Sysco CEO vows to support America’s grocers

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Sysco CEO vows to support America’s grocers

By Mike Troy - 03/20/2020
Sysco is looking ot unlock the supply chain potential of its private fleet and distribution center network to benefit food retailers - and help sustain its business.

The nation’s largest foodservice distributor is vowing to support America’s grocers as demand from restaurant customers disappears, leaving its U.S. distribution centers filled with food.

In a March 20 update, Sysco’s new CEO Kevin Hourican said, “due to the significant impact on the food-away-from-home business, we are pivoting our business to better support the surge in demand that is being experienced in the retail grocery store setting. We are establishing new customer relationships with retail grocers to provide them with logistics services and much needed product.”

Sysco operates 169 of its 325 distribution centers in the U.S. and last year the company generated 62% of its annual sales of $60.1 billion from restaurants. However, demand from food service customers has evaporated as COVID-19 related restrictions, whether mandated or self-imposed by restaurants, severely curtailed business. Meanwhile, food retailers’ supply chains are under duress from a combination of panicked shoppers stocking up and increased at home meal preparation.

For Sysco, leveraging its supply chain to provide a needed source of supply to food retailers is both a valuable community service and bridge to help it weather what a hopeful nation believes is a short-term health crisis.

“In addition to efforts to reduce costs, the company is actively pursuing new sources of revenue by leveraging its supply chain expertise to provide services to the retail grocery sector,” Hourican said. “This net new business will help off-set some of the declines in the food-away-from-home segment and also positions the company well to capitalize on growth opportunities after the COVID-19 crisis subsides.”

Hourican also noted that Sysco’s balance sheet with $2 billion cash on hand gives it financial flexibility to help it navigate the challenges in the food-away-from-home market resulting from the spread of COVID-19 and social distancing efforts. The company is reducing variable expenses, aligning inventory to current sales trends, reducing capital expenditures to only urgent projects, and tightly managing receivables, according to Hourican.

“Sysco is operating from a position of financial strength and will weather this storm,” said Hourican, whose tenure as CEO at Sysco began Feb. 1. “I am confident Sysco will emerge a stronger company, even more focused on being our customers’ most trusted and valued business partner.”

Hourican is well known in the retail industry and joined Sysco after seven years at CVS Health where he most recently served as EVP and president of CVS Pharmacy, overseeing the company $85 billion retail business with nearly 10,000 stores. Prior to CVS, Hourican was with Macy’s. He also has a master’s degree in supply chain management from The Pennsylvania State University.

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