Chefs' Warehouse Says Demand Is Resilient at UBS Conference, Highlights AI, Tariff Flexibility

Key Points

• Demand resilient: Management says demand from its chef and high‑end foodservice customers has held up well, with company‑wide inflation roughly 3–3.5% last year and early signs of disinflation late in the quarter.
• Sourcing flexibility limits tariff risk: The company carries about 90,000 SKUs sourced from 40+ countries and uses private‑label and "good/better/best" options to shift supply and protect margins when tariffs or product volatility occur.
• Tech, operations and disciplined M&A: Chefs' Warehouse is rolling out digital and AI tools to raise sales productivity and EBITDA margins while consolidating Hardie’s integration, and remains open to low‑risk tuck‑in acquisitions rather than large deals.

Chefs’ Warehouse NASDAQ: CHEF executives said demand across the company’s customer base has remained resilient, even as broader food-away-from-home trends have shown more pressure. Speaking at a UBS event, Founder, Chairman, President and CEO Chris Pappas and CFO Jim Leddy highlighted a combination of diversified sourcing, ongoing operational investments, and a sales strategy built around category expertise as key drivers of performance.

Customer demand and pricing environment

Pappas framed the company’s end market as the “customer’s customer,” describing it as structurally resilient due to business dining, conferences, high-end travel, and celebrations. He said the sector has held up well and that momentum carried into the current year, though the company noted talk of disinflation emerging toward the end of the quarter.

On inflation and margin dynamics, management emphasized the company’s breadth of assortment and sourcing. Leddy said the company carries roughly 90,000 SKUs across its distribution centers in the U.S., Canada, and the Middle East and imports from more than 40 countries, which helps it manage both inflation and deflation at the product level. Executives cited recent volatility in proteins and a shift in dairy from inflation to deflation, while noting that, in aggregate, the company has historically seen overall inflation in a 1% to 4% range. They said company-wide inflation last year was about 3% to 3.5% despite volatility and tariffs.

Tariffs and sourcing flexibility

Asked about tariffs and potential changes in trade policy, Pappas said the company’s approach is built around offering “good, better, best” options and letting chefs choose based on preference and price points. He said the company’s broad import footprint and private-label capabilities provide flexibility if disruptions arise in specific regions or categories.

As an example, Pappas said the company sources olive oil from multiple countries—including Spain, Italy, France, Greece, Tunisia, Argentina, and Australia—allowing customers to adjust based on taste profile or cost sensitivity. He added that while tariffs can create uncertainty, many products already had tariffs and the latest changes did not appear significant enough to cause panic among category managers.

Management also discussed how customers respond to cost pressure. Pappas said some customers may change products, while many mid-to-higher-end operators adjust by changing menus, moving certain items to market price, and balancing margins across appetizers, entrées, and beverages rather than raising prices broadly.

Middle East exposure and supply chain considerations

Executives addressed the company’s Middle East business amid rising geopolitical tensions. Pappas said the region is a small but “very exciting” part of the company and described recent demand as fluctuating day to day, with some days significantly impacted and other days “really good.” He said he remained bullish longer term due to infrastructure investment and development in markets such as Saudi Arabia, Dubai, and Qatar, while acknowledging uncertainty around the duration of the conflict.

On supply chain risk tied to the region, Leddy said there are challenges specific to the Middle East but that the team has navigated disruptions before, including prior Red Sea shipping issues that required rerouting around Africa. He said the company does not currently see a broader macro supply chain impact and characterized any incremental effects as likely temporary, referencing the surge and subsequent normalization of container rates during COVID.

On fuel, management said diesel prices spiked but then leveled off and that fuel is not the company’s largest cost. Leddy said the company manages fuel centrally through contracts and may use a fuel surcharge in certain circumstances, though it is not done lightly and typically would require a sustained spike. Pappas added that the company’s delivery routes are often relatively short (such as in New York), and that even a small surcharge would be less material given the value of the products delivered.

Sales strategy, digital tools, and AI

Pappas and Leddy outlined an approach centered on “team selling,” category expertise, and increasing use of digital tools. Pappas said the company’s complexity—tens of thousands of items, many perishable—requires specialized departments and training. He pointed to investments in “Chefs’ Warehouse University” and ongoing education through customer shows and supplier visits.

On technology, management said the goal is to improve efficiency and “do more with less,” contributing to rising EBITDA margins through overhead leverage. Pappas said the company is not slowing hiring but expects improved productivity per dollar of sales as tools improve. Leddy said AI has been most impactful in digital and sales enablement, including better search functionality and real-time visibility into customer behavior and inventory, which can help customers discover products they didn’t know the company carried.

Operationally, Leddy said the company is early in applying AI and robotics more broadly, noting efforts such as using drones to improve inventory management, with expectations that the impact could be larger several years down the road.

Hardie’s integration, capacity, and M&A posture

In Texas, management described ongoing progress integrating the Hardie’s acquisition and building Chefs’ Warehouse capabilities around it. Pappas said the company is consolidating operations in Dallas, including building an Allen Brothers protein cut shop nearby and working to secure a new facility to unify categories and improve truck utilization. He said the company intentionally moved away from lower-margin, “big chunky corporate business” within Hardie’s to focus resources on the more attractive customer base.

Leddy said the company has already increased EBITDA margin on a combined basis and expects a larger “aha” moment once a new consolidated facility is secured. Management compared the opportunity to prior consolidations, including Florida, where leadership said the business accelerated after facilities were unified.

On M&A, Pappas said the company paused after a heavy post-COVID deal period to allow the organization to catch up operationally, and that recent efficiency gains have shown in results. He said the company is “open for business” but disciplined, favoring tuck-in acquisitions that are low risk and accretive, especially where facilities have excess capacity. He also noted “white space” in the Southeast between Virginia and Florida, adding that organic expansion is difficult and the company typically starts with depots and routes, hires locally, and looks for an acquisition to accelerate scale when available.

Management also briefly discussed the Rocky Mountain region following the Italco acquisition, describing it as a smaller market today but one they expect can scale, aided by a building retrofit that would allow the company to expand capacity significantly without heavy capital expenditure.

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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