Sysco buys restaurant catering supplier Jetro Restaurant Depot for a whopping $29 Billion: Here's what this means for independent restaurants

Sysco is making one of its biggest moves in recent years with a $29 billion agreement to acquire Jetro Restaurant Depot, a deal that significantly expands its presence in the U.S. food distribution market. The acquisition strengthens Sysco’s reach among price-conscious independent restaurants while opening the door to the high-margin cash-and-carry wholesale business. The move also comes at a time when large consumer-facing companies are pursuing scale to manage softer demand and rising costs.

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The deal marks a significant strategic expansion for the U.S. food giant, which is widely known for supplying products such as steaks, fillets, and frozen foods to major fast-food chains including KFC and Subway. By acquiring Restaurant Depot, Sysco is set to strengthen its hold on independent restaurants and broaden its presence in a fast-growing wholesale segment, as per a report by Reuters.

Why is this deal important for Sysco?

The acquisition gives Sysco direct access to the high-margin “cash-and-carry” business, an area where Jetro Restaurant Depot has built a strong footprint. Unlike Sysco’s traditional delivery-focused model serving restaurants, hospitals, and hotels, Restaurant Depot operates on a wholesale warehouse system where customers pay upfront for food, beverages, and takeaway supplies.

This business model has proven resilient, particularly among smaller independent restaurants looking for affordable bulk purchasing options.

Restaurant Depot currently operates around 166 warehouse locations spread across 35 U.S. states, giving Sysco an immediate and substantial presence in this segment, as per a report by Reuters.

As Sysco CEO Kevin Hourican said in a statement, "Sysco and Jetro Restaurant Depot will enhance value for small independent restaurants and the consumers they serve by expanding access to more affordable, fresh food products and delivering more choice and convenience."

The company emphasized that the combination is expected to improve pricing access and product availability for a wider customer base.

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How will Restaurant Depot fit into Sysco’s business?

Under the agreed terms, Restaurant Depot shareholders will receive $21.6 billion in cash along with 91.5 million Sysco shares. Once the transaction closes, these shareholders are expected to own roughly 16% of the combined company, while Sysco will issue around 19.1% of its outstanding shares.

To fund the acquisition, Sysco said it will raise $21 billion through new and hybrid debt, alongside $1 billion in available cash and equity, as per a report by Reuters and RTT News.

Following the announcement, shares of Sysco declined in premarket trading, reflecting investor concerns around the size of the financing package and the company’s increased leverage.

In response, Sysco said it is temporarily pausing its share repurchase program to focus on rapid deleveraging after the acquisition. The buyback program is expected to resume once meaningful progress has been made in reducing debt.

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What does the acquisition mean for future growth?

Sysco expects the Restaurant Depot acquisition to be immediately beneficial to earnings. According to the company, the transaction is projected to be mid- to high-single-digit accretive to earnings per share in the first year after closing, and low- to mid-teens accretive in the second year.

The company also reaffirmed its third-quarter and full-year fiscal 2026 guidance, signaling confidence in its core operations despite the large-scale deal, as per a report by Reuters and RTT News.

For the third quarter of 2026, Sysco said it remains aligned with previously announced expectations for adjusted earnings per share of approximately $0.94.

For the full fiscal year, the company maintained its forecast for sales growth of 3% to 5%, while adjusted earnings per share are expected to come in at the high end of the $4.50 to $4.60 range.

The transaction is expected to close by the third quarter of Sysco’s fiscal 2027, subject to customary conditions, including regulatory approvals.

This acquisition also arrives against the backdrop of broader consolidation efforts across consumer-facing industries, as companies pursue scale to offset weaker demand and persistently high costs.

For Sysco, the Restaurant Depot deal is more than just an expansion, it is a strategic push into a growing and resilient channel that could define its next phase of growth in the U.S. food distribution market.

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FAQs

Why is Sysco buying Restaurant Depot?
To expand into the high-margin cash-and-carry business and better serve independent restaurants.

When is the deal expected to close?
Sysco expects the transaction to close by the third quarter of fiscal 2027.