Sysco is there to help keep food supply chain moving
Editor’s note: This is part of a series of articles on how companies are responding to the COVID-19 crisis.
Prior to the COVID-19 crisis, almost all of Sysco Corp.’s work as a food service distributor involved restaurants, schools, health care facilities, hotels and other “food away from home” venues, which in normal times account for roughly half of food consumption in the U.S. We are now rapidly shifting our focus to align our capabilities with the changing consumption patterns brought about by social distancing measures implemented to combat the novel coronavirus.
Recognizing that the food supply chain in this country simply does not work without Sysco, we have recently reached out and established relationships with a number of leading food retailers. To help supermarket operators in their struggle to keep up with unprecedented demand, we are acting as a third-party trucking company, a third-party distribution company, and a supplier of food and nonfood products to the retail channel. In response to the rapidly evolving needs of our associates and our communities, we have, among other partnerships, entered into an agreement with Kroger to provide temporary work opportunities for Sysco associates at Kroger distribution centers, and made our first deliveries to Albertsons, Southeastern Grocers, and many others.
Throughout the current crisis, our first priority has been the health and well-being of our associates and customers. We continue to address the coronavirus with the seriousness it demands, and we are working closely with our partners, in conjunction with the Centers for Disease Control and Prevention, World Health Organization and others, to ensure that we are doing our part to prevent the spread of COVID-19. Only through a collaborative effort can Sysco, our customers and our communities emerge stronger than before.
Think about recent changes in the marketplace. If a large percentage of the food away from home business goes down meaningfully, that means that significant volume has transitioned to grocers. As everyone has seen through their own shopping experience, supermarkets have been hard pressed to handle the surge of demand that has come their way, especially with such products as paper, cleaning supplies, fresh food and fresh proteins.
One way that Sysco is helping its existing customers and the communities they serve is to convert their dining rooms into mini food markets. These “grocerants” are a great innovation. They’re located in the communities where customers live, providing key staples to the neighborhood. The most entrepreneurial restaurant operators have taken their dining room space, which is now obviously dormant, and they’ve converted it into mini grocery stores selling things such as canned soups, bread, eggs, cheese and meat. And guess where they can get all of those products? They can get them from Sysco, their existing supplier.
We’ve now stood up the program nationwide. All members of our salesforce were tasked with helping our restaurant customers create similar marketplaces.
We’re really proud of that work for three reasons. One, it helps keep that small restaurant customer in business, their people employed and their communities stocked with food and supplies. Two, it keeps the food supply chain flowing. Three, this is going to help Sysco build stronger relationships with these customers in a way that will enable us to grow along with them in a meaningful way post COVID-19.
Even as we strive to keep the food supply chain that Americans rely on operating efficiently, while simultaneously protecting the health of our employees and business partners, we’ve segmented our work into three categories — take meaningful cost out of the business, drive the upside potential that we have, and ensure we’re ready for the snap back in business that we expect to come once the crisis subsides.
The food away from home business has declined dramatically as necessary steps have been taken to flatten the COVID-19 curve. As a result, we need to flex our labor costs to match outbound customer demand. It’s easy to say. It’s hard to do. We are handling that process with care, and we’re treating our associates with professional respect. We will be prepared when volume returns to normal.
The dynamics in the food business have changed dramatically. We saw this happening right away and pivoted our business. Americans need food, and grocers are struggling with sources of supply. We’re there to help.
Kevin Hourican is president and chief executive officer of Sysco Corp., a global food service distributor.