Episode Details

The proposed acquisition of Jetro Restaurant Depot by Sysco seems very different from the failed merger between Sysco and US Foods. Sysco mainly ships food to restaurants. Restaurant Depot operates on a cash-and-carry basis, meaning the restaurant owners come and pick up the food themselves.

But different channels don’t necessarily mean different competition. Delivery may be a must for a large restaurant or national chain. But for a smaller independent restaurant, the choice may be between paying for delivery or doing some of the logistics itself. That means the overlap is critical for smaller restaurants. And Houston might provide a particularly useful test.

Before purchasing Restaurant Depot, Sysco opened its own cash-and-carry stores, called Sysco To Go, in Houston. That provides economists the opportunity to ask what happened when Sysco entered the pickup channel.

Did prices at nearby Restaurant Depot respond? Did delivered prices from Sysco change? If both did, then the boundaries between delivery and cash-and-carry may be less significant than they first appear. This episode explores what the FTC would need to prove if it wanted to challenge the Sysco–Jetro deal—and why the best evidence may come from the actions of restaurant owners rather than from national market shares.

Read the full article and graphic analysis: https://blog.econworks.com/p/when-delivery-meets-cash-and-carry?r=562wri

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