Chefs’ Warehouse at Global Farm to Market: Growth and Strategic Insights

On Wednesday, 14 May 2025, The Chefs’ Warehouse (NASDAQ:CHEF) participated in the 20th Annual Global Farm to Market Conference and Chemicals @ Farm to Market. The company emphasized its strategic growth, market share gains, and operational efficiencies while addressing challenges such as rising costs and competition.

Key Takeaways

• Chefs’ Warehouse is gaining market share through technology and new customer acquisition.
• The focus is on gross profit dollar growth, incentivizing teams to drive EBITDA growth.
• The company is cautious about supply chain automation, preferring incremental improvements.
• Significant growth is noted in various markets, with some experiencing up to 40% growth.
• Investments continue in technology and facilities to maintain a competitive edge.

Financial Results

• Revenue is tracking at just over $4 billion for the year.
• Changes in product mix, particularly with acquisitions, are affecting gross profit margins.
• The focus remains on gross profit dollar growth to drive EBITDA.
• Some markets are seeing growth rates as high as 40%.
• Historically, Chefs’ Warehouse has maintained high EBITDA margins compared to peers.
• Rising operational costs, including insurance and distribution, are being managed.
• Debt levels have decreased, with cash available for strategic opportunities.

Operational Updates

• Chefs’ Warehouse serves over 44,000 customer locations with nearly 50 distribution centers.
• The company manages around 88,000 SKUs and partners with 4,000 suppliers.
• Over $1 billion has been invested in facilities, technology, and salespeople over the past decade.
• A SKU rationalization team works to eliminate underperforming products.
• New facilities have been constructed in Florida, Los Angeles, and Northern California.
• Rising distribution costs and competition for salespeople impact profitability.
• Technology and AI are emphasized to improve efficiency and sales force productivity.

Future Outlook

• The company focuses on organic growth and internal acquisitions through hiring and new category development.
• Continued investment in technology aims to enhance efficiency and customer service.
• Chefs’ Warehouse adopts a strategic approach to M&A, favoring fold-in acquisitions.
• Automation is being evaluated cautiously, with a focus on achieving quicker ROIs.

Q&A Highlights

• The impact of larger distributors developing higher service models is downplayed.
• No significant softness is seen in the cruise line business, though import tariff issues are monitored.
• Some softness is acknowledged in the Las Vegas market due to fewer tourists from Canada and Mexico.

Readers are invited to refer to the full transcript for more detailed insights.

Full transcript - 20th Annual Global Farm to Market Conference and Chemicals @ Farm to Market:

Unidentified speaker: and center of the plate products. I think the latest numbers, correct me where I’m wrong, you service over 44,000 customer locations, almost 50 DCs, 88,000 SKUs, 4,000 suppliers, and we have you tracking just over $4,000,000,000 in revenue for this year.

And despite being the smallest of the public foodservice distributors, the company’s EBITDA margins are historically among the highest in the peer group, really due to their mix of customers and this disciplined focus on the more profitable menu driven independent restaurants. So happy to have Chris Papa’s, founder, president, CEO, and chairman and as well as Jim Letty, CFO. Thanks again for for for coming. I wanna kick it off, with a question on market share, something we try to, do a lot of work on across our coverage, but it’s a little harder for Chefs’ Warehouse. So we know you came off a very strong quarter to start the year.

But how much of that quarter and that growth do you contribute to the underlying health of your customer to versus market share gains? And how do you kind of think about that as you measure it and look at what you’re hearing across the street?

Chris Papa, Founder, President, CEO, and Chairman, Chefs’ Warehouse: Yes. Well, you definitely hear a lot of chatter, right? The first quarter is always a little wonky because of the weather and coming out of the holidays. But we have the team really focused on penetration and new customer acquisition. So you hear that it’s a little slow.

There’s negativity in headcount at restaurants. And yes, you saw our numbers for the first quarter. So with that real population growth, we discussed this daily. It’s like the numbers team comes in and they give me their forecast. I’m like, well, where is it going to come from?

You can’t eat the same meal twice, right? So if we’re not really growing population, you really got to grow market share. So I think that a lot of the success that you’re seeing with us is I think we’re really winning in gaining market share and gaining new customers constantly. And that’s due to our technology, our sales force, over $1,000,000,000 investment over the last ten years into facilities, technology and salespeople. And you’ve been following us since our IPO.

We’re not a new business. We’re celebrating our fortieth year, hard to believe, starting with a big garage and a lot of debt and to see how we’re progressing and really would just start to hit, I think, our groove in becoming the one stop shop for chefs in the marketplace that we focus on, which is good, better, best, right? We’re not chasing the big volume, though we do have great volume customers. We are chasing independents, smaller groups and people that want a better quality product, right?

Unidentified speaker: And I guess we it’s harder for us to have visibility into your competitors, your kind of smaller specialty competitors. And so I guess number one is what are you seeing from them? And how many of them have the customer focus that you have, which is, you know, continues to be very focused on and disciplined on the kind of customers you want to service and that value your service levels and your expertise?

Chris Papa, Founder, President, CEO, and Chairman, Chefs’ Warehouse: Yeah. Well, many people that work for us, they think we’re a cult. We’re a little cultish. Because really, name Chef’s Warehouse came from, we graduated. We started with Dairyland.

We were in the cheese business originally and more specialty food. As we grew, we realized that we were the warehouse for all these independents. You go through New York where we started, nobody has any storage space. So you had to give almost daily deliveries and you had to be on time and you had to have the products or else they almost couldn’t open, right, because they didn’t have the inventory. So we had to build a different mousetrap than your typical big three, who are really I mean, we’re all focused on getting cost out, efficiencies, being better at everything.

But we’re in the hospitality. We’re servicing people that, yes, of course, we have upscale casual, where you can go in and grab and go for $15 20 dollars 30 dollars all the way up to you know, your Michelin three star restaurants where it costs you a thousand dollars to eat, and it better be good, and they better have it, and it better be what they want. So there’s a lot of pressure on our team to execute. So it’s that’s why you have to create almost that cult kind of attitude in the company of we have to be better, we to be right on point. There’s not a lot of room forever where you could say, yeah, go down the block, pick up a case of this or that.

All the products we carry, they can’t find them anywhere. So it’s really about building that culture into the team and the training. We have what we call Chef’s Warehouse University. We have a lot of chefs. Part of the name came from we realized so much of our team were chefs at this point and that’s continued over forty years.

I mean, hire front of the house, we hire back of the house, we hire experts in hospitality, in food and mixology. And of course, we train people that just want to be they’re foodies and we make them into business people because we are much more entrepreneurial the way we allow them to price, the way we allow them to interact with the customers and build the inventory. Obviously, we have the systems and the algorithms and the teams watching. We are a for profit business, but it’s a very high demanding, high touch business and that’s really part of our moat. We make Chef’s Warehouse the chef’s warehouse.

And we don’t sell a lot of chains. We don’t chase really low end business and that’s our comfort zone. And today, that’s who we are.

Unidentified speaker: I know you get this question over and over, but we do have some of the bigger distributors developing higher service models so they can go after more specialty, you know, accounts, I guess. I don’t know if this is happening broadly across the competitors, but

Chris Papa, Founder, President, CEO, and Chairman, Chefs’ Warehouse: Haven’t we been talking about this?

Unidentified speaker: I know we, I know, yeah, we talk about it every year.

Chris Papa, Founder, President, CEO, and Chairman, Chefs’ Warehouse: There’s always somebody chasing you.

Unidentified speaker: Right. But it doesn’t ever seem to have an impact. And I think I know what you’re going to say. But is anything different on that front? And how do you

Chris Papa, Founder, President, CEO, and Chairman, Chefs’ Warehouse: What was our growth rate

Unidentified speaker: in the first quarter? Yes.

Chris Papa, Founder, President, CEO, and Chairman, Chefs’ Warehouse: There’s always going to be competition. Competition makes you better. I’m an ex professional athlete, and it’s all about you got to train. There’s no day off. Everybody’s coming.

You got to get better and better. And they just make us better. We look at what they’re doing, and we keep curating our business plan and our strategy. And we just have to be better at what we do. And it’s a big universe.

Mean, you think about how small we are in food away from home, it’s, you know, what, over $3,400,000,000,000 today. You know, nobody really wants to cook. Even when they’re cooking, they’re really assembling more. We do a lot of the, you know, we service a lot of the people doing meal kits and food away from home, and, you know, they’re growing, you know, pretty nicely as customer base. But everybody everybody wants to service, but it’s this is hard.

I mean, the the rules of of running a giant opco, like people that just presented, you know, doing a billion dollars out of a facility. I don’t know if I ever want a facility want a single facility to be that big because you’re gonna get a little clumsier. You’re gonna have to put in a lot more rules and you you’ll lose a lot of your flexibility. So I think it’s easy to say, and it’s such a big market. I’m sure they’ll do fine.

Unidentified speaker: Mhmm.

Chris Papa, Founder, President, CEO, and Chairman, Chefs’ Warehouse: But we know who we are. We’re really good at it. And I just think that we’re just starting with all the technology and the people that have joined Chef. I think that’s driving a lot of efficiency. It’s really made us so much better as an operator.

We continue to be higher pick rates, less mistakes, which makes life lot easier and allows everybody to focus more on servicing our customers. So from where I sit today, you know, I think our strategy is is is really working. You know, we’re constantly gonna, you know, keep improving it. But, you know, we’re in the people business. So, you know, I hear everybody talking about AI.

We’ve always had AI. We just called it something else. You know? So you gotta have it. You you you gotta have that.

I mean, it’s it’s really excited me at this point in my career with the information that we have, and we’re able to see what you know, how the customer is shopping, and we can, you know, we can educate them a lot better than almost any rep when you have so many products. So yeah, you have to have that stuff. I mean, I don’t think you can exist and compete unless you have great technology today and keep implementing it. But it’s making the reps more productive. You know, there are a lot of the sales reps were nervous they’re gonna get replaced.

Right. And the people that are embracing it, especially the newer people coming into the industry, they know how to use it. They’re adopting quicker. And even the real experienced reps are seeing that their quality of life is a lot better. So before they were working Sunday nights, taking all their own orders.

Now customers could come online, place their own orders. They could check it, you know, on an hourly basis while they’re watching a game or playing with their family or children or, you know, out out boating in the summertime, and it’s given them a much better quality of life, gives them a lot more information, solves a lot of the problems customers would normally have to call and ask them.

Unidentified speaker: Right.

Chris Papa, Founder, President, CEO, and Chairman, Chefs’ Warehouse: You know? So it’s a it’s a win win.

Unidentified speaker: Is that is that, you know, making that that dynamic making that job a little a little easier? You know? Is that changing who you can attract in terms of potential sales reps?

Chris Papa, Founder, President, CEO, and Chairman, Chefs’ Warehouse: Nothing nothing is getting easier. I mean, they’re just less people. Right? So we’re we’re attracting great people, but, you know, it’s you know, we got a a reenergized HR department that we have a a new director for the last few years that’s really put in, you know, a complete a complete new team and way of going to attract people because you’re really competing for the people looking for jobs, and you have to be you have to be more attractive than your competition today. You know?

When I started the business, you know, people were begging for jobs. Now we’re you’re begging for people. So I think Musk was right. We know we need the robots. But kidding aside, are attracting great people.

They’re usually foodies. Right? So you want them to be interested in the products because they have to have a passion. They have to be storytellers. Over 50% probably of what we sell is in our box.

You know, we people call it private label. We call it you know, it’s under the chef’s umbrella. You know, it could be an exclusive, semi exclusive. You know, one of our companies, an Allen Brothers box or a Foley box or a a Dairyland box, but it’s the way we differentiate ourselves. But, you know, a lot of the products that you know, when I grew up in the industry, you private label the products because you sold them cheaper.

We private label them because we sell them for more in most cases because they’re super premium. And we go to the grower, we go to the manufacturer, we work with our team. It’s they’re made for our specs. So that’s the way we differentiate ourselves from the typical box movers. We’re more of a you heard Bisemi, we’re more of a marketing company, almost a grower at this point.

We’re so close to it. And then we distribute. And distribution is hard. You know, distribution is where you lose all your profit. So, you know, I always I always tell them, we make the money when we sell it, and then you try to hold on to as much as possible by the time you deliver it and get paid because that’s where all your cost comes.

Right? And it’s getting more expensive. Right? Insurance and, you name it, it’s, much more expensive to operate than it was five years ago before COVID, so you have to be a lot more efficient.

Unidentified speaker: It’s funny you say that. I remember you said a comment a couple years ago that really stuck with me. I think it was maybe you, Chris, that said the business has changed from a gross profit margin to a gross profit dollar because you have you you have to think about that overhead, the insurance and and the cost. Mhmm. Is that more true today?

Or how do you think about managing that versus the dollar versus the rate?

Jim Letty, CFO, Chefs’ Warehouse: It’s really not more true today, but it’s what drives EBITDA growth. So what we the product mix changes, and especially for us because we’ve done so many acquisitions over the last couple of years where we’ve added categories. We started building center of the plate about ten years ago, and then we started building produce. And as you integrate those businesses and your category mix changes, your gross profit margins are going change because you may be selling more expensive protein boxes on your trucks at a lower margin, but you’re getting really good gross profit dollar growth. And so we incentivize our opcos, our salespeople are on and our teams are on gross profit dollar growth, the gap above adjusted OpEx growth.

And that’s what drives EBITDA growth. And so we may have a period where we’re selling more expensive boxes and our margins are lower, but we’re getting the appropriate gross profit dollar growth.

Unidentified speaker: Right.

Chris Papa, Founder, President, CEO, and Chairman, Chefs’ Warehouse: Yes. And that’s why it’s a little tricky. I’ve grown up with margin, margin, margin. And we do look at margin every day. We have the margin patrol, but it’s really how many gross profit dollars are on those trucks, right?

So if you see our truck delivering to this hotel, once it backs in, after it’s gotten its ticket out front, which, you know, New York is no matter how great the drivers are, they’re gonna give you tickets. So they’re I mean, it’s really it’s it’s it’s obnoxious what’s going on, but it’s part of what we Yeah. It’s every day. As soon as they roll in tickets You don’t need

Jim Letty, CFO, Chefs’ Warehouse: the city know the amount. The city yeah.

Chris Papa, Founder, President, CEO, and Chairman, Chefs’ Warehouse: The city needs the money. But so the incentive we incentivize our customers and our reps that get more boxes on the delivery. Even though we’ve given them high touch service, we to have the volume because it’s gotten so expensive between drivers and the cost of a truck and you name it. So it’s about the gross profit dollars they’re delivering, right, versus the expense. Because once they pull in to have one more hand truck doesn’t really cost anything.

So that’s really what’s driving a lot of our success now is penetration.

Unidentified speaker: Is if this number is right, I wanted to talk about SKUs because I think you are up to 88,000. A lot of that is acquisitions and and new categories. But if you’re a sales rep, I mean, how do you have expertise across 88,000 SKUs? Artificial intelligence. Okay.

Chris Papa, Founder, President, CEO, and Chairman, Chefs’ Warehouse: Yeah. You know, the core so it’s an eighty twenty rule, you know, most most menus, you know, it’s 80% of of what they’re buying is 20% of our product lines. Right? So it’s, you know, it’s steaks, it’s seafood, it’s olive oil and all that. So it’s really the long tail because our customer base is so diverse that we have a tremendous just in time team, and we have that’s where the technology is helping is getting products in and through the system without having to actually stock 88,000 SKUs.

So New York might stock five, six, seven thousand products at one time, but there’s so many SKUs coming in and out, and that’s kind of what makes Chef Chef is our ability to manage that long tail. It does cost us more Mhmm. Okay, than typical distribution where you say this is what we carry, this is how we manage it, and you keep driving out costs. We have the SKU rationalization team that’s constantly looking to get rid of stuff. But, you know, we do have a higher level of donations and products that, you know, are not gonna sell, you bring in, and for whatever reason, it dies.

So makes it harder to manage. But after forty years, we kind of understand that’s part of what we do.

Jim Letty, CFO, Chefs’ Warehouse: I think there’s two other things that really support our sales reps with the problem that you mentioned is our team sell approach. So in almost all of our markets now, we have protein specialists, produce specialists and different category specialists, French pastry chefs that travel around the country and support our reps. They can’t know all those products and have that expertise. So they ride with them, they support them with the customer. And the other thing is the digital platform provides a window for our customers into our 88,000 SKUs online that a rep could never possibly communicate.

And so when they’re online and they’re saying, oh, I’m buying this and this. I didn’t realize Chef had this. So I’m going to buy that. And that’s part of what’s driving that penetration growth. That’s offsetting slightly softer traffic or customer demand, whatever you’re seeing in the market.

Unidentified speaker: And I think you did mention SKU rationalization. You said it right there. But is that something that is a new initiative? Or is there is it just a constant, there’s no change, that’s just always

Chris Papa, Founder, President, CEO, and Chairman, Chefs’ Warehouse: It’s always the fight between sales and categorical purchasing. Salespeople want more. The reason that they have to get this product to get this customer, it’s a very important customer. And I would say seven out of 10 times, it’s a product that we have identical, but they just want a brand or they think they want it, it comes in and then it doesn’t go out. And that’s why it’s so hard to manage and you constantly have a team that’s and and you’re educating.

You know, once reps, you know, know, two, three, four, five years under their belt, they kind of start to learn better than to we’re always going to import olive oil, and we’re always going to import, you know, French cheeses and products like that. And, you know, 10%, it’s it’s not going to change much. Yeah. You know, everyone’s going to complain, but our clientele base, if an entree is $37 and it goes to $39 I don’t think anybody’s canceling I mean, the dinner place is really what drives the price is really the beverages. And I think they’re feeling it.

You know, in a slowdown, beverage always feels it. So instead of drinking a, you know, 200, 3 hundred dollar bottle of wine, people start ordering wines by the glass. Hurts our operators, but for us, the food, they they want really good quality food. You’re always gonna remember a bad steak, a bad piece of fish, a bad pasta more than you’re gonna you’re gonna remember saving $2.

Unidentified speaker: I wanted to talk about cross selling because it sounds like there’s a lot of progress on the cross selling in Texas. I guess as we step back, how many facilities at Chefs are doing cross selling the way that you would like them to do? And what’s the potential as you get more facilities up to the chefs’

Chris Papa, Founder, President, CEO, and Chairman, Chefs’ Warehouse: It’s a long runway. Texas is in the first inning. We have to help them with we’re still operating out of multiple facilities. We’re making space right now in Houston to really get it up and growing. Florida’s Florida’s killing it.

We built them a new facility. We gave them the categories. And we were small, so obviously, it’s a huge state. A lot of people are moving to Florida. So they have the growth they actually have the growth in population, but they also have the growth in categories.

So there, it’s a whole integrated team of cross sellers. So produce, protein, specialty, dry, commodity. So when you look at our size, we don’t break it out by territory, but I could say that New York’s our most mature business, our biggest business. And I am pleasantly surprised of how high their growth rate is. It just shows you how big the market is because we are giving them new categories, and we have new facilities in South Jersey and we’re pulling out of New England.

So we’re able to take some of the pressure off of the of our major facility, you know, here in The Bronx, which is allowing them to go deeper, add more categories. And I think that they’re going to continue to grow real they have a real healthy runway even though they’re such a mature business. So every market has a tremendous runway for growth.

Unidentified speaker: Well, think you gave you gave some good disclosures on that at your Analyst Day with some of the higher growth markets kinda growing in that 10 to 15% range. I’m I’m sure there’s a range there, Florida, Texas, SoCal, Middle East, then I think you’ve talked about New York and California, Northern California growing five to 10%, which is still pretty that Healthy growth. Yeah.

Chris Papa, Founder, President, CEO, and Chairman, Chefs’ Warehouse: Yeah. Mean, we have markets growing 40%, right, because we’re still we’re building, we’re adding categories and then we have businesses. I mean, are fixers, right? We buy a lot of companies for not a lot of money and then we have to sheficize them. So we have a lot of those going on right now where we’re still building the teams, we’re building technology, either renovating or moving them into better facilities.

And I think there’s a tremendous amount of growth once we we’ve proven over the years and years. It takes some time, but once we get everybody in there, we know how to get them going and up to they become more like chef’s warehouse. So obviously, Texas is a big example of that. We bought a company that had routes. It’s probably the most difficult business to chef aside because of their customer mix.

But there was nobody to buy in Texas, which told us that it’s a market waiting for us. It’s just we had to get the route. So we’re in that. We’re making money, but there’s a long runway to become real chef’s warehouse. But the market is huge.

Unidentified speaker: I guess on that point with respect to M and A, so we’ve been on a little bit of a pause or a break here for the past couple of quarters. What kind of goalposts should we think about or catalysts when you might return to being more active on that front?

Chris Papa, Founder, President, CEO, and Chairman, Chefs’ Warehouse: Yes. Well, money got more expensive, right? So it was a much better use of capital to focus inward. The last few years coming out of COVID, we did a lot, right? Because like Jim said before, it was backed up.

We didn’t do anything, obviously, during COVID. So we’ve been busy integrating those businesses and upgrading the technology and the facilities. So we’re constantly looking. There’s I think fold ins make a lot of sense for us because they’re low risk and they’re usually once we have the facilities, which we didn’t have before, I think I’ve said over the last year, once we get all these new facilities, it’s easier to do the fold ins, someone in the territory that we could just take the sales. And a lot of times, we don’t even take many of the trucks, which are very expensive, and we could fold them in.

So it’s a great flow through to the bottom line. There’s a few markets that we’re not in yet to be really national. So obviously, we’re looking at that. But it it’s kind of like we’re doing acquisitions, even though we’re, not writing checks because we’re hiring so many people. You know, we’re hiring a lot of salespeople.

We’re putting in the the the new categories. So it’s almost like we’re, you know, in in acquisition mode, but it’s internal. And, we’re really enjoying it. But, you know, tomorrow the phone rings and there’s something really interesting, and I’m gonna say, you know, this is really interesting. But I think also multiples had to become more realistic.

Mhmm. I think, you know, with all the cheap money that came out, you know, out of COVID, we’re up against PEs that were paying what we thought was very high high multiples. And I think that they probably some of them might have way overpaid stuff. So I think we’re really disciplined. We know the business.

And we know that if you pay a high multiple, it’s either be either a great, great business or it’s got to be something you could take tremendous amount of cost out and fold in. And it’s always harder than it looks. So we like where we are. Our debt levels are down. We have cash.

It’s easy to move if we see something really great. But if we could grow at the rate we’re growing organically, it’s we’re making really good bottom line.

Unidentified speaker: And with respect to salespeople, we get a lot of questions just about how competitive it’s getting to hire the right sales reps. Are you seeing a change? Do you feel like you could still get the quality and the expertise that you want in that level?

Chris Papa, Founder, President, CEO, and Chairman, Chefs’ Warehouse: It’s been hard for forty years. So I wish we have I wish we had recordings when we started. It’s hard to find salespeople. It’s hard to find drivers. It’s hard to find night crews.

I don’t think anything’s changed. We’re a great place to work. We got voted again as a great place to work. We really focus on that, you know, to make it fun. And obviously, we give the ability, you know, salespeople.

I think we have some of the highest paid salespeople in the industry because we give them so many expensive products to sell. So it’s usually I mean, we get a lot of people coming. We don’t like to hire too many people from the competition because it’s usually a different culture. But as we get bigger, we are attracting more that knock on the door that say, I want to work for you. So I think we have a mix of that.

And most of them are coming from hospitality, that they know the food, and we just have to train them on the business. And the 88,000 SKUs come in the system. So I think we’re in a pretty good spot attracting talent.

Unidentified speaker: Okay. So obviously, restaurants is your focus, but you do do some cruise line business. We’ve been getting some questions, maybe some softness there. I don’t know if that will last, but are you seeing that? Or are you still adding more accounts there, and so you’re not really seeing it show through?

Chris Papa, Founder, President, CEO, and Chairman, Chefs’ Warehouse: Or No. The only thing with the cruise ships that was, I would say, is on my radar was that they buy a lot of imported products.

Unidentified speaker: So

Chris Papa, Founder, President, CEO, and Chairman, Chefs’ Warehouse: dealing with that, seeing how, you know, substitutions or, you know, creating another warehouse, you know, that everything’s in bond. Right? So they they don’t pay the tariffs. So it it is more sensitive. I haven’t heard really a slowdown in our in our cruise business.

Again, it’s it’s a good business, but it’s not a huge, you know No. Of the 4,000,000,000.

Jim Letty, CFO, Chefs’ Warehouse: Not overly material.

Unidentified speaker: Yeah. Yes. And but what about I know this question came up on the last earnings call, just what you’re seeing in terms of tourism. It sounds like Vegas might be having a little bit of softness. Who knows if that’s

Chris Papa, Founder, President, CEO, and Chairman, Chefs’ Warehouse: You know, Vegas, our numbers are good, but we always want better. What we’re hearing from our team there is January, March is I mean, it’s winter too. The pools are all closed out, but they weren’t I think maybe they were spoiled coming out of COVID. Everybody wanted to go to Vegas. I don’t think they’re getting as many of the Canadian tourists and the Mexican tourists as we’re in this tariff tussle, but they’re they’re gonna have conferences.

The weekends are really strong still. I’m not seeing a lot of concern.

Unidentified speaker: Okay. As we think about just longer term managing costs and you talked about the cost of distributing. Where are you in terms of supply chain automation? Are the facilities big enough to really kind of look at that? Is that

Chris Papa, Founder, President, CEO, and Chairman, Chefs’ Warehouse: We talk about it every day. We are we’re looking, you know, we are adding automation, you know, where it makes sense. Mhmm. I I still think that that giant jump, you know, I’m always caffetting to to Jim. It’s like, really don’t wanna build another facility without a major change in robotics, audiation.

And when we do the math on the ROI, it still wasn’t there. It’s not

So it’s coming. Every week, we’re probably going to see somebody and to look at the automation. It works for a lot of other distributors, a lot better than for us. We pick so much by the piece. Okay.

We break so many cases. We’re selling 10 lemons and limes and a basket. The you know, for loading and unloading, for, you know, moving a lot of the pallets and stuff like that, I mean, we’ve put in a lot of technology, which has made us a lot more efficient. Mhmm. I still think the big jump is is coming.

As as the prices come down, technology improves, you know, I I think right now, we have a few warehouses, you know, budgeted over the next two years. Maybe we are going a little slower to see really what’s coming up the pipeline in automation to implement. So we just built a new protein cut shop in Northern California. And a lot of the automation there is in really the production of what we’re able to do now with much better laser cutters and packing the machinery for our we do a big hamburger business, so even seafood. So that’s where we really see automation helping us more

Jim Letty, CFO, Chefs’ Warehouse: than any The ROI on those investments in the center of play processing automation is like a in terms of the labor savings, is a payback in like a year, one point years. So we’re kind of focusing on the incremental technology improvements that will help us make us more efficient in production and warehouse as well as distribution and even in back office. But we haven’t seen that leap change that Chris was talking about where we have robots jumping around the warehouse. ROI is not there

Unidentified speaker: yet, and they Is it harder to do because Chefs is still in that growth phase where you’re consolidating warehouses or maybe moving and expanding and there’s you don’t want to put too much into one space and one location if you have to move that? Or is that part of the consideration?

Chris Papa, Founder, President, CEO, and Chairman, Chefs’ Warehouse: Again, we just built Florida. We just built LA. We just built Northern California. Dubai. Just doubled the size of Dubai, Oman.

Qatar. Qatar. So the team’s been really busy. So we don’t feel like we’re at a disadvantage right now because we don’t have and I’ve walked so many modern ways. See all their problems.

I mean, one of our I want to call them a friendly competitor, but they were in an area that we didn’t distribute, almost put them out of business. The automation was just it wasn’t perfect. They had to close for a while. It happened to a retail distributor here in this market. So I think we’re wise enough to say, let’s take it a step at a time.

Let’s prove it, maybe put it into one warehouse and test it, and then we’ll have more confidence to roll it out.

Unidentified speaker: Okay. You mentioned Chef’s Middle East. We got a lot of questions on that. That was a very unique situation. But maybe just help us learn more about that market.

Maybe we should go for a tasting over there at some of the restaurants.

Chris Papa, Founder, President, CEO, and Chairman, Chefs’ Warehouse: It’s a long trip. A lot of restaurants. And we looked at that for five years, and it took a lot to get me to pull the trigger on that because it was far away. But you’ve heard me say, the great thing about being a chef warehouse, there’s nobody like us. The hard thing is there’s nobody like us to buy.

So we buy all these companies and we have to cheficize them. So we found one. It was very far away, but they had similar supply chain, similar customer base, focused on high end casual to fine dining and you have tremendous population growth, right? They’re going to double their population still. So it kind of checked off all the filters, and we got a great, great management team.

And that was the last bit of it. I needed to know that the team was going to be on board. And as we obviously groom more and more people into that business, we really love the management team. And when they said that they were on board for the long term, gave us the confidence to invest, and it’s probably one of the best investments we’ve ever made.

Jim Letty, CFO, Chefs’ Warehouse: They’ve been outperforming our original model and our expectations pretty much since we’ve owned them.

Chris Papa, Founder, President, CEO, and Chairman, Chefs’ Warehouse: Every time a bomb goes off in The Middle East, we all jump. It seems that, you know, the the crazier the world gets, the busier they get there. It looks like it attracts more capital. Right. You know, they’re building tons of condos, hotels.

So it seems like a like a safe haze, almost like the Switzerland of of

Unidentified speaker: Mhmm. I’m trying to finish up our conversations today with this question, and and I get this a lot from investors too, so I think this will be good. But why why should investors think about Chefs today? You’ve made a lot of progress. You’ve had a lot of good growth.

I I guess, you know, some investors say, Kelly, I missed it. So

Chris Papa, Founder, President, CEO, and Chairman, Chefs’ Warehouse: We’re we’re we’re 4,000,000,000. I mean, we will double the business. So to say that, oh, we’re going to go be forty-fifty. We love our space. We love what we do.

We see the growth. We realize we’re just getting better and we have a much broader audience now because we’ve gotten bigger and our categories are all our new categories are just in their infant stage. So they should be interested because we’re a growth company, and we’re going to grow.

Unidentified speaker: Great. I hear the kitchen behind us. I think we’re ready to head to lunch. But thank you so much for taking the time to

Chris Papa, Founder, President, CEO, and Chairman, Chefs’ Warehouse: come to Thanks for having us.

Unidentified speaker: Yeah. That was great.

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