ICYMI: CONGRESSMAN PAT RYAN HOSTS HUDSON VALLEY RESTAURANT OWNERS FOR DISCUSSION ON RISING COSTS & IMPACTS OF PROPOSED SYSCO-RESTAURANT DEPOT MERGER
ICYMI: Congressman Pat Ryan Hosts Hudson Valley Restaurant Owners for Discussion on Rising Costs & Impacts of Proposed Sysco-Restaurant Depot Merger
Mid Hudson News: Ryan and restaurant owners dish on Sysco at diner
Ryan hosted Hudson Valley restaurant owners, caterers, and small food distributors to discuss how corporate consolidation is raising prices and making it harder to run their small businesses
The discussion comes after Ryan called on FTC Chairman Andrew Ferguson to block the proposed $29.1 billion merger between Sysco and Restaurant Depot, arguing the merger would reduce competition, drive up operating costs for restaurants, and make dining out more expensive
NEWBURGH, NY – Yesterday, Congressman Pat Ryan – co-chair of the Congressional Monopoly Busters Caucus – hosted a roundtable conversation at Alexis Diner with Hudson Valley restaurant owners, caterers, and small food distributors to discuss how corporate consolidation is raising prices and making it harder to run their small businesses.
Participants discussed how the proposed merger between Sysco and Restaurant Depot – two of the largest suppliers Hudson Valley independent restaurants rely on – would bring a dramatic, negative impact to their businesses.
The conversation followed a letter Ryan sent to Federal Trade Commission (FTC) Chairman Andrew Ferguson last week, demanding the FTC block the proposed $29.1 billion merger and raising the alarm on how it would reduce competition, drive up operating costs for restaurants, and make dining out in the Hudson Valley more expensive.
“When the largest food distributor in the country seeks to acquire one of its biggest competitors, it’s all of us – our small restaurant and diner owners, food truck operators, caterers, and customers – who will be forced to pay the higher price,” said Congressman Pat Ryan. “Hudson Valley restaurants are part of what makes our community so special. We should be making it easier, not harder, for them to succeed. Keeping prices competitive is essential to the success of these restaurants, which is why we’re going to fight with everything we’ve got to make sure the FTC blocks this harmful deal and protects the independent businesses that keep our Hudson Valley communities thriving.”
“We're grateful that Congressman Ryan is standing with independent restaurants and bars by urging the FTC to fully investigate the proposed merger between Sysco and Restaurant Depot,” said Erika Polmar, Executive Director of the Independent Restaurant Coalition. “Restaurants already operate on margins of just 3 to 5 percent, and when one company controls more of the food supply chain, owners lose bargaining power and are left with higher prices, fewer options and lousy terms, costs that either land on the menu or eat into already meager margins. Restaurants are New York's second-largest private employer, and letting Sysco absorb the supplier independents rely on most would threaten the neighborhood businesses that anchor communities across the state.”
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Mid Hudson News: Ryan and restaurant owners dish on Sysco at diner
By Jeanine Agnolet
TOWN OF NEWBURGH – A handful of small, independent restaurant owners, food educators, chefs and a farmer sat around a table at the Alexis Diner in Newburgh on Monday to express their concerns to Congressman Pat Ryan (D, NY -18) about the proposed merger of the food industry giant Sysco Corporation and Restaurant Depot.
Above the frenetic sounds of a hectic lunch crowd with plenty of hot coffee, they candidly described what they said was the disaster that will strike if Sysco is successful in acquiring Restaurant Depot, which has a warehouse in the Town of Newburgh.
“The merger will drive the food prices up, and it will drive small restaurants right out of business,” said Tom Costa, chef and owner of North Plank Road Tavern in the Town of Newburgh and an active member of the Independent Restaurant Coalition. “Right now, I can run out to Restaurant Depot, and I can get three pounds of Faroe Island salmon, but if I have to order a case of it from Sysco, I risk losing some of it before I actually sell it. Restaurant Depot is a godsend for the small, independent restaurant, which is a dying breed.”
Congressman Ryan held the roundtable discussion to get feedback from local restaurant owners and food service providers.
Last Friday, Ryan, who co-chairs the Congressional Monopoly Busters Caucus, sent a letter to Federal Trade Commission Chairman Andrew Ferguson, urging him to block the proposed $29.1 billion merger.
Ryan says the appeal to prevent the acquisition has bipartisan support.
“I cannot overstate how big of a deal this is as one of the biggest mergers in this country in the past decade,” said Ryan. “At a time when costs are already exorbitantly high, this is incredibly problematic.”
Ryan said there are nearly 2,000 food service and accommodation businesses in his district, most of them with less than 20 employees.
“There are over 30 thousand food workers in these three counties—a huge source of employment across our communities, so this affects everyone,” said Ryan.
Sysco is the single biggest distributor of food in the nation, serving over 700,000 customers globally, including schools, hospital systems and other organizations that have high volume.
Earlier this year, it announced plans to purchase Restaurant Depot, one of the nation’s largest food wholesale cash-and-carry warehouse companies, that sells to independent restaurant owners, caterers and non-profits.
Restaurant owners contend the proposed merger would reduce competition, drive up operating costs and make dining out more expensive.
Rei Peraza, director of Operations and Executive Chef for Rossi & Sons, prides himself on the fact that he has never utilized Sysco.
“Sysco has an algorithmic pricing system. The more you buy, the better your pricing is, and that’s why it doesn’t work for a lot of small, mom and pop operations. I don’t think Sysco and the way they do business has ever been good for small businesses,” said Peraza.
With Sysco, the identities of restaurants get lost. You’re using the same chicken fingers and the same toilet paper as everyone else. As a whole, they have very little to offer in quality products outside of convenience.”
In 2013, Sysco attempted to acquire US Foods, but the Federal Trade Commission sued to block the merger and won.
Assemblyman Jonathan Jacobsen says he intends draft a letter to State Attorney General Letitia James, urging her to take action and enforce the current laws that prohibit monopolistic practices.
“It’s wrong in the insurance, healthcare and pharmaceutical industries, and it’s wrong here,” said Jacobsen.
“With this merger, we’ll be out priced, and this will be catastrophic,” said Gaby Pereyra, owner of Yara Farm in Middletown, New York and director of Operations for the Chester Agricultural Center. “It would be impossible for small farmers to be able to sell to small restaurants or suppliers.”
Ryan says he is hopeful that the merger can still be stopped, despite the fact that negotiations are in the final stages.
“Sysco has a pricing structure based on volume,” said Tom Costa. “It may be smart but it’s going to kill the little guy.”
Ryan’s letter to FTC Chairman Andrew Ferguson is included in full below, and can be viewed here.
Dear Chairman Ferguson,
I am writing to urge the Federal Trade Commission to conduct a rigorous review of Sysco Corporation's proposed acquisition of Restaurant Depot, and to formally oppose the merger unless substantial evidence is shown that the merger will not lessen competition in the markets on which independent restaurants and small food service operators rely. This issue is of personal interest as many of my constituents rely on the Restaurant Depot Warehouse located in my district in Newburgh, New York. In addition, as independent restaurants are forced to raise prices, those high prices are either absorbed, decreasing profits, or passed along to consumers. My constituents are already drowning in skyrocketing prices, and this acquisition will only make it more difficult both for small businesses working hard to make a living and for customers trying to afford the basics, like a warm meal from a local restaurant.
Restaurant Depot exerts indirect but consequential competitive pressure on Sysco by serving as an outside option for independent, price-sensitive operators who want to avoid rising delivery fees. Independent restaurant operators, including the 30,000 restaurant workers in my district, depend on low-cost product sourcing to operate. While Sysco has defended the acquisition, characterizing the two companies as possessing “minimal overlap” in customers, the truth is that this acquisition would establish Sysco’s total control over two unique channels of distribution that independent restaurants have historically used as substitutes for each other.
This acquisition would make Sysco the largest player in the cash-and-carry market, on top of its existing leadership in the broadline distribution market. This consolidation of market power will have severe and devastating consequences for independent restaurants, food service operators, and other small businesses who rely on competitive markets to keep prices low for their customers. With folks feeling intense financial pressure across the board right now, we should be working together to bring down costs, instead of fueling high prices. I’ll continue to stay in close contact with local businesses negatively impacted by rising prices and help them fight for fair practices.
As you look into the details of the merger, I urge the Federal Trade Commission to closely review the potential impact on the food service industry, including the small businesses and consumers who patronize our beloved independent restaurants.
On behalf of the hardworking independent restaurants and constituents who would be impacted by this merger in my district and around the nation, I urge the Commission to investigate this matter and take decisive action to protect competition, consumers, and small businesses.
Thank you for your attention to this matter.
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