Economy / Tonight’s Dinner Fell Off the Sysco Truck Sysco’s market dominance means that something essential is being lost. As local businesses fade away, a sense of a distinct regional and local identity disappears with them.
A Sysco Corp. tractor trailers at the company’s distribution center in Halfmoon, New York, on January 30, 2024. (Angus Mordant / Getty Images)
Excerpt from the “Distribution Baron” chapter in Barons: Money, Power, and the Corruption of America’s Food System. One of my favorite restaurants is Milk & Honey in Harlan, Iowa, a small town in the western part of the state. The restaurant is run by Ellen Walsh-Rosmann, who is also a farmer and a mother. Milk & Honey has a delicious homemade strawberry jam that’s way better than the normal mediocre corn syrup-based jam packets served at most diners. Their skillets include chorizo made from pork raised on Ellen’s farm. It’s one of the best breakfasts I’ve had, and on top of it, it’s basically the same price as a McDonald’s breakfast meal. Quality and price can go hand in hand when done locally.
But places like Milk & Honey are fighting an uphill battle. Mirroring broader trends in the American economy, the largest chains are even consolidating their hold on the restaurant industry. In 2023, the largest ten chains represented 44 percent of all Top 500 chain restaurant sales. It’s why every interstate exit increasingly seems to offer the same options.
There’s even been consolidation among owners of chains. A large number of food options in and around American malls trace back to one private equity firm named for the main character in Ayn Rand’s novel The Fountainhead. The group, which is based in Atlanta, owns stakes in Arby’s, Auntie Anne’s, Baskin-Robbins, Buffalo Wild Wings, Carvel, Cinnabon, Carl’s Jr., Culver’s, Dave’s Hot Chicken, Dunkin’, Hardee’s, Jamba, Jim ‘N Nick’s Bar-B-Q, Jimmy John’s, McAlister’s Deli, Miller’s Ale House, Moe’s Southwest Grill, Nothing Bundt Cakes, Schlotzsky’s, Seattle’s Best International, SONIC Drive-In, and Subway.
Meanwhile, the number of local restaurants, especially full-service sit-down restaurants, are becoming proportionately less common in America. The irony is that many of the chains play into our desire for local with family restaurant aesthetics and slogans like “Eatin’ Good in the Neighborhood” and “When You’re Here, You’re Family.”
The Covid pandemic accelerated this trend. With restaurants closed for prolonged periods and hemorrhaging money, Congress passed the Restaurant Revitalization Fund with the goal of offsetting some of their losses. Senator Chuck Schumer, the New York Democrat and party leader, referred to this $28.6 billion as “a down payment” and “that the fund would be replenished as needed.”
But for many restaurants, that support never came, because a far greater number of place applied for assistance than could be supported with available funds. The Senate couldn’t muster the votes to replenish the fund. The Washington Post estimated that 70,300 establishments had closed as of June 2022. Numerous news stories documented many local restaurants whose applications the government rejected while noting numerous chains that received millions.
There are a lot of reasons why the restaurant industry has consolidated so much, and it’s not fair to pin the blame on Sysco alone. But massive consolidation by one company in a sector pushes others to consolidate as a “get big or get out” mentality takes hold. That’s what happened to the broadline distributor my mom used. It got swallowed up by a broadliner attempting to keep up with Sysco.
In face of this consolidation, Sysco has been growing at a steady clip, gaining more and more market share because of its acquisitions. As the pie has shrunk, Sysco is getting a bigger piece of it. Sysco, through its subsidiary, SYGMA, is one of the largest chain distributors in the country. It supplies massive chains like Wendy’s, Arby’s, and Olive Garden to name a few, as well as chains owned by the Coffee Barons like Panera Bread.
But even much of the food being served at local restaurants is from Sysco. It’s why you hear the phrase “tonight’s dinner fell off the Sysco truck.” For local restaurants, relying on Sysco is often necessary to compete against the big boys. Restaurateurs have repeatedly told me that Sysco has the lowest prices for the ”center of the plate,” which is industry speak for meat or fish, the centerpiece of most meals. These low prices function as a sort of loss leader to get customers in the door. And in an ironic twist of baron fighting baron, Sysco has been engaged in lawsuits with various meatpackers, including the Slaughter Barons, over allegations of price gouging.
That phrase—“tonight’s dinner fell off the Sysco truck”—also implies a low-quality meal. In the food world, Sysco is universally known for being cheap, but also for having the lowest quality. As one chef remarked, “When I see a Sysco truck delivering to a restaurant, I assume that they’re not trying very hard to be any good.”