Sysco's Wide Moat Based on Cost Advantage Helps Insulate the Potential Impact From Slowing Economy

Foodservice distribution is highly fragmented, with Sysco holding just 17% share as the leader of the roughly $370 billion US market. However, we think its dominance is far stronger than share alone may imply. Restaurants demand timely and consistent delivery to serve the freshest food. Sysco allows restaurants to buy the bulk of their needs from a single source rather than dozens of producers, simplifying logistics and saving time. While the goods it sells are commodities, Sysco can differentiate on selection, quality, and freshness while also offering services like menu planning and kitchen setup advice. Indeed, we believe this has driven top-line growth that has outpaced industry growth, which should persist, leading to our 4.3% average annual sales growth forecast over the next five years.