Top U.S. food distributors Sysco, U.S. Foods shift supply chain to grocers

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Top U.S. food distributors Sysco, U.S. Foods shift supply chain to grocers

Suppliers and distributors for U.S. restaurants are in an unprecedented position as masses of locales have closed down amid the Covid-19 outbreak. The country's largest restaurant and foodservice distributors Sysco and US Foods are shifting their supplies to grocery stores, reports CNBC.

Huge inventories of food items originally destined for restaurants from specialty foods importers like Regalis are giving away products like Kaluga caviar to customers who spend more than US$250.

Finding themselves with excess product and no supply chain to direct food through, restaurant suppliers are getting creative to sell their products to individual consumers.

However, big companies like Sysco and US Foods are taking alternative routes to redirect their food stock. As the grocery industry sees increased sales and empty shelves as consumers rush to markets to stock up in the Covid-19 pandemic, Sysco turns its efforts to the grocery supply chain.

In normal circumstances, restaurants make up 62% of Sysco's sales, it doesn't usually serve grocers. Kevin Hourican - Sysco's CEO - told CNBC last week that the company was connecting with leaders in the grocery industry.

US Foods is also making moves to partner up with grocery supply chains. Supporting and selling to grocery stores as a way to transfer goods is one of its goals, according to spokeswoman Sara Matheu.

"In some cases, product is easily transferrable from food service to retail. In cases where it's more challenging, we've been directly working with the retailer to make proper adjustments," she explained in a comment to the publication.

And while US Foods also works with C&S Wholesalers and retailers to transfer some of its employees to similar jobs in the grocery distribution line, new grocery sales and measures likely won't totally offset losses.

Foodservice operators in the restaurant industry have drawn back their fiscal forecasts significantly in past weeks. Sysco pulled its long-term outlook for 2018-2020 back by US$1.5bn while US Foods altered its projections with a decrease of US$1bn for 2020.

Food importers like Regalis have been smart in their pivot to the retail sector. This doesn't mean that its sales won't take a big hit. The food supplier highlighted, alongside steps taken by big food distributors, it plans on becoming more connected with retailers in upcoming months to transfer its supply chain.

It also emphasized the importance of e-commerce during these times.

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