Chefs”™ Warehouse Holdings L.L.C. filed for an initial public offering of stock, just a few years after relocating its headquarters to Ridgefield from New York City and as interest in the IPO market intensifies with a number of big-name companies filing plans to go public in April.
The company distributes top-shelf foods for restaurants, caterers, culinary schools and specialty food stores throughout the tristate area and five other major metropolitan centers nationally ”“including specialty cheeses, truffles, caviar and chocolate ”“ filling a total of more than 11,000 orders weekly from a list of 11,500 separate products from 1,000 suppliers. Chefs”™ Warehouse carries 125 different varieties of olive oil alone.
The company, which has nearly 450 employees, plans to change its name to The Chefs”™ Warehouse Inc. when it completes the offering.
Chefs”™ Warehouse”™s predecessor company Dairyland USA Corp. was founded in 1985; since 2007, it has expanded rapidly with the assistance of small acquisitions covering markets in Miami, San Francisco, and Washington, D.C.
The company joins an active pipeline for IPOs in April, including a $125 million filing this month by Staffmark Holdings Inc., a subsidiary of Compass Diversified Holdings Inc. That filing arrives even as Compass CEO Joseph Massoud remains on a leave of absence over unspecified matters unrelated to Westport-based Compass.
Other consumer-oriented companies with IPO filings on deck include Zipcar Inc., a Cambridge, Mass.-based company that provides hourly car-rental services in Fairfield County and many other parts of the U.S., and online travel agency Kayak Software Corp. of Norwalk.
Chefs”™ Warehouse aims to raise at least $100 million in an IPO; in its most recent fiscal year, it earned nearly $16 million on $330 million in revenue, up 22 percent from the year before after a recessionary dip from 2008.
Last October, Chefs”™ Warehouse inked a new credit agreement giving it access to $100 million in loans.
Perhaps incredibly, the Nasdaq ticker symbol “CHEF” had not been gobbled up by any other food companies that trade on the exchange, and Chefs”™ Warehouse made a reservation for its own use.
Its IPO could provide an interesting bellwether on investors”™ overall taste for where things stand with regard to consumer confidence ”“ because Chefs”™Warehouse”™s customers operate principally within the fine-dining segment, it says its business is more exposed to reductions in discretionary spending than larger, more traditional food distributors focused on the casual-dining and quick-service segments of the restaurant industry.
That latter industry, of course, is dominated by Sysco Corp. and U.S. Food Service Inc., which account for 17 percent and 9 percent of industry sales, respectively. The leftovers are left to some 16,500 distributors in the U.S., if three-quarters of a $161 billion market could be thought to be leftovers.
In a review of Sysco”™s quarterly results in February, CEO William DeLaney said the company has had to absorb higher costs in some food categories, particularly perishable items.
“These are expensive boxes in these particular categories, especially in the meat and seafood areas, so they”™re a very significant part of the spend budget for our customers.,” DeLaney said. “It”™s difficult for them to absorb price increases in the short term and as a result, we”™ve struggled to pass it along in the right way. I expect that over time, generally and gradually, we”™ll be able to do that, but I think it will take a lot longer.”
