Sysco (NYSE:SYY) said it has entered into a definitive agreement to acquire Restaurant Depot, a wholesale cash-and-carry foodservice supplier focused on small restaurants and local businesses. On a conference call announcing the deal, Sysco Chair and CEO Kevin Hourican described the transaction as “transformational,” arguing the combination will create a nationwide omni-channel platform that serves different customer needs across delivery and in-store purchasing.
Strategic rationale: adding a cash-and-carry growth channel
Hourican said Restaurant Depot serves a different customer than Sysco’s core broadline delivery business, emphasizing “minimal overlap” between the two companies’ customer bases today. He contrasted Sysco’s “white glove consultative service” and delivery model with Restaurant Depot’s self-serve approach, where customers pick up products themselves in exchange for lower prices.
Sysco also framed cash-and-carry as a sizable, resilient market segment. Hourican said the U.S. cash-and-carry channel represents an estimated $60 billion to $70 billion total addressable market, separate from the broadline delivery channel, which he characterized as “well over $300 billion.” He added that the value-oriented format tends to perform well in economic downturns, when customers seek lower prices.
Restaurant Depot footprint, customer base, and growth profile
Hourican said Restaurant Depot was founded 50 years ago in New York by Natie Kirsh and operates 166 large-format warehouse locations across 35 states, serving more than 725,000 local customers. He noted that 55% of U.S. independent restaurants are within a 30-minute drive of a Restaurant Depot store, and that the company owns more than 80% of its physical locations, many purchased decades ago near major metropolitan areas.
Sysco executives repeatedly highlighted Restaurant Depot’s long-term growth track record. Hourican said that since 2004, Restaurant Depot delivered a 9% compound annual growth rate (CAGR) in revenue and a 14% CAGR in adjusted EBITDA, and that adjusted EBITDA has increased for 30 consecutive years, including during COVID.
Asked about growth drivers and pace of store openings, Hourican said Restaurant Depot’s growth comes from a mix of same-store sales increases and new store openings, with same-store sales benefiting from both volume and “traditional inflation of approximately 2%.” He said Restaurant Depot has typically opened about five to six net new locations per year, and Sysco’s pro forma assumptions reflect continuation of that pace.
Hourican also pointed to longer-term expansion potential, saying Sysco has “a direct line of sight to 125+ net new locations in the coming decades,” and that the company sees an opportunity to bring the model to additional communities where Restaurant Depot does not currently operate.
Financial expectations: accretion, synergies, and balance sheet impact
Interim CFO Brandon Sewell provided transaction and financial details, including preliminary commentary on Sysco’s recent performance. Sewell said Sysco expects third-quarter fiscal 2026 adjusted EPS of approximately $0.94 and U.S. Foodservice (USFS) local case growth of at least 3% versus the prior year. He said that local case growth expectation is more than 50 basis points higher than prior guidance and reflects Sysco’s “fourth consecutive quarter of improving U.S. local case growth.” Sewell said the company remains confident in full-year fiscal 2026 guidance of 3% to 5% sales growth and adjusted EPS at the high end of its $4.50 to $4.60 range.
For Restaurant Depot, Sewell said that in calendar 2025 the business generated approximately $16 billion in revenue and $2 billion in EBITDA, with an EBITDA margin of 13%. Sewell said Sysco expects the combined pro forma EBITDA margin to increase by about 150 basis points to 6.7%.
Sysco also emphasized Restaurant Depot’s cash generation. Sewell said Restaurant Depot’s 2025 capital expenditures were $136 million, about 7% of EBITDA, and that working capital is “typically a source of cash flow” due to fast inventory turns and accounts receivable collection relative to vendor payments. Sewell said Restaurant Depot generated $1.9 billion in free cash flow in 2025 and achieved a free cash flow conversion rate of more than 90%.
On expected impact to Sysco’s results, Hourican said the transaction is expected to increase revenue by approximately 20%, adjusted EBITDA by approximately 45%, and free cash flow by approximately 55% on a pro forma basis. He and Sewell said the deal is expected to be mid- to high-single-digit accretive to earnings per share in the first year after close and low- to mid-teens accretive in the second year.
Synergies were presented as procurement- and supply-chain-focused rather than revenue-driven. Sewell said the companies expect approximately $250 million in annualized net cost synergies within three years of closing, primarily from procurement and merchandising scale, including SKU harmonization and supplier funding, as well as private label optimization and some supply chain efficiencies. In response to analyst questions, management stressed that no revenue synergies are included in the deal model.
Transaction value was disclosed at $29.1 billion, including $21.6 billion in cash and 91.5 million Sysco shares issued to Restaurant Depot based on Sysco’s closing price of $81.80 as of March 27, 2026. Sewell said Sysco expects to fund the cash portion using cash on hand and new debt financing, with leverage rising to approximately 4.5x post-close. He said Sysco plans to prioritize deleveraging, targeting at least 1x reduction in net leverage within 24 months after closing, and will pause its share repurchase program while doing so. Sewell added that Sysco intends to maintain its current dividend and “prioritize our Dividend Aristocrat status.”
Operating approach: separate segment, light-touch integration
Both executives said Restaurant Depot will operate as a standalone business segment after closing, retaining its leadership team, pricing model, culture, and operating approach. Hourican said Restaurant Depot CEO Richard Kirschner is expected to remain CEO of that business and report to him.
Management repeatedly characterized integration as “light touch,” emphasizing limited need for deep technology integration to achieve planned synergies. Hourican said the companies do not need major tech work to realize procurement savings or certain inbound logistics opportunities, and said Restaurant Depot’s systems “work” as they are.
Hourican also said Sysco does not plan to change Restaurant Depot’s membership approach, describing it as “a free membership” requiring a tax ID and stating there are “absolutely no plans to change anything about Restaurant Depot’s go-to-market approach,” including no paid membership fees.
Governance, ownership, and timing
Upon closing, Restaurant Depot shareholders are expected to own approximately 16% of Sysco’s common stock, with the Kirsch family owning about 12%, Leonard Green & Partners about 3%, and remaining shareholders about 2%, Sewell said. Two Restaurant Depot directors are expected to join Sysco’s board; Hourican later identified them as Sir Bradley Fried, former Chair of the Court of the Bank of England, and Stanley Fleishman, executive chairman and former CEO of Restaurant Depot.
Sysco expects the transaction to close by the third quarter of fiscal 2027, subject to customary closing conditions, including regulatory approvals.
About Sysco (NYSE:SYY)
Sysco Corporation (NYSE: SYY) is a global foodservice distribution company that supplies a broad range of food and related products to restaurants, healthcare and educational facilities, lodging establishments, and other foodservice customers. Its core business is the procurement, warehousing and delivery of fresh, frozen and dry food products, complemented by non-food items such as paper goods, kitchen equipment, cleaning supplies and tabletop products. Sysco serves customers through an extensive network of distribution centers and dedicated delivery fleets, positioning itself as a one-stop supplier for operators of all sizes.
Founded in 1969 and headquartered in Houston, Texas, Sysco has grown through both organic expansion and acquisitions.
