A master distribution agreement (MDA) is the contract that sets how a broadline distributor prices, delivers, and bills every item a restaurant group buys for the next three years or so, and the terms that cost the most money are usually in the schedules and minimums, well away from the case prices the sales rep showed you.
Most operators sign an MDA after a proposal they liked. The proposal is a sales document. The MDA is what the distributor's billing system follows, and the two do not always match. We review these agreements for restaurant groups every month, and the gaps show up in the same places.
What is a master distribution agreement for restaurants?
An MDA is a multi-year contract between a restaurant group and a broadline distributor such as Sysco, US Foods, or Performance Foodservice. It sets the price formula for each category, the commitments you make in return, delivery rules and fees, incentives, and how either side can change or end the deal. Some distributors call it a master service agreement or a customer pricing agreement. The structure is the same.
The key point is that an MDA rarely lists item prices. It lists a formula, usually a margin percentage or a fee per case added to the distributor's landed cost, applied category by category. Every invoice you receive for three years is that formula at work. How distributor pricing actually works walks through the math.
What terms should you check in an MDA before signing?
| Section | What to look for | Why it matters |
|---|---|---|
| Pricing schedule | Margin or fee per case by category, plus any minimum per-case markup | A minimum markup can override a low fee on inexpensive items |
| Annual commitment | Dollar volume and minimum share of purchases | Set too high, it triggers penalties or lost incentives |
| Exclusive brand requirement | Percentage of spend in the distributor's private label | Forces product swaps your kitchen may not want |
| Delivery terms | Minimum drop, small-order fee, deliveries per week, split-case charges | Each one adds cost that never appears in the item price |
| Incentives | Signing payments, growth rebates, clawback conditions | Often repayable if you leave early or miss volume |
| Fuel surcharge | The fuel chart and its trigger points | Moves your delivery cost without a new negotiation |
| Audit rights | Right to verify landed cost on a sample of items | Without it, you cannot check the formula |
| Term and escalators | Start and end dates, notice period, annual increases | Decides how long you are locked in and how fast terms drift |
Where do MDAs usually differ from the proposal?
Three patterns come up again and again in agreements we review. The first is a term the distributor agreed to in the RFP that never reached the contract: we have seen a distributor answer yes to semi-annual audit rights in its proposal and send a draft agreement where the word audit does not appear. The second is a concession that changed shape: an incentive quoted per case returns as a percentage of sales, which pays far less on a high-volume, low-cost category. The third is a term negotiated out in one round that returns in the next draft, such as a drop-size rebate tier.
None of these is unusual, and many are honest drafting errors. They are also easy to miss when the operator reads the final document alone, weeks after the proposal meeting. We read every draft against the distributor's written bid answers and against the client's prior agreement, clause by clause, before anyone signs.
How should the annual commitment be set?
Lower than today's spend. If a renegotiated agreement works, your purchases fall, because you are paying less for the same food. A commitment written at your current spend can leave you short of the volume you promised after the savings arrive, which can cost you incentives. We set the commitment below current spend for that reason, and we size the share-of-purchases requirement to the items the distributor actually priced in the bid.
Why do independents get weaker MDA terms?
Distributors reserve their best margins, incentives, and contract language for buyers whose volume they most want to keep. A single restaurant group signing alone usually gets the standard paper: the distributor's own schedule, few audit rights, and fees applied as written. The sales team across the table negotiates agreements every week, while the operator does it once every few years.
FoodServiceIQ changes that balance. We bring more than $2 billion in buying power to every negotiation, so the distributor drafts your MDA knowing it is pricing a relationship with all the business we represent. Our team includes former distribution executives, and we hold senior-level relationships inside the major broadliners. We run the food distributor RFP, negotiate the MDA, redline the draft, and after signing audit your invoices monthly against the pricing schedule so the agreement holds. Thunderdome Restaurant Group saved $521,000+ by upgrading its broadline distribution contract with our help.
Questions operators ask
Can I renegotiate an MDA before it expires? Sometimes, usually in exchange for a longer term or new volume. Read the clawback clause first, because an early exit can mean repaying part of your signing incentive.
Is an MDA the same as a GPO agreement? No. A GPO agreement covers manufacturer programs and rebates. The MDA governs what your distributor charges you. Our GPO vs outsourced procurement comparison covers how the two fit together.
Who pays for FoodServiceIQ's review? In most engagements the distributor pays our fee as an administrative fee under the agreement we negotiate, so you pay nothing out of pocket. We work with groups spending $1 million or more a year on food.
What should I send you? Your current agreement, any draft you have been sent, and three months of invoices. Start here, and we will tell you which terms in your MDA are costing you money.
