Pod Insights The Chef's Cut This Merger Could Change What You Eat—and How Much You Pay For It About this episode There’s an impending food supply merger that could have a huge impact on the restaurant industry, so Adrienne and Joe break down what that means for business owners, consumers, and the food that ends up on your plate. In this episode, we discuss:
The Sysco–Restaurant Depot merger and why a food supply monopoly is bad for you
Why customers are ultimately going to foot the bill with rising prices
The difference between wholesale delivery (Sysco) and cash-and-carry (Restaurant Depot)
A chef’s perspective on how wholesale purchasing actually works
Rising food costs, and the hidden impact of eliminating competition
Will this spell doom for small restaurants?
Why a merger wouldn’t just impact costs, but also the selection of brands, ingredients, and supplies you have access to
What we can all do to keep this from happening
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Follow Joe: @insta.flamm
Transcript Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:14 Adrienne Cheatham? Today on The Chef's Cut, Joe and I are talking about something that you're not going to see on the restaurant menus, but you're going to feel it when you get the check. We're breaking down the potential merger between Cisco, which is the largest food distributor in the country, with Restaurant Depot, which is the most important and often only alternative restaurants have for purchasing, and how this monopoly could reshape the price of eating out. But first, Chef's Cut Nation, we need 10 seconds of your time. Please rate and review the show wherever you get your pods. It really helps.
0:54 Adrienne Cheatham? Joe, there is a story in the news right now that somehow is like kind of flying under the radar, but it's a huge deal and it's going to have a massive impact on restaurant prices and what you end up paying for food.
1:06 Joe Flamm? Yeah, this is one of those like super mergers that you just see a blurb about, and I think it flies under the radar. It's not the, you know, there was a big one the other week of like United saying they want to merge with American and people like, no way, we can't do that. Like, it's too obvious, right? But this is one where it's a really big deal. Because Cisco, for people who don't know, Cisco is what we refer to as a broadliner. And a broadliner purveyor is a purveyor that can give you anything from filet mignon to garbage bags. It's really, really helpful for a lot of places, right? Because you can get one delivery a week. You know, you can get everything from charcoal to chicken to vegetables to soap to everything you could need for a restaurant Cisco sells. So they're
1:46 Joe Flamm? a massive, massive company. They operate, I think, in every single state in the United States.
1:53 Adrienne Cheatham? Cisco is also a global company. They do $75 billion in revenue annually. They have deep, deep supply chain in every single sector of everything that you would ever need for a restaurant. They are massive.
2:08 Joe Flamm? Massive, right? So people know the Cisco names. People know the Cisco brand.
2:12 Adrienne Cheatham? You've seen the trucks.
2:13 Joe Flamm? You've seen the trucks. You know what I mean? They're everywhere. And I think the one they might not know is the one they're trying to take over, which is Restaurant Depot.
2:22 Adrienne Cheatham? Yes. So explain a little bit, what is Restaurant Depot and why is it so important to restaurants?
2:29 Joe Flamm? So Restaurant Depot, or The Depot, as a lot of us, you know, call it. Restaurant Depot is like your Costco, your Sam's Club, but for restaurants specifically. You have to have a business license to shop there is the big thing. But it's a wholesale provider and much like a Cisco or US Foods or one of the other big broadliners, a chef's warehouse, or whatever you have, they have all the stuff, right? So you can get anything from tongs to teriyaki sauce. You know, you can get pineapples and you can get, you know, garbage cans. So they have everything there. But the difference is Restaurant Depot is a standalone store. You can show up there and purchase things where Cisco, you know, Cisco is delivery only. So you have to have an account, you have to be set up, you have to hit minimums.
3:14 Joe Flamm? You have to do all these things, right, to be a Cisco representative. Where it's like you and I tomorrow, if we started Joe and Adrian's Hot Dog Cart, we would be Restaurant Depot people. We would go to the depot, we'd show up, you know, handful of cash and we'd be able to buy product. So the big deal is like, they're two very different things that they, they do serve the same purpose, right? They both kind of sell the same stuff, but in very different ends of it, on very different levels of it. So the merging of those two together could be a massive, massive problem if it goes through.
3:49 Adrienne Cheatham? And not a lot of people know this, but when you're opening a restaurant, to be able to get a distributor, a broadline distributor like Cisco, you have to submit an application for a line of credit, you have to submit references, you have to submit bank statements, you have to have a guarantor. It's like buying a home, almost, like just to be able to get food deliveries to your restaurant. So if you're a mom and pop shop or a small operation in a neighborhood, you may not have all that. But guess what? Doors are opening Tuesday. So let's just go to Restaurant Depot and get everything that we need because we may not qualify for this line of credit from Cisco. And like you said, the minimums and the credit terms that they can set can really affect the
4:32 Adrienne Cheatham? margins of restaurants. So Restaurant Depot is like a lifeline for small restaurants.
4:38 Joe Flamm? Right. And so this is something that's been happening in restaurants for the last 15 years, really, like tremendously. There used to be a lot of little purveyors out there from dairy ones to produce ones to, you know, specialty meat ones. And they keep getting gobbled up by the bigger ones, right?
4:55 Adrienne Cheatham? Yeah.
4:56 Joe Flamm? They're getting bought out there and then they're just getting folded into these brands, you know? And I think it got extremely aggressive during the pandemic. When that went down and everybody was hurting, these big brands came in and they started, you know, all these little brands that were in trouble, they gobbled them all up. So now there's less and less options for restaurants. And the less options we have, the less power that gives us in our purchasing to be able to pit them against each other.
5:20 Adrienne Cheatham? And the more that affects the pricing for the customer that they ultimately see on the check.
5:26 Joe Flamm? Right. And, you know, people talk about all the things that are affecting restaurants that are driving up costs, right? We talk about rent. We talk about labor. We talk about all these things. But like, this is a thing that doesn't get talked about enough. Because the less purveyors there are, the less options we are, then the more the price of things is just gonna get fixed.
5:43 Adrienne Cheatham? Exactly.
5:43 Joe Flamm? The more that price is fixed, the less options I have to put a better value on that menu. You know what I mean? Because if one person is controlling the price of skirt steak across the continental United States, that price is whatever they want it to be.
5:55 Adrienne Cheatham? Exactly.
5:56 Joe Flamm? And they don't, and they don't care what I think about it.
5:59 Adrienne Cheatham? No, and they don't care what your customer thinks about. They don't care if the customer stops coming to your restaurant because instead of charging $25 for four ounces of skirt steak on a dish, you're now charging 75. They don't care that they're putting people out of business.
6:20 Joe Flamm? I think people sometimes, you know, they look at like, you know, a chef like me or a chef like Karen, we talked to the other day, they're, oh, well, those are big chefs. They're not going to have these problems. It's like, we might be a big brand as far as exposure, as far as a name, but we're not, you mean, like, if you're Cisco, I'm nothing.
6:39 Adrienne Cheatham? Right.
6:40 Joe Flamm? You know what I mean? They're thinking about, they want that Longhorn Steakhouse account.
6:42 Adrienne Cheatham? Yeah, yes.
6:43 Joe Flamm? You know what I mean? They want the Chili's account. They want the Applebee's account. They want the restaurant group that has, you know, 300 locations and buys, you know, 300,000 pounds of meat a year.
6:54 Adrienne Cheatham? Yeah.
6:54 Joe Flamm? Because like, that's who they're going to play ball with.
6:57 Adrienne Cheatham? Yep.
6:57 Joe Flamm? They're not, you know, for me, it's like, oh, yeah, we spend a ton of money on food every year, every week, every day, every day. But comparatively, you know, we're a drop in the bucket.
7:08 Adrienne Cheatham? Compared to a hotel, a casino, one of those massive chains.
7:12 Joe Flamm? Compared to an arena. You know, you look at events, like, you think of like, the US Open in New York. That's a 14 day tennis event, right? They'll do $70 million in food and beverage in 14 days, in 14 days. You know what I mean? The busiest restaurant in Chicago does $32 million in a year.
7:33 Adrienne Cheatham? Wow, wow.
7:35 Joe Flamm? So like, for perspective, you know what I mean, of like, what they are looking at, if you're a Cisco, if you're US Foods, like, they're not worried about what I think. We're a small, independent restaurant. I have three business partners, you know, we don't have private equity backing or anything like that. You know, we're not mom and pop. It's not just, you know, like, you know, me and Hill out here slinging chivops on the corner, but we're not, you know what I mean, this massive empire where we have all that weight to swing around.
8:02 Adrienne Cheatham? Right.
8:02 Joe Flamm? So Cisco getting more powerful, and especially the Restaurant Depot one.
8:09 Joe Flamm? Is the biggest deal to me because the restaurant depot, the other thing about it, it's a seven day a week operation, right?
8:14 Adrienne Cheatham? Mm hmm.
8:14 Joe Flamm? And it's a cash and carry operation.
8:17 Adrienne Cheatham? Right.
8:17 Joe Flamm? So like you said, you don't have to have, you know, those net terms where it's like, okay, 14 days, you know, or a week or check on delivery. It's like you could show up, you could go for the weekend, say, hey, we had a good week. It's going to be a busy weekend. Maybe I can spend a little bit more so that, you know, I mean, I'm going to buy three tender ones because I think I'm going to sell those this weekend. I'm going to run a special because it's Valentine's Day, right? And you don't have to hit a minimum with Cisco. It's there's a certain amount of money you have to order every time to get that food on the truck.
8:47 Adrienne Cheatham? Yep.
8:47 Joe Flamm? To get that truck to show up. And depending on where you are, you know, I'm in Chicago. So it's like, we have the benefit of basically every purveyor in the Midwest is based out of Chicago, more or less, because everything's coming in through O'Hare. So we're the hub where it's like, you know, if you're buying fish in Detroit, if you're buying fish in St. Louis, if you're buying fish in Indianapolis. It's, it's usually the same companies. You know, my friends in Michigan who have restaurants, they're using the same purveyors that we used in Chicago when we all worked here, right? But if you're in some of those smaller markets, like Cisco might just come once a week and it's whatever day they decide. It's not what you decide.
9:22 Adrienne Cheatham? Exactly.
9:23 Joe Flamm? What, you know what I mean? Adrian's Supper Club and, you know, Eau Claire, Wisconsin wants. You're like, oh, Thursday works better for me. It's like, well, that's tough shit. We don't give a fuck.
9:31 Adrienne Cheatham? Exactly. And that's who it's really putting a huge squeeze on. And this is actually a really fast growing sector of food service is caterers, pop ups, independent shops and, and operations like that, that don't necessarily have a set number of service days a week. You have to be adaptable. You have to be nimble and you have to be able to change based on what your orders are for that week, whatever event you're doing. If I'm doing a dinner for five people or if I'm doing a dinner for 500, my ordering needs are going to be very different. And if I'm doing a dinner for 10 people or five people, I'm not going to meet a minimum for Cisco. I also can't get a line of credit for a pop up series. So Restaurant Depot is clutch.
10:13 Adrienne Cheatham? If you're doing catering, if you're doing pop ups, if you're, if you're doing pop ups at restaurants, sometimes you can order through the restaurant that you're doing the pop up at, but not always if it's a small quantity.
10:26 Joe Flamm? Right.
10:26 Adrienne Cheatham? They're like, oh, I'm sorry, that's not going to meet the minimum. And what people don't realize also is you have to pay a premium sometimes. If you don't get good terms and you have to do COD, cash on delivery, before they set up your credit. Like when we were opening Street Bird for Marcus Samuelson, our application was taking forever to get our credit set up to be able to get the distributor to come and make these deliveries. They were nice enough to give us COD for our first two deliveries, just because we had such a good credit history with them from Red Rooster. And they're like, okay, we get it. That's your sister restaurant, same company. Sorry, the application's taking too long. And we're like, guys, we're opening in a few days.
11:08 Adrienne Cheatham? Like, I need to start getting stuff in. They're like, okay, we'll do COD. But the premiums on COD, definitely like, it, it, it caused a one or one and a half percent change in the prices we were paying. And when you only have a three or 5% margin on a restaurant, that is huge.
11:30 Joe Flamm? It's massive. And it also undercuts your ability to negotiate.
11:34 Adrienne Cheatham? Right.
11:34 Joe Flamm? Because that's a huge part of what we do. It's like, we have to look, we look at prices every day.
11:39 Adrienne Cheatham? Yes.
11:39 Joe Flamm? Every day.
11:40 Adrienne Cheatham? They're not fixed.
11:42 Joe Flamm? And we have to go, okay, who's got the best price on this shrimp? Who's got the best price on this steak? Who's got the best price on this charcoal? Seafoam napkins, fryer oil, whatever it is. But if I'm a small restaurant and I really need Cisco to come, and they don't really feel like it, I don't have that ability anymore. If I'm like, hey, I need you to drop fryer oil a buck, they're like, no, we just won't deliver to you.
12:05 Adrienne Cheatham? Right.
12:05 Joe Flamm? And then it's like, you're pinched.
12:07 Adrienne Cheatham? Yeah.
12:07 Joe Flamm? You know what I mean? Where it's like, depot's fixed prices, you show up. And I think like, the other part of it, people understand, it's like, well, why don't these people just go to a Costco or Sam's Club or something like that?
12:15 Adrienne Cheatham? Oh, retail prices.
12:18 Joe Flamm? And that's the thing.
12:20 Joe Flamm? Depot gives you the ability to have the purchasing of a restaurant from, you know, a purveyor like, you know, cause like the pricing we do get from a Cisco, from a meats by Linz, from these bigger companies, from a US foods, whatever you may have, is going to be better because their purchasing power is greater of what they're bringing into market, right? Restaurant Depot has that. So it gives you the ability to buy at bulk in a, you know, non-retail shopping price, right?
12:46 Adrienne Cheatham? Right.
12:46 Joe Flamm? Because if we were buying, if you were trying to run any sort of restaurant and you have to buy stuff and you know, as a private chef, like if you have to go buy fish for a dinner from Whole Foods.
12:57 Adrienne Cheatham? Right. It's okay.
12:58 Joe Flamm? You couldn't, you couldn't charge for that though.
13:00 Adrienne Cheatham? No.
13:01 Joe Flamm? Like if I had to go do that for service, you know what I mean? A bronzino would be a hundred and four dollars on my menu.
13:06 Adrienne Cheatham? Exactly. If you look at retail prices, like take salmon, for instance, it's, everybody has a salmon dish almost on their menu in, in every city, right? Salmon retail, like organic Norwegian salmon, at some places in New York, at some fish counters, this is retail fish counters, it can be forty dollars a pound.
13:27 Joe Flamm? Forty dollars a pound, yeah. And that's.
13:29 Adrienne Cheatham? How much is the wholesale price that restaurants are paying?
13:33 Joe Flamm? You know, for that, it's probably like whole fish, you're talking, you know, fourteen dollars a pound, maybe thirteen, you know what I mean? Depending on what you're looking at, filet it out, right?
13:41 Adrienne Cheatham? That is a massive difference. That is a huge difference. And restaurants cannot pay retail prices because you have to build those costs into what the customer is paying. So if you're paying forty a pound for salmon, the guest is, is going to be charged like sixty bucks, seventy-five.
14:01 Joe Flamm? Ten bucks on the plate for just a piece of fish.
14:03 Adrienne Cheatham? Right.
14:03 Joe Flamm? If you're doing four ounces of fish.
14:05 Adrienne Cheatham? Yeah.
14:05 Joe Flamm? Right? So it's like, and most people, places are doing six. So you're like, you know, fourteen bucks on the plate before you even, before you even touch it, before you even season it, you're fourteen bucks on the plate. So it's just like, looking at this, I think the, the other end of this, that's really scary. So I think the, the one big problem is right, like Cisco having the ability to control the prices of Restaurant Depot is, is a problem.
14:33 Adrienne Cheatham? Yeah.
14:33 Joe Flamm? Because they're saying, because what they can easily do is saying like, hey, well, we would rather have people be Cisco clients and sign up and be locked in.
14:42 Adrienne Cheatham? Mm hmm.
14:43 Joe Flamm? So we can raise prices at Depot. And make it so if you're not a client, like it doesn't, you know what I mean? It's no longer a benefit.
14:52 Adrienne Cheatham? And that's the thing. Restaurant Depot was kind of like that pressure valve you could pull. If you're, like you said, in restaurants, chefs and people doing ordering are checking prices every single day. What are the fluctuations? Can I get a better price over here? And if Cisco is raising the price on something, you can say, you know what? Cisco rep that I call or I place my order with, I'm going to go to Restaurant Depot because your prices are a little high right now. And then Cisco will start to correct those prices because Restaurant Depot is kind of like that checks and balance on the distributors because it gives you that option. And when you start to buy that option, they control everything.
15:31 Joe Flamm? Right. I feel like Restaurant Depot is also like the emergency ripcord. And I think every chef I know has a Sunday Restaurant Depot story. Because, you know, as you know, no one delivers on Sunday.
15:43 Adrienne Cheatham? Nobody. I don't care how big you are.
15:45 Joe Flamm? When you're, when it's a Sunday morning and you had a busier Saturday night than you thought.
15:49 Adrienne Cheatham? Yep.
15:50 Joe Flamm? Or somebody didn't order something they were supposed to. You know what I mean? All the meat places stopped cutting on Friday. Everybody knows that. Nobody cuts on the weekend. You could, sometimes you can go, if you know people, they'll let you in to get something. You can cut it yourself, right? You know what I mean? You can get a whole ribeye, you can get a whole pismo, but they're not cutting anything for you. But come Sunday, you are on your own. It's you and the Lord out there.
16:11 Adrienne Cheatham? I need fry oil. I mean, we forgot to order eggs and we have brunch service.
16:16 Joe Flamm? Right.
16:16 Adrienne Cheatham? I need a case of eggs.
16:18 Joe Flamm? You need 12 eggs.
16:18 Adrienne Cheatham? Right.
16:19 Joe Flamm? You know what I mean? You need 300 eggs.
16:21 Adrienne Cheatham? 250, right. 300 eggs.
16:23 Joe Flamm? You know what I mean? I need 300 eggs, like at 8 a.m. And there's only one place to go. And I will tell you, there's few places in the restaurant world that are as hell on earth as a Sunday at Restaurant Depot.
16:39 Adrienne Cheatham? It's like supermarket sweep. You remember that old show where people are like running with their carts? Oh, man.
16:45 Joe Flamm? It is. It is insanity. Like in any, and you could like, you, you know, like if you hear it from anyone, it's like, oh yeah, I had to go to like depot on Sunday. It's just like, oof.
16:57 Adrienne Cheatham? Sorry.
16:59 Adrienne Cheatham? We were in dire straits.
17:01 Joe Flamm? Like you know, they were down bad. You know, they were down bad, but it's there.
17:06 Adrienne Cheatham? Yeah.
17:06 Joe Flamm? And you can still open the doors and you could still do service and you can still, and you're not getting raked over the coals. We gotta go to Whole Foods and buy 300 eggs.
17:13 Adrienne Cheatham? Oh.
17:14 Joe Flamm? It's like, you might as well not open. You're selling eggs at cost at that point.
17:17 Adrienne Cheatham? Yeah.
17:18 Joe Flamm? You know what I mean? You are, you are losing money that day if that is your option. So it's like, you have to have that option of this place. Like it has to exist.
17:27 Adrienne Cheatham? Yeah.
17:27 Joe Flamm? It has to exist and it being controlled by a company that it doesn't behoove to exist is a really scary thought.
17:45 Adrienne Cheatham? Do you remember, remember not that long ago, but within the past, I don't know, five, seven years when Amazon bought Whole Foods? Remember how people were up in arms? They're like, quality is going to go down. It's just about large scale distribution. Well, Cisco buying restaurant depot is like Amazon, not only buying Whole Foods, but buying your local grocery store and the farmer's market. That is what this merger would do. I mean, they would control everything.
18:13 Joe Flamm? It's like Amazon buying the post office. You know what I mean? And just being like, yeah, you could still get like cheap mail. It's going to be totally cool and fine. And it's like, I don't fucking believe you at all. Like, you know what I mean? Like at all. It's like, that's, that's like the bigger issue for me. It's like, I think it's like Amazon buying Whole Foods is like a quality issue. Where, where Cisco buying depot is like, this is a.
18:40 Joe Flamm? An issue on, on, on many levels. And I think one talking about, you know, like their ability to mess with the prices, I think is first and foremost, the scariest thing, you know what I mean? Cause if they jack those prices up, like, well, if you said the biggest places are gonna feel it. It's not the big box restaurants, right?
18:56 Adrienne Cheatham? Right, no.
18:57 Joe Flamm? And it's not even necessarily, you know, for me, like I said, depot is more of a, of, of an oh shit run, you know what I mean of like, oh shit, we don't have that. Oh shit, we need this. That's, you know, how deep.
19:08 Adrienne Cheatham? But some restaurants, that's how they purchase for, you know, three times a week or every day.
19:14 Joe Flamm? Yeah. When I was coming up in restaurants, when I worked at like, you know, I worked at a bar and grill in a strip mall and that was the only place we bought everything.
19:22 Adrienne Cheatham? Mm hmm.
19:22 Joe Flamm? You know what I mean? Like the only thing we got delivered was alcohol, but like everything else was bought at depot. And it was like Saturday morning, you know, they give you a, you know, boss give you an envelope of cash and a list.
19:35 Adrienne Cheatham? Right.
19:35 Joe Flamm? And you go to depot, you load a truck up and that's when you got your stuff for the week, right?
19:40 Adrienne Cheatham? Even Maya Camille Broussard at Justice of the Pies, I was talking to her a couple of weeks ago about this same thing because she buys at Restaurant Depot in Chicago, not because like she's buying cases of butter at a time. And yes, that's expensive and it's, it's a lot in brown sugar, but she's buying several cases of butter once a week or twice a month. And she doesn't meet the minimums for these distributors to come out to where she is.
20:09 Joe Flamm? Cause that's the other thing is these minimums have gone up, up, up and up. And like where she's at, you know, cause she's on, she's on 75th.
20:17 Adrienne Cheatham? Yeah, off of Stony Island, I believe.
20:19 Joe Flamm? Right. So she's not on a restaurant row.
20:22 Adrienne Cheatham? Right.
20:22 Joe Flamm? You know what I mean? Cisco doesn't have 20 stops in that neighborhood.
20:25 Adrienne Cheatham? Right.
20:25 Joe Flamm? You know, where I'm at in the West Loop, it's like they're coming down there, right? So if I want to beat them up about the minimum and say, hey, I don't want, you know what I mean? You're going to be on my street no matter what. If it's not me, it's girl on the goat. If it's not girl on the goat, it's, you know, Fioretta or it's whoever it's, you know, there's a hundred restaurants on my street. But if you're, you know, like, like Maya, like.
20:48 Joe Flamm? She's the only one out there. So they can be like, your minimum's 500 bucks.
20:51 Adrienne Cheatham? Yeah.
20:51 Joe Flamm? And she's like, well, I'm at 450. They're like, yeah, well, we don't give a shit.
20:54 Adrienne Cheatham? Right. And there's nobody else near you that we're going to deliver to anyway. So it's not on our route. We're not going to do it.
21:01 Joe Flamm? Right. So she has to have depot to be able to go there and be like, all right, I can go buy exactly what I need. I don't have to add on 12 cases of garbage bags so that I can get my butter.
21:13 Adrienne Cheatham? Exactly. That's, that's what we used to do is add on fryer oil or paper towels.
21:19 Joe Flamm? Rosemary, it's always add on charcoal. You know what I mean? You're always going to need charcoal. So it's like, you know what I mean? It's like when in doubt, throw 10, you know, with any purveyor, it's like almost everybody carries charcoal now. It's like get 10 bags of charcoal.
21:39 Adrienne Cheatham? There's another aspect to this besides the pricing and how this is going to drive up prices for restaurants. And ultimately the guests that we haven't even talked about yet. And this is something that I know for you, it's a real passionate issue. This could also give Cisco more control over what items restaurants can even buy.
22:00 Joe Flamm? Now that one is, I think, like the sleeper cell of this.
22:06 Adrienne Cheatham? Yes.
22:07 Joe Flamm? Like, that's the one because that's what happened with beer, right? So like in the past 10, 15 years, again, right? We saw craft beer explosion. There was all these little breweries coming up. There was this beer renaissance, you know, where, you know, and I think it was like the ebb and flow of America where they're like turning the century. There were thousands of craft breweries and then it went away and then it came back. But then after it came back, all these big, you know, the Anheuser Busch, the Miller, the Coors, all these started buying up all these little breweries that had come up. Right? All these little craft breweries started getting bought by them. And then all of these big breweries became conglomerates, right?
22:46 Joe Flamm? Where it was, uh, you know, Anheuser Busch is now in Bev and, you know, Miller is now, uh, Miller Coors or, you know, Molson. I know it's Molson Coors.
22:55 Adrienne Cheatham? Molson Coors, yeah.
22:57 Joe Flamm? So they have like a thousand brands and again, it's one of those ones that people don't really think about, right? You know what I mean? If you're drinking Miller Lite Bud Light, you're like, I don't care if Miller Lite also owns Coors.
23:07 Adrienne Cheatham? Fat Tire or.
23:08 Joe Flamm? Yeah, or Fat Tire or Sierra Nevada or whoever, right?
23:14 Joe Flamm? The problem comes with distribution because when you own those products, you control the distribution. Cisco owning JetRO, now they control what's on the shelves.
23:24 Adrienne Cheatham? Yes, and, and JetRO is Restaurant Depot. That's the corporate name for anybody who's, we threw JetRO out there, but that is JetRO-Restaurant Depot.
23:34 Joe Flamm? Yeah, so Cisco owning Depot, they now control what's on the shelves.
23:38 Adrienne Cheatham? Right.
23:39 Joe Flamm? So they can choose what they want to sell in store versus what they want to sell online.
23:44 Adrienne Cheatham? Yeah.
23:45 Joe Flamm? Now, they're all like, oh, we won't change a thing. We won't do anything. We would never do that.
23:50 Adrienne Cheatham? Bullshit.
23:51 Joe Flamm? You know what I mean? And it's like, that's not how business works.
23:54 Adrienne Cheatham? No, because if Cisco has a massive company like Anheuser-Busch that they're like, you know what? This new startup brewery over here is competing too much with a large part of our segment and those are, that's a company we've had a relationship with for a long time. They will keep that competitor out of their distribution system, which means that competitor, that producer, that artisan, does not have access to restaurants and customers to sell their products to.
24:24 Joe Flamm? Right, and they can decide what they want to sell. And we dealt with this in beer. When we were opening Rosemary, there's a Croatian beer called Karlovacko, and it's distributed by a company here. You used to be able to buy it in Illinois, and then somebody else bought it. And whoever bought it also owns Heineken.
24:43 Joe Flamm? And so I was like, what happened? What happened? Why can't I get this beer? It says it's distributed in Illinois. It should be here. And then I finally got down the rabbit hole of it and talked to someone who was finally like, listen, yes, they could sell it in Illinois. They don't. And I was like, why not? And they were like, because they sell Heineken here and they own both. And Karlovacko competes with Heineken. And they don't want us to compete with Heineken. They want to sell more Heineken in Illinois because it's a better profit margin for them.
25:12 Adrienne Cheatham? Geez.
25:12 Joe Flamm? So they're not going to sell it here. They're just going to, they'll make more money keeping it on a shelf and selling less of that beer. Because they're incentivized by profitability of the things they sell, not to just have the greatest variety. And that's what scares me about Cisco taking over Depot, is that they're incentivized by products that are the best profit margin.
25:33 Adrienne Cheatham? Yes, not the best quality. None of that.
25:37 Joe Flamm? No, not the best quality and not, not providing, you know, the whole thing of depot is like you can get anything. We could go, if me and you wanted to start a restaurant today, we could drive over to depot and buy literally everything.
25:50 Adrienne Cheatham? Everything we need to start cooking.
25:51 Joe Flamm? We could get everything. We could probably find three people hanging out there who would come cook. Like everything you need to start a restaurant is at depot.
26:00 Adrienne Cheatham? Yeah.
26:00 Joe Flamm? Cisco is not going to be incentivized to do that.
26:04 Adrienne Cheatham? Yeah.
26:04 Joe Flamm? To have all those things.
26:06 Adrienne Cheatham? They're incentivized by what companies, like you said, they have the best profit margins on.
26:11 Joe Flamm? Right. And, and if they decide like, hey, we want to push more people into delivery, they can take, be like, oh, we know people are coming here just for this product. Well, we're going to move that to delivery. So that number one selling thing at depot, we're going to take that, we're going to make that delivery only with Cisco. And so if you want that thing, you've been buying for 20 years as your local taqueria, as your local bar and grill, as your local whatever, you gotta get it delivered now and you gotta hit a minimum. And you know what I mean? You gotta deal with whatever price changes we give you. And that's, that's what scares me. That's what scares me. And those small places are gonna get pinched and they're gonna get fucked in this.
26:53 Joe Flamm? And they have no voice. They have no voice. Cause it's three people operating in a shop. And there's, you know, a million of these shops, but they're not connected in any way, shape or form, you know what I mean? To, you know, kind of come together and be like, hey, this is a really big deal to us. This is going to affect a lot of people. Because the squeeze is gonna, one, it's going to affect the customer first, right? Because like you, you just have to raise prices. There's no other option. You know what I mean? The restaurant can't.
27:21 Adrienne Cheatham? Restaurants can only get their margins so thin before, and restaurant margins are already razor thin. You're operating at like a three to 5% margin at some restaurants. Maybe if you're lucky, if you're buying everything frozen and you just open bags, maybe you're operating closer to a 10% margin. But if you keep eating the cost when they raise prices, you're going to be operating at a loss. Like restaurants are going to start shutting down because there is no leverage to control price.
27:47 Joe Flamm? Right? And it's like, and the biggest thing is like, it's going to get passed on to consumers and then consumers, you know, will buy less.
27:53 Adrienne Cheatham? Right.
27:53 Joe Flamm? Or go there less. I mean, oh, I've been going to this place forever and you know, whatever that burger was 10 bucks and now it's 12. Or you know, a taco there was a dollar 75 and now it's 250. And it's like, yeah, they have to charge that.
28:05 Adrienne Cheatham? Yeah.
28:06 Joe Flamm? They have to charge that. And that's what's scary.
28:10 Adrienne Cheatham? Yeah. If you don't have leverage to be able to negotiate and control prices, it becomes a monopoly. And that's what we're looking at. And Cisco is not just part of the supply chain. Cisco is the supply chain. If they buy Restaurant Depot, they will be completely dominant in the food supply space. And they will be able to set whatever prices, whatever products are on their shelves that they determine. It will no longer be up to chefs. And then you're going to start seeing the same things at all restaurants, because that's all that's available. If chefs don't have access to a local producer, if you're in a place where you don't have a farmer nearby, or a dairy farm, or, you know, a guy who who fabricates lamb, you may not be able to get the quality and the things that you want,
28:54 Adrienne Cheatham? because Cisco will have such immense control over everything.
28:58 Joe Flamm? And and we talk about this a lot at our restaurants of that, like, you know, this is why it's so important to support our local farmers, right? And not just come summertime. And not, you know, when they have all the best stuff. But it's like, we got to figure out ways to keep their food on the menu over the winter. Like, we got to buy onions. We got to buy sweet potatoes. We got to buy celery root. And why it's important, you know, and some chef told me this years ago. They're like, be the person that takes that thing for your farmer that they need to sell. Like, that's how you keep them going. So when I get a text from my pig farmer, and he's like, I got an extra pig this week. It's like, guys, let's figure out something to do with this.
29:35 Adrienne Cheatham? Yeah, because that's how you keep them in business. And that's how you keep them from being able to say no to Cisco. Because when Cisco comes in, this is also something not a lot of people know about. But I know because my mom worked for Kraft in the 80s and 90s, which was a huge competitor with Cisco back in the day before they got bought up. Kraft. And companies like Cisco can come in and say your pig farmer does things a certain way. That is generational. It's they do things the right way. They're keeping the pigs clean. They're feeding it. Certain things. They're not letting it roll around and shit all day. They're doing things the right way. Cisco can come in and say, I'm only going to pay you this much for your pork and you're not selling enough to any other restaurants. So that becomes real attractive to that farmer.
30:18 Joe Flamm? Right, because they'll buy all of it.
30:19 Adrienne Cheatham? Farmers, exactly. And they will buy your whole herd.
30:22 Joe Flamm? So it's a bigger check. It's a lower for price, but it's a bigger check. They come in and they say, I'll give you a quarter mill guaranteed as opposed to like, you can go to market and maybe you'll make 150, maybe you'll make 300. But I'm giving you 200 guaranteed. And that's just getting thrown into pork.
30:39 Adrienne Cheatham? And over time, because they force the farmers and producers to bring their prices down. They're forced to change the way they operate. They're forced to get lower quality feed for their animals. They're forced to squeeze more animals into a pen than they would have before. They can no longer let them run around on the field because they have to have so many and they need to keep them corralled. So it changes not only what chefs can purchase, but it changes the way that producers can make these high quality goods that we love to support.
31:12 Joe Flamm? Right. And I'm not saying like Cisco doesn't get to exist or shouldn't exist. And you know, like in depot, but also needs to exist.
31:20 Adrienne Cheatham? Exactly.
31:21 Joe Flamm? But they need to be separate. They should not let this happen. This is a big problem. It's been happening for years they that these big companies, and I know it's part of just capitalism. It's part of how we live, whatever. But it's like, at some point, there's gotta be a tipping point where we say, all right, this is too much. And this just feels like to me, this feels like to me that this has gotta be the one where we say, no, no fucking way. Like you can't, you can't do this. You can't do this. You're gonna fuck it up.
31:49 Adrienne Cheatham? We're at that point and we're lucky that we're still in the regulatory phase. So we, this is not approved yet. This merger has not been approved. So here comes the what can we do? Which is very important because chefs are not passive people. And guests who are forced to pay more and more every time they go to their favorite restaurants are not passive people either. And if you guys support us like we support these causes, there are some things that we can do. So the FTC has a website.
32:21 Adrienne Cheatham? Where you can lodge a complaint. The Federal Trade Commission has not yet approved this merger. It's still in the regulatory phase. The DOJ can get involved. Not so sure if that's going to happen. But if you file a complaint with the Federal Trade Commission, that through their website, that can get logged. Because what you want to focus on when you submit these comments is the loss of competition, how this is going to drive up food costs and how it's going to give fewer supplier options. There's also precedent for this. The FTC blocked a merger 10 years ago when Cisco tried to do this same thing. They tried to buy US Foods, which is that other broadline distributor you talked about at the beginning of the show. So this deal is being scrutinized
33:05 Adrienne Cheatham? under antitrust questions, the same as it did 10 years ago. You can contact local representatives. And another important thing is the Independent Restaurant Coalition. They are posting about this on IG. They're posting about this on social media. Share these people's posts. Tag your local representatives. I know, it can be a bit cumbersome to look people up. Just go to IG, find a post about it, share the post and start tagging representatives and the FTC so this can be brought to their attention and they know that we are paying attention and they know that a lot of people do not want this to happen.
33:42 Joe Flamm? Yeah, get out there, get loud about it. And hopefully, hopefully this one doesn't go through. You know, it'll be, it'll be a real swift kick in the pants if it does. So I'm hoping, you know what I mean? We can get loud enough about this one. And you know, it's a rock fight every day to try to save our independent restaurants. And you see posts about it all the time. And every little thing helps from, you know what I mean? Showing up every day to support your great local restaurateurs to, you know, fighting for them on the back end like this. You know what I mean? This is the way we stay at business. We stay afloat. We keep, you know, those mom and pop places that have been there for 20 years on the corner where when you see them go, oh yeah, we're closing. And you're like, oh no, how could this happen? You've been here forever. It's like, this is how this shit happens.
34:23 Adrienne Cheatham? Yep.
34:24 Joe Flamm? You know what I mean?
34:25 Adrienne Cheatham? And we're fighting for ourselves.
34:26 Joe Flamm? This is how this shit happens, so.
34:26 Adrienne Cheatham? As consumers also. Because ultimately, the restaurants pay more, guests pay more. So this is affecting all of us in every way.
34:35 Joe Flamm? All right, Age, well, that's our PSA for the day about getting angry about broadliners and monopolies and antitrust.
34:42 Adrienne Cheatham? Woo, got real.
34:43 Joe Flamm? We'll be back next week talking more restaurants and hopefully not too much legislation.
34:48 Adrienne Cheatham? We'll see. I don't know. They're forcing us into it. I'll see you next time, Jo.
34:55 Adrienne Cheatham? That is it for this episode of The Chef's Cut. Be sure to subscribe wherever you're listening, especially if you're watching us on YouTube where you can get full-length videos of every episode. And be sure to follow us on IG at The Chef's Cut Pod. For Jo Flamm, I'm Adrian Cheatham, and this has been The Chef's Cut: Life Beyond the Past.
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