Chefs’ Warehouse (NASDAQ:CHEF) reported higher second-quarter sales, profit and adjusted EBITDA, citing continued gains in product penetration, case volume and customer counts across its regional operations. The specialty food distributor also raised its full-year 2026 financial outlook and extended its long-term targets through 2030.
For the quarter ended June 26, net sales increased 12.9% year over year to $1.169 billion. Organic sales rose 12.2%, while acquisitions contributed 0.7 percentage points to sales growth. Net inflation was 4.9%, including 4% inflation in specialty products and 6.4% in center-of-the-plate products.
Profitability Improved as Margins Expanded
Gross profit rose 15.2% to $292.9 million, and gross margin increased 49 basis points to 25.1%. Specialty-category gross margin improved 47 basis points from the prior-year period, while center-of-the-plate gross margin increased 75 basis points.
Selling, general and administrative expenses rose 9.6% to $234.2 million, reflecting higher compensation and benefits, facility and distribution costs supporting growth, and depreciation associated with facility and fleet investments. However, adjusted operating expenses increased 8.4%, less than the company’s sales growth rate, and represented 17.5% of net sales.
Operating income increased to $58.6 million from $40.2 million a year earlier. GAAP net income was $33.8 million, or $0.76 per diluted share, compared with $21.2 million, or $0.49 per diluted share, in the prior-year quarter.
On an adjusted basis, EBITDA rose to $88.1 million from $65.4 million, while adjusted net income increased to $34.7 million, or $0.78 per diluted share, from $22.5 million, or $0.52 per diluted share.
Pappas said the company’s margin opportunity stems from leveraging investments made to build its distribution and sales platform. He said newer markets can initially face higher logistics and inventory costs, but margins can improve as sales volume, customer density and operational efficiency increase.
Company Raises 2026 Outlook
Chief Financial Officer James Leddy said Chefs’ Warehouse raised its full-year 2026 guidance. The company now expects:
- Net sales of $4.5 billion to $4.6 billion;
- Gross profit of $1.102 billion to $1.125 billion; and
- Adjusted EBITDA of $305 million to $315 million.
The company expects its 2028 convertible notes to be dilutive during 2026 and projected a fully diluted share count of approximately 46 million to 46.7 million shares.
Leddy said the outlook incorporates conservatism related to the Middle East, where the company’s operations have been affected by regional conflict and changes in product logistics. During May and June, operations in the region ran at about 94% of the prior-year level, Pappas said.
Leddy said the Middle East team has worked with suppliers to reroute products through different ports and transport channels, including air and ground routes. Those changes have increased logistics costs, he said. The company also noted uncertainty surrounding the return of tourism to Dubai during the fourth quarter.
Meanwhile, the company said its Texas operation is growing and has improved its EBITDA margin by “multiple hundred basis points” compared with the past several years. Leddy said the company is evaluating real estate solutions in Dallas and Houston, with Dallas expected to be addressed first.
2030 Targets Call for Continued Organic Growth
Chefs’ Warehouse updated the five-year targets it originally established in 2023, extending them from 2028 to 2030. The company is now targeting annual revenue growth of 7% to 10%, with 2030 revenue of $6 billion to $6.5 billion.
The company expects organic expansion to be the main growth driver, with acquisitions potentially adding about 1% annually. It said years with more substantial acquisitions could produce total growth above the stated range.
Its 2030 profitability targets include adjusted EBITDA of $450 million to $520 million and an adjusted EBITDA margin of 7.5% to 8%.
Pappas said the company sees growth opportunities in underpenetrated markets, including Texas and Florida, as well as smaller and developing markets. He said these regions have followed patterns seen in more mature operations, with customer growth, maturing sales teams and improving logistics supporting additional expansion.
Capital Allocation and Technology Investments
Chefs’ Warehouse ended the quarter with $321.1 million in total liquidity, including $135.5 million in cash and $185.6 million available under its asset-based lending facility. During the quarter, it repaid $30 million of ABL debt, reducing the outstanding balance to $70 million.
Net debt was approximately $478.5 million as of June 26, and net debt to adjusted EBITDA was about 1.6 times.
The company said it has generated approximately $270 million of free cash flow since implementing its capital allocation plan at the start of 2024. It expects capital expenditures to average about 1% of revenue going forward, directed toward distribution-center development, fleet expansion, technology, inventory management, sales training and customer-facing digital tools.
Leddy said the company intends to maintain net debt-to-adjusted-EBITDA leverage between 1.5 times and 2.5 times, increase share repurchases as leverage remains within that range, and retain capital for potential accretive tuck-in acquisitions. The company expects free-cash-flow conversion of 40% to 60% of adjusted EBITDA.
Pappas said the company has begun deploying AI-based technology across sales, pricing, procurement, inventory management, logistics and customer experience. He described the investments as tools that help employees access information faster, improve execution and operate more efficiently rather than as a standalone source of dramatic cost reductions.
About Chefs’ Warehouse (NASDAQ:CHEF)
Chefs’ Warehouse, Inc is a specialty food distributor that supplies a broad range of high‐end ingredients and culinary products to professional chefs, restaurants, hotels, and other foodservice operators. Headquartered in Maspeth, New York, the company sources its portfolio from local artisans, boutique producers and leading global suppliers. Its core offerings include fresh and frozen proteins, specialty cuts of meat and seafood, handcrafted cheeses and charcuterie, seasonal produce, value‐added preparations, pantry staples and premium desserts and beverages.
The company operates a network of distribution centers strategically located in major metropolitan markets across North America.
