The Chefs' Warehouse (CHEF) has quietly been making new highs in recent days and since it's not a well-known name, we wanted to provide some color on them. CHEF is a distributor of specialty food products in the US and Canada. It's focused on serving the specific needs of chefs who own and/or operate some of the nation's leading restaurants, fine dining establishments, country clubs, hotels, caterers, culinary schools, bakeries, patisseries, chocolatiers, cruise lines, casinos and specialty food stores.
CHEF believes that it has a competitive advantage as a result of its extensive selection of distinctive and hard-to-find specialty and center-of-the-plate food products. It defines specialty food products as gourmet foods and ingredients that are of the highest grade, quality or style as measured by their uniqueness, exotic origin or particular processing method. Its product portfolio includes over 48,000 SKUs from more than 2,500 different suppliers and is comprised primarily of specialty food products, such as artisan charcuterie, specialty cheeses, unique oils and vinegars, truffles, caviar, chocolate and pastry products.
It also offers an extensive line of center-of-the-plate products, including custom cut beef, seafood and hormone-free poultry, as well as broadline food products, such as cooking oils, butter, eggs, milk and flour. When marketing its products, CHEF focuses its efforts on chefs, and by offering a wide selection of both distinctive and hard-to-find products, together with center-of-the-plate proteins and staple broadline foods, CHEF is able to differentiate itself from larger, traditional broadline foodservice distributors. CHEF has also been active on the M&A front having completed eight acquisitions since 2013.
Excluding its direct-to-consumer business, CHEF currently serves more than 30,000 customer locations in its 15 primary geographic markets, including New York, Washington DC, Los Angeles, San Francisco, Las Vegas, Miami, Portland, Seattle, Columbus, Cincinnati, Chicago, Sacramento, Vancouver, Edmonton and Toronto. CHEF operates 23 distribution centers and provides service six days a week in many of its service areas, using a fleet of delivery trucks to fill orders.
The stock jumped when CHEF reported strong Q1 results on May 9. Non-GAAP EPS jumped to a $0.03 profit from a $(0.05) loss in the prior year period. Revenue rose 10.7% YoY to $318.6 mln. Revenue was in-line but EPS was better than market expectations. Despite some challenging winter weather across CHEF's network in Q1, especially in the mid-west early in the quarter and the four named winter storms that hit the Northeast and mid-Atlantic in February and March, CHEF continued to see solid organic growth amid a supportive economic backdrop and continued strength in independent restaurants. For 2018, CHEF expects full year revenue of $1.40-1.44 bln and non-GAAP EPS of $0.69-0.78.
In sum, CHEF seems to be doing well despite what has been a difficult time for the restaurant industry. It seems that their focus on hard-to-find food items coupled with center-of-the-plate offerings is helping them navigate a tough industry. The stock has made a strong move over the past year, up around 150%.