The Chefs’ Warehouse, Inc. (CHEF): A Bear Case Theory

We came across a bearish thesis on The Chefs’ Warehouse, Inc. on Valueinvestorsclub.com by yarak775. In this article, we will summarize the bears’ thesis on CHEF. The Chefs’ Warehouse, Inc.’s share was trading at $63.81 as of June 30t^h. CHEF’s trailing and forward P/E were 41.98 and 37.04 respectively according to Yahoo Finance.

The Chef’s Warehouse (CHEF) presents a compelling short opportunity due to a confluence of structural and macro headwinds. Once a high-growth food distributor focused on premium products for fine dining and hospitality, CHEF’s expansion relied heavily on acquisitions, which drove revenues from $1.6B in 2019 to $3.8B in 2024.

However, despite topline growth, margins failed to expand, with gross margins falling 150bps and EBITDA margins remaining flat, highlighting the company’s lack of operating leverage. More concerning is that in downturns, CHEF suffers significant margin compression, as seen in 2020’s 30% revenue drop, leading to negative EBITDA.

With M&A opportunities drying up due to a saturated market and elevated acquisition costs, future growth will likely revert to mid-single digits, largely driven by price inflation rather than volume. This deceleration is critical, as the stock currently trades at ~40x 2025E earnings, roughly double the multiple of larger peers like SYSCO and US Foods. The competitive landscape is also shifting, with SYSCO and US Foods aggressively entering the specialty segment—CHEF’s core niche—leveraging scale, logistics, and incentives to poach customers. Testimonials suggest this shift is already eroding CHEF’s customer base.

A broader economic slowdown, especially in travel and fine dining, would further expose CHEF’s vulnerability, given its negative operating leverage in downturns. While bulls may argue that the affluent clientele cushions downside, current conditions likely reflect peak demand. With slowing growth, intensifying competition, and a stretched valuation, CHEF appears primed for multiple compression. Insider selling adds another red flag, reinforcing the view that risk/reward is skewed to the downside.

Previously, we covered a bullish thesis on United Natural Foods, Inc. by The Value Road in June 2025, which highlighted the company’s turnaround driven by cost cuts, supply chain improvements, and activist involvement. The company’s stock price has appreciated by approximately 7.5% since our coverage. This is because the thesis has started to play out. yarak775 shares a contrarian view on CHEF but emphasizes on structural fragility and macro risks.

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Disclosure: None. This article was originally published at Insider Monkey.