Odd Lots - The Hidden Supply Chain Making Every Menu Feel Familiar

Episode Date: October 25, 2025

If you go out to eat at a restaurant, whether it's a fast food chain or a Michelin-starred bistro, there's a good chance the ingredients on your plate came from the same source. Sysco is the dominant foodservice distributor in the US, using its massive logistics network to quietly supply the food that goes into meals in thousands of restaurants across the US. Sysco's scale and product standardization have helped define what American dining tastes like -- sometimes literally. But critics say its power has gone too far, leaving chefs and diners with fewer choices and blander outcomes. In this episode, we talk with Austin Frerick, author of Barons: Money, Power, and the Corruption of America's Food Industry, about how Sysco became the middleman shaping America's menus.   Only Bloomberg.com subscribers can get the Odd Lots newsletter in their inbox — now delivered every weekday — plus unlimited access to the site and app. Subscribe at bloomberg.com/subscriptions/oddlotsSee omnystudio.com/listener for privacy information.

Bloomberg Audio Studios. Podcasts Radio News. Hello and welcome to another episode of the All Thoughts podcast. I'm Tracy Allaway. And I'm Joe Wazenthal. Joe, I have a question. Go on. What is your favorite chain restaurant?

It has to be a sit-down chain restaurant. A sit-down chain restaurant. That's a really good question. You know, I actually really like chilies. I think their fajitas are absolutely legit. And I say this as someone who is eaten quiet. a lot of Tex-Mex fajitas from my time in Texas. And so I think I have credibility.

And as a kid, and I haven't been there in years, but I still think my memory of the food is really good. I love Cracker Barrel. Ooh, breakfast at Cracker Barrel is really, really good. Well, I bring it up because today we're going to be answering the question of where all of these restaurants actually get their food from. That's a great question. I don't know anything about sit down chain restaurants.

I mean, I don't know anything about most chain restaurants, period, let alone fast food ones, but the world of sit-down ones that are real restaurants, whether there's waiters, waitresses, et cetera. I don't know how I think about it. You're not interested in my favorite restaurants? Oh, sorry. This is how it works. I ask you a question and you reciprocate.

I was going to, and I was planning to, and then you, like, turned a 90-degree angle to talk about how, like, to talk about we were going to start answering the question of where these come from. I was like, oh, okay, I guess we're going on to some new direction here. We could just keep talking about favorite restaurant. Tracy, what is your favorite restaurant to sit down in? I actually have many. Okay, go on.

Red Robin. You still love that place. They had a salad that was basically just a plate of chicken tenders. It was so good. But Bill does a salad. Fridays, you still love that place. That's so American. I know.

And there was one in London, and it was like my anchor to America in the early 2000s and Chili's. Chili's with my boys. You like Chili's too. Yeah. Yeah, it's legit. Keep going. We're going to make up for the fact that I didn't ask you by now. Keep going.

Well, one thing I did realize recently, I've never been to an olive garden. I don't know why that is. I've been a few times. It's not terrible. I don't think like, I've even been to the one in Times Square. Yeah. I feel like it's very hard to make carbs badly, right?

It's just pasta and bread. Yeah. It's good. Okay. All right. I am going to move the conversation on now. Applebee's a bit of the one in Times Square there. I do not like Applebee's.

Why do we have to move the conversation on? I don't get it. Why can't we just keep talking about it? sit down restaurants. All right, well, we'll get back to them. We'll get to our recommendations. But on a serious note, one of the reasons we are interested in the subject is because we did a series last year called Beat Capitalism, where we talked a lot about agriculture and the chicken industry specifically and antitrust and monopolies and things like that. And one of the things that stood out to me from that series was a comment from Doha Mecki, who is the former assistant

Attorney General, where she talked about the tyranny of the middleman in the economy. And I think this is something that people are, you know, perhaps just waking up to. There are all these companies out there that you have probably never heard of, but have massively dominant positions in the economy and charge a lot for their services. And one of those happens to be a very large company that provides food for all these sit-down chain restaurants. You know, I'm going to play devil's advocate on this episode because, as you know, because you love Chili's so much. Because I love chilies and I love food production at massive scale and I love all of this.

But it is true that there are all these companies that are really important that sort of sit between whether the retailer or the customer or more in the case of food, more frequently the farmer and the retailer or the farmer and the restaurant. that we literally know nothing about and they're huge and they're massive and they don't get any attention. And so I am very interested in this topic. All right. Well, we do have the perfect guest. It is someone who has been on the show before.

I think maybe a year or two ago now. Sounds right. I mean, wow, time flies. of America's food industry. It's a great book. Even if you're not interested in agriculture or antitrust specifically, it says a lot about the U.S. economy. So I would highly recommend it. And Austin actually has just written a new chapter for his book that is all about this particular company. And I guess I should just say what it is. It's called Cisco. It's not the networking gear company. Not the networking gear company, although it does have the most generic origin story

ever. So Cisco stands for Systems and Services Company. Yum. Yum. Delicious. All right. Austin, welcome back to the show. Thanks for having me on again. And I just want to say, you guys having me on last year really changed the course of my book. So I appreciate that. Oh, thank you. Well, it was genuinely excellent. I am not just saying that. I really enjoyed it. Okay. Speaking of which, how does it work when you decide to add a new chapter to a book? And why did you decide to do that? Yeah. So the funniest thing about this book was when I would do book talk, people kept tell me about barons I missed. Like, when I was in Idaho, they're like, let me tell you about a potato baron.

When I was in Indiana, they're like, We're going to get the name of the potato baron after the episode. Oh, yeah, I have a whole purgatory folder that I just put this information into. But Cisco kept coming up. And it was the weirdest, um, polite origin story where, so I talk fast and I know it. So I purposely been doing book talks in nursing homes. So you have to slow down and practice? Okay.

I blame it on, I listen to podcasts like 1.5. 2.5, and especially Midwestern, older people, you got to take it down. And what kept happening when I was doing these... You realize if you're speaking fast because you're used to it, then people who listen to you on those podcasts are now looking to you at two and a half to three X speed. Anyway, it's bad because my husband listens them on 2x 2. We talk that way. And it's the, so a lot of times when you do nursing home gigs, they'll invite you for dinner before and after. And it was, people kept complaining about the food. And I mean, anyone that's been to a hospital or or so in America, it's pretty bad. I mean, we're serving our most foreign-ball people that

wears food. And it kept coming up. But Cisco is one of those things everyone kind of complains about, but no one knows. And my mom used to have a bakery, and I write about that in my coffee chapter. And she had a broadliner, and her broadliner disappeared. They got bought up by a bigger entity. And so I was just curious. And then... That's broadline distribution, right? Yes, thanks for... That's industry term. I think of them as grocery store for restaurants. They were Amazon before Amazon. They were the everything store. This is really important because when we're talking about food distribution, so there are broadliners. You get everything there from, you know, huge jar of olives to cheese or whatever.

But then also a restaurant might also have specialty distributors too that like just really focus on one thing, right? If they have the option. Okay. In certain markets, usually most rural communities, there's very few options. But like, for example, New York has one most competitive broadliner market. So restaurants here have a lot of different sourcing options. Yeah. I should just say this is going to be a very odd-lotsy episode because it brings together baking, warehouses, logistics, trucking, antitrust, all that good stuff.

So I'm very excited. Okay, well, on that note, how did Cisco get to be a dominant player in this particular space? I love this origin story. John Bot, he's a different type of character compared to the other Barron's in my book. I really like him. He's like a model businessman where he's one of those people, comes out of Waco, Texas. his brother and dad died young, dropped out of college, Bleep Baylor to support his mom, worked at A&P, got transferred to the A&P in Houston.

He's one of those people you see in business history that just saw things before other people. He saw two important things. Number one, the rise of frozen food. We're talking like right after World War II and how that was going to do. And then also frozen food mixed with women entering the workforce, knowing that they want to make quicker meals. So he thought, oh, people are going to eat out more. And the thing that keep in mind here is our norm of eating out is a very new thing in America.

Like historically used to like bring a dish to something. It was like a church function. Now we eat out about once a day. So he saw that thing ahead of people and he didn't think A&P was moving fast enough. So he founded a frozen, potentially a frozen berry company. But going back to this point you made Joe about all these different things, that's how the idea from Cisco came from, where literally some Irish oil man was opening a fancy hotel in Houston. and he was working the loading dock that night, and he saw in the day,

a frozen strawberry, it's a frozen strawberry. I don't have a competitive advantage. But what I can do is this food buyer has like 30 different vendors for all these different things. What I can do is offer him as much as possible. So the origin of Cisco was he brought nine companies together to create it and he realized someone's going to fill this at some point. So even though they only did business in a few states,

he registered in all 50 states. So that's how Cisco was created. I am fascinated by this idea because it's just one of those things that hadn't really occurred to me until like I read your chapter. Just like, yeah, like it's really weird how much we eat out. Or it's just really novel in terms of the prevalence of restaurants. I mean, I eat out way more than I did like when I was a kid growing up. I think about that all time.

We used to like Bonanza was like a buffet was like a special occasion once a week and now I do it pretty often. Or like I sit down Pizza Hut. That's another one. Oh, that was such a big deal. Yeah. And now, yeah, no, you just do it now. Well, let me pose a question to you. What do you think?

And there's a new king. the number one sit down chain restaurant in America is where you order off a menu. Oh. This is tough. Before I tell you, it's my favorite chain. Your favorite chain? Maybe my husband is going to know it.

I'm worried that I'm not going to know it and then I'm going to be really embarrassed at how out of touch because then you're going to say it is going to be really obvious. What is it? Cheesecake Factory? Nope. Now, are we talking about by dollar volume? Dollar volume.

Okay. All right. Yeah, you're going to have to tell us. I think I'm having stage fright. What's the answer? Texas Roadhouse. Oh, I love Texas Roadhouse. Oh my God, they have the best bread rolls.

My mom brings Ziploc bags. I should have said that was my favorite. They had one of those. When I was living in Abu Dhabi, they had one, and it was absolutely fantastic. You want to understand America, go to a Texas Roadhouse on a Friday night. I wasn't one in Dubuque, Iowa. I was on a book tour last weekend. I got a steak, vegetable, and mashed homemade, $14.

$1.Irottically, their stakes are really good. Like, they're good. I always have to fill out. Where do they get their food? Oh, I mean, who knows how they, I mean, the unique thing about But they get it from Cisco and they don't, I don't know. And they only charge $14 because of the incredible miracle of capitalism and scale. Joe, my hot take is two things. They do scratch cooking. Most chain restaurants and out of frozen food. They actually cut up broccoli in the back and number two, volume. Okay, yeah. Their servers only have three tables and they move you so quick. I love that you're doing in-person research on the subject of chain restaurants.

But you know, you mentioned that we're not entirely sure where Texas Roadhouse gets its food from. How does it work the contracts between a restaurant and someone like a Cisco? What do we know about those specific agreements? So a few things. One, we can kind of figure out what chain Cisco does based on its website. So it has a subdivision called Sigma. So if you go to Sigma's website, it will brag about its corporate client. And some of them are Olive Garden.

Red Robbins won, you know, different chains like that. The agreements, there's a lot. I mean, what I do know from these agreements is what we see with public universities. And even that are not transparent. There's a famous one at the University of Iowa. Someone wanted to know what's the contract for food here. And it went up to Supreme Court in Iowa, and it was rejected. Which is kind of a weird thing.

Like, you think the agricultural state would have really good sourcing of food. You would know the contracts. There's not a lot of disclosure here. They filed to see the actual contracts. closed. Yeah. Okay. So let's say a red robin is a, or an olive garden is a client of Cisco. Would that be a national contract that would cover every red robin or olive garden or would there be any variation in regional distribution or anything like that? I would think, so I would contextualize Cisco as think of it as like FedEx for food. Okay. A lot of these companies have patent products and

Cisco is just moving their patent, patent fries. You know what I mean? They all have their kind of, that's what Cisco is there to do is outsource that part. or handle that. Is there some giant like Cisco food production center in like, I don't know, the wilderness of Wyoming or something? Or are they sort of like scattered around the United States? Scattered around. I mean, this is, this is harder to understand. There was a good Wall Street Journal article like 20 years ago how a lot of your jalapeno poppers in a restaurant, all be made at one factory in Mexico. You know, it's cheaper to pay someone offshore, essentially, you know, stuff it. But then you are sacrificing taste at some point. But Cisco doesn't own

production facilities. It owned a slaughterhouse in Iowa at one point, but then it sold it off. Which I can't quite figure out why they got into that. My guess is, is from most restaurants, people pick their vendor based on, they call it center of the plate, the protein. So they were trying to probably do quality control. Yeah. I'm sorry, you're saying center of the plate. A restaurant to refer to whichever protein I ordered. But this is, so they don't have production. What basically is, and you already said, it's like FedEx, at its core, it sounds like it's logistics companies. Yes. Most of their employees are truck drivers. Huh. Your dad was a truck driver, right? You talk about this in the book. He is. He works from a corn syrup company.

So what did that experience of growing up with a truck driver dad teach you about a company like Cisco? So my dad used to be, first, he used to be in the beer business. So he was a beer truck driver, and then he worked in beer sales. So that's actually where a lot of my, I look at looking at displays in grocery stores because my dad used to merchandise. So I love good merchandising. So like my favorite grocery stores, H-AB in Texas. Love H-E-B. No one merchandise is like them. Yeah, this is a fact.

And so you look at that. And so, like, my dad always taught me, like, he could, he knew the type of demographics of a grocery store based on the normal one beer. Like, oh, this is a blue moon, hi-bee. Or this is a, you know, red, red dog, hyvy. So there's different price points. And so my dad now does corn products, but just understanding, because there's independent truck drivers, there's.

There's in-house truck drivers and there's kind of a hierarchy to these different worlds, all that kind of stuff. So let's talk about the competitive landscape because that's in addition to the fact that, you know, you are a big fan of the stakes at Texas Roadhouse. That's why we're here. What does the competitive landscape for sort of this sort of broadline or food distribution or restaurant really look like? So that, I mean, that's the big question, antitrust. Market definition. I mean, that is, this is like my little pet peeve is how you define a market. markets, everything. So, like, Cisco tried to buy U.S. foods back in 2015. And they argue their

competition includes Sam's Club. Hmm. I think people like, I just remember personally and adultfully, my mom, we only went to Sam's Club when she ran out cups and needed to get cups between her next truckload. Most people would not include Costco and Sam's Club as a broadliner. I mean, Texas Roadhouse is it going to Costco to buy stakes? But in theory, a restaurant, I mean, I take your point. It's not really a comp. But in theory, there probably are a restaurant. that source from some of these whole shows. Yeah. And you can tell when you go into certain local restaurants,

you'll see Costco branded products in the back. My bigger thing here is right now a lot of what is a market is defined by highly paid economists, and these things aren't publicly disclosed usually. I kind of, keep in mind, I come out of the Treasury Tax Analysis Office. The beauty of that world is you have Treasury doing tax revenue estimates, you have CBO, and then you have independent academic institutions like UPenn doing revenue estimates.

So you have three different estimates. at you for the same thing. I would love if we did something like this with market definition, because here's the thing, these markets are pretty stable. Having, like, there should be a government agency doing market definition reports. So based on how you, so the merger attempt was blocked, it was, so based on however the regulators at the time defined, okay, this is the market, this is the circle we're drawing, what are we talking about in terms of market share and so forth? So at the time, too, there's basically three national broadliners. And they were, number one, Cisco was trying to buy number two, U.S. Foods.

That was rejected, but what's really interesting here is basically, even though Cisco got stopped, two things. Number one, number two is trying to buy number three right now. US Foods is trying to buy, I have to write it down, performance food. But then Cisco basically is engaged in when people call roll-ups. To my calculations, it's buying over 216 companies. So even though it got stopped once for this big merger, its market dominance really comes from rolling up, you know, a local Miami-C-field. food place, local produce place in that Anaheim, that kind of stuff.

So I know roll-up strategies started to get more attention under the Biden administration. But historically, it does seem like regulators kind of go after the big M&A deals and they kind of ignore all the small ones, even though once you add up all the small ones, it can get a company into a very, very dominant position like with Cisco. I think this is one of the biggest loopholes in modern competition policy in America. I mean, go back to my coffee, bearing JAB. Their second move they did was vet clinics. Because this sounds awful, they realize people are economically irrational with their pets when it comes to health care.

So they bought over like 1,500 vet clinics they rolled up. Commissioner Kahn helped put a stop to that. I generally think with big companies like this, once you reach a certain size, you basically don't allow them to acquire. Because you just know, they're not buying a company for pro-competitive reasons. But a lot of this flies under the radar because the Federal Trade Commission, you know, It's very understaffed. They can't keep, they can not keep tracking a seed food provider in Miami and who's buying it. Talk to us more about what they rolled up or what they've been trying to roll up.

So I take it these aren't other broadliners. Are these specialty? Are these niche? Are these regional? Like what are they, what are the fragmented assets that they're consolidating under the Cisco umbrella? All of above. Okay. I mean, they generally don't compete.

They buy. Okay. So like in Iowa, they came to Iowa because they bought a broadliner, a local broadliner. That's essentially what they did for earlier their history. Now they tend to buy more specialty. So they'll buy like hotel things, like little soaps. They'll buy a company that does like Asian food. All these little things.

And then they're starting to buy foreign like an Irish broadliner, a Canadian broadliner, Costa Rica broadliner. It's just kind of a blob that keeps growing. Am I a tomato broadliner? I brought Joe tomatoes this morning. Tracy brought me tomatoes. Yes. Thank you.

Really nice tomatoes. You're a niche. I think you're a specialty distributor. Yeah, okay, fair enough. I certainly don't do it in volume, especially this year. Okay, well, on that note, in your chapter, it says that Cisco has something like 27% market share. It's unclear what the market share is. Okay.

So originally— This is going to be my question. Like, when we say that, what do we actually mean? We don't know. I originally in that chapter have quoted as a 50% market share, but you sometimes you'll see 40, sometimes you'll see 30. It really comes back to that market definition. That's why I want to go back to having some public entity debate this, so it's transparent. but also partly what stopped that purchase of U.S. foods is when the FTC looked into it,

they started looking at metropolitan and they realized in like Las Vegas in San Diego, it would have like an 80% market share. So even with food, we tend to talk national. Food is so local. Food markets in particular, we really need to drill down regionally. What do they use this power for? Setting aside the fact that they want to make a lot of money like all companies do. Like when I think about the risk of anti-competitive abuse or why I wouldn't want one, company to have such a dominant, you know, share of a given market. I think, okay, what is the potential for abuse? So maybe they say, no, you're not, you can't get access to all of this stuff unless you buy our olives. Maybe it could be one sort of thing. Or they tell a restaurant, you can't buy X unless you buy our soaps. Like, what is the fear or what is the reality of what

Cisco currently does with the amount of power that they have? Yeah, so two things. Number one, And so it's not like you get a big sales book with the prices of Cisco. Those days are gone. Most of it's on an app. And this is a black box. My understanding from people I've talked to is they always want to make their margin. So they might sell you your center of the plate of the protein at a loss or cost to get you in the door. But then they'll make the margins up by tweaking the napkin prices.

Here's the thing. One could argue that's a violation of the Roberts and Batman Act. Because in theory, you should charge everyone the same price for X amount of units. But we don't know because of... Oh, so we think it might be personalized pricing, but we're not sure. We're not sure. Okay. That is what some people have accused.

The other thing to keep in mind here, and the biggest, honestly, part of the reason why I wrote this chapter is just the quality decline. I feel like most eating out in America, especially local places, it's all kind of because companies like Cisco, they don't want to buy from like a local beef provider. They want one entity to do a bunch. And so it's just stifling out that kind of innovation, the quality. and especially in rural America. Cisco doesn't want to deal with local things.

And so especially in real, I think in undercurrent two of my book, I realized after the fact was, the communities produced in our food are actually being hit hardest by the food system. We saw in the Crogreps in Albertson merger case, failed merger, that they're gouging the most in rural communities. Most, the broadliner dominance tends to be highest in real communities,

and real communities tend to have the most fast food. So it's kind of getting the worst of all these worlds. So, like, New York has the best food. Like, it's kind of, The more yuppie you are in America, probably the better food selection you have. That seems fair, actually. Seems right.

And again, like, that's pretty ironic, given that most of the food is grown outside of cities, obviously. I'm going to ask the question that is very close to Joe's heart, but with market dominance tends to come pricing power. But on the other hand, with market dominance and scale comes savings from volume. Do we have any idea of, like, the net effect of a. Cisco on food prices in restaurants? We don't.

I mean, kind of what I realized writing this chapter, and just in general with this book, is I just kind of view everything as Goldilocks. And you know, there is beauty to scale. But things have just gone too far. And things are out of whack. And I think with Price, and I brought this up last time, and it's the first slide I show people anytime I talk anymore,

is Americans spend more on average on food than most Western democracies. And I think, and it's like cliche to say, I went to Europe and had cheaper food and it was better. I think that's how you're seeing the system play out. Because you basically, big, big, gets big. You have all these big boys kind of like going at each other. And it's just kind of just kind of just right to the bottom.

Talk to us more about the food creator side of the business. If I'm, I don't know, if I'm growing tomatoes or if I'm, or if me and Tracy are growing tomatoes, to what degree does Cisco play us off of each other or squeeze our margin? in order to get within the Cisco distribution system. I think the best example of that's in seafood. Okay. The seafood in general America is just a dumpster fire to be blunt with you. There's a really, and I'm going to make a comparison here.

CNBC came with a really good story the other day where Walmart and Amazon are this big fight right now. Yeah. And Walmart basically has very low standards for its third party platform. There's a lot of fraud, a lot of abuse going on in that platform because it's trying to get market share from Amazon. I would compare Cisco to that where, you know, Here's the thing, they don't really care how their seafood source. I mean, there's been so many allegations of the calamari coming from Chinese slave labor, fish that's saying it's Gulf shrimp from America.

It's not. Just all these constant abuses in the seafood system, but Cisco not caring because all it cares about is price. Think of Cisco like the Walmart food distribution. That makes sense. So when you were reporting out this particular chapter, Did you hear any specific stories from either restaurant owners or food producers about dealings with Cisco and what it's like to actually negotiate with them? The biggest critique I've heard is just the lack of selection. Cisco has such a dominance in a lot of these markets.

Local restaurant owners really don't have a lot of choices. That's probably the biggest critique I heard. And just my favorite phrase and it's a subtitle of this chapter is, tonight's dinner fell off the Cisco truck. We've all had those meals. You know what I mean? you go to a wedding, you can just tell it's like the lowest tier of Cisco where it's just so blah and tasteless. But a lot of restaurants, I mean, that's kind of this whole undercurrent of this book, this chapter is I kind of think of this as my Frankenstein chapter. What started off as an

aid to local restaurants to make their life easier is now undermining them because they're losing their specialness. Oh yeah. On that note, didn't the founder at one point try to, I guess he retired but was still connected to the company and then he tried to correct some of what you're describing? Yes. I mean, I can't say this enough. He is a model. model businessman. I mean, this guy, he retired in the late 80s, he stepped aside, donated the charities, kept coming into the office each day, didn't want to sign parking, and he always trusted his people. Especially let basically each warehouse do its own thing. And I would compare it to like Whole Foods. Famously Whole Foods let the managers do its own thing pre-Amazon. So if they saw a good thing at

the farmer's market, they could bring that producer in. He retires, a few CEOs come along. One comes along in, the old man hated consultants. Number one, he's like, they don't know my business. Number two, they'll probably share, even though they're not supposed to, they'll share my secret sauce with my competitors. New guy comes in, hires consultants, and what the first thing he says is centralized procurement. Instead of having all these local different things, get all your berries for one person. And what John saw is he saw changing the numbers. So he wanted to go to the board to talk about this. See how time was kept being like, no, no, no. this is a nine-year-old man who built this company,

this is his everything. He went around him, got it to the board. According to one executive, he was escorted out the building. This broke the old man. Did he like literally go into the building and like find the board? No, he had a certain staffer get it to all the board members. And he was shown the door. This broke the old man.

And you see the quality decline. You know, centralized procurement. Like you, I don't want to romanticize a jalapeno pepper or like this kind of stuff. But you are cutting corners at some point when you're doing these. Like, not everything can be frozen and taste just as good as a fresh thing. Like a good example is actually a tomato. Like a good summer tomato. Like, there's no reason Iowa can't get a good summer tomato.

It's so easy to grow a tomato there. But they're all the same blah tomato grown who knows where. And that's kind of that kind of story. And part of it, the argument of my making there is part of regulation garterails, whatever you want to call them, is almost to prevent companies from themselves to stop a race to the bottom. It's interesting this idea that the restaurants can't distinguish themselves to the same degree because of the sort of decline in quality. And it strikes me. We did an episode with some guys who actually opened up a pizza restaurant right around the corner from Bloomberg.

And in that case, we were talking about the delivery apps. And the idea is like, you know, one point in theory, service, delivery, et cetera, might have been a restaurant's calling card, right? we have really good we really know you etc and we have we'll get to your house in under 15 minutes or the pizza's free but then everyone in theory it's like this game theory thing where everyone feels compelled to okay we're going to distribute through the well-known delivery apps that everyone has heard about and that's great and on some level it makes markets more efficient perhaps although they've gotten so expensive i think it's for me it's more efficient often to just go pick it up but That's besides the point. But the long-term effect is essentially this sort of elimination of the specialness of the place. And so maybe there is more efficient. Maybe the food is cheaper. Maybe it does get too faster. Maybe even gets too faster and hotter, et cetera. But this idea that we have this sort of textured economy with this sort of flora and fauna of businesses that are distinct and that of texture sort of disappears once they plug into these giant platforms.

You just made a great Neil Brandeis argument. Oh, great. I mean, this might not shock anyone. I'm a neo-brandized person, but that is, my critique of the current antitrust framework is not everything can be put into Excel. How many hogs when a person is shown, it's a question society has to wrestle with? And I make that kind of point in this chapter was, at my wedding, I'm part check. And we serve colatchez, which coal watches in Iowa are very different than ones in Houston. Houston they put meat in them.

But like, you can't buy colatches from Cisco. It's like these local little things make a place. a place and you're losing this the homogenization of the American food system. Everything's kind of the same. It's kind of blah. And that's what it's hard to you can't, that's what's the thing that's missing. That's why I just a little

it does seem frankly a little hard to quantify this effect that everybody feels. I think of two little examples is my mom had her own coffee store and then she worked at Starbucks and what drove her the nuts the most were something called planograms. She was told where to put every single thing on the shelf. And my mom

worked next to a journal mill's plan. She knew that audience and she knew how to merchandise, but they didn't trust her. It's like the lack of trust in employee. We learned about plenograms. Oh yeah, that's right. And he was with the Celsius CEO. On beverages. Yeah, yeah, it was a good episode. Yeah. I have since walked into CVS's looking at the shelf space very, very differently than I used to. Oh, I'll just add on, the thing to keep in mind is no one gets, no one opens a restaurant to get rich. Everyone, it's a really, really hard industry. You're willing to sacrifice incomes because you do it because of what you love. And you just, you feel that pride in local places, and they're just running, they're running uphill more and more

based on because of these structures. You know, you mentioned Frozen Berries earlier, and I know Barry Barron's are in your book. Do the dominant companies like a Cisco or a Barry Barron, do they kind of like feed on each other, you think? Like, does Cisco naturally lean towards producers who are making stuff in huge volumes? Yes. I mean, I think it goes back to Walmart. I mean, part of it was people in negotiating power when they negotiate deals with these companies, so you've got to get big, so you have some volume, so you can negotiate. Like, I think of, I go back to Walmart just because I think of Walmart as the closest thing America's ever had to a Soviet Union-South Polar Bureau.

That's the weirdest chapter people have reached out to me about, is all these suppliers. Like, you don't negotiate with Walmart. Walmart dictates to you. And I think with Cisco is they're just so big. These are centrally planned internal economy. Yes. Absolutely. And it's, I think the best example of the bad quality is actually the produce system in America.

partly is because of the farm bill, we subsidize corn, we don't subsidize carrots. So our produce system went offshore, you know, because you can exploit labor and exploit environmental stuff. So that green pepper is coming from who knows where traveling long things. And it's also designed for durability and not for taste. And you're seeing this play out in your local restaurants where just the food's kind of, it's interesting you used the phrase earlier, saving companies from themselves. I think even the companies seem to be aware of this.

And you mentioned Starbucks as a. great example. I forget, what's the name of the Starbucks founder? It's not Howard Schultz. That's what we think it is. Oh, Howard Schultz, every few years, his name is back of the headlines. And he himself seems to rue the fact that this company, which early on sort of had a local coffee shop vibe, which I think he really liked, has not been able to sustain that in part because of, yeah, the required ponder grams and seven. He complains about that. Everyone's like, we've got to get back to feeling like a real Italian coffee shop, it never seems to happen.

Well, one of the Ben and Jerry's founders just quit as well because Ben and Jerry's was bought by Unilever. So the funding, each chapter I realized they all had these like niche. Every commodity is different in America. And they all, like dairy is actually to me the most complex commodity. The whole dairy regulation in America has written in the 19, before we had refrigeration. So it makes no sense. The joke in dairy is only five people understand the dairy program and four are dead. And I was kibbutzine with this dairy guy in Wisconsin last week, and there's a glut right now in the butterfat market. It could be engineered soybeans and increased the butterfat, and the

rumor right now in the street, too, is they're feeding palm oil the cows. Oh, wow. Speaking of dairy, you know, when we did that episode with Mike Froman recently, and you mentioned that you asked him, what was the big surprise he learned as U.S. trade rep, and he's like, oh, there's 500 different things you could do with a dairy molecule and because of trade rules. Anyway, by the way, just following up, I am currently in touch with someone from the big New Zealand dairy cooperative Fontera. So I'm working on finding, I am working on finding the dairy molecule specialist for that episode.

Oh, well, that's very exciting. Maybe we'll end up doing a three-part milk series. Yeah, good, I'm sure. Who knows? We better hurry it up since it's almost October. Okay. Is there anything that can be done about this? Like now that a Cisco has rolled up all these different companies

and it has substantial market share, although as we were discussing, we can debate what that actually. actually means, is there, like, what swings that dominance the other way? Yeah. I mean, to Joe's, I just want to add on to Joe's point early about the companies not wanting to have to do this, but if they don't engage this, like, the system design right now is they have to do this behavior. And I actually think about that with farmers now in America.

The farm building right now is designed to maximize corn. So you have to overplant corn, even though it's bad for the environment or else you go broke. So everyone's behaving this way because we're in a laissez-faire era. what to do about it. And that's kind of why I profiled this woman named Ellen in that chapter. I think people crave heroes right now. No one's really articulating hope on whatever your political party is. What is a positive food system?

And Ellen, Ellen's fascinating where she's a farmer, she has two kids. She opened her own restaurant and then she opened her own like Cisco. Because the problem she has was Cisco didn't want to take her product and sell to restaurants on Omaha and Des Moines. So she created a nonprofit, got it up. They would basically pull different farmers in Western Iowa to sell into these. It was using, and they were also doing schools. That was a big one, but then they got really hard hit by the Doge Cuts. That to me is like maybe one possible thing is maybe extension.

You have extension all across rural America. Maybe they can kind of get into that, help this kind of procurement. Yeah, maybe you don't try to compete against Cisco on volume, but you go like hyper localized. Hyper local, but also something we got to reign in Cisco. I mean, looking at the black box of the pricing strategy would be huge, but also I think we should put merger acquisition freezes on these large entities. At some point, it's like you can't buy anymore. Like you've hit your cap.

It's interesting, Tracy, like the other great homogenizing effect, of course, on society is big digital platforms, right? Instagram, et cetera. And everyone feels that they have to constrain whatever they do, whether it's a restaurant or a media company, et cetera, in order to serve the alga god that is sort of capricious and unpredictable in some way. And it feels like the story, whether we're talking about the physical world or the digital world, is that scale has this homogenizing effect, which nobody really likes these conditions. Yeah, I think that's right. But also, there are these, like, hidden tiers of scale, these middlemen companies.

All right, well, Austin, thank you so much for coming back on Oblots. Congrats on the new chapter. And I'm sure a lot of people will be looking forward to picking up the revised book. Thank you so much for having me on again. Joe, that was really enjoyable. Yeah. I always love talking about food, although I haven't had lunch today. Me neither.

I'm a little bit hungry. Can we go to Olive Garden in Times Square? Let's do it right. Let's go soon. I'm happy to go there soon. Okay. I actually would like to go to an Olive Garden. It's got great view.

It's actually really fun, and it's got great views. Oh, you've been to that specific one? Yeah. Oh, I didn't realize. Yeah. Okay. So there's a lot to pick out from that. I know you're on the side of cheap and plentiful food.

Yeah. But perhaps, perhaps, I guess, the homogeneity of the offering. Maybe that concerns you. It definitely concerns me. And this idea that, no, and this idea that restaurants, if they, you know, so much of the preparation is done off-site, et cetera, for various things that you eat. And so what is the restaurant anymore? Right. And so this is a thing where scale is great and cheapness is great. And I'm all for this. And I think food should be a lot cheaper than it is because we've had a lot of food inflation in this country. And I think it's very worrisome. And so food should be a lot cheaper and more efficient, et cetera than it is. But when we think about the things that sort of make a society nice, if a restaurant is really just a sort of Cisco manufacturing. A giant microwave. Yeah, or a Cisco man. Right. A giant microwave that connects a system.

manufacture distribution system to a grubhub delivery system, what world are we living in? Yeah. And I think it gets back to the flora and fauna point that you were making. So maybe you could have, you know, food that's cheap and maybe not of the highest quality, but it is plentiful and inexpensive. But then you should have, you know, more local options. Well, you brought me those really nice tomatoes. Yes. So thank you for those. You're welcome. And so there are some nice But I do not think that is a scalable solution for most people. No. And I grew up hating tomatoes because I thought that they were all really bland because I

only got them in the grocery store. Yeah. It is phenomenal how different a supermarket tomato taste from a homegrown one. Anyway, shall we leave it there? Let's leave it there. This has been another episode of the Odd Thoughts podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway.

And I'm Joe Wisenthal. You can follow me at the stalwart. Follow our guest, Austin Fur. He's at Austin Frerick, and check out the new edition of his book, Barrens, which has the whole chapter about Cisco. Follow our producers, Carmen Rodriguez, at Carmen Armin, Dashel Bennett at Dashbot, and Kale Brooks at Kail Brooks. For more Odd Lots content, go to Bloomberg.com slash Oddlots. We have a daily newsletter and all of our episodes, and you can chat about all of these topics 24-7 in our Discord. Discord.g.g. slash oddlots.

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