Sysco Corporation (SYY) Business Profile

What it does

Sysco sells and delivers food and related supplies to businesses and institutions that prepare meals away from home. Its customers include restaurants, hospitals, schools, hotels, caterers and entertainment venues. Founded in 1969 and headquartered in Houston, Sysco is led by Chair and Chief Executive Officer Kevin P. Hourican.

The company supplies ingredients such as fresh and frozen meat, seafood, produce, dairy and dry goods, alongside prepared foods and beverages. Customers can also buy non-food items, including disposable plates and cups, tableware, cookware, cleaning supplies and kitchen equipment. Sysco distributes national brands as well as products made for its own brands.

Its distribution centers assemble orders for delivery to customer locations. Some sites offer daily delivery and can handle special orders on short notice. Sales representatives help customers select products, while the company also offers services such as menu-planning advice, food safety training, inventory assistance and product usage reports.

Sysco operates through U.S. and international foodservice businesses, a customized distribution business serving quick-service chains, and other operations that include hotel supplies. Its primary operations are in North America and Europe.

How it makes money

Sysco earns sales by distributing food and non-food products. Its U.S. Foodservice Operations include broadline distribution, which supplies a range of products, and specialty businesses focused on categories such as produce, meat, seafood and restaurant equipment. International Foodservice Operations distribute food and supplies outside the United States. SYGMA provides customized distribution to quick-service chain locations, while the Other category includes hotel supply operations.

Fiscal 2026 sales were $84.6 billion; first-quarter fiscal 2027 enterprise sales were 21.7 billion.

Sales depend on the volume of products customers order, product prices and the mix of customers and products. Sysco fills a majority of orders within 24 hours, and customers can reorder as they need supplies. Net sales reflect returns and sales incentives, including discounts and upfront payments to certain customers. Sysco also extends credit to some customers based on their assessed creditworthiness.

The economics differ by customer. Local customers include independent restaurants and locally managed chains; Sysco says their pricing terms can generate higher gross margins. National customers can negotiate pricing across multiple businesses, reducing gross profit potential, but their larger deliveries reduce the overall cost per case.

Products sold include branded merchandise and Sysco’s private-brand range. Sysco sets specifications for its private-brand products and its quality assurance team certifies the plants where they are packaged. In fiscal 2026, operating income was $3.1 billion. Sysco’s first-quarter fiscal 2027 sales increased 2.8% year over year.

Customers and how it sells

Sysco serves independent and chain restaurants, hospitals and skilled nursing facilities, schools and colleges, hotels, caterers and other venues where food is prepared or served. It also sells to foodservice management companies that operate cafeterias and other facilities for institutions. No single customer accounted for 10% or more of total sales in fiscal 2026.

Foodservice sites deliver to both independent and chain customers. SYGMA’s customized distribution operations serve certain chain restaurant locations. Customers may also buy food and supplies through other distributors, wholesale and retail outlets, or directly from suppliers.

Sysco’s primary operations are in North America and Europe. Outside the United States, its businesses include operations in Canada, the Bahamas, Costa Rica and Panama, as well as exports to international customers. Its European operations are concentrated in the United Kingdom, France, Ireland and Sweden.

In fiscal 2026, U.S. Foodservice Operations represented approximately 69.5% of overall sales, and International Foodservice Operations represented 19.0%. As of June 27, 2026, Sysco operated 333 distribution facilities throughout North America and Europe.

Suppliers and costs

Sysco purchases from thousands of domestic and international suppliers. They include large corporations selling branded and private-label products, regional processors and packers, and smaller producers of specialty or seasonal goods. No individual supplier accounted for more than 10% of purchases in fiscal 2026.

Suppliers manufacture Sysco’s private-brand products to company specifications. Sysco purchases through centrally developed programs and through direct programs established by its operating sites. Its procurement program covers branded merchandise and products across substantially all product lines.

Cost of sales primarily includes product costs, net of supplier consideration, and inbound freight. Operating expenses include facilities, product handling, delivery, selling and administrative costs. Fuel costs sit in operating expenses, while fuel surcharges are included in sales and gross profit. Sysco also carries inventory to meet demand, with levels varying by shelf life, supplier lead times and customer demand.

Sysco says inbound fuel costs are not hedged. It expects technology and efficiency initiatives across sales, merchandising, supply chain and back-office functions to generate approximately $100 million of cost savings during fiscal 2027.

Competitive position

Sysco competes with local, regional and multi-regional food distributors. Customers can also purchase through specialty distributors, wholesale outlets, club stores, cash-and-carry stores, grocery stores, online retailers or directly from suppliers. Some distributors form purchasing cooperatives and marketing groups to broaden their product range and geographic reach.

Sysco has identified Costco and Sam’s Club as cash-and-carry competitors relevant to Restaurant Depot, the business it has agreed to acquire. Sysco estimates that it served about 18% of the U.S. foodservice market in calendar year 2025. It identifies customer contacts, product range, dependable delivery and competitive prices as principal competitive factors.

The company points to its sales consultants, private-brand products, service reliability, customer services and multi-regional presence as advantages. Its distribution sites include warehouses that handle products at different temperatures, and its representatives offer services such as menu analysis.

Our reading: Sysco’s geographic network and range of products provide a meaningful service advantage for customers that need regular deliveries. Our reading: That advantage is constrained by low switching costs and few barriers to entry; customers commonly buy from multiple suppliers and channels.

Growth opportunities

Sysco has grown through expansion of existing operations and acquisitions. In fiscal 2026, sales increased 3.9% from fiscal 2025, driven by inflation and volume growth, including contributions from recent acquisitions. U.S. Foodservice total case volume increased 1.4%, while local case volume increased 1.7%.

Sysco has agreed to acquire Jetro Restaurant Depot, a U.S. cash-and-carry foodservice provider serving smaller independent restaurants and businesses. The agreed consideration is approximately $29.1 billion, consisting of cash and shares. The transaction remains subject to closing conditions, including regulatory clearance. Sysco expects it to close by the end of its fiscal third quarter of 2027 and is planning joint purchasing with Restaurant Depot.

The company is also working on sales and operating initiatives. Its AI360 tool suggests products or Sysco-brand alternatives for sales representatives to offer customers. Sysco says both sales-offer activity and sales to existing customers increased through use of the tool. A routing pilot has improved pieces delivered per mile and compliance with delivery windows, and Sysco plans to roll out the capability across its U.S. operating locations.

Sysco estimates the U.S. foodservice market was approximately $377 billion in calendar year 2025. It expects fiscal 2027 cost savings from technology and efficiency initiatives across several parts of the business.

Structural risks

• Food costs and margins: Foodservice distribution is a low-margin industry. Significant or prolonged inflation or deflation can affect Sysco’s product costs and profitability; customer and product mix also influence gross profit.
• Supply and delivery: Conditions outside Sysco’s control can interrupt supplies, increase product costs or impair deliveries. Fuel and inbound freight are part of the cost of operating its distribution network.
• Demand and labor: Economic conditions and changes in trade policy can affect restaurant foot traffic, demand and margins. Sysco’s operations also depend on its ability to recruit and retain qualified employees.
• Acquisition: The Restaurant Depot transaction depends on closing conditions, including regulatory clearance. If it does not close, Sysco could incur transaction and financing costs and, under certain circumstances, owe a termination fee of $1.164 billion.
• Debt and technology: Sysco says indebtedness can limit financing and operating flexibility. Cybersecurity incidents or technology disruptions could affect its operations, and its prevention and disaster recovery efforts may not be fully effective.

Bottom line

Our reading

Our reading: Sysco is a recurring foodservice distribution business whose reach, product range and delivery network support its customer relationships, while low switching costs keep competition active. [item1] Its results depend on moving products efficiently through a low-margin system, with food prices, fuel costs and restaurant demand affecting performance. [item1a, item7] The proposed Restaurant Depot acquisition adds a potential cash-and-carry growth channel, but also brings closing and financing risks. [item1, item1a, item7]