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    CHEF
    Earnings call· Mar 2026(Q1 FY26)

    Chefs' Warehouse Q1 FY26 earnings call CHEF

    Apr 29, 2026 Source

    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

    5

    • 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

    3

    • 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

    5
    CategoryTargetConfidence
    Net sales
    $4.35 billion to $4.45 billion
    high materiality
    High
    Gross profit
    $1.053 billion and $1.076 billion
    medium materiality
    High
    Adjusted EBITDA
    $276 million and $286 million
    high materiality
    High
    Fully diluted share count
    46 million and 46.7 million shares
    low materiality
    High
    Top line growth
    double-digit
    medium materiality
    High

    Operational metrics

    39
    Organic net sales growth
    10.4%YoY
    Q1 FY26

    Driven by unique placement growth, specialty case growth, and price inflation.

    Organic specialty sales growth
    6.8%YoY
    Q1 FY26

    Driven primarily by unique placement growth of 6.2% and specialty case growth of 5.7%.

    Unique placement growth
    6.2%YoY
    Q1 FY26

    Contributed to organic specialty sales growth.

    Specialty case growth
    5.7%YoY
    Q1 FY26

    Contributed to organic specialty sales growth.

    Unique customers growth
    1.9%YoY
    Q1 FY26

    Reported growth, impacted by Texas attrition.

    Unique customers growth (ex-Texas attrition)
    4.3%YoY
    Q1 FY26

    Adjusted for the impact of transitioning out of noncore customer business in Texas.

    Pounds in center-of-the-plate growth
    6.2%YoY
    Q1 FY26

    Higher than prior year first quarter.

    Gross profit margins increase
    53YoY
    Q1 FY26

    Overall increase in gross profit margins.

    Gross margin in specialty category increase
    43YoY
    Q1 FY26

    Increase compared to Q1 FY25.

    Gross margin in center-of-the-plate category increase
    110YoY
    Q1 FY26

    Increase compared to Q1 FY25.

    Acquisitions contribution to sales growth
    1%
    Q1 FY26

    Added to sales growth for the quarter.

    Middle East impact on organic growth
    50
    Q1 FY26

    Estimated reduction in overall organic growth due to the conflict.

    Middle East business performance
    75%vs prior year
    April 2026

    Operating at this level in recent weeks, primarily due to low occupancy in hotels and resorts.

    Net inflation
    4.1%YoY
    Q1 FY26

    Overall net inflation for the quarter.

    Specialty inflation
    1.5%YoY
    Q1 FY26

    Inflation in the specialty category.

    Center-of-the-plate inflation
    8.2%YoY
    Q1 FY26

    Inflation in the center-of-the-plate category.

    Center-of-the-plate inflation (adjusted)
    4.5%YoY
    Q1 FY26

    Adjusted for the impact of Texas attrition.

    Gross profit growth
    13.9%YoY
    Q1 FY26

    Gross profit increased to $257.4 million from $226 million.

    Gross profit margins
    24.3%
    Q1 FY26

    Overall gross profit margin for the quarter.

    Selling, general and administrative expenses growth
    10.5%YoY
    Q1 FY26

    Increased to $224.1 million from $202.8 million.

    Adjusted operating expenses growth
    10.5%YoY
    Q1 FY26

    Compared to prior year first quarter.

    Adjusted operating expenses as percentage of net sales
    18.6%
    Q1 FY26

    For the first quarter of 2026.

    Operating income growth
    45.8%YoY
    Q1 FY26

    Operating income was $33.1 million compared to $22.7 million in Q1 FY25.

    GAAP net income growth
    68.9%YoY
    Q1 FY26

    GAAP net income was $17.4 million compared to $10.3 million in Q1 FY25.

    GAAP diluted EPS growth
    60%YoY
    Q1 FY26

    GAAP diluted EPS was $0.40 compared to $0.25 in Q1 FY25.

    Adjusted EBITDA
    $60.1 millionup from $47.5 million
    Q1 FY26

    For the first quarter of 2026, compared to prior year.

    Adjusted net income
    $17.2 millionup from $10.2 million
    Q1 FY26

    For the first quarter of 2026, compared to prior year.

    Adjusted diluted EPS
    $0.40up from $0.25
    Q1 FY26

    For the first quarter of 2026, compared to prior year.

    Total liquidity
    $278.3 million
    Q1 FY26

    Comprised of cash and ABL availability as of March 27, 2026.

    Cash
    $122.7 million
    Q1 FY26

    Cash and cash equivalents as of March 27, 2026.

    ABL facility availability
    $155.6 million
    Q1 FY26

    Availability under ABL facility as of March 27, 2026.

    Term loan prepayments
    $5 million
    Q1 FY26

    Prepayments made on term loan maturing in 2029.

    Share repurchases
    $10 million
    Q1 FY26

    Equivalent shares purchased under share repurchase program.

    Total net debt
    $522 million
    Q1 FY26

    Inclusive of all cash and cash equivalents as of March 27, 2026.

    Net debt to adjusted EBITDA
    1.9x
    Q1 FY26

    As of March 27, 2026.

    North American operations contribution
    >90%
    Q1 FY26

    Represents over 90% of The Chefs' Warehouse business.

    Florida market growth
    >20%
    Annualized

    Expected to continue for many years as the company expands.

    Middle East business contribution
    <10%
    Q1 FY26

    Represents less than 10% of the overall business.

    Organic growth impact from weather and Middle East
    150
    Q1 FY26

    Combined impact of two storm events and one month of Middle East conflict on Q1 organic growth.

    Industry KPIs

    2
    MetricValueDetails
    Sg a rate18.6%%
    Gross margin drivers24.3%%

    Risks & headwinds

    3
    Middle East conflict and geopolitical uncertaintyOngoing, 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 eventsQ1 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 exitQ1 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

    4

    Middle East business performance

    Next quarter
    CurrentOperating at ~75% of prior year
    TargetNormalization 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.

    Q&A highlights

    5

    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 read5 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    AI-generated summary of the company’s earnings call. Not investment advice.