Chefs’ Warehouse (NASDAQ:CHEF) reported higher third-quarter sales, profit and margins as organic growth continued across its specialty and center-of-the-plate businesses, while the food distributor raised its full-year outlook.
For the quarter ended Sept. 25, 2026, net sales rose 11.2% to $1.135 billion from $1.021 billion a year earlier. Organic sales increased 10.3%, while acquisitions contributed an additional 0.9 percentage point to growth.
Founder, Chairman and CEO Chris Pappas said revenue followed its normal seasonal pattern during the quarter, building from summer months into September. He credited regional teams with driving growth in revenue, gross profit dollars, customer placements and customer counts.
“Momentum continued into October,” Pappas said, adding that the company was entering its holiday season with strong execution across sales, procurement and operations.
Sales Growth and Customer Trends
Organic specialty sales increased 8.4% from the prior-year period, driven primarily by 7.2% growth in unique item placements, 6.1% growth in specialty cases and price inflation. Unique customers increased 4.4% year over year. Excluding the effect of the Middle East conflict, unique customer growth would have been approximately 5.7%, Pappas said.
Center-of-the-plate pounds increased about 6.6% from the third quarter of 2025. Net inflation was 4.1% during the quarter, including 2.6% inflation in specialty products and 6.6% inflation in center-of-the-plate products.
During the question-and-answer session, Pappas attributed the company’s double-digit organic growth to a combination of demand, market-share gains, new categories and new territories. He said the company continues to add customers across regions and businesses.
Management said October sales trends remained strong, with double-digit growth consistent with earlier periods in the year. Pappas said the company is seeing healthy demand for private events, corporate events and celebrations during the fourth quarter, though it has heard that some conferences are experiencing lower attendance.
Margins and Earnings Improve
Gross profit increased 15% to $284.3 million, while gross margin expanded 84 basis points to 25%. Specialty gross margin increased 63 basis points year over year, and center-of-the-plate gross margin rose 137 basis points.
Chief Financial Officer Jim Leddy said margin expansion reflected product mix, increasing scale in procurement and pricing, and continuing improvements in digital tools and artificial intelligence-enabled technology. The company is selling a higher mix of higher-margin products in both specialty and protein categories, he said.
Selling, general and administrative expenses increased 12.1% to $233.4 million, reflecting higher compensation and benefits, facilities and distribution costs supporting sales growth, fuel prices, and depreciation associated with facility and fleet investments. Adjusted operating expenses increased 11% and represented 17.8% of net sales.
Operating income rose to $51.5 million from $38.9 million in the prior-year quarter. GAAP net income was $29.6 million, or $0.67 per diluted share, compared with $19.1 million, or $0.44 per diluted share, a year earlier.
Adjusted EBITDA increased to $82.2 million from $65.1 million. Adjusted net income was $29.5 million, or $0.66 per diluted share, compared with $21.5 million, or $0.50 per diluted share, in the prior-year quarter.
Pappas said higher fuel costs have weighed on operating expenses, but the company has passed along much of those costs through pricing, with the offset appearing in gross margin. Management said fourth-quarter guidance implies an adjusted EBITDA margin above 7%, while full-year guidance implies reaching a 7% margin level that had previously been targeted for 2028.
Middle East Operations and Capital Structure
The company said its Middle East operations continue to perform effectively despite the challenging regional environment. Recent revenue trends have been approximately 100% of the prior-year level as local residents and expatriates return following the summer off-season. Pappas said operations in the United Arab Emirates, Qatar and Oman are delivering high EBITDA margins.
At quarter-end, Chefs’ Warehouse had $348.1 million in liquidity, including $164.7 million of cash and $183.4 million available under its asset-based lending facility. Net debt was approximately $448.5 million, and net debt to adjusted EBITDA was about 1.4 times.
During the quarter, the company priced and allocated a new $675 million seven-year term loan. The loan closed Oct. 15, concurrently with the settlement of its 2028 convertible notes. Proceeds were used to prepay the company’s term loan due in 2029 and settle the principal and part of the premium on the convertible notes. The remaining premium was settled through the issuance of about 2.7 million common shares to noteholders.
Leddy said the refinancing was intended to address the convertible maturity and related springing maturities, keep leverage within the company’s 1.5-times to 2.5-times target range, and reduce the fully diluted share count. The company expects year-end net debt of $550 million to $600 million and net leverage of 1.7 times to 2 times.
Raised 2026 Outlook
Chefs’ Warehouse raised its full-year 2026 guidance. The company now expects:
- Net sales of $4.56 billion to $4.61 billion;
- Gross profit of $1.13 billion to $1.14 billion; and
- Adjusted EBITDA of $317 million to $321 million.
Management said its fourth-quarter outlook includes some conservatism around December tourism activity in the Middle East and reflects the lapping of the Italco acquisition. Pappas said the high end of the company’s outlook implies roughly 10% organic growth, broadly consistent with growth during the first three quarters of the year.
Looking beyond 2026, management said it is advancing distribution-capacity projects in Texas, New England, Las Vegas and several Midwest markets. The company is also evaluating multiple options for additional New York-area capacity, though Leddy said there was nothing to announce.
About Chefs’ Warehouse (NASDAQ:CHEF)
Chefs’ Warehouse, Inc is a specialty food distributor serving professional chefs, restaurants, hotels, caterers, culinary institutions and other foodservice customers. The company supplies a broad range of products, including fresh produce, seafood, meat, poultry, dairy, specialty and imported foods, center-of-the-plate items, dry goods, and other ingredients used in commercial kitchens.
Founded in 1985, Chefs’ Warehouse has expanded from a regional distributor into a North American foodservice platform.
