The Chefs’ Warehouse Posts Strong Growth Amid Transitions

The Chefs’ Warehouse Inc ((CHEF)) has held its Q4 earnings call. Read on for the main highlights of the call.

The Chefs’ Warehouse Inc. delivered an earnings call that balanced robust growth with a few manageable headwinds. Executives highlighted double-digit sales and gross profit expansion, sharp gains in adjusted EBITDA and EPS, and clear efficiency improvements, while acknowledging a small gross margin dip, an $8 million impairment, and temporary distortions from exiting two non-core Texas programs.

Q4 Net Sales Growth

Net sales in the fourth quarter climbed 10.5% to $1.143 billion, up from $1.034 billion a year earlier. Management stressed that underlying demand remains healthy, with organic net sales growth of 9.7% underscoring strength in the core business despite some noise from exited programs.

Full-Year Revenue Milestone and Organic Growth

For the full year, organic revenue increased 9.1% and total revenue surpassed $4.0 billion for the first time in company history. The milestone reflects sustained volume and pricing tailwinds across key categories and geographies, positioning the company as a scaled player in specialty foodservice distribution.

Adjusted EBITDA and EPS Strength

Profitability metrics were a standout, with Q4 adjusted EBITDA rising to $80.3 million from $68.2 million, a gain of about 17.7%. For the full year, adjusted EBITDA grew roughly 18% and adjusted EPS jumped 29% versus 2024, driving an adjusted EBITDA margin of 6.2% as the company converts growth into earnings.

Gross Profit Dollar and Efficiency Improvements

Gross profit in the quarter increased 10.2% to $276.6 million, closely tracking net sales growth and expanding gross profit dollars. Over the trailing twelve months, gross profit per route improved 6.2% versus FY2024 and 7.4% versus 2023, while adjusted EBITDA per employee rose 13%, pointing to better productivity and route density.

Operating Expense Leverage

Adjusted operating expenses were kept in check, rising just 7.4% year over year in Q4 and totaling 17.2% of net sales. On a full-year basis, adjusted operating expenses as a percentage of gross profit improved by 176 basis points versus FY2024 and 200 basis points versus 2023, signaling meaningful operating leverage as scale builds.

Key Specialty Category and Customer Metrics

Specialty remains a growth engine, with organic specialty sales up 6.4% year over year, fueled by 4.2% growth in unique placements and 3.3% specialty case growth. Excluding the Texas produce program exit, specialty case growth would have been 5.4%, and unique customers would have grown about 3.5% instead of the reported 1.2%, highlighting healthier underlying momentum.

Balance Sheet, Liquidity and Capital Actions

The company ended the quarter with $280.5 million in liquidity, including $121 million in cash and $159.5 million of availability under its asset-based lending facility. Net debt stood at approximately $529.5 million, or about 2.1 times adjusted EBITDA, while management executed a term loan repricing to cut the spread from 3.0% to 2.5% and continued opportunistic share repurchases.

Strategic Investments and M&A

Management underscored ongoing investments in distribution capacity and facility consolidations to support growth and efficiency. Strategic M&A remains a key pillar, with the acquisition of Italco Specialty Foods in Colorado expanding the company’s specialty footprint and reinforcing its value proposition in high-end, chef-driven markets.

Slight Compression in Overall Gross Margin

Despite strong gross profit dollars, overall gross margin slipped about 8 basis points in Q4 to 24.2%. The pressure largely came from center-of-the-plate products, where gross margin declined around 50 basis points, partially offset by roughly 45 basis points of improvement in higher-margin specialty categories.

Center-of-Plate Inflation and Volume Distortion

Reported center-of-the-plate inflation was elevated at 16.1% in the quarter, inflated by mix and attrition effects tied to the Texas poultry program exit. Excluding that non-core program, center-of-the-plate inflation would have been closer to 9.5%, and reported pounds, which were down 2.4%, would have instead shown a robust 7.5% increase.

Impact of Non-Core Program Attrition

The elimination of two non-core Texas programs in protein and produce processing and packaging removed about 1% of full-year revenue. Management noted these exits will continue to distort year-over-year price, volume, and customer metrics until they are fully lapped in 2026, but they sharpen strategic focus and improve quality of earnings.

Impairment and Higher Other Operating Expenses

Operating income slipped to $43.0 million from $46.5 million in the prior-year quarter as other operating expenses increased by $10.5 million. The key driver was an $8 million impairment related to a non-core customer relationship intangible, which management framed as non-recurring and not reflective of underlying operating trends.

GAAP Net Income Decline in Q4

GAAP profitability softened modestly in the quarter, with net income declining to $21.7 million, or $0.50 per diluted share, from $23.9 million, or $0.55 per diluted share, a year earlier. The drop was primarily tied to the impairment charge and related operating expenses rather than core margin erosion or revenue weakness.

Leverage and Dilution Considerations

While leverage at roughly 2.1 times adjusted EBITDA remains manageable, absolute net debt of around $529.5 million is still meaningful. Management also reminded investors that the company’s 2028 convertible notes are expected to be dilutive by 2026, with the fully diluted share count projected to range between 46.0 million and 46.7 million shares.

2026 Guidance and Outlook

Management’s 2026 outlook calls for net sales between $4.35 billion and $4.45 billion, gross profit of $1.053 billion to $1.076 billion, and adjusted EBITDA of $276 million to $286 million. The guidance implies roughly 6–8% revenue growth with 2–4% baseline inflation, continued operating leverage, solid liquidity of $280.5 million, and a term loan carrying a reduced 2.5% spread over SOFR, supporting further cash generation and strategic flexibility.

The overall message from The Chefs’ Warehouse earnings call was one of solid fundamental momentum and disciplined execution. Despite a small GAAP earnings setback driven by a discrete impairment and some margin mix pressure, management showcased healthy growth, improving efficiency metrics, a stronger balance sheet, and a clear path for mid-single-digit top-line expansion and rising profitability into 2026.