Sysco Just Bought Restaurant Depot for $29 Billion

Sysco announced on March 30 that it will acquire Jetro Restaurant Depot for $29.1 billion in cash and stock, combining the largest foodservice distributor in the United States with the largest cash-and-carry warehouse chain serving restaurants. The deal would create a combined entity with nearly $100 billion in annual revenue and fundamentally reshape how independent restaurant operators source their inventory.

The Independent Restaurant Coalition responded within days, urging the Federal Trade Commission to block the acquisition before it closes. The last time Sysco tried to consolidate the foodservice distribution market was in 2015, when a federal judge blocked its $3.5 billion bid for US Foods after the FTC argued the merger would give Sysco the power to raise prices on national accounts. That deal was roughly one-eighth the size of this one.

What Sysco Is Buying

Restaurant Depot operates 166 warehouse stores across 35 states, generating $16 billion in annual revenue with $2.1 billion in EBITDA. The chain serves approximately 725,000 independent restaurant operators who walk in, buy what they need at wholesale prices, and drive it back to their kitchens. No minimum orders, no delivery fees, no contracts, no negotiations over pricing tiers.

That purchasing model is exactly why the Independent Restaurant Coalition is alarmed. Executive Director Erika Polmar called Restaurant Depot “the great equalizer,” a place where a single-unit taqueria owner pays the same price per case of avocados as a ten-unit operator down the street. Sysco’s traditional distribution model works differently, with tiered pricing, volume commitments, delivery schedules, and account management built around larger customers.

The deal values Restaurant Depot at 14.6 times operating income. Sysco is financing it with $21 billion in new debt plus $1 billion in cash on hand, with Restaurant Depot shareholders receiving 91.5 million Sysco shares that will represent roughly 16% of the combined company. Sysco CEO Kevin Hourican called Restaurant Depot “a gem” and projected $250 million in annual cost synergies within three years through combined procurement.

Why the FTC Fight Matters

The IRC’s letter to the FTC frames the $250 million in projected synergies as a red flag, not a benefit. Their argument is that “synergies” in procurement means Sysco intends to use its dominant purchasing power to extract supplier prices that no remaining competitor can match, which would squeeze smaller distributors out of the market entirely.

The 2015 precedent is directly relevant. In that case, the FTC successfully argued that Sysco and US Foods were the only two companies with truly national broadline distribution networks, and merging them would create a company controlling 75% of sales to national customers. A federal judge agreed and blocked the deal, and Sysco abandoned the acquisition.

Restaurant Depot is not a broadline distributor in the traditional sense, so the competitive overlap analysis will look different this time. But the IRC is making an access argument rather than a market-share argument. Their position is that eliminating the one meaningful cash-and-carry alternative in most markets strips independent operators of their only leverage against Sysco’s pricing structure.

Sysco plans to open 125 or more new Restaurant Depot locations nationally, which could expand access in underserved markets. Whether that expansion happens under Sysco ownership or gets blocked depends on how the FTC weighs competitive access against consolidation risk.

What This Means for Restaurant Buyers

Every restaurant acquisition involves a cost-of-goods-sold analysis, and the sourcing model is central to that analysis. If the deal closes, buyers evaluating independent restaurants need to understand how dependent the operation is on Restaurant Depot for its purchasing economics. An operator who sources 60% of inventory through cash-and-carry runs at different margin assumptions than one locked into a Sysco or US Foods delivery contract.

The deal also raises questions about what happens to existing Restaurant Depot locations. Sysco has not committed to maintaining the cash-and-carry model indefinitely, and integration plans over three years leave room for format changes, membership requirements, or pricing restructures that could shift the economics for small operators.

For buyers looking at multi-unit acquisitions, the combined entity’s $100 billion in revenue and consolidated procurement could actually create favorable pricing if you are large enough to negotiate directly with Sysco. The risk concentrates on single-unit and small multi-unit operators who depend on walk-in wholesale access without the volume to command account-level pricing.

What This Means for Sellers

If you are an independent operator considering a sale, your purchasing model is now part of the valuation conversation in a way it was not six months ago. A buyer will want to know where you source, what percentage comes from cash-and-carry versus contracted delivery, and how your margins hold up if that sourcing model changes.

The strongest position is diversified sourcing. Operators who split purchasing across multiple channels, including direct relationships with local farms, protein suppliers, and specialty vendors alongside warehouse and delivery accounts, present a more resilient cost structure than those dependent on any single source.

The deal is expected to take 12 to 18 months to close, assuming it survives regulatory review. During that window, nothing changes operationally at Restaurant Depot. But the uncertainty itself will factor into how sophisticated buyers model forward-looking margins for any business that relies heavily on the warehouse chain.

Source: Restaurant Business Online, Restaurant Business Online (IRC Opposition), Federal Trade Commission