What are the expectations for summer domestic travel and its potential positive impact on the business?

The outlook for summer domestic travel appears very strong. The company anticipates continued acceleration of sales and leverage from past investments. They see strong demand for premium products and experiences, with no slowdown expected, and believe they are gaining market share in the high-end foodservice segment. “I mean, it looks really strong. Again, I mean, we didn't really see the war coming, but things start settling down in the Middle East. I mean, the -- I think all our investments for the last 15 years are starting to bear fruit, and we're getting that acceleration of sales and leverage with the massive investments we've made to build this thing.”

Can you clarify the math on the Middle East impact, specifically if it's a larger drag in April, and how North American strength is offsetting it?

The Middle East impact, combined with two storm events, cost about 150 basis points on Q1 organic growth. While the Middle East business is trending at 75% of prior year in April, the North American business is so strong that the company is still achieving double-digit growth overall. The North American team's execution and high-end consumer spending are overcoming the Middle East headwinds. “Those 3 things combined cost us about 150 basis points on the quarter. So if you look at our organic growth at 10.5%, you have the 1% ramp of mainly Italco. You could add 150 basis points to that if we didn't have those 3 events in the quarter.”

Given the exceptionally high Q1 EBITDA margin, is the historical 20 basis points of expansion still a good estimate, or has the company reached an inflection point for greater margin flow-through?

The company delivered more than 20-25 basis points of EBITDA margin improvement in FY25 over FY24 and is seeing operating leverage from investments. There's a strong possibility for more than 20 basis points of expansion, but the uncertainty in the Middle East is preventing an upward adjustment to guidance at this time. If the Middle East situation improves, guidance would likely be adjusted up. “If it stays where it is or gets better, I would imagine we would be adjusting up. And '25 over '24, we delivered more than 20 or 25 basis points of EBITDA margin improvement. And I think to what Chris mentioned earlier, we're really starting to see the operating leverage from all the investments that we've made.”

CHEF

Chefs' Warehouse (CHEF) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Consumer Staples· Apr 29, 2026

Source: earnings call transcript

Executive summary

The Chefs' Warehouse Q1 FY26 — Strong North American Performance Offsets Middle East Headwinds

The Chefs' Warehouse delivered a strong first quarter, driven by robust performance in its North American operations, which more than offset the impact of the Middle East conflict. The company's long-term investments in talent, technology, and infrastructure are yielding significant operating leverage and market share gains, particularly in high-growth markets. Management maintained its full-year guidance, noting potential for upward revision if the Middle East situation normalizes.

Highlights

Organic net sales grew 10.4% in Q1 FY26.
Adjusted EBITDA increased 26.5% to $60.1 million in Q1 FY26 from $47.5 million in Q1 FY25.
Gross profit margins increased 53 basis points to 24.3% in Q1 FY26.
Adjusted diluted EPS grew 60% to $0.40 in Q1 FY26 from $0.25 in Q1 FY25.
Net debt to adjusted EBITDA improved to 1.9x as of March 27, 2026.

Concerns

The Middle East conflict reduced overall organic growth by approximately 50 basis points in Q1 FY26.
Middle East business operating at approximately 75% of prior year in recent weeks due to low hotel/resort occupancy.
Reported unique customer growth was impacted by attrition related to noncore customer business in Texas.

Guidance & targets

Category	Target	Timeline	Confidence
Net sales	$4.35 billion to $4.45 billion high materiality	Full Year · FY26	High
Gross profit	$1.053 billion and $1.076 billion medium materiality	Full Year · FY26	High
Adjusted EBITDA	$276 million and $286 million high materiality	Full Year · FY26	High
Fully diluted share count	46 million and 46.7 million shares low materiality	Full Year · FY26	High
Top line growth	double-digit medium materiality	Q2 · FY26	High

Risks & headwinds

Middle East conflict and geopolitical uncertainty Ongoing, started in Q1 FY26

Reduced overall organic growth by approximately 50 basis points in Q1 FY26; Middle East business operating at ~75% of prior year in recent weeks.

Mitigation:Followed safety protocols, effectively navigating supply chain and customer demand volatility; factored a range of possibilities into forward guidance; North American strength is offsetting impact.

Volatility in business due to extreme weather events Q1 FY26

Contributed to approximately 150 basis points drag on Q1 organic growth (combined with Middle East impact).

Mitigation:Team's execution allowed continued market share growth.

Customer attrition from noncore business exit Q1 FY26, fully lapped starting Q2 FY26

Impacted reported unique customer growth (1.9% vs 4.3% ex-attrition).

Mitigation:Strategic decision to exit noncore customer business in Texas; impact is now fully lapped.

What to watch in Q2 FY26

Middle East business performance

Next quarter

Current Operating at ~75% of prior year

Target Normalization or improvement towards prior year levels

Why it matters

The Middle East conflict is a key headwind; its resolution or stabilization could lead to an upward revision of full-year guidance and improved profitability.

At this time, we are keeping our full year guidance unchanged with the potential for upward revision should the situation in the region normalize.

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Q&A highlights

What are the profitability implications for the Middle East business, and what assumptions are baked into the full-year guidance regarding its performance?

The Middle East business is less than 10% of total business but very profitable. While the company doesn't disclose specific EBITDA contribution, it has modeled multiple scenarios for the region's performance. Full-year guidance remains unchanged, but would likely have been adjusted upwards if not for the Middle East uncertainty, indicating strong performance elsewhere.

“Obviously, if the Middle East thing wasn't happening, I believe we would have adjusted our guidance this quarter. But I think given the uncertainty, we're just going to wait a little longer and see how things play out.”

asked by Alexander Slagle · answered by James Leddy

2 min read 5 chapters

Detailed narrative

North American Strength and Market Share Gains

The company's North American operations, representing over 90% of the business, continue to perform strongly, growing well above guidance and generating significant operating leverage. This performance is driven by effective execution, market share gains, and growth in volume, product penetration, and unique customers.

New markets like Florida are experiencing over 20% growth, and major markets such as New York, California, and Texas are expected to drive significant future growth towards the company's $10 billion goal.

Middle East Operations and Impact

The conflict in the Middle East, particularly impacting Dubai and Abu Dhabi due to reliance on tourism, reduced overall organic growth by approximately 50 basis points in Q1 FY26. The business in the region has been operating at about 75% of prior year levels in recent weeks.

Despite the uncertainty, the company has modeled various scenarios and maintained its full-year guidance, with potential for upward revision if the situation normalizes. Operations in Qatar and Oman are performing closer to plan.

Inflation Management and Gross Margin Expansion

Net inflation was 4.1% in Q1 FY26, with specialty inflation at 1.5% and center-of-the-plate inflation at 8.2% (4.5% adjusted for Texas attrition). Gross profit margins increased by 53 basis points to 24.3%, driven by effective management of a diverse product portfolio and sequential price changes, particularly in center-of-the-plate.

The company's teams have become adept at navigating both inflationary and deflationary environments, focusing on gross profit dollars rather than just margin percentage.

Operating Leverage and Investment Payoff

The Chefs' Warehouse is experiencing significant operating leverage from its long-term investments in talent, systems, technology, and infrastructure. This includes training sales and operational teams, leveraging new facilities, and integrating acquisitions. The maturity and collaboration of these teams across sales, operations, procurement, and pricing are contributing to improved profitability and the ability to manage complex market dynamics.

Capital Allocation and M&A Strategy

The company repurchased $10 million in shares and made $5 million in term loan prepayments during Q1 FY26, while maintaining total liquidity of $278.3 million. Net debt to adjusted EBITDA improved to 1.9x. Management intends to maintain dry powder for strategic and accretive acquisitions, repurchase shares opportunistically, and gradually pay down debt.

The M&A pipeline is described as 'frothy,' but the company is patient and not in urgent need of acquisitions.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.