US Foods to buy Smart Foodservice Warehouse Stores

US Foods is going big with cash-and-carry.  

The Rosemont, Ill.-based broadline distributor has announced an agreement to buy Smart Foodservice Warehouse Stores, which operates 70 small cash-and-carry stores in California, Washington, Oregon, Idaho, Nevada, Utah and Montana, for $970 million in cash.

The stores, currently owned by private-equity group Apollo Global Management, serve small and midsized restaurants and other food business customers with a broad assortment of products.

Smart Foodservice generated $1.1 billion in revenues last year, the company said. “We know customers, particularly independent restaurants, increasingly use cash-and-carry as a convenient, cost-effective purchasing option,” US Foods CEO Pietro Satriano said in a statement.

Smart Foodservice is expected to complement US Foods’ existing cash-and-carry concept, Chef’store, which it first opened in Charlotte, N.C., in 2012. The deal will “provide a platform to significantly accelerate our presence in this attractive, growing channel.”

Independent operators increasingly are getting supplies from various cash-and-carry outlets such as Costco and Restaurant Depot, and US Foods wants a part of that business. The company said it is a $17 billion channel of the foodservice industry that is growing at a rate of 4% to 5% per year.

That also gives it a channel to continue serving independent restaurants, a key target market for distributors like US Foods. The company said that it gets higher volume from customers who use both traditional orders and those that buy through its Chef’store concept.

Smart Foodservice also generates profitable growth and “significant expansion opportunities,” the company said.

US Foods, the second-largest foodservice distributor that provides food to some 300,000 restaurant and foodservice operators, said it would finance the deal with $700 million in financing from Citigroup and Bank of America and will use cash for the remaining $270 million.