The food distributor US Foods Holding Corp. (USFD) plans to cut hundreds of jobs as part of a restructuring of its corporate headquarters near Chicago, according to people familiar with the plans of the company.
the nation’s second largest food provider to restaurants and cafes has been looking for ways to cut costs after its plan to merge with rival Sysco Corp. was thwarted by antitrust regulators last year.
US Foods, which records nearly $23 billion in annual sales and employs about 25,000 people nationwide, expected to benefit and gain greater scale and efficiency by merging with Sysco. Instead, an initial public offering in May was launched, earning $1 billion, used to pay debts and finance small acquisitions.
The company said Thursday it plans to cut jobs in corporate roles as accounting, technology services and human relations within the next 12 to 18 months.
“This is a continuation of the work we did before our IPO… and something we believe will further support our long-term growth,” said a spokeswoman for US Foods.
Over the past year, the company has been working to consolidate back-office jobs that support its 62 distribution centers.
US Foods this year hired a “vice president of continuous improvement,” whose function is to make their distribution more agile and more efficient.
Sysco, the company’s largest competitor, announced 1,200 job cuts at the beginning of the year.
The profit margins in this industry are historically low, and apart from Sysco and US Foods, there are hundreds of regional distributors and specialty providers competing for the business of independent restaurants.
For the first half of the year, US Foods had an operating profit margin of 4%, when adjusted to exclude interest, taxes and other expenses.
Meanwhile, falling food costs are affecting sales of US Foods due to the reduced value of their inventory, especially meat and dairy products.