Food Service Distribution Industry: M&As
PFG, US Food Holdings, Sysco, and United Natural Foods are four of the biggest public food service distributors in the US. As public companies, we were able to gather information about their EBITDA and reported revenue. Overall, the EBITDA margins in the food service distribution industry appear to fluctuate between 1.6% and 4.8% of the total company sales. Sysco appeared to have made the most acquisitions of food distributors but they did not detail the amount for which they acquired each company, which made it impossible to calculate the EBITDA multiple for any of their acquisitions. US Food Holdings and UNFI also made a few acquisitions.
Performance Food Group
- Performance Food Group is one of the biggest public food service distributors in the US.
- In 2020, the company generated $25.1 billion in revenue, an increase of 27.1% compared to the previous year.
- However, their EBITDA decreased by 14.7% to $405.5 million, representing only 1.6% of the total sales of the company.
US Food Holdings
- US Food Holdings is another major food service distributor in the United States.
- In 2019, the company generated a total of $6.9 billion, representing an increase of 14.8% compared to 2018.
- Contrary to PFG, US Food Holdings' EBITDA increased by 12.8% to $335 million, which amounts to 4.85% of the total sales.
- Sysco is the largest food service distributor in the United States, with over 8,500 trucks.
- In 2020, Sysco generated $52.9 billion in sales, a 12% decrease from 2019.
- Their EBITDA was also one of the lowest in 2020, at only $293.4 million or only 0.55% of the total sales.
- In contrast, their 2019 EBITDA was $2 billion, representing over 3.3% of the company's 2019 total sales.
United Natural Foods
- UNFI is the premier distributor of wholesale food and meat products in the US.
- 2019 was a record year for the company, doubling its revenue in a year, going from roughly $10.2 billion in 2018 to $21.4 billion in 2019.
- Their EBITDA also increased accordingly, reaching $562.5 million or about 2.63% of the total sales.
- Sysco acquired Doerle Food Services, a leading Louisiana broadline food distributor for an undisclosed amount in February 2018. Doerle's 2017 revenue amounted to roughly $250 million.
- In January 2019, Sysco acquired the Illinois-based broadline food distributor Waugh Foods for an undisclosed amount. Waugh Foods generated $40 million in revenue at the end of 2018.
- In April of the same year, Sysco acquired two meat distributors, J&M Wholesale Meats and Imperio Foods. The two companies generated a combined revenue of $44 million the previous year.
- Several months later, in August, Sysco acquired another broadline food distributor, the Huntsville, New York-based J. Kings Food Service Professionals, which brought $150 million in annual sales in 2018.
- Sysco also acquired two of the largest fresh product distributors in Hawaii, Armstrong Produce and Kula Produce for an undisclosed amount. In 2018, Armstrong Produce generated $89 million in sales, while Kula Produce generated $61 million.
US Food Holdings acquisitions
- US Food Holdings has only made two acquisitions in the last 2-3 years.
- In July 2017, US Foods acquired the Nebraska-based broadline food distributor, TOBA Inc. and all of its subsidiaries for an undisclosed amount. In 2016, the company brought over $130 million in sales.
- A year later, US Foods announced that it has placed a $1.8 billion bid for the acquisition of the SGA's Food Group of Companies, one of the biggest regional broadline distributors in the US.
- SGA's Food Group of Companies generated a total of $3.2 billion in revenue in 2018.
- As SGA's EBITDA in 2018 was estimated to reach about $123 million, the total EBITDA multiple for the deal amounted to about 12.5 times.
United Natural Foods acquisitions
- United Natural Foods has made a single acquisition in the last 3 years.
- On July 26, 2018, United Natural Foods and SUPERVALU announced that they have entered into an agreement under which UNFI will acquire SUPERVALU for $2.9 billion.
- SuperValu generated $3.25 billion in sales in 2018, with an EBITDA of $478 million.
- This means that the EBITDA multiple for the SuperValu acquisition was roughly 6.1 times ($2.9 billion / $478 million).