on my social media sites, the regular person doesn’t think much of it, either.
But there’s just one thing: There is a good chance that Sysco will one day regret that deal, too.
For evidence, we simply look to US Foods.
In 2020, the broadline distributor acquired Smart Foodservice, paying $970 million for the right to operate its 70 mostly small format cash-and-carry providers. The next year, it rebranded those locations under US Foods’ much smaller, existing Chef’Store brand.
“As we continue to expand our multi-channel strategy, we know customers, particularly independent restaurants, increasingly use cash-and-carry as a convenience, cost-effective purchasing options,” Pietro Satriano, US Foods chairman at the time, said in announcing the deal.
He called cash-and-carry an “attractive, growing channel.”
As in most deals, the company said that it expected to get “synergies” by combining the two companies, in this case $20 million worth.
US Foods expanded Chef’Store over the next couple of years. By 2024, the cash-and-carry provider had grown to 95 locations from 80 stores at the time of the rebranding in 2021.
But it had also changed its tune. Under Dave Flitman, who became CEO in 2023, the distributor decided that Chef’Store would be better off under different ownership. A US Foods spokesperson told Restaurant Business at the time that the combination did not have many of the foreseen benefits, specifically when it came to those aforementioned “synergies,” or cost savings.
“Those benefits have been very limited,” they said.
Unfortunately for US Foods, others weren’t exactly lining up to acquire Chef’Store. The cash-and-carry provider remains part of the distributor, due largely to overall weakness in the merger-and-acquisition environment.
“After multiple conversations with potential buyers and engaging in active negotiations over the past several months, it became apparent that the current macro environment was not conducive to completing a transaction at an appropriate valuation,” Flitman told analysts last year, according to a transcript on the financial services site AlphaSense.
He then added that he stilled believed that “the ChefStore business is not the right long-term strategic fit for our company.”
Now it’s worth pointing out that Chef’Store is a much smaller business than Restaurant Depot. In 2025, Chef’Store represented just 5% of US Foods’ EBITDA. If the Restaurant Depot deal goes through, it will represent 45% of Sysco’s EBITDA, or earnings before interest, taxes, depreciation and amortization. Restaurant Depot is simply on another planet compared with Chef’Store.
Sysco is buying Restaurant Depot to get into that business, which is growing and clearly more profitable than is the business of delivering food and other goods to restaurants and other foodservice providers. And that explains its willingness to take on the debt it is using to finance the deal.
But bigger acquisitions come with bigger problems. Many of the same types of challenges that US Foods experienced with its cash-and-carry foray could well emerge when Sysco starts integrating Restaurant Depot.
Sysco will be counting on $250 million worth of annualized cost savings, or well over 10 times the amount that US Foods was counting on. Those savings will be necessary to fund the debt and win over what has thus far been a skeptical Wall Street. If it runs into the same challenges that US Foods apparently experienced, then that could be a problem.
Sysco is a very different company from Restaurant Depot. Sysco is a logistics company. Restaurant Depot is effectively a retailer. They have different needs and cultures, and those needs and cultures could clash.
Any acquisition in and of itself is dangerous for a company. It’s particularly dangerous when those businesses are different. Sysco may rightly believe that it can create an omnichannel operation by swallowing Restaurant Depot, and could well turn out to be right. But the distributor may also find it a lot more difficult to run a retail business than it thinks.