Food Cost Drivers Beyond Consolidation

The U.S. food system consumes a massive amount of energy, requiring an average of 7 to 10 calories of input, primarily from fossil fuels, to produce just one calorie of food. Globally, food systems account for 30% of the world's energy consumption and are responsible for over 20% of greenhouse gas emissions. Transportation is a significant factor, with trucking costs hitting a record high in 2022, surpassing an average of $2.25 per mile to operate. These expenses are passed down to consumers; research has shown that rising diesel prices can increase the per-pound price of potatoes by over 10 cents. The U.S. became the world's largest food importer in 2024, bringing in $105 billion worth of foodstuffs, primarily from Mexico and Canada. This reliance on imports has driven the U.S. food trade deficit to over $58.7 billion, a surge of more than $46 billion since 2015. Climate change increasingly disrupts this global supply chain, with extreme weather events damaging transportation infrastructure and storage facilities. Since 1961, climate change has already reduced global agricultural productivity by an estimated 21%. In the foodservice distribution sector, Sysco leads with a 17% market share, followed by US Foods at approximately 10%. A potential merger between US Foods and competitor Performance Food Group (PFG) would create the nation's largest distributor, controlling a combined 18% of the market. Regional commissaries serve as centralized kitchens for large fast-food chains, ghost kitchens, and mobile food vendors. This model allows for standardized, bulk production of ingredients that are then distributed to individual outlets for final assembly, ensuring consistency and operational efficiency.