Choosing a Distributor
By
Sarah Smith
HTM 250
Dr. Bonimy
May 16, 2014
Assignment 1

Founded in 1969 by John Baugh, Sysco has continued to grow and experience great success since its establishment began. It all started in 1969 when Baugh persuaded owners of eight small food distributors to combine the nine companies, which would establish what he hoped to transition into a national foodservice distribution organization. It was Baugh’s hope that he would someday be able to distribute any food despite its regional availability. In 1970, Sysco went public and was able to acquire its first acquisition. In 1979, Sysco’s Revenues exceeded $1 billion. In 1981, Sysco becomes the largest foodservice distribution company in the United States.
Throughout the early 1990s, SYSCO made acquisitions, which further increased the company's geographic spread. In early, 2001 SYSCO acquired a group of specialty meat supply operations in Texas, which focused on providing fresh meat to upscale restaurants. (Kreimer, Susan, Dec. 2001) This acquisition enabled Sysco to generated annual revenues in excess of $200 million. And lastly, in 2005 the very first SYSCO regional redistribution centers opened.
Over the years, Sysco has grown steadily through massive acquisitions of smaller distributors, which has enables Sysco to obtain double-digit increases in sales and earnings every year. The geographical areas that Sysco serves are; USA, Canada, United Kingdom, Asia, and China. More than 160 of these distribution facilities are located throughout the United States as well as parts of Alaska, Hawaii, and Canada. Sysco’s categories are as follows: Culinary Tools and Apparel, Dairy, Meat, Organic/Natural/Kosher, Pantry, Pantry Frozen, Poultry, Seafood, and Vegetables. In addition, SYSCO is the food provider as well as the provider of other related products and services to numerous restaurants, schools, hospitals, nursing homes, hotels, businesses, and other foodservice customers. With that being said, restaurant customer’s account for two-thirds of Sysco’s revenues. Sysco’s superior product selection includes about a plethora of items; Like, fresh and frozen meats, seafood, poultry, prepared entrees, produce, canned and dry foods, desserts, imported specialties, paper and disposable items, china and silverware, restaurant and kitchen equipment and supplies, and cleaning supplies.
Some of Sysco’s competitors within the retailing industry are: Performance Food Group (PFG), US Foods (USF), United Natural Foods,Inc (UNFI). Spartan Nash (SN), and Core-Mark Holding Company (CORE). See the chart below to view a comparison/contrast table with one of Sysco’s largest competitors:
Sysco Price Quality Value
Mild
Cheddar $59.36 Semi hard white
Cheddar
rectangular block Excellent
AmaBlu
Blue Cheese Crumbles $21.63 Cave-aged 75 days to create a tangy, not-too-sharp flavor Excellent
Coconut
(Dominican) $41.00 Fragrant creamy notes a tropic treat with the perfect touch of sweetness. Kosher Excellent
Uncured
Hickory
Smoked
German
Bratwurst
All Natural
No Nitrates or
Nitrites.
Ships
Frozen Excellent
Grass
Fed
Beef
Patties,
Round
$38.49 All natural Excellent
UNFI Price Quality Value
Grassmilk Raw Cheddar Cheese, $67.46 Organic Valley Grassmilk Raw Cheddar Cheese is a premium, artisan cheese crafted from Organic Valley Grassmilk, which is sourced from 100% grass-fed cows. Good
Blue Cheese Crumbles, $22.69 Organic Valley Blue Cheese Crumbles are a convenient, piquant, earthy-flavored cheese with the mild flavor typical of young blues. Good
Vita Coconut Coconut Water $41.72 Mother Nature’s most hydrating, refreshing, vitamin- and mineral-rich nectar. Good
Organic Pork Bratwurst $43.49 Pasture-raised, heirloom-breed hogs that frisk in the fresh air and sun, yielding the big-hearted flavor and gusto brats are famous for. Good
Organic Grassfed
Ground Beef $41.49 Raised, on Australian family farms, our grassfed cattle graze on over 200 varieties of 100% organic, pesticide free grass. This unique environment produces the highest quality, healthiest and best tasting grassfed beef in the world. Good

The objective of Sysco’s payment policy is to provide goods, services, credit, or financial accommodations to the customer from time to time. In the event the customer does not pay on time, a fee of 1.5% will be charged and the customer is responsible for all fees and costs associated with collection activities, including but not limited to, reasonable attorney fees, court costs, and as liquidated damages, the amount charged by a collection agency Also, a $35.00 fee for each returned check will be charged. The mechanics of bill payment is that the customer must pay at the physical location of Sysco or as specified in their credit agreement. In the case of discounting, Sysco offers both monthly and daily options. In regards to monthly discounts and assuming the daily totals from your credit card processing terminal equal $500, the customer receives a deposit in the amount of $500. Any processing fees associated with their merchant account are then debited at the end of the month. In regards to daily discounts, the $500 total would result in a deposit of approximately $490.00 with the difference being fees assessed by the processor. At the end of the month the customers merchant account is also charged any remaining fees not assessed during the month.
In comparing and contrasting Sysco, USF, and PFG; I have found that USF has late fees assessed on all purchases made via USFood.com and must be paid in full,; Including all applicable taxes, is due C.O.D. unless agreed in writing .There is a late payment charge of 1.5% and the customer is responsible for all fees associated with collections in an amount not to exceed 50% of the delinquent account balance. In regards to PFG, I have researched that the entire outstanding balance due to PFG by the customer on all invoices shall become due in full immediately upon the failure by the customer and PFG may at any time deduct the money owed. In addition, there is 1.5% per month or the highest rate permitted by law, whichever is less, on any past due amounts until collected, as well as any collection costs incurred.
In my opinion, Sysco has the most efficient payment policy because not only do they have late payment charges comparable to the above mentioned, but they also offer $0.06 Transaction Fees, No Cancellation Fee, Month-to-Month Contracts, 24 Hour Deposits, and 24/7 Customer Support. I would use this distributer as the main supplier for Burger King because Sysco is the # 1 food service marketer and distributor in North America. Sysco has distribution centers intentionally located throughout the world, which enables this phenomenal company to meet practically any demand and volume. The impact of Sysco’s purchasing power is due to proper manufacturing and sourcing skills. Sysco guarantees they always have product availability, therefore allowing their customers to choose from a vast amount of superior products. Furthermore, due to Sysco’s diverse relationships within the geographic regions they serve, customers are able to obtain quick and efficient responses ranging from international hotel chains to independent properties. Due to Sysco’s buying plan, one-stop shopping, and massive facilities located throughout the world, their ranking is amongst the highest.
The most important supplier selection criterion is the fact that Sysco is a one-stop shop. Unlike UNFI the company compared to Sysco in the table above, Sysco has an advantage over UNFI because Sysco also provides suppliers with equipment and supplies, and UNFI does not.

References

Salkin, Stephanie, "Sysco's Schnieders Previews Growth Agenda," ID, May 2002, pp. 17-18.

Lawn, John, "Sysco's Strategy: 'Divide and Multiply,'" Foodservice Distributor, January 1995, p. 32.

Greer, Jim, "First in the Food Chain," Houston Business Journal, April 28, 2000, p. 16A.

Kreimer, Susan, "Sysco to Expand Presence in Canada," Houston Chronicle, December 6, 2001

SYSCO Corporation: Serving Up Steady Growth," Better Investing, December 2004, pp. 36-38