Businessmodel of Sysco

Customer Segments

Sysco serves a range of customers across its business divisions. The Company serves customers primarily across the following business sectors:

• Restaurants, comprising various chain and independent restaurants, cafes, and food outlets;
• Healthcare, including hospitals, nursing homes, and private clinics;
• Education, comprising schools, colleges, and universities;
• Government, comprising various government institutions, and public organisations;
• Travel and Leisure, comprising hotels, motels, stadiums, and other venues; and
• Retail, comprising various retail outlets and businesses. Sysco’s remaining customers are organised into ‘Other’ category, comprising bakeries, industrial caterers, churches, civic and fraternal organisations, vending distributors, other distributors and international exporters.

Sysco’s principal market is its native US, which accounts the vast majority of the Company’s annual sales. The Company also serves customers in Canada, as well as in Europe.

Value Propositions

Sysco provides value to its customers in the following ways:

• Its reputation and industry standing, with the Company established as a reliable and efficient provider of food and foodservice products, with a proven track record, particularly in the US and Canada;
• Its strong supply chain and supplier relationships, with the Company working closely with its suppliers, including coaching growers on sustainable practices and helping to connect small and local farms with restaurants;
• Its quality assurance processes, with the Company implementing stringent quality assurance procedures and dealing with reliable suppliers, in order to provide its customers with high-quality and safe products; and
• The breadth of its product portfolio, with the company providing a range of food and foodservice products, including the provision of kitchen supplies, dinnerware, healthcare catering, sanitation maintenance products. ### Channels

Sysco operates a website at www.sysco.com, through which it provides information on its various products, services, and operating companies. The Company also operates an online customer portal through its website that enables customers to access certain services and tools, and provides mobile apps for iOS and Android platforms the provide much of the same functionality.

Sysco operates in-house sales teams across its operating divisions and organised geographically, which serve customers directly. The Company has around 12,800 sales and marketing representatives and support staff that advise customers on the Company’s products and services. Sysco’s operating companies offer daily delivery to certain customer locations and have the capability of delivering special orders on short notice.

Sysco’s services are supported by physical facilities, vehicles, material handling equipment and operating personnel, including a network of distribution centres, distribute nationally-branded merchandise, as well as products packaged under the Company’s private brands. The Company also has distribution facilities in Europe through The Brakes Group, including central distribution hubs, satellite depots and a fleet of over 2,000 delivery vehicles.

Customer Relationships

Sysco offers certain functionality to its customers through its online customer portal on a self-service basis. This portal, as well as the Company’s mobile app, allows customers to access tools and services and manage account details autonomously, without interacting directly with members of the Company’s sales and support teams.

Sysco’s sales teams consult directly with customers, working with them closely to establish the details of sales and distribution agreements, seeking to encourage longstanding relationships. The Company maintains a close relationship with customers, providing regular product usage reports and other data, menu-planning advice, food safety training and assistance in inventory control, as well as access to various third party services.

Sysco provides various online support resources to its customers through its website, including market reports, and quality assurance information. Customers are also able to contact support staff directly over the phone, receiving personalised responses to queries and enquiries.

Additionally, Sysco is able to interact directly with its customers through its social media accounts, including with Facebook and Twitter.

Key Activities

Sysco operates as a distributor of food and food-related products primarily to the foodservice or food-away-from-home industry, particularly in the US. The Company provides products and related services to approximately 425,000 customers, including restaurants, healthcare and educational facilities, lodging establishments and other foodservice customers.

The Company organises its operations into a number of segments, of which only two are reportable: Broadline, which comprises the distribution of a portfolio of food products and a variety of non-food products to customers; and SYGMA, which comprises the distribution of a line of food products and a variety of non-food products to chain restaurant customers. The Company has other segments relating to the sale and distribution of specialty produce, such as custom-cut meat products.

Key Partners

Sysco works with a range of partners across its multiple operating segments. These partners include:

• Supplier Partners, comprising growers and food producers and providers of products and materials, that provide the Company with its portfolio of products and key materials;
• Vendor and Service Partners, comprising various service providers and vendors that provide tools and resources that support the Company’s sales and distribution activities, as well as companies to which certain functions can be outsourced;
• Distribution and Channel Partners, comprising various third-parties that support and extend Sysco’s own distribution and sales reach; and
• Social and Community Partners, comprising various non-profits and charitable organisations with which the Company collaborates on social and community projects, with a particularly focus on sustainability. Sysco has recently agreed a number of partnerships, including a marketing partnership with the Food Network and celebrity chef Robert Irvine, a tie-up with Central American food distributor Mayca Distribuidores, and a supply agreement with ABP Food Group.

Key Resources

Sysco’s key resources are its supply chain and portfolio of products, its distribution and logistics infrastructure, its IT infrastructure and customer portal, its sales channels, its partnerships, and its personnel.

Sysco owns and leases a number of properties, including 199 distribution facilities throughout the US, Bahamas, Canada, and Ireland, as well as various corporate, sales, and administrative offices. It also has a 50% interests in facilities in Costa Rica and Mexico.

Cost Structure

Sysco incurs costs in relation to the procurement of supplies and products, the management of its supply chain and distribution infrastructure, the development of its online customer portal and the maintenance of its IT infrastructure, the operation of its sales portals, the management of its partnerships, and the retention of its personnel.

For the year ended 2nd July 2016 Sysco accrued substantial cost of sales, amounting to $41.33 billion. This principally comprised the Company’s procurement of products and supplies. The Company’s operating costs totalled $7.19 billion for the year, which included shipping and handling costs of approximately $2.6 billion, as well as costs associated with the payment of salaries and benefits to the Company’s workforce of $51,900 employees.

Revenue Streams

Sysco generates revenue through the sale and distribution of food and foodservice products, as well as the provision of related services, to customers across various business sectors, including the foodservice, healthcare, education, and travel and leisure sectors. The Company’s product portfolio fresh, refrigerated and frozen food products, as well as non-food products and supplies, such as dining ware and kitchenware.

For the year ended 2nd July 2016 Sysco generated annual sales of $50.37 billion, up on the $48.68 billion recorded by the Company the previous year. The majority of the Company’s sales are made through its Broadline segment, which accounted for 79.2% of the Company’s total sales, with sales to restaurants accounting for 63% of total sales.