The Chefs’ Warehouse Delivers Profitable Growth Amid Volatility

The Chefs’ Warehouse Inc ((CHEF)) has held its Q1 earnings call. Read on for the main highlights of the call.

The Chefs’ Warehouse Inc. struck a broadly upbeat tone on its latest earnings call, underscoring double‑digit organic growth, widening margins and stronger profitability despite a choppy macro backdrop. Management framed geopolitical volatility, weather disruption and Texas customer attrition as temporary headwinds, arguing that underlying demand and execution remain firmly intact.

Top-Line Revenue Growth

Net sales climbed 11.4% year over year to $1.059 billion in the first quarter of 2026, with organic net sales up a robust 10.4%. Acquisitions added roughly 1 percentage point to the top‑line, signaling that most of the growth is coming from the core business rather than deal‑making.

Strong Profitability and Margin Expansion

Gross profit rose 13.9% to $257.4 million, outpacing revenue and lifting gross margin by about 53 basis points to 24.3%. Both major segments improved, with specialty gross margin up 43 basis points and center‑of‑the‑plate margins expanding an impressive 110 basis points year over year.

EBITDA and Earnings Power Step Up

Adjusted EBITDA surged to $60.1 million from $47.5 million a year ago, an increase of roughly 26.5% that reflects meaningful operating leverage. GAAP net income advanced to $17.4 million, or $0.40 per share, while adjusted net income matched at $17.2 million, or $0.40, versus $0.25 a year earlier.

Volume, Placements and Customer Growth

Organic specialty sales grew 6.8%, fueled by a 6.2% rise in unique product placements and 5.7% growth in specialty case volumes. Unique customer count increased 1.9% year over year, and management said that excluding attrition from noncore Texas customers, underlying unique customer growth was closer to 4.3%.

North American Momentum and Share Gains

North America, which accounts for over 90% of company sales, grew well above management’s prior expectations and delivered solid operating leverage. Executives said they continue to win share in their core markets and highlighted that April is tracking to double‑digit top‑line growth to start the second quarter.

Improved Operating Efficiency

Management emphasized that key efficiency metrics are moving in the right direction as recent investment waves bed in. Gross profit per route and adjusted EBITDA per employee both improved, suggesting that upgraded facilities, systems and talent are now translating into better productivity.

Liquidity, Deleveraging and Balance Sheet Strength

The Chefs’ Warehouse ended the quarter with total liquidity of $278.3 million, including $122.7 million of cash and $155.6 million of asset‑based lending availability. Net debt stood at roughly $522 million, with net debt to adjusted EBITDA around 1.9 times, and the company prepaid $5 million on its term loan.

Capital Returns and Allocation Discipline

The company repurchased approximately $10 million of stock under its buyback program during the quarter, signaling confidence in long‑term value. At the same time, management stressed a balanced approach, retaining flexibility for opportunistic acquisitions and continued gradual debt reduction.

Middle East Conflict and Demand Volatility

Operations in the Middle East, now running at about 75% of prior‑year levels, trimmed roughly 50 basis points from first‑quarter organic growth as hotel and resort occupancy softened. While the region contributes less than 10% of total revenue, management said the conflict adds an element of uncertainty to near‑term planning.

Weather and Regional Headwinds

Extreme weather, including two significant storms, added to the quarter’s challenges and compounded the drag from Middle East weakness and Texas attrition. Taken together, these factors reduced growth by an estimated 150 basis points in the period, masking what management believes was even stronger underlying demand.

Texas Exit Distorts Customer Metrics

Reported unique customer growth was dampened by the strategic transition away from noncore business in Texas, leading to deliberate attrition. Management argued that adjusting for those exits better reflects the health of the franchise, lifting implied unique customer growth to roughly 4.3%.

Higher Operating Costs and SG&A

Selling, general and administrative expenses increased 10.5% to $224.1 million, driven mainly by higher compensation and benefits, rising depreciation from prior investments, and higher self‑insurance costs. Adjusted operating expenses represented 18.6% of net sales, which management views as manageable given the revenue and margin trajectory.

Commodity Inflation Still a Headwind

Net inflation ran at 4.1% in the quarter, with specialty products up 1.5% and center‑of‑the‑plate categories rising 8.2% year over year. Adjusting for the Texas attrition effect, center‑of‑the‑plate inflation was closer to 4.5%, but management still faces ongoing cost volatility that must be passed through or offset by efficiencies.

Guidance Sensitivity and Convertible Dilution

Executives reiterated that full‑year expectations remain sensitive to the trajectory of Middle East demand, and they modeled multiple outcomes before deciding not to raise guidance. They also reminded investors that convertible notes maturing in 2028 are expected to be dilutive in 2026, with a projected fully diluted share count of about 46.0–46.7 million.

Forward-Looking Guidance and Outlook

For 2026, The Chefs’ Warehouse maintained its outlook for net sales of $4.35–$4.45 billion, gross profit of $1.053–$1.076 billion and adjusted EBITDA of $276–$286 million. Management pointed to a strong first quarter, double‑digit early‑Q2 growth and a solid balance sheet as reasons for confidence, while acknowledging that Middle East volatility and storms have so far trimmed growth but could ease later in the year.

The overall message from The Chefs’ Warehouse earnings call was one of steady execution and resilient growth despite notable external headwinds. With margins expanding, leverage contained and guidance intact with possible upside, management signaled that it sees more runway ahead, even as investors will need to monitor geopolitical and inflation dynamics closely.