Sysco: 13 Facts About The Nation's Largest Food Distributor

Sysco has customers in 90 countries outside of the United States and Canada, with physical locations in the Bahamas, Ireland, Costa Rica, Mexico, the United Kingdom, France, Sweden, Luxembourg, Panama, and Belgium. Additionally, its International Food Group works with U.S.-based chains with locations abroad, totaling Sysco's reach to nearly 100 countries.

There are pros and cons to having this type of global supply chain. Some benefits include lower costs, larger access, and potentially higher-quality products. Unfortunately, these pros can come with a lack of transparency and regulation, as well as a negative impact on the environment. For example, Sysco doesn't release specific information about its plastic usage, meaning consumers are in the dark about the exact environmental footprint of the world's largest food supplier. On the other hand, during the pandemic, Sysco's wide reach allowed it to set up pop-up grocery stores to alleviate some food shortages in the U.S. 

Because Sysco sources from other producers, this can and has led to producer-specific issues. At one point, Sysco even tried to sue the world's largest meat processors over price gouging. However, more sickeningly, in 2021, fresh onions imported from Mexico to ProSource Inc. and Keeler Family Farms and consequently sold to Sysco (and other companies) for wholesale distribution caused a salmonella outbreak. This led to multiple recalls in North America and affected around 900 hundred people. The previous year, Sysco Canada recalled jumbo red onions under its Imperial Fresh brand. 

Another big brand affected by these recalls was Green Giant. Individual store chains also sold the onions, leading to recalls at Costco, Walmart, and HelloFresh locations. These recalls lasted from October to November of that year. According to the CDC, salmonella is a group of bacteria, most of which cause salmonellosis. Symptoms include fever and gastrointestinal issues and can begin anywhere from a few hours to nearly a week after infection, lasting a few days to a week. Most people affected by these bacteria do not need medical treatment, but those with compromised immune systems, 65 and older, and infants, usually receive antibiotics.

A decade ago, NBC Bay Area found out that Sysco had been using outdoor public storage units to store perishable food items such as raw meat, milk, and produce. A team of investigators from the news channel checked out these refrigerated units around the San Francisco Bay Area. Inside, they found items of food that were unrefrigerated for hours in areas that had no-food policies in place to deter rodents. In addition, the investigators discovered food, rat droppings, and bugs on the floor. As a follow-up, they interviewed California health inspectors. 

In response to this investigation, Sysco told NBC Bay Area, "Sysco's first priority is our commitment to provide safe, quality-assured products to our customers. Sysco San Francisco's drop-site practices in the Bay Area were not compliant with company policy." The statement went on to say that Sysco was working with the San Francisco health department to remedy the situation. The state later fined Sysco $19.4 million in penalties for the illegally stored food. 

In 2015, Sysco tried to merge with supplier US-Foods, the country's second-largest food supplier. The merger would have entailed Sysco buying the other company for $3.5 billion. However, the Federal Trade Commission placed an injunction on the deal over concerns about how it would affect the market. If the two companies had become one, they would have created a monopoly and had the leverage to raise prices in the market. 

Sysco decided not to move forward based on that injunction decision. As a result, it was required to pay $300 million in "breakup fees" to US-Foods. It's prevalent for breakup fees to be part of a merger deal, though they are typically paid by the company that was going to be taken over as a way to keep it from backing out of the agreement; in this case, Sysco was required to pay for ending the acquisition.

A cybersecurity event at Sysco began on January 14, 2023, and the company did not become aware of it until March 5 of the same year. A data-breach filing with the Office of the Maine Attorney General showed that more than 100,000 people in the United States and Canada had been affected by the hacking. Social Security Numbers and other identifying information were compromised. Sysco again confirmed the cyber attack in a quarterly report to the U.S. Securities and Exchange Commission. 

The report states that Sysco began an investigation as soon as it realized there had been a breach. With the help of cybersecurity and forensic specialists, the company found that the "threat actor" collected company data, which included information about business operations and customer and employee data. The company highlighted that the attack didn't affect its ability to operate but it had notified the authorities. As of May 2023, the investigation into the attack was ongoing. Sysco provided free credit monitoring to current and former employees who had their data stolen in the breach.

Hundreds of union members in Indianapolis and Syracuse went on strike throughout 2022 and 2023 over unfair labor practices. The striking workers wanted better pay and more benefits. Drivers, who often work shifts longer than 14 hours due to overloaded trucks, demanded shorter shifts. One employee noted that the company always wanted them to work more hours and operate equipment in potentially unsafe conditions. In the end, the workers were able to negotiate to secure new contracts. The positive resolution of the strikes is good for everyone, as a lack of employees could have caused food supply issues to worsen.

We have seen a rise in strikes post-pandemic, especially over the last year. Some companies that previously didn't have unions are now witnessing their workers unionize. According to NPR, these include Starbucks and Amazon, which have traditionally been anti-union. This comes on the heels of a labor force decreasingly represented by unions. However, even though this year has inspired the nickname "Hot Labor Summer," and most U.S. Americans favor unions, the tide is not changing.

Sysco's tactic of aggressively acquiring other companies is part of how it became the nation's largest food distribution company — historically, at least. In 1969, founder Baugh created the company by merging with eight other small distributors (Louisville Grocery Company of Louisville, Kentucky; Plantation Foods of Miami; Texas Wholesale Grocery Corporation and Wicker, Inc. of Dallas; Frost-Pack Distributing Company of Grand Rapids; Global Frozen Foods and Albany Frosted Foods of New York; Food Service Company of Houston; and Thomas Foods of Cincinnati). 

In 1970, Sysco acquired Arrow Food Distributor, which was its first. The '80s saw Sysco acquiring parts of PYA Monarch and CFS Continental, the country's third-largest food distributor at that time. The latter was the company's biggest acquisition to date, as its proposed merger with US-Foods did not go through. Sysco has also made smaller acquisitions throughout the years but has focused less heavily on buying other companies since the late 1990s.