For chain restaurants, this company is an important link in the food chain. The SYGMA Network is a leading foodservice supplier that specializes in serving large, national restaurant chains. It supplies more than 13,000 eateries representing some 40 chains through its 17 distribution centers located throughout the US. SYGMA provides its customers with such food products as fresh and frozen meat, poultry, seafood, fruits and vegetables, canned goods, and dry products, as well as with paper and cleaning supplies, kitchen equipment, and other non-food products. Formed in 1984, it operates as a unit of SYSCO, the #1 foodservice supplier in North America.
The chain restaurant service division accounts for nearly 14% of its parent's revenue. Through contractual agreements, SYGMA typically charges its chain restaurant clients on a per-delivery basis. Leading chain operator Wendy's accounts for about 31% of SYGMA's sales. SYGMA logs lower overall operating margins than other Sysco subsidiaries because its volume business allows it to negotiate reduced margins. Typically, deals are structured as fee-per-case delivered.
Sales were up 9% in 2011 vs. 2010, thanks to a rise in case volume from new customers and certain existing ones. The improvement follows slight increases in 2010 vs. 2009, a reporting period that gave the company an extra week in fiscal 2010 to fuel its bottom line. What helped to bring in higher profits in 2011 were more sales deals and money earned from charging customers higher fuel prices. (Fuel costs in 2011 were nearly $13 million more than the previous year.)