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Chefs' Warehouse, Inc. (CHEF)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered solid top-line growth and non-GAAP profitability: net sales up 9.6% YoY to $1.021B, adjusted EPS $0.50 and adjusted EBITDA $65.1M .
  • Versus S&P Global consensus, CHEF beat on revenue ($1.021B vs $0.986B*) and EPS ($0.50 vs $0.416*), while EBITDA was modestly below S&P’s EBITDA consensus ($58.7M actual vs $59.6M*) .
  • Mix was constructive in specialty (gross margin +59 bps YoY), while center‑of‑the‑plate margins compressed (‑49 bps); adjusted FY25 guidance was raised across revenue, gross profit and adjusted EBITDA .
  • Management flagged healthy demand into October and a “cautiously optimistic” 4Q setup; acquisition of Italco expands into Colorado; Middle East remains a growth engine despite temporary summer headwinds in Qatar .

Note: *Values retrieved from S&P Global.

What Went Well and What Went Wrong

  • What Went Well

    • Revenue and profitability momentum: net sales +9.6% YoY to $1,021.3M; adjusted EPS $0.50 vs $0.36 YoY; adjusted EBITDA $65.1M vs $54.5M YoY .
    • Specialty category execution: specialty margins +59 bps YoY; placements +5.3% and unique customers +2.6% YoY in Q3; excluding Texas processing exit, specialty cases +5.4% .
    • Healthy demand and share gains: “momentum in demand and market share gains continued into October” with multiple regions growing and double‑digit growth in several high‑growth markets . Quote: “We… started to invest in the facilities… sales force… technology… the team is… gaining market share and winning in a lot of categories” .

  • What Went Wrong

    • Center‑of‑the‑plate margin pressure: category margins ‑49 bps YoY amid elevated protein inflation (beef) and pricing lag effects; strategy is to hold price longer on the way down to recover over time .
    • Reported volume optics from Texas program exits: center‑of‑the‑plate pounds ‑1.1% reported, though +9.6% excluding commodity poultry attrition; reported unique customer growth damped by Texas exits and temporary Middle East conflict impact .
    • Sequential softening vs Q2: revenue slipped from $1,034.9M to $1,021.3M; gross margin moderated from 24.6% to 24.2% .

Financial Results

Headline P&L (GAAP/Non‑GAAP) – Last 3 Quarters

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$950.7 $1,034.9 $1,021.3
GAAP Diluted EPS ($)$0.25 $0.49 $0.44
Adjusted EPS ($)$0.25 $0.52 $0.50
Gross Profit ($USD Millions)$226.0 $254.3 $247.2
Gross Margin (%)23.8% 24.6% 24.2%
Adjusted EBITDA ($USD Millions)$47.5 $65.4 $65.1

YoY reference for Q3: revenue $931.5M and GAAP EPS $0.34 in Q3’24; adjusted EPS $0.36; adjusted EBITDA $54.5M .

Q3 2025: Actuals vs S&P Global Consensus

MetricEstimateActual
Revenue ($USD Millions)$986.0*$1,021.3
Primary EPS ($)$0.416*$0.50
EBITDA ($USD Millions)$59.6*$58.7

Note: *Values retrieved from S&P Global.

Segment & Operating KPIs

KPIQ1 2025Q2 2025Q3 2025
Specialty case growth (reported)+5.7% +3.5% +3.2%
Specialty case growth (ex‑Texas program)n/a+5.8% +5.4%
Unique customer growth (reported)+4.5% +3.6% +2.6%
Unique customer growth (adjusted)n/an/a~+5.8% (excl. Texas & Qatar impact)
Placements growth+7.7% +8.7% +5.3%
Center‑of‑the‑plate pounds (reported)−1.3% −4.0% −1.1%
Center‑of‑the‑plate pounds (ex‑attrition)+3% +5.8% +9.6%
Specialty gross margin (bps Δ YoY)+6 bps +59 bps +59 bps
Center‑of‑the‑plate gross margin (bps Δ YoY)−83 bps +56 bps −49 bps
Digital adoption (specialty orders via digital)~58% ~60% “a little bit over 60%”

Guidance Changes

MetricPeriodPrevious Guidance (7/30/25)Current Guidance (10/29/25)Change
Net SalesFY 2025$4.00B–$4.06B $4.085B–$4.115B Raised
Gross ProfitFY 2025$964M–$979M $987M–$995M Raised
Adjusted EBITDAFY 2025$240M–$250M $247M–$253M Raised
Diluted Shares (FY basis)FY 2025~46–47M ~46M Refined

Management added that at the midpoint, 4Q implies ~7%–7.5% revenue growth and ~10% flow‑through to adjusted EBITDA, reflecting typical conservatism and tougher comps .

Earnings Call Themes & Trends

TopicQ1 2025 (Apr)Q2 2025 (Jul)Q3 2025 (Oct)Trend
AI/Technology & DigitalDigital ~58% of specialty orders; build-out of digital footprint incl. Middle East & Hardie’s Digital ~60%; initiatives (Select Prime, predictive forecasting) supporting margins “A little over 60%” adoption; AI investments help efficiency, but customer service remains differentiator Steady adoption; incremental efficiency gains
Supply chain & TariffsTariff risk manageable; diversified sourcing; suppliers may absorb some costs EU import tariffs raised; net inflation ex-Texas programs ~3%; substitution advantage across 130+ olive oils Tariff headwinds moderate; mixed inflation/deflation across categories (olive oil, chocolate, produce) Moderate inflation backdrop, manageable via mix
Product performanceCenter-of-plate pounds −1.3% YoY; specialization offsets Center-of-plate reported −4% YoY, +5.8% ex‑Texas; margins improved 56bps Protein margins down YoY amid beef inflation; dollars solid; SP ex‑attrition +9.6% Protein volumes normalize ex-attrition; pricing lag
Regional trendsMiddle East growth; new Dubai facility Mixed tourism impacts; solid big-city trends; Texas transformation in 2nd inning Middle East: Qatar summer dip; Dubai/Abu Dhabi/Oman strong; broad US momentum ME growth intact; US demand steady
M&A / Capacityn/a“Frothy” M&A; selective/tuck-ins preferred Italco acquisition (Denver) adds Rockies presence; tuck-in, high-quality catalog Selective tuck-ins to augment organic

Management Commentary

  • Strategic focus: “Our operating divisions… delivered strong growth in revenue and gross profit dollars… momentum in demand and market share gains continued into October” .
  • On Q4 and guidance tone: “We feel pretty good about the mid to higher end of the guidance… we’re always a little… conservative” .
  • On protein inflation/margins: “Protein prices have been pretty firm… year‑over‑year protein margins were down… we got really good gross profit dollar growth… you’re not going to pass all of it on” .
  • On digital/AI: “We’re a little bit over 60% [digital adoption]… we’re using AI and investing in AI… but the differentiator… is customer service” .
  • On competitive consolidation: Large distributor combinations can create customer hedging and talent opportunities—“we usually get a nice uptick” .

Q&A Highlights

  • Demand cadence: Summer was solid across July–Sept; momentum continued into October; 4Q expected to perform “pretty well” .
  • Margin model: Specialty margins +59 bps YoY; protein pressure managed via pricing cadence and supply-chain execution .
  • Texas transformation: Shedding non-core, low-margin programs; rebuilding routes with CW‑profile accounts; in “second inning” with significant runway .
  • Tariffs/Inflation: Tariff impacts partly offset by substitution and category diversity; net underlying inflation (ex program exits) ~2–3% modeled earlier in the year .
  • Middle East: Temporary Qatar disruption in summer; facilities expanded in Dubai/Qatar/Oman; aggregate region in double‑digit growth .

Estimates Context

  • Q3 2025 outcomes vs S&P Global consensus: Revenue beat ($1,021.3M vs $985.96M*), EPS beat ($0.50 vs $0.416*), EBITDA slightly below ($58.7M vs $59.6M*) .
  • Prior quarters also exceeded on revenue and EPS vs S&P consensus (Q2: $1,034.9M vs $1,013.5M*; $0.52 vs $0.461*; Q1: $950.7M vs $926.6M*; $0.25 vs $0.195*) .
  • Guidance raises (sales, gross profit, adj. EBITDA) suggest upward pressure on FY25 sell‑side models, while category mix and protein margin recovery cadence may shape 4Q profitability expectations .

Note: *Values retrieved from S&P Global.

Key Takeaways for Investors

  • Revenue and adjusted EPS beats, plus a full‑year guidance raise across all key metrics, reinforce an improving operating backdrop and execution momentum .
  • Mix dynamics remain favorable: specialty strength and placements growth, with protein margins managed through pricing cadence; expect margin normalization as inflation moderates .
  • Reported volume optics (Texas attrition) mask underlying growth in center‑of‑the‑plate pounds; excluding exits, growth is strong and capacity is being refilled with higher‑quality CW accounts .
  • Digital adoption exceeds 60% and AI initiatives enhance efficiency; management emphasizes customer service as the sustainable differentiator .
  • Middle East continues to provide a durable growth vector despite episodic disruptions; US demand appears resilient into the holiday period .
  • Near‑term trading: Positive surprise on revenue/EPS and raised FY guide are likely constructive catalysts; modest sequential gross margin easing and protein margin pressure are watch‑items .
  • Medium‑term thesis: Operating leverage, route/employee productivity, disciplined tuck‑ins (e.g., Italco), and continued CW‑model expansion into new markets support the 2028 margin roadmap .

Sources

  • Q3 2025 8‑K and press release: revenue, margins, EPS, adjusted metrics, and FY25 guidance .
  • Q3 2025 earnings call transcript: demand/mix commentary, digital/AI, Middle East, Texas, and Q&A .
  • Q2 2025 8‑K and call: comps, guidance baseline, specialty/protein metrics, inflation .
  • Q1 2025 8‑K and call: early‑year run‑rate, digital baseline, tariff context .

Note: S&P Global consensus figures marked with an asterisk (*) are values retrieved from S&P Global.