Major deal allows the largest U.S. food distributor to expand into a rapidly growing restaurant segment
Sysco, the largest food distributor in the United States, has announced a $29.1 billion acquisition of Jetro Restaurant Depot. This move is aimed at expanding into a fast-growing and highly profitable segment of the restaurant industry, with plans to open more than 125 new stores across the country.
The Houston-based company, which operates 337 distribution centers across 10 countries, stated that Restaurant Depot serves small and independent restaurants by offering competitively priced products seven days a week. Its “cash-and-carry” model allows customers to purchase fresh and frozen food directly in-store with free membership access.
According to Sysco executives, this business model is not only more profitable than other segments of the food service industry but also remains stable during economic fluctuations.
Restaurant Depot has maintained profitability for the past 30 years and generated approximately $16 billion in revenue in 2025. The company has seen revenue growth in 28 of the last 30 years and owns around 130 of its store locations, representing nearly 80% of its real estate portfolio across 35 states.
Sysco’s CEO, Kevin Hourican, emphasized that Restaurant Depot’s real estate holdings are a valuable asset and will be retained as part of the acquisition.
Currently, Restaurant Depot operates 166 warehouse-style stores serving over 725,000 independent restaurants. The acquisition will provide these customers access to Sysco’s advanced supply chain and logistics network, while Sysco will benefit from new ways to serve local markets.
Hourican described the deal as a combination of two industry leaders that will create a powerful multichannel foodservice distribution platform. He added that the integration will improve purchasing efficiency and enable lower prices for customers.
Despite the strategic benefits, Sysco’s shares dropped by more than 15% following the announcement, largely due to investor concerns about the significant debt required to finance the deal. However, some analysts have described the acquisition as attractive, noting its potential to reach underserved customers.
This marks the largest food distribution deal in the past year. The only other major transaction during that period was C&S Wholesale Grocers’ $1.8 billion acquisition of SpartanNash.
Cost efficiency remains critical in the food service sector due to its narrow profit margins. Sysco reported $81.4 billion in revenue for the fiscal year ending June 28, 2025, with an operating margin of 3.8%.
Sysco plans to expand Restaurant Depot’s operations significantly, aiming to open at least 125 new stores over the next 20 years. This expansion is expected to bring affordable food solutions to new communities while creating thousands of jobs.
The company will collaborate with Restaurant Depot’s experienced real estate team to identify new market opportunities, although specific locations have not yet been disclosed.
Restaurant Depot was founded 50 years ago by Nathan Kirsh, starting with a single warehouse in Brooklyn, New York. Over time, Kirsh built it into a major food distribution business in the United States.
Stanley Fleishman, Executive Chairman of Restaurant Depot, stated that Sysco is an ideal partner for the company’s next phase of growth, citing its strong logistics capabilities and shared growth vision.
Sysco has also been expanding into the retail foodservice sector by launching Sysco To Go stores, which cater to small businesses such as food trucks and caterers that do not require large-scale delivery services.
The acquisition is expected to close in the third quarter of Sysco’s fiscal year 2027, pending regulatory approvals. Restaurant Depot will continue to operate as a separate business unit under its existing leadership, led by Richard Kirschner.
The company will maintain its headquarters in Whitestone, New York, ensuring continuity for employees and clients. No workforce reductions are anticipated as part of the deal.
Sysco plans to issue 19.1% of its shares to Restaurant Depot and temporarily pause its share repurchase program to reduce debt over the first 24 months following the acquisition.
Sysco is expected to release its fiscal 2026 third-quarter results on April 28.
For the transaction, Sysco is being advised by Goldman Sachs and TD Securities, while Restaurant Depot is being advised by Evercore, along with several legal and communications firms supporting both parties.
Source: Original reporting by Candace Carlisle, Andy Peters, CoStar News.
