Many restaurant-goers in the US can thank this company for the food on their plates. US Foods (formerly U.S. Foodservice) is the nation's #2 foodservice supplier (with about half the sales of rival SYSCO), distributing food and nonfood supplies to more than 250,000 customers. The company operates more than 60 distribution facilities that supply thousands of items to restaurants, hotels, schools, health care facilities, and institutional foodservice operations. In addition to food items and ingredients, US Foods distributes kitchen and cleaning supplies as well as restaurant equipment. Tracing its roots to 1853, the company is jointly owned by private equity firms KKR & Co. and Clayton, Dubilier & Rice.
While US Foods is the second-largest supplier in the US with about a 10% market share and ranking in size with SYSCO, Performance Food Group, and McLane Foodservice, it must still compete with a large number of local and regional distributors because the industry is highly fragmented. Some of the larger regional wholesalers include Ben E. Keith, Reinhart FoodService, and Shamrock Foods. Like other wholesale distributors, US Foods succeeds on its ability to supply goods to its customers at the lowest possible cost, which means profits margins are slim. As it works to improve sales volume, the company has focused on cutting expenses and improving efficiency throughout its supply chain operation. Part of that effort has involved closing some of its distribution centers and consolidating those operations at larger regional facilities.
The company is growing by entering new markets and by inking several acquisitions in recent years. In late 2012 it acquired Hawkeye Foodservice Distribution, one of Iowa's largest broadline food service distributors, for its first distribution center in Iowa. To attract more customers, US Foods in 2012 purchased New City Packing Company, supplier of high-end steaks and fresh-cut portion meats, giving US Foods a roster of some 400 customers and a modern 60,000-sq.-ft. distribution warehouse and meat-cutting factory in its home state of Illinois. (As part of the agreement, US Foods shuttered its Stock Yards Chicago location in September 2012 to move to the Aurora, Illinois, facility owned by New City Packing Company.) Previous purchases include the local restaurant distribution operations of White Apron, a provider of premium meats in the Los Angeles area, in 2011. Nino's Wholesale, an Italian foods distributor for pizzerias and restaurants in South Florida, purchased in 2010 expanded US Foods' customer base in the region and gave Nino's customers access to 12,000 additional products from US Foods. Focusing on sustainability, US Foods in 2011 acquired the assets of South Carolina-based WVO Industries, a collector of waste vegetable oil. As part of the acquisition, WVO's assets were moved to a "tipping station" (used for storing waste vegetable oil) at US Foods' distribution center in Lexington, South Carolina. Oil stored at the tipping station is converted into biodiesel. Most of the biodiesel is used to fuel food delivery trucks at the South Carolina distribution center and any remaining biodiesel is sent to other US Foods divisions or marketed outside the company.
As part of its growth strategy, US Foods has been looking to expand its customer base and products portfolio. Since John Lederer replaced CEO Robert Aiken in 2010, US Foods has been busy developing and introducing more than 800 new products in 2011. As part of the effort, it rolled out new brand Chef's Line, chef-inspired foods developed to save preparation time. The move was fueled by some 64 test kitchens, US Foods chefs, and product developers who scout for innovative food and flavor ideas worldwide.
KKR and Clayton, Dubilier joined together in 2007 to purchase US Foods from Royal Ahold for about $7.1 billion. The Dutch food retail giant disposed of its US wholesale business in an effort to focus on its core supermarket business and as a way to recover from an accounting scandal that embroiled the business from the time it acquired US Foods in 2000. Following that $3.6 billion acquisition, federal investigators began reviewing accounting irregularities at the company and later brought charges and some convictions against several former executives and suppliers. – less