Sysco

Sysco Corporation (Systems and Services Company)

Type	Public
Traded as	NYSE: SYY S&P 500 Component
Industry	Retail
Founded	1969
Headquarters	1390 Enclave Parkway, Houston, Texas, U.S.
Key people	William J. DeLaney III, CEO Jackie L. Ward, Chairman
Services	Food-service, food-away-from-home
Revenue	US$44.41 Billion (FY 2013)[1]
Operating income	US$1.66 Billion (FY 2013)[1]
Net income	US$992 Million (FY 2013)[1]
Total assets	US$12.67 Billion (FY 2013)[2]
Total equity	US$5.91 Billion (FY 2013)[2]
Number of employees	47,000 (2009)
Slogan	Good things come from Sysco
Website	www.sysco.com

Headquarters of Sysco in the Energy Corridor

Sysco Corporation is an American multinational corporation involved in marketing and distributing food products to restaurants, healthcare and educational facilities, hotels and inns, and other foodservice and hospitality businesses. The company is headquartered in the Energy Corridor district of Houston, Texas.^[3]

Sysco, an acronym for Systems and Services Company, is the world's largest broadline food distributor; it has more than 400,000 clients in a wide array of fields. Management consulting is also an integral part of their services. As of July 2, 2005, the company operated 170 facilities throughout the United States and Canada.

The company was founded by Herbert Irving, John F. Baugh and Harry Rosenthal in 1969.^[4] The company became public on March 3, 1970. On July 20, 2009, Fortune magazine ranked Sysco #204 in the annual Fortune 500 companies in world based on sales volume. On May 3, 2010, Fortune ranked Sysco as the 7th largest Fortune 500 Company in Texas and 55th largest in the US by total revenue.^[5] However, with the Sysco merger with the smaller US Foods announced in December 2013, the combined revenue of the two corporations will now give it a 27% share of last year's U.S. food-distribution market.^[6]

Sysco competes with national distributors US Foods, Performance Food Group, and Edward Don and Company, as well as regional companies such as Gordon Food Service, Ben E. Keith, Maines Paper & Food Service, and local foodservice distributors.

Sysco is also the largest non-oil related company in Houston and the third largest non-oil related company in Texas (Behind AT&T and Dell).^[5]

In 2013, Sysco was involved in a scandal in which some locations were found to be using unrefrigerated drop sites.^[7][8]

By April 2014, more than a dozen U.S. state attorneys general had raised competition concerns with Federal Trade Commission officials concerning Sysco Corp.'s $8.2 billion planned acquisition of its next-largest food distribution rival, U.S. Foods Inc. The companies have said the combined entity would have 25% of the U.S. food distribution market, but other estimates range as high as 35%.^[9]

History

In 1996 Sysco was the third largest company in Houston. It had over 30,000 employees.^[10]

In 2002, Sysco purchased SERCA Foodservices and renamed it Sysco Canada. SERCA had been owned by the supermarket giant Oshawa Group, which was acquired by Sobeys in 1998.

In 2003, Sysco purchased Asian Foods, the largest Asian foods distribution in North America. The first group of Asian Foods joined Sysco Kansas City in 2006, followed by Asian Foods Chicago joining Sysco Chicago in Sep, 2009.

In 2009 Sysco acquired Pallas foods, the largest food distributor in the Republic Of Ireland. Continuing the expansion of their Irish offerings, in 2012 Sysco purchased Crossgar Foodservice for an undisclosed amount.^[11]

In a strategic move to improve offerings and communication for their clients in high end grocers and restaurants, Sysco acquired Specialty Food Distributor European Imports for an undisclosed amount.^[12]

On December 9, 2013, Sysco announced they would acquire US Foods for a total of $3.5 billion. The acquisition is expected to close during the first quarter of 2015. ^[13]

SYGMA Network

The SYGMA Network, Inc. is a wholly owned subsidiary of Sysco that provides food and non-food products to chain restaurants throughout the United States.

SYGMA was founded in January 1984 when senior officers of Sysco Corporation started discussions for forming a new distribution company. The first products were shipped in May 1985 from SYGMA’s first distribution center in Oklahoma. In 1988, Sysco acquired CFS, increasing head count at the organization.

SYGMA's customers include approximately 17,000 restaurants representing 32 concepts. Operating from 15 distribution centers, SYGMA is one of the largest chain distributors in the United States with sales over $6.7 billion. 191 million cases of product are delivered each year. SYGMA currently employs over 4,000 employees.

Sysco truck docked at Duke University

iCare

iCare partners include:

• Applied Media Technologies Corporation, which provides background music and on-hold messaging to Sysco customer restaurants.
• The Franchise Edge, LLC., providing consultations and full service franchising programs to Sysco customer restaurant concepts.

Governance

In December, 2004, SYSCO announced that Gregory E. Otterbein had been named president and chief operating officer of Sysco Food Services of Northern New England, Inc., succeeding current president Richard A. Giles.^[14]

In 2005, Thomas E. Lankford retired as president and chief operating officer after a 41-year career in the foodservice distribution industry. Richard J. Schnieders, SYSCO's chairman and chief executive officer, assumed the additional role of president.^[15]

The company is governed by a board of directors. Current members of the board are: John Cassaday, Judith Craven, Jonathan Golden, Joseph Hafner, Richard Merrill, Nancy Newcomb, Richard Schnieders, Phyllis Sewell, John Stubblefield, Richard Tilghman, and Jackie M. Ward. Kevin Mangan is currently the president of Sysco San Diego.

Scandal regarding unrefrigerated drop sites

Beginning in the Summer of 2013, the California Department of Public Health was investigating a total of 21 sheds which were never regulated with the state of California and never inspected. This food included overnight drop-offs of chicken, pork, beef, bacon, and milk.^[16] An investigative report by NBC Bay Area recorded food sitting in these sheds for up to five hours, in temperatures as hot as 81 degrees Fahrenheit, before the food was delivered to hotels and restaurants. An employee speaking anonymously stated that sheds in Spokane, Washington, had refrigerators which were not large enough, and that most of the time there were cases of frozen food sitting on the floor outside the refrigerators.^[16][7]

The Canadian Food Inspection Agency and the Ontario Ministry of Agriculture were looking at Sysco's compliance with Canadian food laws.^[7][8][17]

In an essay, logistical consultant David K. Schneider stated, “I think it was a combination of cost control and misguided customer service. Yes, in an effort to do a better job serving the customer, the local operations cut cost corners,” with the result that food was left unrefrigerated for “hours” and people probably did get sick.^[18]

A Sept. 6, 2013 Sysco press release stated that “drop sites were locations that permitted Sysco to meet the service needs of our customers by allowing delivery associates to drop off product at locations for temporary storage. Salespeople would then pick up the product and transport it to our customers.”^[19][20] This press release also stated that Sysco had “decided to discontinue its drop-site program across the U.S. and Canada” after the company conducted an internal investigation into the practices and “identified additional operating companies that were not fully complying” with Sysco’s drop site policies.^[21][19]

A Sept. 18, 2013, NBC Bay Area broadcast reported that Sysco has purchased refrigerated vans for northern California.^[7]

On July 16, 2014, Sysco agreed to pay fines totaling $19.4 million and admitted to the allegations made by the NBC Bay Area news team and investigated by the California Department of Public Health. ^[22]

References

External links

• Sysco Corporation
• Asian Foods
• BusinessWeek 50 ranking and analysis of Sysco
• SeekingAlpha analysis of Sysco
• The SYGMA Network, Inc.