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Sysco

Sysco

Net Worth

$39,810,000,000

Started in (City)

Delaware

Started in (Country)

United States of America

Incorporation Date

19th December, 1969

Bankruptcy Date

-

Founders

  • Herbert Irving
  • John F. Baugh
  • Harry Rosenthal

About

Sysco Corporation is an American multinational corporation involved in marketing and distributing food products, small wares, kitchen equipment and tabletop items to restaurants, healthcare and educational facilities, hospitality businesses like hotels and inns, and wholesale to other companies that provide foodservice (like Aramark and Sodexo). The company is headquartered in the Energy Corridor district of Houston, Texas. Sysco, an acronym for Systems and Services Company, is the world’s largest broadline food distributor; it has more than 600,000 clients in a wide array of fields. Management consulting is also an integral part of their services. The company operates approximately 330 distribution facilities worldwide; providing service to over 90 countries.

Beginning

John Baugh was the guiding force behind the founding of SYSCO. Baugh had grown up on a ranch near Waco, Texas, and got his start in the food business through a part-time job at a local A&P grocery store when he was in high school. He eventually founded Zero Foods Company of Houston, a Houston-based food distributor. In 1969 Baugh convinced the owners of eight other small food distributors to combine the nine companies, forming what he hoped to mold into a national foodservice distribution organization, one that would be able to distribute any food despite its regional availability. The other eight original companies were: Frost-Pack Distributing Company (Grand Rapids, Michigan) ; Global Frozen Foods, Inc. (New York); Houston's Food Service Company (Houston); Louisville Grocery Company (Louisville, Kentucky); Plantation Foods (Miami, Florida); Texas Wholesale Grocery Corporation (Dallas); Thomas Foods, Inc. and its Just rite Food Service, Inc. subsidiary (Cincinnati); and Wicker, Inc. (Dallas). The combined 1969 sales for the nine founding companies were $115 million. SYSCO went public in 1970 and that year made its first acquisition, o f Arrow Food Distributor. In its early years the company grew by acquiring a number of small foodservice distribution companies, carefully chosen for their geographic regions. These acquisitions helped to realize Baugh's early goal of providing uniform service to customers across the country. Throughout the 1970s SYSCO Corporation built many new warehouses to deal with this rapid expansion, later incorporating freezers into its warehouses and adding multi-temperature refrigerated trucks to transport produce and frozen foods.

Road to Success

During the 1970s SYSCO grew steadily except for a brief earnings drop in 1976 caused by a canned food glut and excessive start-up costs due to increasing capacity. One reason for such rapid recovery and regular growth was SYSCO's continuing diversification into new products, such as fish, meat, and fresh produce. In 1976 SYSCO acquired Mid-Central Fish and Frozen Foods Inc., expanding the company's distribution capabilities around the nation. In 1979 SYSCO's sales passed the 6.1 billion mark for the first time; by 1981 the company was rated as the largest U.S. foodservice distribution company. That year SYSCO set up Compton Foods in Kansas City to purchase meat, and began to supply supermarkets and other institutions with meat and frozen entrees. In 1981, SYSCO Food Services bought out the assets of Lankford Produce, based in West Pocomoke, Maryland and founded in 1964, by Stanley E. Lankford Jr., forming the Lankford-SYSCO division in the Delmarva Peninsula, renamed Sysco Eastern Maryland in 2008.In 1988, Sysco acquired CFS Continental which had recently been acquired from Tate & Lyle through their purchase of A. E. Staley in Illinois. In 1996 Sysco was the third largest company in Houston. It had over 30,000 employees. In 1999 Sysco acquired Newport Meat Company, which generated a yearly revenue of $100 million supplying meat to over 1,000 restaurants. In 2002, Sysco purchased SERCA Foodservices and renamed it Sysco Canada. 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. Sysco is also the largest non-oil related company in Houston and the third largest non-tech related company in Texas (behind AT&T and Dell).

Challenges

In December 2013, Sysco announced an $8.2 billion planned acquisition of its next-largest food distribution rival, US Foods. The Federal Trade Commission challenged the acquisition as a violation of the Clayton Antitrust Act that would substantially lessen competition. The court ruled that the combined company would likely reduce competition because it would control 75% of the U.S. food service industry, Sysco terminated its merger with US Foods. On July 16, 2014, Sysco agreed to pay fines totaling $19.4 million in California and admitted to the allegations of manipulation on food storage made by KNTV's news team and investigated by the California Department of Public Health. While the pandemic has been the obvious source of weakness for Sysco, that’s not the only issue it’s facing. In recent years, Sysco’s operating margins have slipped. A combination of inflation and loss of share in the restaurant space caused Sysco’s results to take a hit.

Failures

Beginning in the Summer of 2013, the California Department of Public Health was investigating the storage of food in a total of 21 sheds which were never regulated and never inspected. This food included overnight drop-offs of chicken, pork, beef, bacon, and milk. An investigative report by KNTV 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.

Achievements

  • Top company for women (2017)
  • On July 20, 2009, Fortune magazine ranked Sysco No. 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
  • Ranked No. 54 in the 2018 Fortune 500 list of the largest US corporations by total revenue

Subsidies

  • Pallas Foods
  • SYGMA Network Inc
  • SOTF, LLC
  • Brake Bros

CEOs

  • Kevin Hourican