Chefs' Warehouse Q1 Earnings Call Highlights

Key Points

• Chefs' Warehouse reported Q1 net sales up 11.4% to $1.059 billion (10.4% organic), with momentum into April and management expecting double-digit top-line growth to start Q2; unique customers rose 1.9% (about 4.3% excluding a Texas transition).
• Profitability strengthened as gross profit rose 13.9% to $257.4 million (gross margin 24.3%), adjusted EBITDA was $60.1 million and GAAP EPS was $0.40, with management citing operating leverage from prior investments.
• The Middle East conflict trimmed roughly 50 basis points of organic growth but was described as not material and represents under 10% of the business; full‑year guidance was maintained and the company finished the quarter with $278.3 million of liquidity and net debt/adjusted EBITDA of about 1.9x.

Chefs' Warehouse NASDAQ: CHEF reported first-quarter 2026 results that management said reflected a “typical seasonal cadence,” with revenue trends strengthening from January into February and March, even as the company navigated extreme weather events and the start of a conflict in the Middle East late in the quarter.

Founder, Chairman and CEO Chris Pappas said the company’s “exceptional execution and the strength of our North American business” helped it continue to gain market share and produce year-over-year growth in volume, customer counts, revenue and profitability. He added that momentum continued into April and the company “currently expect[s] double-digit top-line growth to start the 2nd quarter.”

Quarterly sales growth led by North America

CFO James Leddy said net sales for the quarter ended March 27, 2026 rose 11.4% to $1.059 billion, up from $950.7 million in the first quarter of 2025. Leddy attributed the increase to 10.4% organic sales growth plus an additional ~1% benefit from acquisitions.

Pappas highlighted several operating metrics from the quarter, including:

• Organic net sales growth of 10.4%
• Organic specialty sales up 6.8%, driven primarily by 6.2% unique placement growth, 5.7% specialty case growth, and price inflation
• Unique customers up 1.9% year over year; management said the reported figure was affected by attrition tied to exiting non-core customer business in Texas
• Center-of-the-plate pounds up ~6.2% versus the prior-year quarter
• Gross profit margin up ~53 basis points, with category margin improvements in both specialty and center of the plate

On unique customers, Pappas said the company “fully lapped” the Texas transition impact starting in the second quarter and estimated that excluding the Texas-related attrition, first-quarter unique customer growth would have been approximately 4.3%.

Middle East conflict: limited Q1 impact, uncertainty remains

Management discussed the impact of conflict in the Middle East, emphasizing safety and operational continuity. Pappas said the company has followed safety protocols instituted by governing bodies and is “effectively navigating volatility in supply chains and customer demand.”

Leddy said the start of the conflict occurred in the last month of the quarter, and the impact to first-quarter year-over-year revenue growth “was not material.” He estimated the conflict reduced overall organic growth by about 50 basis points in the quarter. Prior to the conflict, the company’s Middle East business grew about 11% in January and February compared with the prior year, but in recent weeks operations in the region have been running at about 75% of the prior-year level, driven primarily by “low occupancy in hotels and resorts.”

Leddy noted that Qatar and Oman have been performing closer to plan and prior year, as those markets are less reliant on tourism than Dubai and Abu Dhabi. He also said North America represents over 90% of Chefs’ Warehouse and is “continu[ing] to grow well above our guidance while generating operating leverage.”

In Q&A, management said it did not disclose how much adjusted EBITDA the Middle East contributes, but reiterated it is less than 10% of overall business and described the region as “a very profitable company.” Pappas said the company has not adjusted guidance due to the uncertainty, adding, “if the Middle East thing wasn’t happening, I believe we would have adjusted our guidance this quarter.”

Profitability improves as margins and operating income rise

Leddy reported gross profit increased 13.9% to $257.4 million versus $226.0 million a year earlier, with gross margin rising to 24.3%. Pappas said specialty gross margin increased about 43 basis points year over year and center-of-the-plate gross margin rose about 110 basis points.

SG&A expenses increased 10.5% to $224.1 million, which Leddy said was primarily due to higher compensation and benefits to support sales growth, higher depreciation from facility and fleet investments, and higher self-insurance costs. Operating income rose to $33.1 million from $22.7 million.

On the bottom line, the company posted GAAP net income of $17.4 million, or $0.40 per diluted share, compared with $10.3 million, or $0.25 per diluted share, in the prior-year period. Adjusted EBITDA was $60.1 million versus $47.5 million a year ago, while adjusted net income was $17.2 million, or $0.40 per diluted share, compared with $10.2 million, or $0.25 per diluted share.

During the analyst discussion, management attributed profitability gains to multiple factors rather than a single driver. Leddy described the results as the combined effect of investments in training, regional leadership, technology, infrastructure, and improved collaboration across sales, procurement, pricing, and operations. Pappas said the company is “starting to see the operating leverage from all the investments that we’ve made,” while also emphasizing that building capabilities in new territories and categories “takes a lot longer” than it may appear.

Inflation, demand trends, and category dynamics

Leddy said net inflation was 4.1% in the quarter, including 1.5% in specialty and 8.2% in center of the plate. He added that center-of-the-plate inflation adjusted for the impact of Texas attrition was approximately 4.5%.

Management said it has become more effective at operating in both inflationary and deflationary environments due to its product breadth and improved execution. Leddy cited the company’s “diversity of our product portfolio” and said the organization has gotten “very good at managing through” price fluctuations across categories such as dairy and eggs.

Addressing center-of-the-plate margin performance, Leddy said sequential pricing changes from December into the first quarter were deflationary due to typical seasonality, and management viewed improved margins as the result of effective execution in that environment. Pappas added that when prices rise sharply, the company focuses on gross profit dollars more than margin percentage because of relatively fixed overhead, and noted that mix can shift when inflation changes consumer behavior within proteins.

Liquidity, leverage, capital allocation, and guidance

At quarter end, Leddy said Chefs’ Warehouse had total liquidity of $278.3 million, including $122.7 million in cash and $155.6 million of availability under its asset-based lending facility. The company made $5 million of term-loan prepayments (maturing in 2029) and repurchased $10 million of shares during the quarter. Total net debt was approximately $522 million, and net debt to adjusted EBITDA was approximately 1.9x.

Management maintained full-year 2026 guidance, with Leddy reiterating expectations for:

• Net sales of $4.35 billion to $4.45 billion
• Gross profit of $1.053 billion to $1.076 billion
• Adjusted EBITDA of $276 million to $286 million

Leddy also said the company expects convertible notes maturing in 2028 to be dilutive for full-year 2026, with fully diluted share count expected to range from approximately 46.0 million to 46.7 million.

On capital allocation, management said it intends to keep “dry powder” for strategic and accretive acquisition opportunities, continue opportunistic share repurchases, and gradually pay down debt. Pappas described the M&A pipeline as “frothy” but said the company is “very patient,” adding it has seen some deal multiples come down.

In closing remarks, Pappas said the company is “really proud of the last quarter” and remains optimistic about the future, while expressing hope for a resolution to the Middle East conflict.

About Chefs' Warehouse NASDAQ: CHEF

Chefs' Warehouse, Inc is a specialty food distributor that supplies a broad range of high‐end ingredients and culinary products to professional chefs, restaurants, hotels, and other foodservice operators. Headquartered in Maspeth, New York, the company sources its portfolio from local artisans, boutique producers and leading global suppliers. Its core offerings include fresh and frozen proteins, specialty cuts of meat and seafood, handcrafted cheeses and charcuterie, seasonal produce, value‐added preparations, pantry staples and premium desserts and beverages.

The company operates a network of distribution centers strategically located in major metropolitan markets across North America.

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