It’s a tale as old as time: A big company acquires another similarly big company, thus creating limited choices for consumers. In today’s go-round, the two companies in question are major food distributors and suppliers, and the consumers who may be facing more limited choices are California restaurants, bakeries and food businesses, as well as those across the country.

Sysco, the country’s largest restaurant supply distributor, announced that it would acquire Jetro Restaurant Depot, more commonly known as Restaurant Depot, for an eye-popping $29.1 billion on March 30. The two businesses, each a relative titan in its lane, offer complementary but not overlapping services, with Sysco operating on a membership- and delivery-only basis. Restaurant Depot, meanwhile, has been an important cash-and-carry retailer for restaurants since its founding in 1976, with 166 storefronts across 35 states, including 24 in California.

Sysco not only requires a contract and minimum orders, but its delivery schedule can be tricky for small restaurants to work around. Restaurant Depot offers a more flexible wholesale experience, akin to a Costco for restaurant businesses only, and all without minimum purchase requirements. The stores are vital places to pick up last-minute ingredients and cooking tools, among other things, without the need to schedule far in advance.

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Concerns over the acquisition from the restaurant industry have been fast and furious. Some worry that the merger is creating a monopoly that could result in, among other things, higher prices for an industry that already operates on paper-thin margins. Others worry about the growing restaurant monoculture, where restaurants can start to literally taste the same because of a stagnating supply ecosystem.

On April 1, the Independent Restaurant Coalition, a national trade organization, issued a statement: “The Independent Restaurant Coalition (IRC) believes the FTC must scrutinize that ambition for exactly what it is: the elimination of Restaurant Depot, the one meaningful wholesale alternative in many regions that independent restaurants have used for decades to avoid the minimum order requirements, delivery fees and pricing power of the nation’s largest food distributor, Sysco.”

Local advocacy groups are also wary. Brittney Valles, executive director of the Los Angeles-founded Independent Hospitality Coalition, restaurant consultant and former operator of longstanding local taqueria Guerrilla Tacos, fears that Sysco is using “the Amazon playbook.”

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The Restaurant Depot location in Van Nuys, Calif.

“In other words, they’re absorbing all of their competitors and forcing everyone to have one option,” Valles tells SFATE. “Restaurant Depot is so much cheaper than Sysco. When I ran Guerrilla Tacos, a case of Mexican Coke was $32 at Sysco and $19 at Restaurant Depot.”

She adds, “Of course, there’s a labor cost associated with sending someone [to Restaurant Depot], but more than $10 a case is a big difference when you go through a lot of product.”

Chef Vanda Asapahu, whose family has operated the beloved restaurant Ayara Thai in the Westchester neighborhood of LA since 2004, is leery of what the acquisition could mean for smaller restaurants.

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“I used to shop at Sysco, but they increased their minimum to 10 cases of any product,” Asapahu says. “Plus, their SKUs have decreased over time. A lot of it has become white-labeled Sysco products, and we don’t know where that comes from.”

Asapahu adds, “Restaurant Depot serves a purpose. For tons of mom-and-pop, immigrant-owned businesses, it’s a daily trip. They don’t want to have to rely on having a contract or having someone deliver on a certain day.”

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California alone has more than 88,000 restaurants across the state, generating more than $220 billion in restaurant and food service sales — much of that from independent, non-chain restaurants with small footprints and a small economic safety net.

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“When I started out, I was working out of my parents’ house and three commercial kitchens, so I couldn’t even order from Sysco because the business didn’t have a permanent address they could deliver to,” says Kirstyn Shaw, who started her cookie bakery the Very Best Cookie as a pop-up during the pandemic. Shaw now has an LA brick-and-mortar, and she credits the flexibility of Restaurant Depot in those early days for helping the business to get off the ground. “Restaurant Depot was all we had.”

Not every operator is as concerned.

“I think it’s crucial to not just use one supplier and to create relationships with multiple so that you can create competition between them. Anytime I’ve told my [Sysco] rep about being able to get something cheaper at Restaurant Depot or from another purveyor, they’ve negotiated a better price for me,” says Sol Bashirian, co-owner and chef at red-sauce joint Sunday Gravy in Inglewood. 

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He adds, “Also, Restaurant Depot has no other cash-and-carry competition, so it’s essentially a monopoly itself — and [that’s] reflective in its pricing on a lot of items. There’s also a lot of value in not having to leave your restaurant or spend money, in labor, to have to make that trip.”

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Sysco has announced that it will maintain current Restaurant Depot pricing, should the deal go through. Still, operators are worried about the lack of transparency in pricing and selection.

“Restaurant Depot is that place that every restaurant owner and chef goes because you need to grab a last-minute item,” Asapahu says. “It’s going to be really bad for small-business owners who are used to buying olive oil from a particular brand. A different Thai fish sauce in a recipe changes everything.”Valles adds, “We’re already struggling. I do think it’s going to lead to a price increase.”

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