The Chefs' Warehouse
Annual Report 2017

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549FORM 10-K☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 29, 2017 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________ Commission file number: 001-35249 THE CHEFS’ WAREHOUSE, INC. (Exact name of registrant as specified in its charter)Delaware 20-3031526(State or other jurisdiction of (I.R.S. Employerincorporation or organization) Identification No.) 100 East Ridge RoadRidgefield, Connecticut 06877(Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: (203) 894-1345 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registeredCommon Stock, $.01 par value per share The Nasdaq Stock Market LLC (Nasdaq Global Select Market) Securities registered pursuant to Section 12(g) of the Act: NoneIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submittedand posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes☒ No ☐ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’sknowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growthcompany. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☒Non-accelerated filer ☐ (Do not check if a smaller reporting company) Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if registrant has elected not to use the extended transition period for complying with any new or revised financialaccounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒The aggregate market value of the registrant’s common stock held by non-affiliates computed by reference to the price at which the common equity was last sold as of thelast business day of the registrant’s most recently completed second quarter (June 30, 2017): $269,159,670Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.Class Outstanding at March 5, 2018Common Stock, $.01 par value per share 28,441,253 shares DOCUMENTS INCORPORATED BY REFERENCE Document Parts Into Which IncorporatedProxy Statement for the Annual Meeting of Stockholdersexpected to be held on May 18, 2018 (Proxy Statement) Part IIITotal number of pages: 84 1THE CHEFS’ WAREHOUSE, INC.INDEX Description PageNumber Part I Item 1Business 5 Item 1ARisk Factors 15 Item 1BUnresolved Staff Comments 29 Item 2Properties 29 Item 3Legal Proceedings 30 Item 4Mine Safety Disclosures 30 Part II Item 5Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 31 Item 6Selected Financial Data 33 Item 7Management’s Discussion and Analysis of Financial Condition and Results of Operations 35 Item 7AQuantitative and Qualitative Disclosures About Market Risk 47 Item 8Consolidated Financial Statements and Supplementary Data 48 Item 9Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 73 Item 9AControls and Procedures 73 Item 9BOther Information 75 Part III Item 10Directors, Executive Officers and Corporate Governance 75 Item 11Executive Compensation 75 Item 12Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 75 Item 13Certain Relationships and Related Transactions, and Director Independence 76 Item 14Principal Accounting Fees and Services 76 Part IV Item 15Exhibits and Financial Statement Schedules 76 Item 16Form 10-K Summary 76 Signatures 842CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K of The Chefs’ Warehouse, Inc. contains forward-looking statements within the meaning of Section 27A of the SecuritiesAct of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements provide our current expectationsor forecasts of future events and are not statements of historical fact. These forward-looking statements include information about possible or assumed futureevents, including, among other things, discussion and analysis of our future financial condition, results of operations, our strategic plans and objectives, costmanagement, liquidity and ability to refinance our indebtedness as it matures, anticipated capital expenditures (and access to capital) required to completeprojects, amounts of cash distributions to our stockholders in the future, if any, and other matters. Words such as “anticipates,” “expects,” “intends,” “plans,”“believes,” “seeks,” “estimates” and variations of these words and similar expressions are intended to identify forward-looking statements. These statementsare not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control, are difficult to predictand/or could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. Forward-looking statements involve inherent uncertainty and may ultimately prove to be incorrect or false. Investors in our common stock are cautioned notto place undue reliance on forward-looking statements. Except as otherwise may be required by law, we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or actual operating results. Our actual results could differmaterially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to, the following: •our success depends to a significant extent upon general economic conditions, including disposable income levels and changes in consumerdiscretionary spending;•a significant portion of our future growth is dependent upon our ability to expand our operations in our existing markets and to penetrate newmarkets through acquisitions;•we may not achieve the benefits expected from our acquisitions, including our recent acquisitions of Fells Point Wholesale Meats, Inc. (“FellsPoint”) and M.T. Food Service, Inc. (“MT Food”), which could adversely impact our business and operating results;•we may have difficulty managing and facilitating our future growth;•conditions beyond our control could materially affect the cost and/or availability of our specialty food products or center-of-the-plate productsand/or interrupt our distribution network;•our increased distribution of center-of-the-plate products, like meat, poultry and seafood, following our acquisitions of Michael’s Finer Meats, LLC(“Michael’s”), Allen Brothers, Inc. (“Allen Brothers”), Del Monte Capital Meat Co. and related entities (“Del Monte”) and Fells Point, involvesincreased exposure to price volatility experienced by those products;•our business is a low-margin business and our profit margins may be sensitive to inflationary and deflationary pressures;•group purchasing organizations may become more active in our industry and increase their efforts to add our customers as members of theseorganizations;•because our foodservice distribution operations are concentrated in certain culinary markets, we are susceptible to economic and otherdevelopments, including adverse weather conditions, in these areas;•damage to our reputation or lack of acceptance of our specialty food products, center-of-the-plate products and/or the brands we carry in existingand new markets could materially and adversely impact our business, financial condition or results of operations;•our customers are generally not obligated to continue purchasing products from us;•we have experienced losses due to our inability to collect accounts receivable in the past and could experience increases in such losses in the futureif our customers are unable to pay their debts to us in a timely manner or at all;•product liability claims could have a material adverse effect on our business, financial condition or results of operations;•fuel cost volatility may have a material adverse effect on our business, financial condition or results of operations;•new information or attitudes regarding diet and health or adverse opinions about the health effects of the products we distribute could result inchanges in consumer eating habits, which could have a material adverse effect on our business, financial condition or results of operations;•we have significant competition from a variety of sources, and we may not be able to compete successfully;•our substantial indebtedness may limit our ability to invest in the ongoing needs of our business;•our ability to raise capital in the future may be limited;•we may be unable to obtain debt or other financing, including financing necessary to execute on our acquisition strategy, on favorable terms or atall;3•information technology system failures or breaches of our network security could interrupt our operations and adversely affect our business;•our investments in information technology may not produce the benefits that we anticipate;•we may not be able to adequately protect our intellectual property, which, in turn, could harm the value of our brands and adversely affect ourbusiness;•our business operations and future development could be significantly disrupted if we lose key members of our management team;•our insurance policies may not provide adequate levels of coverage against all claims, and fluctuating insurance requirements and costs couldnegatively impact our profitability. In addition, if we fail to establish proper reserves and adequately estimate future expenses, the costs associatedwith our self-insured group medical, workers’ compensation liability and auto liability plans may adversely affect our business, financial conditionor results of operations;•increases in our labor costs, including as a result of labor shortages, the unionization of some of our associates, the price or unavailability ofinsurance and changes in government regulation, could slow our growth or harm our business;•we are subject to significant governmental regulation and failure to comply could subject us to enforcement actions, recalls or other penalties, whichcould have a material adverse effect on our business, financial condition or results of operations;•federal, state, provincial and local tax rules in the United States and Canada may adversely impact our business, financial condition or results ofoperations;•the price of our common stock may be volatile and our stockholders could lose all or a part of their investment;•concentration of ownership among our existing executive officers, directors and their affiliates may prevent new investors from influencingsignificant corporate decisions;•if securities analysts or industry analysts downgrade our stock, publish negative research or reports or do not publish reports about our business, ourstock price and trading volume could decline;•we do not intend to pay dividends for the foreseeable future and our stock may not appreciate in value;•our issuance of preferred stock or debt securities could adversely affect holders of our common stock and discourage a takeover; and•some provisions of our charter documents and Delaware law may have anti-takeover effects that could discourage an acquisition of us by others,even if an acquisition would be beneficial to our stockholders, and may prevent attempts by our stockholders to replace or remove our currentmanagement.This list of risks and uncertainties, however, is only a summary of some of the most important factors and is not intended to be exhaustive. Investors in ourcommon stock should carefully review the risks that are set forth under the caption “Risk Factors” included in Part I, Item 1A of this Form 10-K.Unless this Form 10-K indicates otherwise or the context otherwise requires, the terms “The Chefs’ Warehouse,” “we,” “our,” “our Company,” “the Company”or “us” as used in this Form 10-K refer to The Chefs’ Warehouse, Inc. and its subsidiaries.4Item 1. BUSINESSWe are a premier distributor of specialty food products in the United States and Canada. We are focused on serving the specific needs of chefs who ownand/or operate some of the leading menu-driven independent restaurants, fine dining establishments, country clubs, hotels, caterers, culinary schools,bakeries, patisseries, chocolatiers, cruise lines, casinos and specialty food stores in the United States and Canada. We believe that we have a distinctcompetitive advantage in serving these customers as a result of our extensive selection of distinctive and hard-to-find specialty and center-of-the-plate foodproducts, our product knowledge and our customer service.We define specialty food products as gourmet foods and ingredients that are of the highest grade, quality or style as measured by their uniqueness, exoticorigin or particular processing method. Our product portfolio includes over 48,000 stock-keeping units (“SKUs”) from more than 2,500 different suppliersand is comprised primarily of imported and domestic specialty food products, such as artisan charcuterie, specialty cheeses, unique oils and vinegars, truffles,caviar, chocolate and pastry products. We also offer an extensive line of center-of-the-plate products, including custom cut beef, seafood and hormone-freepoultry, as well as broadline food products, such as cooking oils, butter, eggs, milk and flour. When marketing our products to our customers, we focus ourefforts on chefs, and we believe that, by offering a wide selection of both distinctive and hard-to-find products, together with center-of-the-plate proteins andstaple broadline food products, we are able to differentiate ourselves from larger, traditional broadline foodservice distributors, while simultaneouslyenabling our customers to utilize us as their primary foodservice distributor. Additionally, as a result of our acquisition of Allen Brothers in December 2013,we market certain of our center-of-the-plate products directly to consumers through a mail and e-commerce platform.Since the formation of our predecessor in 1985, we have expanded our distribution network, product selection and customer base both organically andthrough acquisitions. From December 27, 2013 to December 29, 2017, our net revenues increased from approximately $674 million to approximately $1.3billion. During these periods and in prior years, our sales to both new and existing customers have increased as a result of an increase in the breadth and depthof our product portfolio, our commitment to customer service, the efforts of our experienced and sophisticated sales professionals, the increased use oftechnology in the operations and management of our business and our ongoing consolidation of the fragmented specialty foodservice distribution industry.Since December 29, 2012, we have completed eight acquisitions which have increased our penetration in existing markets, expanded our footprint into newmarkets and/or enhanced our product capabilities. The up-front cash purchase prices for these eight acquisitions ranged from $0.4 million to $123.9 million,resulting in aggregate up-front cash consideration of more than $252.8 million, which we funded with borrowings under our then existing senior securedcredit facilities, a portion of which we repaid with proceeds from the issuance of $125.0 million of senior secured notes in April 2013 and April 2015, and theproceeds of our common stock offering completed in September 2013.Excluding our direct-to-consumer business, we currently serve more than 30,000 customer locations in our fifteen primary geographic markets across theUnited States and Canada, including New York, Washington, D.C., Los Angeles, San Francisco, Las Vegas, Miami, Portland, Seattle, Columbus, Cincinnati,Chicago, Sacramento, Vancouver, Edmonton and Toronto. By leveraging an experienced and sophisticated sales force of approximately 470 sales andcustomer service professionals, we maintain collaborative relationships with thousands of chefs while also acting as a critical marketing arm and route-to-market for many of our suppliers. We operate 23 distribution centers and provide service six days a week in many of our service areas, utilizing our fleet ofdelivery trucks to fill our customers’ orders.Competitive StrengthsWe believe that, during our over 30-year history, we have achieved, developed and/or refined the following strengths which provide us with a distinctcompetitive position in the foodservice distribution industry and also the opportunity to achieve superior margins relative to most large broadlinefoodservice distributors:Leading Distributor of Specialty Food Products in Many of the Key Culinary Markets. Based on our management’s industry knowledge and experience, webelieve we are the largest distributor of specialty food products, as measured by net sales, in the New York, Washington, D.C., San Francisco and Los Angelesmetropolitan markets. We believe these markets, along with a number of other markets we serve, including Las Vegas, Miami, Philadelphia, Boston, NapaValley, Portland, Seattle, Chicago, Cincinnati, Vancouver and Toronto, create and set the culinary trends for the rest of the United States and Canada andprovide us with valuable insight into the latest culinary and menu practices. Furthermore, we believe our established relationships with many of the top chefs,culinary schools and dining establishments in these key culinary markets have benefited us when we entered into new markets where we believe that chefs atour potential customers were generally knowledgeable of our brand and commitment to quality and excellence from their experience working in othermarkets which we serve or through their personal relationships throughout the culinary industry.5Expansive Product Offering. We offer an extensive portfolio of high-quality specialty food products, ranging from basic ingredients and staples, such as milkand flour, to custom cut steaks and seafood and pastries, as well as delicacies and specialty ingredients sourced from North America, Europe, Asia and SouthAmerica, which we believe helps our customers distinguish their menu items. We carry more than 48,000 SKUs and we constantly evaluate our portfolio andintroduce new products to address regional trends and preferences and ensure that we are on the leading edge of broader culinary trends. Through ourimporting division, we provide our customers with access to a portfolio of exclusive items, including regional olive oils, truffles and charcuterie from Italy,Spain, France and other Mediterranean countries. In addition, and as evidence of our commitment to aid our customers in creating unique and innovativemenu items, we regularly utilize our sourcing relationships and industry insights to procure additional products that we do not regularly carry but that ourcustomers specifically request. We believe that the breadth and depth of our product portfolio facilitates our customers’ ability to distinguish and enhancetheir menu offerings and differentiates us from larger traditional broadline foodservice distributors. For example, we provide a selection of more than 200different varieties of olive oil, while large broadline foodservice distributors only carry, on average, 5 - 10 types of olive oil.Critical Route-to-Market for Specialty Food Suppliers. We currently distribute products from more than 2,500 different suppliers. Our suppliers are locatedthroughout North America, Europe, Asia and South America and include numerous small, family-owned entities and artisanal food producers. We are thelargest customer for many of our suppliers. As a result, our experienced and sophisticated sales professionals, customer relationships and distribution platformare important to these suppliers’ route-to-market, which enables us to offer a wide range of products on an exclusive basis.Expanding Base of Premier Customer Relationships. Our breadth and depth of product offerings coupled with our highly regarded customer service hasallowed us to develop and retain a loyal customer base that is comprised of chefs who own or work at more than 30,000 of the nation’s leading menu-drivenindependent restaurants, fine dining establishments, country clubs, hotels, caterers, culinary schools, bakeries, patisseries, chocolatiers, cruise lines, casinosand specialty food stores. Our focus on product selection, product knowledge and customer service has rewarded us with a number of long-term customerrelationships, which often begin when chefs are introduced to us while attending the nation’s leading culinary schools, including The Culinary Institute ofAmerica and The French Culinary Institute, both of which have been customers of ours for more than nine years. Based on our management’s industryexperience and our relationships and dealings with our customers, we believe we are the primary distributor of specialty food products to the majority of ourcustomers that are not part of our direct-to-consumer center-of-the-plate business.Collaborative Professional and Educational Relationships with our Customers. We employ a sophisticated and experienced sales force of approximately470 sales and customer service professionals, a significant number of whom have formal culinary training, degrees in the culinary arts or prior experienceworking in the culinary industry. Equipped with advanced culinary and industry knowledge, our sales professionals seek to establish a rapport with ourcustomers’ chefs, so that they can more fully understand and anticipate the needs of and offer cost-effective food product solutions to the chefs who own oroperate these businesses. We believe that the specialized knowledge base of our sales professionals enables us to take a more collaborative and educationalapproach to selling our gourmet foods and ingredients and to further differentiate ourselves from our traditional broadline competitors.Expertise in Logistics and Distribution. We have built a first-class, scalable inventory management and logistics platform that enables us to efficiently fillour customers’ orders and to profitably meet our customers’ needs for varying drop sizes, high service levels and timely delivery. Our average distributionservice level, or the percentage of in-stock items ordered by customers that are not part of our direct-to-consumer center-of-the-plate business that weredelivered by the requested date, was in excess of 97% in 2017, which we believe is among the highest rates in the foodservice distribution industry. With 23distribution centers located throughout the United States and Canada, we are able to leverage our geographic footprint and reduce our inbound freight costs.This scale enables us to maintain a portfolio of more than 48,000 SKUs, and through the operation of our sophisticated information technology, inventorymanagement and logistics systems, we believe we provide our customers with some of the highest levels of customer service and responsiveness in ourindustry.Experienced and Proven Management Team. Our senior management team has demonstrated the ability to grow the business through various economicenvironments. With collective experience of more than 90 years at The Chefs’ Warehouse, its predecessor and other foodservice distribution companies, ourfounders and senior management are experienced operators and are passionate about our future. Our senior management team is comprised of our founders, aswell as experienced professionals with expertise in the foodservice distribution industry and in a wide range of functional areas, including finance andaccounting, sales and marketing, operations, information technology, legal and human resources.6Our Growth StrategiesWe believe substantial organic growth opportunities exist in our current markets through increased penetration of our existing customers and the addition ofnew customers, and we have identified new markets that we believe also present opportunities for future expansion. Key elements of our growth strategyinclude the following:Increase Penetration with Existing Customers. We intend to sell more products to our existing customers by increasing the breadth and depth of our productselection and increasing the efficiency of our sales professionals, while at the same time continuing to provide excellent customer service. We are a data-driven and goal-oriented organization, and our management and sales professionals are highly focused on our weekly sales and gross profit contribution fromeach of our non-direct-to-consumer customers and increasing the number of unique products we distribute to such customers. We believe our acquisitionactivity since our initial public offering reflects this focus, as we have sought to complement our existing product offerings and enhance our productcapabilities through our August 2017 acquisition of Fells Point, a specialty protein manufacturer and distributor, our June 2016 acquisition of MT Food, awholesale distributor of dairy, produce, specialty and grocer items, our April 2015 acquisition of Del Monte, a supplier of high quality, USDA inspected beef,pork, lamb, veal, poultry and seafood products, our October 2014 acquisition of Euro Gourmet Inc. (“Euro Gourmet”), a wholesale specialty distributor ofimported and domestic products, our December 2013 acquisition of Allen Brothers, a leading processor and distributor of premium quality meats, and ourMay 2013 acquisition of Qzina Specialty Foods North America Inc. (“Qzina”), a leading supplier of gourmet chocolate, dessert and pastry products.Expand our Customer Base Within our Existing Markets. As of December 29, 2017, we served more than 30,000 customer locations, excluding our direct-to-consumer business, in the United States and Canada. We plan to expand our market share in the fragmented specialty food distribution industry bycultivating new customer relationships within our existing markets through the continued penetration of menu-driven independent restaurants, fine diningestablishments, country clubs, hotels, caterers, culinary schools, bakeries, patisseries, chocolatiers, cruise lines, casinos and specialty food stores. We believewe have the opportunity to continue to gain market share in our existing markets by offering an extensive selection of specialty food products, as well ascenter-of-the-plate proteins and traditional broadline staple food products through our unique, collaborative and educational sales efforts and efficient,scalable distribution solution.Improve our Operating Margins. As we continue to grow, we believe that the investments we are making in our facilities and information technologyplatforms, along with improved efficiencies that we are working to achieve in our general and administrative functions, should yield both improved customerservice and profitability. Utilizing our fleet of delivery trucks, we usually fill customer orders within 12-24 hours of order placement. We intend to continueto offer our customers this high level of customer service, while maintaining our focus on realizing efficiencies and economies of scale in purchasing,warehousing, distribution and general and administrative functions which, when combined with incremental fixed-cost leverage, we believe will lead tocontinued improvements in our operating margin over time.Pursue Selective Acquisitions. Throughout our over 30-year history, we have successfully identified, consummated and integrated multiple strategicacquisitions, which were designed to increase our penetration in existing markets, expand our footprint into new markets and/or enhance our productcapabilities. We believe that, over time, we will be able to improve the operations and overall profitability of each acquired company by leveraging oursourcing relationships to provide an expanded product portfolio, implementing our tested sales force training techniques and metrics and installing improvedwarehouse management and information systems. We believe we have the opportunity to capitalize on our existing infrastructure and expertise bycontinuing to selectively pursue opportunistic acquisitions in order to expand the breadth of our distribution network, increase our operating efficiency andadd additional products and capabilities. Since our initial public offering (“IPO”), we have completed eleven acquisitions which have increased ourpenetration in existing markets, expanded our footprint into new markets and enhanced our product capabilities. During fiscal 2014 we implemented an“integration team” that is dedicated to onboarding new acquisitions and integrating information technology systems as quickly and efficiently as possible.The integration team helps streamline the acquisition process and enables us to achieve expected benefits and synergies more quickly. Having a teamdedicated to integration helps us make sure the people, processes and products we add through acquisitions are consistent with the rest of our business andallows our management team to focus its attention on our day-to-day operations.Our Markets and the Customers that We ServeExcluding our direct-to-consumer business, we distribute our specialty food products to over 30,000 distinct customer locations from distribution centerslocated in our primary markets, which include New York, Washington, D.C., San Francisco, Los Angeles, Las Vegas, Miami, Portland, Seattle, Columbus,Cincinnati, Chicago, Vancouver, Edmonton and Toronto. We also serve customers in a number of other markets, including Philadelphia, Boston and NapaValley. We believe that many of these7markets set the culinary trends for the rest of the United States and Canada and provide us with valuable insight into the latest culinary and menu trends. Wehave established collaborative professional and educational relationships with some of the United States’ and Canada’s most demanding chefs, which allowsus to anticipate the needs of, and offer cost-effective food product solutions to, our customers while allowing our customers to locate ingredients that willenable them to create unique and differentiated menu items. Our target customers include menu-driven independent restaurants, fine dining establishments,country clubs, hotels, caterers, culinary schools, bakeries, patisseries, chocolatiers, cruise lines, casinos and specialty food stores. We have no meaningfulcustomer concentration as our top ten customers accounted for less than 1.9% of total net sales for our 2017 fiscal year.Additionally, as a result of our acquisition of Allen Brothers in December 2013, we have also begun to market certain of our center-of-the-plate proteinsdirectly to consumers through a mail and e-commerce platform.Set forth below is a breakdown of the primary geographic markets we serve and the year we entered each market:Market Name Geographies Served Year EnteredNew York Boston to Atlantic City 1985Washington, D.C. Philadelphia to Richmond 1999Los Angeles Santa Barbara to San Diego 2005San Francisco Napa Valley to Monterey Bay 2005Las Vegas Las Vegas 2005Miami Miami 2010Portland Bend, OR to Seattle, WA 2011Columbus Midwest 2012Cincinnati Dayton, OH to Lexington, KY 2013Chicago Chicago 2013Vancouver Vancouver and Western Canada 2013Edmonton Edmonton and Calgary 2013Toronto Toronto 2013Seattle Seattle 2013Sacramento Sacramento 2015We extend credit to virtually all of our non-direct-to-consumer customers on varying terms. Most of our customers have payment terms from 20-60 days. Wecomplete a formal credit assessment of all significant new non-direct-to-consumer customers, and our Credit and Collections Department regularly evaluatescredit terms for each such customer based upon several factors, including order frequency, average order size, the types of products purchased and the lengthof the relationship. We believe that we are skilled at managing customer credit.Our Gourmet Food ProductsWe strive to be the primary food source solution for our customers, and, to this end, we offer our customers a comprehensive product portfolio that rangesfrom basic ingredients and staples, such as milk and flour, to custom-cut steaks and seafood and pastries, as well as delicacies and specialty ingredientssourced from North America, Europe, Asia and South America. We carry more than 48,000 SKUs and we are fully committed to utilizing our sourcingrelationships and industry insights to procure products that we do not regularly carry but that our customers specifically request as they seek to create uniqueand innovative menu items.8The quarterly sales mix, as a percentage of net sales, of our principal product categories during fiscal years 2017 and 2016 is as follows: Fiscal 2016 Fiscal 2017 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4Center-of-the-Plate 48.4% 50.0% 43.4% 45.8% 46.1% 47.3% 46.5% 48.0%Dry Goods 17.1% 16.8% 18.1% 17.4% 17.3% 17.4% 17.4% 16.9%Pastries and other Bakery Products 13.5% 12.5% 14.7% 15.0% 14.2% 13.2% 13.4% 13.5%Cheeses 7.8% 7.8% 9.1% 8.2% 8.0% 7.8% 7.9% 7.4%Dairy Products 5.2% 5.3% 8.0% 7.7% 6.8% 6.8% 7.2% 7.1%Oils and Vinegars 6.4% 5.9% 4.9% 4.2% 5.7% 5.6% 5.6% 5.3%Kitchen Supplies 1.6% 1.7% 1.8% 1.7% 1.9% 1.9% 2.0% 1.8%Total 100% 100% 100% 100% 100% 100% 100% 100%We continuously evaluate potential additions to our product portfolio based on both existing and anticipated trends in the culinary industry. Our buyershave numerous contacts with suppliers throughout North America, Europe, Asia and South America and are always looking for new and interesting productsthat will aid our customers as they seek to keep up with the latest developments in the culinary industry. Our ability to successfully distribute a significantportion of the total production of smaller, regional and artisanal specialty food producers allows us the opportunity to be these producers’ primary route-to-market in our markets without, in most cases, requiring us to make contractual commitments regarding guaranteed volume. We are also able to utilize our sizeand successful track record of distributing products sourced from outside the United States and Canada to resist efforts from many of our foreign suppliers topush importing costs off onto us.We seek to differentiate ourselves from our competitors by offering a more extensive depth and breadth of specialty products. We carry a wide range of high-quality specialty food products, including artisan charcuterie, specialty cheeses, unique oils and vinegars, truffles, caviar, chocolate and pastry productsacross each of our markets, but we also offer a number of items in each of our respective markets that are tailored to meet the unique preferences of theindividual chefs in that market. We regularly rotate our inventory to identify and bring to market new products that will continue to support our valueproposition.Within our product offerings, we carry numerous gourmet brands, and at the same time, we seek to maximize product contribution through the sale of ourproprietary brands, which we offer in a number of staple products, including bulk olive oil, Italian grating cheeses and butter. We believe that our ability tooffer simultaneously high-quality specialty foods and ingredients, center-of-the-plate products and more traditional broadline staple food products providesour customers with foodservice distribution solutions that are efficient and cost effective.Our Sophisticated and Experienced Sales ProfessionalsWe employ a sophisticated and experienced sales force of approximately 470 sales and customer service professionals focused on meeting our customers’goals and objectives, while concurrently educating them regarding our latest products and broader culinary trends. To ensure a high level of customerservice, we currently maintain a ratio of approximately one sales professional for every 64 of our customers, excluding our direct-to-consumer customers. Oursales force is composed of the following three distinct groups which are all focused on providing outstanding service to our customers:•Outside Sales Associates: Responsible for identifying sales opportunities, educating customers and acting as our public representatives.•Inside Sales Associates: Responsible for processing customer orders and arranging for delivery and payment.•Product Specialists: Responsible for maintaining specialized product knowledge and educating our outside sales associates and customers regardingnew products and general developments in several specific categories, including protein, seafood, pastry and cheese.A significant number of our sales professionals have formal culinary training, degrees in the culinary arts and/or prior experience working in the culinaryindustry. We strive to harness this culinary knowledge and passion for food and to concurrently promote an entrepreneurial working environment. Utilizingadvanced pricing optimization software available to them on a real-time basis, our sales professionals are afforded flexibility to determine the pricing ofindividual items for our9customers within a range of pricing options. The majority of our outside sales professionals are compensated on a commission basis, and their performance ismeasured primarily upon their gross profit dollars obtained. We have historically experienced low turnover among our seasoned sales professionals.Because we are highly focused on collaborating with our customers and educating them regarding our latest products and broader culinary trends, we viewthe ongoing education and training of our sales force as crucial to our continued success. To ensure that our sales professionals remain on the forefront of newculinary products and trends, we regularly hold “vendor shows” at our distribution centers, where our sales force is able to interact with vendors and learnmore about the vendors’ latest product offerings and the performance of these products relative to competitive offerings.Our SuppliersWe are committed to providing our customers with an unrivaled portfolio of specialty food products, as well as a comprehensive broadline product offeringand center-of-the-plate products. To fulfill this commitment, we maintain strong sourcing relationships with numerous producers of high-quality artisan andregional specialty food products, as well as a wide range of broadline product suppliers and protein vendors. Our importing arm also provides us with accessto exclusive items such as regional olive oils, truffles and charcuterie sourced from Italy, Spain, France and other Mediterranean countries.We constantly seek out and evaluate new products in order to satisfy our customers’ desire to be at the forefront of the latest culinary and menu trends, and, asevidence of our commitment to aid our customers in creating unique and innovative menu items, we regularly utilize our sourcing relationships and industryinsights to procure other products that we do not regularly carry but that our customers specifically request.We currently distribute products from more than 2,500 different suppliers. We carry multiple products and utilize multiple suppliers in all of our productcategories, thereby eliminating our dependence upon any single supplier. Additionally, we seek to limit commodity risk by utilizing sophisticatedforecasting and inventory management systems to minimize the inventory carrying time of commodity-oriented products and by leveraging the specializedproduct knowledge of our product specialists to manage purchasing and inventory levels when appropriate.Our Operations and Distribution CentersOperating out of 23 distribution centers of varying size and providing service six days a week in many areas, we utilize our fleet of delivery trucks to fillcustomer orders, usually within 12-24 hours of order placement. Our average distribution service level, or the percentage of in-stock items ordered bycustomers that were delivered by the requested date, was in excess of 97% as of fiscal year ended December 29, 2017, which our management believes isamong the highest in the foodservice distribution industry. To achieve these high service levels, we have invested significantly in sophisticatedwarehousing, inventory control and distribution systems, as described in more detail below.We have implemented pick-to-voice technology in each of our distribution facilities, which enables our warehouse employees to fill orders with greaterspeed and accuracy.Products are delivered to our distribution centers primarily by contract carriers, the suppliers themselves and our fleet of trucks. We lease our trucks fromnational leasing companies and regional firms that offer competitive services. Customer orders are assembled in our distribution centers and then sorted,placed on pallets and loaded onto trucks and trailers in delivery sequence. The majority of our trucks and delivery trailers have multiple, temperature-controlled compartments that ensure all product is delivered to the customer at its optimal temperature.We employ advanced routing and logistics planning software, which maximizes the number of daily deliveries that each of our trucks can make, while alsoenabling us to typically make deliveries within each customer’s preferred 2-3 hour time window. For our direct-to-consumer business, we ship throughnationally recognized couriers. We also use GPS and vehicle monitoring technology to regularly evaluate the condition of our delivery trucks and monitorthe performance of our drivers, by tracking their progress relative to their delivery schedule and providing information regarding hard braking, idling and faststarts. Our use of this technology allows us to conduct proactive fleet maintenance, provide timely customer service and improve our risk management.Our Technology SystemsWe maintain an advanced information technology platform that enables us to manage our operations across our various markets, as we seek to drive ourgrowth and profitability and ensure that the needs of our customers are met in an accurate and10efficient manner. We have made significant investments in distribution, sales, information and warehouse management systems over the last eight years, andare in the process of implementing a fully-integrated ERP system. Our systems improvements include the implementation of route optimization software, awarehouse management system at all specialty warehouses that integrates with pick-to-voice and directed put-away systems. We are driving increasing salesvolume through our ecommerce platform and a new mobile ordering tool which we believe will enable a much more seamless online customer experience.We also leverage a reporting and analytics platform that provides our sales team and management with the information required to drive efficiency andgrowth. We believe that our current systems are scalable and can be leveraged together with targeted investments in new technology to provide the fuel todrive profitable growth.Intellectual PropertyExcept for the Spoleto, Bel Aria, Grand Reserve, Provvista, Argonaut, Praml, Black Falls, Michael’s, Chocoa, Crescendo, Matisse, Qzina, Coccinelle, AllenBrothers, The Great Steakhouse Steaks, Del Monte, Fells Point and The Chefs’ Warehouse trademarks, we do not own or have the right to use any patent,trademark, trade name, license, franchise or concession, the loss of which would have a material adverse effect on our business, financial condition or resultsof operations.CompetitionThe foodservice distribution industry is highly competitive. We compete with numerous smaller distributors on a local level, as well as with a limited numberof national broadline foodservice distributors. Certain of these distributors have greater financial and other resources than we do. Bidding for contracts orarrangements with customers, particularly larger hotels and caterers, is highly competitive and distributors may market their services to a particular customerover a long period of time before they are invited to bid. We believe that most purchasing decisions in the foodservice distribution industry are based uponthe quality and price of the product distributed and the distributor’s ability to completely and accurately fill orders and deliver them in a timely manner.EmployeesAs of December 29, 2017, we had 1,994 full-time employees, 197 of whom (approximately 9.9%) currently operate under a collective bargaining agreementand are represented by unions. This collective bargaining agreement expires on August 3, 2020. We offer attractive compensation and benefit packages, andwe believe our relationship with our employees is satisfactory.RegulationAs a distributor of specialty food products and meat and seafood in the United States and Canada, we are subject to regulation by numerous international,federal, state, provincial and local regulatory agencies. For example, at the U.S. federal level, we are subject to the Federal Food, Drug and Cosmetic Act, theBioterrorism Act and regulations promulgated by the U.S. Food and Drug Administration (“FDA”). The FDA regulates manufacturing and holdingrequirements for foods, specifies the standards of identity for certain foods and prescribes the format and content of certain information required to appear onfood product labels, among other responsibilities. For certain product lines, we are also subject to the Federal Meat Inspection Act, the Poultry ProductsInspection Act, the Perishable Agricultural Commodities Act, the Country of Origin Labeling Act and regulations promulgated thereunder by the U.S.Department of Agriculture (“USDA”). The USDA imposes standards for product quality and sanitation, including the inspection and labeling of meat andpoultry products and the grading and commercial acceptance of produce shipments from vendors. In January 2011, President Obama signed into law the FDAFood Safety Modernization Act, which greatly expands the FDA’s authority over food safety, including giving the FDA power to order the recall of unsafefoods, increase inspections at food processing facilities, issue regulations regarding the sanitary transportation of food, enhance tracking and tracingrequirements and order the detention of food that it has “reason to believe” is adulterated or misbranded, among other provisions. The products we distributein Canada are also subject to regulation and inspection by Health Canada and the Canadian Food Inspection Agency. Our suppliers are also subject to similarregulatory requirements and oversight. The failure to comply with applicable regulatory requirements could result in civil or criminal fines or penalties,product recalls, closure of facilities or operations, the loss or revocation of existing licenses, permits or approvals or the failure to obtain additional licenses,permits or approvals in new jurisdictions where we intend to do business.We are also subject to state and local regulation through such measures as the licensing of our facilities, enforcement by state and local health agencies ofstate and local standards for our products and facilities and regulation of our trade practices in connection with the sale of products. Our facilities aregenerally inspected at least annually by federal and/or state authorities. These facilities are also subject to inspections and regulations issued pursuant to theOccupational Safety and Health Act by the U.S. Department of Labor, which require us to comply with certain manufacturing, health and safety standards toprotect our employees from accidents and to establish hazard communication programs to transmit information about the hazards of certain11chemicals present in certain products that we distribute. Our Canadian warehouse, distribution facilities, repackaging activities and other operations also aresubject to regulation and inspection by the Canadian Food Inspection Agency and provincial health authorities.Our trucking operations are regulated by the Surface Transportation Board, the Federal Highway Administration, Transport Canada and Canadian provincialtransportation authorities. In addition, interstate motor carrier operations are subject to safety requirements prescribed by the U.S. Department ofTransportation and other relevant federal and state agencies. Such matters as weight and dimension of equipment are also subject to federal and stateregulations. We believe that we are in compliance with applicable regulatory requirements relating to our motor carrier operations. Our failure to comply withthe applicable motor carrier regulations could result in substantial fines or revocation of our operating permits.Our operations are subject to a broad range of federal, state, provincial and local environmental health and safety laws and regulations, including thosegoverning discharges to air, soil and water, the handling and disposal of hazardous substances and the investigation and remediation of contaminationresulting from releases of petroleum products and other hazardous substances.We believe that we are in material compliance with all international, federal, state, provincial and local regulations applicable to our operations, andmanagement is unaware of any related issues that may have a material adverse effect upon our business, financial condition or results of operations.Litigation and InsuranceWe may be subject to lawsuits, claims and assessments in the normal course of business. Our management does not believe that there are any suits, claims orunasserted claims or assessments pending which would have a material adverse effect on our operations or financial condition.We maintain comprehensive insurance packages with respect to our facilities, equipment, product liability, directors and officers, workers’ compensation andemployee matters in amounts which management believes to be prudent and customary within the foodservice distribution industry.SeasonalityExcluding our direct-to-consumer business, we generally do not experience any material seasonality. However, our sales and operating results may vary fromquarter to quarter due to factors such as changes in our operating expenses, management’s ability to execute our operating and growth strategies, personnelchanges, demand for our products, supply shortages, weather patterns and general economic conditions.Our direct-to-consumer business is subject to seasonal fluctuations, with direct-to-consumer center-of-the-plate protein sales typically higher during theholiday season in our fourth quarter; accordingly, a disproportionate amount of operating cash flows from this portion of our business is generated in thefourth quarter. Despite a significant portion of these sales occurring in the fourth quarter, there are operating expenses, principally advertising andpromotional expenses, throughout the year.InflationOur profitability is dependent, among other things, on our ability to anticipate and react to changes in the costs of key operating resources, including foodand other raw materials, labor, energy and other supplies and services. Substantial increases in costs and expenses could impact our operating results to theextent that such increases cannot be passed along to our customers. The impact of inflation on food, labor, energy and occupancy costs can significantlyaffect the profitability of our operations.Available InformationOur principal executive office is located at 100 East Ridge Road, Ridgefield, Connecticut 06877, and our telephone number is (203) 894-1345. Our annualreport on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports will be made available free of chargethrough the Investor Relations section of our website (http://www.chefswarehouse.com) as soon as practicable after such material is electronically filed with,or furnished to, the Securities and Exchange Commission (“SEC”). Material contained on our website is not incorporated by reference into this report.We have also adopted a Code of Business Conduct and Ethics (“Code of Ethics”) that applies to all of our employees, including our principal executiveofficer, principal financial officer, principal accounting officer and controller. Our Code of Ethics is12publicly available on the Investor Relations section of our website (http://www.chefswarehouse.com) and is available free of charge by writing to The Chefs’Warehouse, Inc., 100 East Ridge Road, Ridgefield, Connecticut 06877, Attn: Investor Relations. If we make any substantive amendments to the Code ofEthics or grant any waiver, including any implicit waiver, from a provision of the Code of Ethics to our principal executive officer, principal financial officer,principal accounting officer or controller, or persons performing similar functions, we intend to make any legally required disclosures regarding suchamendments or waivers on the Investor Relations section of our website (http://www.chefswarehouse.com).Please note that our website address is provided as an inactive textual reference only.The public may also read and copy any materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549.The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains anInternet website that contains reports, proxy and information statements and other information regarding issuers, including us, that file electronically with theSEC located at http://www.sec.gov.Executive OfficersName & Position Age Business ExperienceChristopher PappasPresident, Chief Executive Officer andChairman of the Board of Directors 58 Christopher Pappas is our founder and has served as our chief executive officer since 1985 andhas been a director on our board and our board chairman since our IPO, and he also served as adirector and the chairman of the board of our predecessor company, Chefs’ Warehouse Holdings,LLC. He has been our president since April 11, 2009 and before that was our president from ourformation to January 1, 2007. Prior to founding our company, Mr. C. Pappas played basketballprofessionally in Europe for several years following his graduation from Adelphi University in1981 with a Bachelor of Arts degree in Business Administration. Mr. C. Pappas currentlyoversees all of our business activities, with a focus on product procurement, sales, marketing,strategy development, business development and operations.John PappasVice Chairman and Director 54 John Pappas is a founder of our company and currently serves as our vice chairman, a positionhe has held since March 1, 2011. From our founding in 1985 to March 1, 2011, he served as ourchief operating officer. Mr. J. Pappas has been a director on our board since our IPO, and he alsoserved as a director on the board of our predecessor company, Chefs’ Warehouse Holdings, LLC.He has over 30 years of experience in logistics, facility management and global procurement andoversees our network of distribution centers nationwide. Mr. J. Pappas is also active in thedevelopment of our corporate strategy.James LeddyChief Financial Officer 54 James“Jim” Leddy is our chief financial officer and assistant secretary, since his appointment asof November 11, 2017. Prior to his appointment, Mr. Leddy served as our executive vicepresident of finance since joining the Company in September 2017. Mr. Leddy previouslyserved as interim chief financial officer at JetBlue Airways from November 2016 to February2017 and served as senior vice president and treasurer from 2012 to November 2016. Prior tojoining JetBlue, Mr. Leddy served as senior vice president, treasury and cash management atNBCUniversal from 2008 until 2012, and as a senior technical advisor at General Electric from2003 until 2008. Previously, Mr. Leddy held corporate risk and treasury management positionsat First Union National Bank and Dai-ichi Kangyo Bank. Mr. Leddy holds an M.B.A. in Financeand Management of Technology from the University of Connecticut and a B.A. in Economicsfrom Fordham University.13Alexandros AldousGeneral Counsel, Corporate Secretary & ChiefGovernment Relations Officer 37 Alexandros Aldous is our general counsel, corporate secretary & chief government relationsofficer, positions he has held since joining us in March 2011, our IPO on July 27, 2011, andMarch 8, 2017, respectively. Mr. Aldous's prior work experience includes working as an attorneywith Barclays Capital, the investment banking division of Barclays Bank PLC, in London, wherehe focused primarily on mergers and acquisitions and capital markets, and prior to that, workingas an attorney with Shearman & Sterling LLP, in New York, where he focused primarily onmergers and acquisitions. Mr. Aldous is a member of both the General Counsel Committee andthe Government Relations Leadership Committee of the International Foodservice DistributorsAssociation, a member of the Global Alumni Advisory Board of the American College of Greece,as well as a member of the Dean's Counsel of American University's School of InternationalService. Mr. Aldous earned a B.A. in Classics and Government from Colby College, a JurisDoctor and M.A. from American University and an LL.M. from the London School of Economicsand Political Science. Mr. Aldous is licensed to practice law in the State of New York, District ofColumbia, and England and Wales.Timothy McCauleyChief Accounting Officer 53 Timothy McCauley is our chief accounting officer, as of February 16, 2018 and previously servedas our controller since joining the Company in May 2015. Mr. McCauley has over 30 years ofexperience in accounting and finance roles across a variety of industries. Mr. McCauley’s priorwork experience includes serving as vice president – finance at MacDermid Inc., corporatecontroller at Northern Tier Energy LP, director of financial reporting and investor relations atPresstek, Inc. and finance director at Eastman Kodak Company. Prior to joining Eastman KodakCompany, Mr. McCauley worked with PricewaterhouseCoopers for eleven years in theirassurance and business advisory practice. Mr. McCauley holds a Bachelor of Science degree inBusiness - Accounting from the University of Connecticut and is a certified public accountant inthe state of Connecticut.Patricia LecourasChief Human Resources Officer 62 Patricia Lecouras is our chief human resources officer, a position she has held since March 5,2007. Ms. Lecouras joined our company from GE Capital Commercial Finance where she wasvice president, human resources from 2001 to 2007. Prior to her time with GE CapitalCommercial Finance, Ms. Lecouras was with Nine West Shoes (f/k/a Fischer CamutoCorporation) and Xerox. Ms. Lecouras’s professional experience is multidisciplinary andincludes prior experience working in finance and tax-related functions. She also has earned a sixsigma master black belt certification. Ms. Lecouras holds a Bachelor of Arts degree inPsychology and Social Work from Skidmore College.14Item 1A. RISK FACTORSOur business, financial condition and results of operations are subject to various risks and uncertainties, including those described below and elsewhere inthis Annual Report on Form 10-K. This section discusses factors that, individually or in the aggregate, we think could cause our actual results to differmaterially from our expected and historical results. Our business, financial condition or results of operations could be materially adversely affected by any ofthese risks. We note these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995.Our success depends to a significant extent upon general economic conditions, including disposable income levels and changes in consumer discretionaryspending.Because our target customers include menu-driven independent restaurants, fine dining establishments, country clubs, hotels, caterers, culinary schools,bakeries, patisseries, chocolatiers, cruise lines, casinos and specialty food stores, our business is exposed to reductions in consumer discretionary spending.Consumer discretionary spending may be affected by many factors outside of our control, including general economic conditions, disposable income levels,and consumer confidence levels. In uncertain economic environments, consumers may choose to spend discretionary dollars less frequently which couldresult in a decline in consumers’ food-away-from-home purchases, particularly in more expensive restaurants, and, consequently, adversely impact thebusinesses of our customers by, among other things, reducing the frequency with which our customers’ customers choose to dine out or the amount theyspend on meals while dining out. If our customers’ sales decrease, our profitability could decline as we spread fixed costs across a lower volume of sales.Moreover, if a prolonged downturn or uncertain outlook in the economy were to occur, consumers might ultimately make long-lasting changes to theirdiscretionary spending behavior, including dining out less frequently on a permanent basis. Accordingly, adverse changes to consumer preferences orconsumer discretionary spending, each of which could be affected by many different factors which are out of our control, could harm our business, financialcondition or results of operations. Our continued success will depend in part upon our ability to anticipate, identify and respond to changing economic andother conditions and the impact that those conditions may have on discretionary consumer spending.A significant portion of our future growth is dependent upon our ability to expand our operations in our existing markets and to penetrate new marketseither through organic growth or through acquisitions.We intend to expand our presence in our existing markets by adding to our existing customer base through the expansion of our product portfolio and theincrease in the volume and/or number of purchase orders from our existing customers. We cannot assure our investors, however, that we will be able tocontinue to successfully expand or acquire critical market presence in our existing markets, as we may not successfully market our specialty food and center-of-the-plate products and brands or may encounter larger and/or more well-established competitors with substantially greater financial resources. Moreover,competitive circumstances and consumer characteristics in new segments of existing markets may differ substantially from those in the segments in which wehave substantial experience. If we are unable to expand in existing markets, our ability to increase our revenues and profitability may be affected in a materialand adverse manner. At times, we have grown our business by expanding into new geographic markets. Efforts to expand organically may take time toproduce revenues that exceed our expenses in these new markets, which can be high as we build out our infrastructure and hire associates to run ouroperations.We also regularly evaluate opportunities to acquire other companies. To the extent our future growth includes acquisitions, we cannot assure investors in ourcommon stock that we will successfully identify suitable acquisition candidates, obtain financing for such acquisitions, if necessary, consummate suchpotential acquisitions, effectively and efficiently integrate any acquired entities or successfully expand into new markets as a result of our acquisitions.Moreover, to the extent that we acquire companies that are principally involved in the distribution of products that we have not historically distributed, likefresh produce, there may be additional risks that we face.We may not achieve benefits expected from our acquisitions, including our recent acquisition of Fells Point, which could adversely impact our businessand operating results.We believe that there are risks related to acquiring companies, including overpaying for acquisitions, losing key employees of acquired companies, failing toidentify potential liabilities associated with the acquisition of the business prior to our acquisition and failing to achieve potential synergies. Additionally,our business could be adversely affected if we are unable to integrate the companies we acquired.On August 25, 2017, we completed our acquisition of Fells Point. We can provide no assurance that: (1) the anticipated benefits of the Fells Point transaction,including any cost savings and operational synergies, will be fully realized in the time frame anticipated or at all, (2) the costs or difficulties related to theintegration of the Fells Point business and operations into ours15will not be greater than expected, (3) unanticipated costs, charges and expenses, including those related to the retention of the Fells Point labor force, will notresult from the transaction, and (4) the transaction will not cause disruption to our business and operations and our relationships with customers, employeesand other third parties. If one or more of these or other risks are realized, it could have a material adverse impact on our business, financial condition andresults of operations.A significant portion of our past growth has been achieved through acquisitions of, or mergers with, other distributors of specialty food products and center-of-the-plate protein items. Our future acquisitions may have a material adverse effect on our results of operations, particularly in periods immediatelyfollowing the consummation of those transactions while the operations of the acquired business are being integrated with our operations. Achieving thebenefits of acquisitions depends on timely, efficient and successful execution of a number of post-acquisition events, including successful integration of theacquired entity. Integration requires, among other things:•maintaining the existing customer and supplier base and personnel;•optimizing delivery routes;•coordinating administrative, distribution and finance functions; and•integrating management information systems and personnel.The integration process may temporarily redirect resources previously focused on reducing product cost, resulting in lower gross profits in relation to sales. Inaddition, the process of combining companies could cause the interruption of, or a loss of momentum in, the activities of the respective businesses, whichcould have an adverse effect on their combined operations. In an effort to streamline the acquisition and integration process and achieve expected costsavings and operational synergies more quickly, we implemented an integration team during fiscal 2014, which is dedicated to onboarding new acquisitionsand integrating information technology systems as quickly and efficiently as possible. We believe that having a team dedicated to integration helps makesure the people, processes and products we add through acquisitions are consistent with our historical business and allows our management team to focus itsattention on our day-to-day operations. If the integration team does not improve our integration process, the integration of acquisitions could divert theattention of management, and any difficulties or problems encountered in the integration process could have a material adverse effect on our business,financial condition or results of operations.In connection with our acquisition of businesses in the future, if any, we may decide to consolidate the operations of any acquired business with our existingoperations or make other changes with respect to the acquired business, which could result in special charges or other expenses. Our results of operations alsomay be adversely affected by expenses we incur in making acquisitions, by amortization of acquisition-related intangible assets with definite lives and byadditional depreciation attributable to acquired assets. Any of the businesses we acquire may also have liabilities or adverse operating issues, including somethat we fail to discover before the acquisition, and our indemnity for such liabilities typically has been limited and may, with respect to future acquisitions,also be limited. Additionally, our ability to make any future acquisitions may depend upon obtaining additional financing or the consents of our lenders. Wemay not be able to obtain this additional financing or these consents on acceptable terms or at all. Moreover, we may need to finance our acquisition activitywith the issuance of equity or debt securities, which may have rights and preferences superior to those of our common stock and, in the case of commonequity securities, may be issued at such prices and in such amounts as may cause significant dilution to our then-existing common stockholders. To theextent we seek to acquire other businesses in exchange for our common stock, fluctuations in our stock price could have a material adverse effect on ourability to complete acquisitions.In addition, although we enter into acquisition agreements with each company or business we acquire that contain customary representations, warranties,covenants and indemnities, there is no guarantee that we will recover all of our losses that may result from a breach of such agreements. For example, mostacquisition agreements contain baskets or deductibles and caps and limitations on damages and on periods in which we may bring a claim. In addition, therecan be no guarantee that we will be successful on the merits of any claim that we bring arising out of a breach of an acquisition agreement or that if we aresuccessful on the merits in bringing a claim that the sellers of the businesses we acquire will be able to pay us for our losses. Moreover, the costs that we incurto investigate a potential matter may not be fully recoverable. Additionally, as a result of an acquisition, we may enter into a new business or market or offerproducts that differ from our core business. Any such new business or market or the sale and distribution of new products may present new challenges for us,and we may not be able to overcome such challenges. Additionally, we may seek to distribute a different set of products than the business that we acquire,which may cause a loss of customers of those businesses if we can no longer carry the products they desire or charge more for those products than was chargedbefore we acquired the business.Our failure to realize the benefits expected from our acquisitions could result in a reduction in the price of our common stock as well as in increased costs,decreases in the amount of expected revenues and diversion of management’s time and energy and could materially and adversely impact our business,financial condition or results of operations.16We may have difficulty managing and facilitating our future growth.At times since our inception, we have rapidly expanded our operations through organic growth, acquisitions or otherwise. This growth has placed and willcontinue to place significant demands upon our administrative, operational and financial resources. This growth, however, may not continue. To the extentthat our customer base and our distribution networks continue to grow, this future growth may be limited by our inability to acquire new distributionfacilities or expand our existing distribution facilities, make acquisitions, successfully integrate acquired entities, implement information systems initiativesor adequately manage our personnel.Moreover, our future growth may be limited in part by the size and location of our distribution centers. As we near maximum utilization of a given facility,our operations may be constrained and inefficiencies may be created, which could adversely affect our results of operations unless the facility is expanded,volume is shifted to another facility or additional processing capacity is added. Conversely, as we add additional facilities or expand existing operations orfacilities, excess capacity may be created. Any excess capacity may also create inefficiencies and adversely affect our results of operations. We cannot assureinvestors in our common stock that we will be able to successfully expand our existing distribution facilities or open new distribution facilities in new orexisting markets as needed to facilitate growth.Even if we are able to expand our distribution network, our ability to compete effectively and to manage future growth, if any, will depend on our ability tocontinue to implement and improve operational, financial and management information systems on a timely basis and to expand, train, motivate and manageour employees. We cannot assure investors in our common stock that our existing personnel, systems, procedures and controls will be adequate to support thefuture growth of our operations. Accordingly, our inability to manage our growth effectively could have a material adverse effect on our business, financialcondition or results of operations.Conditions beyond our control could materially affect the cost and/or availability of our specialty food products or center-of-the-plate products and/orinterrupt our distribution network.Our profitability and operating margins are dependent upon, among other things, our ability to anticipate and react to any interruptions in our distributionnetwork and changes to food costs and availability. We obtain a significant portion of our specialty food products and center-of-the-plate products fromlocal, regional, national and international third-party suppliers. We generally do not enter into long-term contracts with our suppliers, whereby they would becommitted to provide products to us for any appreciable duration of time. Although our purchasing volume can provide leverage when dealing withsuppliers, particularly smaller suppliers for whom we may be their largest customer, suppliers may not provide or may be unable to provide the specialty foodproducts or center-of-the-plate products we need in the quantities and at the times and prices we request. Failure to identify an alternate source of supply forthese items or comparable products that meet our customers’ expectations may result in significant cost increases. Additionally, weather, governmentalregulation, water shortages, availability and seasonality may affect our food costs or cause a disruption in the quantity of our supply. For example, weatherpatterns in recent years have resulted in lower than normal or, conversely, higher than normal levels of rainfall and snowfall in key agricultural states such asCalifornia, impacting the price of water and the corresponding prices of food products grown in states affected by such weather. Additionally, the route-to-market for some of the products we sell, such as baking chocolate, depends upon the stability of political climates and a stable labor force in developingnations, such as the Ivory Coast. In such countries, political and social unrest may cause the prices for these products to rise to levels beyond those that ourcustomers are willing to pay, if the product is available at all. If we are unable to obtain these products, our customers may seek a different supplier for theseor other products which could negatively impact our business, financial condition or results of operations.We do not currently use financial instruments to hedge our risk exposure to market fluctuations in the price of food products. Similarly, our suppliers mayalso be affected by higher costs to source or produce and transport food products, as well as by other related expenses that they pass through to theircustomers, which could result in higher costs for the specialty food products or center-of-the-plate products they supply to us. Our inability to anticipate andreact to changing food costs through our sourcing and purchasing practices in the future could therefore negatively impact our business, financial conditionor results of operations.We may also be subject to material supply chain interruptions based upon conditions outside of our control. These interruptions could include workslowdowns, work interruptions, strikes or other adverse employment actions taken by employees of ours or our suppliers, short-term weather conditions ormore prolonged climate change, crop conditions, product recalls, water shortages, transportation interruptions within our distribution channels,unavailability of fuel or increases in fuel costs, competitive demands and natural disasters or other catastrophic events, such as food-borne illnesses orbioterrorism. The efficiency and effectiveness of our distribution network is dependent upon our suppliers’ ability to consistently deliver the specialty foodproducts and meat, poultry and seafood we need in the quantities and at the times and prices we request.17Accordingly, if we are unable to obtain the specialty food products or meat, poultry or seafood that comprise a significant percentage of our product portfolioin a timely manner and in the quantities and at the prices we request as a result of any of the foregoing factors or otherwise, we may be unable to fulfill ourobligations to customers who may, as a result of any such failure, resort to other distributors for their food product needs or change the types of products theybuy from us to products that are less profitable for us.Our increased distribution of center-of-the-plate products, like meat, poultry and seafood, following our acquisitions of Michael’s, Allen Brothers, DelMonte and Fells Point, involves increased exposure to price volatility experienced by those products.With our acquisitions of Michael’s, Allen Brothers, Del Monte and Fells Point, a larger percentage of our revenues is expected to come from center-of-the-plate products. With our increased distribution of center-of-the-plate products like meat, poultry and seafood, we are more susceptible to increases in theprices of those products, and we cannot assure investors in our common stock that all or part of any increased costs experienced by us from time to time canbe passed along to consumers of our products, in a timely manner or at all. Conversely, rapid downward pricing for these products, including as a result ofrestrictions on the exporting of U.S. beef products or lower demand internationally for U.S. beef products, may result in our lowering our prices to ourcustomers even though our inventory on hand is at a higher cost. The supply and market price of our center-of the plate products are typically more volatilethan most of our core specialty products and are dependent upon a variety of factors over which we have no control, including the relative cost of feed andenergy, weather, livestock diseases, government regulation and the availability of beef, chicken and seafood.The prices of our meat and poultry products are largely dependent on the production of feed ingredients, which is affected primarily by the global level ofsupply inventories and demand for feed ingredients, the agricultural policies of the U.S. and foreign governments and weather patterns throughout the world.In particular, weather patterns often change agricultural conditions in an unpredictable manner. A significant change in weather patterns could affect suppliesof feed ingredients, as well as the industry’s ability to obtain feed ingredients or deliver products. More recently, feed prices have been impacted by increaseddemand both domestically for ethanol and globally for protein production.Additionally, our center-of-the-plate business is subject to risks relating to animal health and diseases. An outbreak of diseases affecting livestock (such asfoot-and-mouth disease or bovine spongiform encephalopathy, commonly referred to as mad cow disease) could result in restrictions on sales of products,restrictions on purchases of livestock from suppliers or widespread destruction of livestock. Outbreaks of diseases, or the perception by the public that anoutbreak has occurred, or other concerns regarding diseases, can lead to inadequate supply, cancellation of orders by customers and adverse publicity, any ofwhich can have a significant negative impact on consumer demand and, as a result, on our business, financial condition or results of operations.In addition, meat, seafood and poultry products that we distribute could be subject to recall because they are, or are alleged to be, contaminated, spoiled orinappropriately labeled. Our meat and poultry products may be subject to contamination by disease-producing organisms, or pathogens, such as Listeriamonocytogenes, Salmonella and generic E.coli. These pathogens are generally found in the environment, and, as a result, there is a risk that they, as a result offood processing, could be present in the meat and poultry products that we distribute. These pathogens can also be introduced as a result of improperhandling in our facilities or at the consumer level. These risks may be controlled, although not eliminated, by adherence to good manufacturing practices andfinished product testing. We have little, if any, control over proper handling before we receive the product or once the product has been shipped to ourcustomers. Illness and death may result if the pathogens are not eliminated before these products are sold to customers.We are also susceptible to increases in the prices of our seafood products. The prices of our seafood products are largely dependent on the continuous supplyof fresh seafood, which in turn could be affected by a large number of factors, including, but not limited to, environmental factors, the availability of seafoodstock, weather conditions, water contamination, the policies and regulations of the governments of the relevant territories where such fishing is carried out,the ability of the fishing companies and fishermen that supply us to continue their operations and pressure from environmental or animal rights groups. Themajor raw material for our seafood products is fresh seafood, and any shortage in supply or upsurge in demand of fresh seafood may lead to an increase inprices, which may adversely affect our profitability, including as a result of increased production costs and lower profit margins.Our operations are subject to extensive regulation and oversight by the United States Department of Agriculture (USDA), the United States Food and DrugAdministration (FDA), and other federal, state, local and foreign authorities regarding the processing, packaging, storage, safety, distribution, advertising andlabeling of its products. Recently, food safety practices and procedures in the meat processing industry have been subject to more intense scrutiny andoversight by the USDA. Failure to18comply with existing or new laws and regulations could result in administrative penalties and injunctive relief, civil remedies, fines, interruption ofoperations, recalls of products or seizures of properties, potential criminal sanctions and personal injury or other damage claims. These remedies, changes inthe applicable laws and regulations or discovery of currently unknown conditions could increase costs, limit business operations and reduce profitability.Our business is a low-margin business and our profit margins may be sensitive to inflationary and deflationary pressures.We operate within a segment of the foodservice distribution industry, which is an industry characterized by a high volume of sales with relatively low profitmargins. Although our profit margins are typically higher than more traditional broadline foodservice distributors, they are still relatively low compared toother industries’ profit margins. Volatile food costs may have a direct impact upon our profitability. Prolonged periods of product cost inflation may have anegative impact on our profit margins and results of operations to the extent we are unable to pass on all or a portion of such product cost increases to ourcustomers. In addition, product cost inflation may negatively impact consumer discretionary spending decisions within our customers’ establishments, whichcould adversely impact our sales. Conversely, our profit levels may be negatively impacted during periods of product cost deflation even though our grossprofit as a percentage of sales may remain relatively constant. However, some of our products, particularly certain of our protein items, are priced on a costplus a dollar markup, which helps mitigate the negative impact of deflation. If our product mix changes, we may face increased risks of compression of ourmargins, as we may be unable to achieve the same level of profit margins as we are able to capture on our traditional specialty products. Our inability toeffectively price our specialty food products or center-of-the-plate products, to quickly respond to inflationary and deflationary cost pressures and to reduceour expenses could have a material adverse impact on our business, financial condition or results of operations.Group purchasing organizations may become more active in our industry and increase their efforts to add our customers as members of theseorganizations.Some of our customers, including a majority of our hotel customers, purchase their products from us through group purchasing organizations. Theseorganizations have increased their efforts to aggregate the purchasing power of smaller, independent restaurants in an effort to lower the prices paid by thesecustomers on their foodservice orders, and we have experienced some pricing pressure from these purchasers. If these group purchasing organizations are ableto add a significant number of our customers as members, we may be forced to lower the prices we charge these customers in order to retain the business,which would negatively affect our business, financial condition or results of operations. Additionally, if we were unable or unwilling to lower the prices wecharge for our products to a level that was satisfactory to the group purchasing organization, we may lose the business of those of our customers that aremembers of these organizations, which could have a material adverse impact on our business, financial condition or results of operations.Because our foodservice distribution operations are concentrated in certain culinary markets, we are susceptible to economic and other developments,including adverse weather conditions, in these areas.Our financial condition and results of operations are highly dependent upon the local economies of the culinary markets in which we distribute our products.In recent years, certain of these markets have been more negatively impacted by the overall economic crisis, including experiencing higher unemploymentrates and weaker housing market conditions, than other areas of the United States and Canada. Moreover, sales in our New York market, which we define asour operations on the East Coast of the United States spanning from Boston to Atlantic City, accounted for approximately 27.8% of our net sales in our 2017fiscal year. We are therefore particularly exposed to downturns in this regional economy. Following our acquisition of Del Monte, we now have significantoperations in the San Francisco Bay area and Los Angeles, California and following our acquisitions of MT Food, we now have significant operations inChicago, Illinois. Deterioration in the economic conditions of our key markets generally, or in the local economy of the New York metropolitan area, SanFrancisco Bay, Los Angeles, California, or Chicago, Illinois areas, specifically, could affect our business, financial condition or results of operations in amaterially adverse manner.In addition, given our geographic concentrations, other regional occurrences such as adverse weather conditions, terrorist attacks and other catastrophicevents could have a material adverse effect on our business, financial condition or results of operations. Adverse weather conditions can significantly impactthe business of our customers and our ability to profitably and efficiently conduct our operations and, in severe cases, could result in our trucks being unableto make deliveries or cause the temporary closure or the destruction of one or more of our distribution centers. Our operations and/or distribution centerswhich are located in (i) New York City, Ohio, Washington D.C., Chicago and Canada are particularly susceptible to significant amounts of snowfall and ice,(ii) Miami are particularly susceptible to hurricanes and (iii) Los Angeles and San Francisco are particularly susceptible to earthquakes, mudslides andwildfires. In addition, our restaurant customers, many of which are independently owned with operations limited to one or two markets, may be less able towithstand the impact on their business from adverse weather conditions than national chain restaurants because they are unable to spread the risks of suchevents19across numerous locations. In some cases these customers may not be able to re-open their restaurants, and consequently make payment to us for productspreviously provided, if the weather event or other catastrophic event is severe, particularly if they lacked sufficient insurance or their insurance claims are notprocessed quickly.Due to their prominence as, among other characteristics, densely-populated major metropolitan cities and as international hubs for intermodal transportation,a majority of our markets are known as targets for terrorist activity and other catastrophic events. If our or our customers’ operations are significantlydisrupted or if any one or more of our distribution centers is temporarily closed or destroyed for any of the foregoing reasons, our business, financialcondition or results of operations may be materially adversely affected. In anticipation of any such adverse weather conditions, terrorist attacks, man-madedisasters or other unforeseen regional occurrences, we have implemented a disaster recovery plan. Should any of these events occur, and if we are unable toexecute our disaster recovery plan, we may experience challenges in acquiring and distributing our products, failures or delays in the recovery of critical data,delayed reporting and compliance with governmental entities, inability to perform necessary corporate functions and other breakdowns in normal operatingprocedures that could have a material adverse effect on our business and create exposure to administrative and other legal claims against us.Damage to our reputation or lack of acceptance of our specialty food products, center-of-the-plate products and/or the brands we carry in existing andnew markets could materially and adversely impact our business, financial condition or results of operations.We believe that we have built a strong reputation for the breadth and depth of our product portfolio and the brands we carry and that we must protect andgrow their value to be successful in the future. Any incident that erodes consumer confidence in or affinity for our specialty food or center-of-the-plateproducts or brands, whether or not justified, could significantly reduce their respective values and damage our business. If our customers perceive orexperience a reduction in the quality or selection of our products and brands or our customer service, or in any way believe that we failed to deliver aconsistently positive experience, our business, financial condition or results of operations may be affected in a materially adverse manner.A specialty foods distribution business such as ours can be adversely affected by negative publicity or news reports, whether or not accurate, regarding foodquality issues, public health concerns, illness, safety, injury or government or industry findings concerning our products or others across the food distributionindustry. Although we have taken steps to mitigate food quality, public health and other foodservice-related risks, these types of health concerns or negativepublicity cannot be completely eliminated or mitigated and may harm our results of operations and damage the reputation of, or result in a lack of acceptanceof, our products or the brands we carry.In addition, our ability to successfully penetrate new markets may be adversely affected by a lack of awareness or acceptance of our product portfolio or ourbrands in these new markets. To the extent we are unable to foster name recognition and affinity for our products and brands in new markets, we may not beable to penetrate these markets as anticipated, and, consequently, our growth may be significantly delayed or impaired.Our customers are generally not obligated to continue purchasing products from us.Most of our customers buy from us pursuant to individual purchase orders, as we generally do not enter into long-term agreements with our customers for thepurchase of our products. Because our customers are generally not obligated to continue purchasing products from us, we cannot assure our investors that thevolume and/or number of our customers’ purchase orders will remain constant or increase or that we will be able to maintain or add to our existing customerbase. Significant decreases in the volume and/or number of our customers’ purchase orders or our inability to retain or grow our current customer base mayhave a material adverse effect on our business, financial condition or results of operations.We have experienced losses due to our inability to collect accounts receivable in the past and could experience increases in such losses in the future if ourcustomers are unable to pay their debts to us in a timely manner or at all.Certain of our customers have experienced bankruptcy, insolvency and/or an inability to pay their debts to us as they come due. If our customers suffersignificant financial difficulties or bankruptcies, they may be unable to pay their debts to us in a timely manner or at all. It is possible that our customers maycontest their obligations to pay us under bankruptcy laws or otherwise. Even if our customers do not contest their obligations to pay us, if our customers areunable to pay their debts to us in a timely manner, it could adversely impact our ability to collect accounts receivable and may require that we take largerprovisions for bad debt expense. Moreover, we may have to negotiate significant discounts and/or extended financing terms with these customers in such asituation in an attempt to secure payment for outstanding debts. Accordingly, if we are unable to collect upon our accounts receivable as they come due in anefficient and timely manner, our business, financial condition or results of operations may be materially and adversely affected. During periods of economicweakness, small to medium-sized businesses,20like many of our independent restaurant and fine dining establishment customers, may be impacted more severely and more quickly than larger businesses.Consequently, the ability of such businesses to repay their obligations to us may deteriorate, and in some cases this deterioration may occur quickly, whichcould adversely impact our business, financial condition or results of operations.Product liability claims could have a material adverse effect on our business, financial condition or results of operations.Like any other distributor of food products, we face an inherent risk of exposure to product liability claims if the products we sell cause injury or illness. Wemay be subject to liability, which could be substantial, because of actual or alleged contamination in products sold by us, including products sold bycompanies before we acquired them. We have, and the companies we have acquired have had, liability insurance with respect to product liability claims. Thisinsurance may not continue to be available at a reasonable cost or at all, and it may not be adequate to cover product liability claims against us or against anyof the companies we have acquired. We generally seek contractual indemnification from manufacturers or suppliers of the product, but any suchindemnification is limited, as a practical matter, to the creditworthiness of the indemnifying party. If we or any of our acquired companies do not haveadequate insurance or contractual indemnification available, product liability claims and costs associated with product recalls, including a loss of business,could have a material adverse effect on our business, financial condition or results of operations.Fuel cost volatility may have a material adverse effect on our business, financial condition or results of operations.Fuel cost volatility may have a negative impact on our business, financial condition or results of operations. The cost of diesel fuel can increase the price wepay for products as well as the costs we incur to distribute products to our customers. These factors, in turn, may negatively impact our net sales, margins,operating expenses and operating results. Although we have been able to pass along a portion of increased fuel costs to our customers in the past, there is noguarantee we can do so again. If fuel costs increase in the future, we may experience difficulties in passing all or a portion of these costs along to ourcustomers, which could have a material adverse effect on our business, financial condition or results of operations.New information or attitudes regarding diet and health or adverse opinions about the health effects of the products we distribute could result in changes inconsumer eating habits, which could have a material adverse effect on our business, financial condition or results of operations.Consumer eating habits may impact our business as a result of changes in attitudes regarding diet and health or new information regarding the health effectsof consuming the products we distribute. If consumer eating habits change significantly, we may be required to modify or discontinue sales of certain items inour product portfolio, and we may experience higher costs associated with the implementation of those changes. Additionally, changes in consumer eatinghabits may result in the enactment of laws and regulations that impact the ingredients and nutritional content of our products or require us to disclose thenutritional content of products. Compliance with these laws and regulations, as well as others regarding the ingredients and nutritional content of ourproducts, may be costly and time consuming. We cannot make any assurances regarding our ability to effectively respond to changes in consumer healthperceptions or resulting new laws or regulations or to adapt our menu offerings to trends in eating habits.We have significant competition from a variety of sources, and we may not be able to compete successfully.The foodservice distribution industry is highly fragmented and competitive, and our future success will be largely dependent upon our ability to profitablymeet our customers’ needs for certain gourmet foods and ingredients, varying drop sizes, high service levels and timely delivery. We compete with numeroussmaller distributors on a local level, as well as with a limited number of larger, traditional broadline foodservice distributors. We cannot assure our investorsthat our current or potential competitors will not provide specialty food products and ingredients, protein items or services that are comparable or superior tothose provided by us at prices that are lower than the prices we charge or adapt more quickly than we do to evolving culinary trends or changing marketrequirements. It is also possible that alliances among competitors may develop and rapidly acquire significant market share. Accordingly, we cannot assureour investors that we will be able to compete effectively against current and future competitors, and increased competition may result in price reductions,reduced gross margins and loss of market share, any of which could have a material adverse effect on our business, financial condition or results of operations.Our substantial indebtedness may limit our ability to invest in the ongoing needs of our business.We have a substantial amount of indebtedness. As of December 29, 2017, we had approximately $325.8 million of total indebtedness. We had approximately$288.4 million of outstanding indebtedness under the Term Loan Facility and nothing outstanding under the ABL Facility. In addition, at December 29,2017, we had $0.7 million outstanding under capital leases21and other financing agreements for computer equipment, vehicles and software. Moreover, as part of the consideration we paid in connection with ouracquisition of Del Monte, we issued to entities affiliated with Del Monte $36.8 million in convertible subordinated notes with a six-year maturity bearinginterest at 2.5% per annum with a conversion price of $29.70 per share.Our indebtedness could have important consequences to you. For example our indebtedness:•requires us to utilize a substantial portion of our cash flows from operations to make payments on our indebtedness, reducing the availability of ourcash flows to fund working capital, capital expenditures, development activity and other general corporate purposes;•increases our vulnerability to adverse general economic or industry conditions;•limits our flexibility in planning for, or reacting to, changes in our business or the industries in which we operate;•makes us more vulnerable to increases in interest rates, as borrowings under our Term Loan Facility and ABL Facility (together the “CreditFacilities”) are at variable rates;•limits our ability to obtain additional financing in the future for working capital or other purposes, including to finance acquisitions;•in the case of the convertible subordinated notes, could result in the issuance of additional shares of our common stock that would result in thedilution of our then-existing stockholders; and•places us at a competitive disadvantage compared to our competitors that have less indebtedness.If our earnings are insufficient to fund our operations, including our acquisition growth strategy, we will need to raise additional capital or issue additionaldebt, including longer-term, fixed-rate debt, to pay our indebtedness as it comes due or as our availability under our ABL Facility is exhausted. If we areunable to obtain funds necessary to make required payments or if we fail to comply with the various requirements of our Credit Facilities, or (subject tocertain limitations on the holders ability to accelerate the obligations) our convertible subordinated notes issued in connection with the Del Monteacquisition, we would be in default, which would permit the holders of our indebtedness to accelerate the maturity of the indebtedness, or in the case of theconvertible subordinated notes, convert the notes to common stock resulting in the holders of those notes and their affiliates becoming one of our largeststockholders, and could cause defaults under any indebtedness we may incur in the future. Any default under our indebtedness requiring the repayment ofoutstanding borrowings would have a material adverse effect on our business, financial condition and results of operations. If we are unable to refinance orrepay our indebtedness as it becomes due, we may become insolvent and be unable to continue operations.Although the agreements governing the Credit Facilities contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to anumber of qualifications and exceptions, and the indebtedness incurred in compliance with these restrictions could be substantial. Also, these restrictions donot prevent us from incurring obligations that do not constitute indebtedness.The agreements governing the Credit Facilities require us to maintain fixed charge coverage ratios and leverage ratios, which become more restrictive overtime. Our ability to comply with these ratios in the future may be affected by events beyond our control, and our inability to comply with the requiredfinancial ratios could result in a default under the Credit Facilities. In the event of events of default, the lenders under the Credit Facilities could elect toterminate lending commitments and declare all borrowings outstanding, together with accrued and unpaid interest and other fees, to be immediately due andpayable. See Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.Our ability to raise capital in the future may be limited.Our business and operations may consume resources, including availability under our ABL Facility, faster than we currently anticipate. In the future, we mayneed to raise additional funds through the issuance of new equity securities, debt, including longer-term, fixed-rate debt, or a combination of both.Additional financing may not be available on favorable terms or at all. If adequate funds are not available on acceptable terms, we may be unable to fund ourcapital requirements or grow our business through acquisitions, or otherwise. If we issue new debt securities, the debt holders may have rights senior to thoseof our common stockholders to make claims on our assets, and the terms of any debt could restrict our operations, including our ability to pay dividends onour common stock. If we issue additional equity securities, existing stockholders will experience dilution, and the new equity securities could have rightssenior to those of our common stock. Because our decision to issue securities in any future offering will depend upon market conditions and other factorsbeyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Thus, our stockholders bear the risk of our futuresecurities offerings reducing the market price of our common stock and diluting their interest.22We may be unable to obtain debt or other financing, including financing necessary to execute on our acquisition strategy, on favorable terms or at all.There are inherent risks in our ability to borrow debt capital. Our lenders, including the lenders participating in the Credit Facilities, may have suffered lossesrelated to their lending and other financial relationships, especially as a result of a generally weak and uncertain national economy, increased financialinstability of many borrowers and the declining value of their assets. As a result, lenders may become insolvent or tighten their lending standards, whichcould make it more difficult for us to borrow under our ABL Facility, refinance our existing indebtedness or obtain other financing on favorable terms or atall. Our access to funds under the Credit Facilities is dependent upon the ability of our lenders to meet their funding commitments. Our financial conditionand results of operations would be adversely affected in a material manner if we were unable to draw funds under the ABL Facility because of a lender defaultor if we had to obtain other cost-effective financing. Longer term disruptions in the capital and credit markets as a result of uncertainty, changing or increasedregulation, reduced alternatives or failures of significant financial institutions could adversely affect our access to liquidity needed for our business. Anydisruption could require us to take measures to conserve cash until the markets stabilize or until alternative credit arrangements or other funding for ourbusiness can be arranged. Such measures could include deferring capital expenditures (including our entry into new markets, including through acquisitions)and reducing or eliminating other discretionary uses of cash.Information technology system failures or breaches of our network security could interrupt our operations and adversely affect our business.We rely upon our computer systems and network infrastructure across our operations. Our business involves the storage and transmission of many types ofsensitive or confidential information, including customers’ and suppliers’ personal information, private information about employees, and financial andstrategic information about us and our operations. Our operations depend upon our ability to protect our computer equipment and systems against damagefrom physical theft, fire, power loss, telecommunications failure or other catastrophic events, as well as from internal and external security breaches, viruses,worms and other disruptive problems. Any damage or failure of our computer systems or network infrastructure that causes an interruption in our operations,or any unauthorized access to sensitive or confidential information, including as a result of hacking, could have a material adverse effect on our business,financial condition or results of operations. Although we employ both internal resources and external consultants to conduct auditing and testing forweaknesses in our systems, controls, firewalls and encryption and intend to maintain and upgrade our security technology and operational procedures toprevent such damage, breaches or other disruptive problems, there can be no assurance that these security measures will be successful.Our investments in information technology may not produce the benefits that we anticipate.In an attempt to reduce our operating expenses, increase our operational efficiencies, boost our operating margins and more closely track the movement ofour inventory in our protein business, we have aggressively invested in the development and implementation of new information technology. We may not beable to implement these technological changes in the time frame we have planned, and any delays in implementation could negatively impact our business,financial condition or results of operations. In addition, the costs to make these changes may exceed our estimates and will likely exceed any benefits that werealize during the early stages of implementation. Even if we are able to implement the changes as planned, and within our cost estimates, we may not be ableachieve the expected efficiencies, cost savings and operational enhancements from these investments which could have an adverse effect on our business,financial condition or results of operations.We may not be able to adequately protect our intellectual property, which, in turn, could harm the value of our brands and adversely affect our business.Our ability to implement our business plan successfully depends in part upon our ability to further build brand recognition, including for our proprietaryproducts, using our trademarks, service marks and other proprietary intellectual property, including our names and logos. We have registered or applied toregister a number of our trademarks. We cannot assure investors in our common stock that our trademark applications will be approved. Third parties mayalso oppose our trademark applications, or otherwise challenge our use of the trademarks. In the event that our trademarks are successfully challenged, wecould be forced to rebrand our goods and services, which could result in loss of brand recognition and could require us to devote resources to advertising andmarketing new brands. If our efforts to register, maintain and protect our intellectual property are inadequate, or if any third party misappropriates, dilutes orinfringes upon our intellectual property, the value of our brands may be harmed, which could have a material adverse effect on our business, financialcondition or results of operations and might prevent our brands from achieving or maintaining market acceptance.We may also face the risk of claims that we have infringed third parties’ intellectual property rights. If third parties claim that we have infringed or areinfringing upon their intellectual property rights, our operating profits could be affected in a materially23adverse manner. Any claims of intellectual property infringement, even those without merit, could be expensive and time consuming to defend, require us torebrand our services, if feasible, divert management’s attention and resources or require us to enter into royalty or licensing agreements in order to obtain theright to use a third party’s intellectual property. Any royalty or licensing agreements, if required, may not be available to us on acceptable terms or at all. Asuccessful claim of infringement against us could result in our being required to pay significant damages, enter into costly license or royalty agreements, orstop the sale of certain products or services, any of which could have a negative impact on our business, financial condition or results of operations and couldharm our future prospects.Our business operations and future development could be significantly disrupted if we lose key members of our management team.The success of our business significantly depends upon the continued contributions of our founders and key employees, both individually and as a group.Our future performance will substantially depend upon our ability to motivate and retain our founders Christopher Pappas, our chairman, president and chiefexecutive officer, John Pappas, our vice chairman, as well as certain other senior key employees. The loss of the services of either of our founders or keyemployees, including key employees of the businesses we have acquired, could have a material adverse effect on our business, financial condition or resultsof operations. We have no reason to believe that we will lose the services of these individuals in the foreseeable future; however, we currently have noeffective replacement for these individuals due to their experience, reputation in the foodservice distribution industry and special role in our operations.Our insurance policies may not provide adequate levels of coverage against all claims, and fluctuating insurance requirements and costs could negativelyimpact our profitability. In addition, if we fail to establish proper reserves and adequately estimate future expenses, the costs associated with our self-insured group medical, workers’ compensation liability and auto liability plans may adversely affect our business, financial condition or results ofoperations.We believe that our insurance coverage is customary for businesses of our size and type. However, there are types of losses we may incur that cannot beinsured against or that we believe are not commercially reasonable to insure. These losses, should they occur, could have a material and adverse effect on ourbusiness, financial condition or results of operations. In addition, the cost of workers’ compensation insurance, auto liability insurance, general liabilityinsurance and directors’ and officers’ liability insurance fluctuates based upon our historical trends, market conditions and availability. Because ouroperations principally are centered in large, metropolitan areas, our insurance costs are higher than if our operations and facilities were based in more ruralmarkets. Additionally, health insurance costs in general have risen significantly over the past few years. These increases, as well as federal legislationrequiring employers to provide specified levels of health insurance to all employees, could have a negative impact upon our business, financial condition orresults of operations, and there can be no assurance that we will be able to successfully offset the effect of such increases with plan modifications and costcontrol measures, additional operating efficiencies or the pass-through of such increased costs to our customers.Effective October 1, 2011, we began maintaining a self-insured group medical program. We record a liability for medical claims during the period in whichthey occur, as well as an estimate of incurred but not reported claims. Management determines the adequacy of these accruals based on a monthly evaluationof our historical claims experience and medical cost trends. Projections of future loss expenses are inherently uncertain because of the random nature ofinsurance claims occurrences and could be significantly affected if future occurrences and claims differ from these assumptions and historical trends. If wesuffer a substantial loss that is not covered by our self- insurance reserves, the loss and attendant expenses could harm our business and operating results. Wehave purchased stop loss coverage from third parties which limits our exposure above the amounts we have self-insured.Effective August 1, 2012, we became self-insured for workers’ compensation and automobile liability to deductibles or self-insured retentions of $350thousand for workers compensation and $250 thousand for automobile liability per occurrence. The amounts in excess of our deductibles are fully insured bythird party insurers. Liabilities associated with this program are estimated in part by considering historical claims experience and cost trends. Projections offuture loss expenses are inherently uncertain because of the random nature of insurance claims occurrences and could be significantly affected if futureoccurrences and claims differ from these assumptions and historical trends.Increases in our labor costs, including as a result of labor shortages, the unionization of some of our associates, the price or unavailability of insuranceand changes in government regulation could slow our growth or harm our business.We are subject to a wide range of labor costs. Because our labor costs (particularly those in our center-of-the-plate businesses) are, as a percentage ofrevenues, higher than other industries, we may be significantly harmed by labor cost increases.24Our operations are dependent upon our experienced and sophisticated sales professionals, warehouse personnel and drivers, and, in our protein unit, on theexperienced butchers we employ. Qualified individuals have historically been in short supply and an inability to attract and retain them may limit our abilityto expand our operations in existing markets, as well as our ability to penetrate new markets. We can make no assurances that we will be able to attract andretain qualified individuals in the future. Additionally, the cost of attracting and retaining qualified individuals may be higher than we currently anticipate,and as a result, our profitability could decline. We are subject to the risk of employment-related litigation, which we believe increased as a result of ourexpansion in California resulting from the Del Monte acquisition and our large workforce in New York, at both the state and federal levels, including claimsstyled as class action lawsuits, which are more costly to defend. Also, some employment-related claims in the area of wage and hour disputes are not insurablerisks.Despite our efforts to control costs while still providing competitive healthcare benefits to our staff members, significant increases in healthcare costscontinue to occur, and we can provide no assurance that our cost containment efforts in this area will be effective. Moreover, we are continuing to assess theimpact of federal healthcare legislation on our healthcare benefit costs, and significant increases in such costs could adversely impact our operating results.There is no assurance that we will be able to pass through the costs of such legislation in a manner that will not adversely impact our operating results.In addition, many of our delivery and warehouse personnel are hourly workers subject to various minimum wage requirements. Mandated increases inminimum wage levels have recently been and continue to be proposed and implemented at both federal and state government levels. Minimum wageincreases may increase our labor costs.We are also subject to the regulations of the U.S. Citizenship and Immigration Services and U.S. Customs and Immigration Enforcement. Our failure tocomply with federal and state labor laws and regulations, or our employees’ failure to meet federal citizenship or residency requirements, could result in adisruption in our work force, sanctions or fines against us as well as adverse publicity and additional cost.As of December 29, 2017, we had 1,994 full-time employees, 197 of whom (approximately 9.9%) are represented by unions and are operating under acollective bargaining agreement. We have in the past been the focus of union negotiating efforts, and it is likely that we will be the focus of similar efforts inthe future.As we increase our employee base and broaden our distribution operations to new geographic markets, including as a result of acquisitions, our increasedvisibility could result in increased or expanded union-organizing efforts or we may acquire businesses with unionized workforces. Three labor unions havebeen certified to represent bargaining units at our New York, Chicago and Maryland facilities, and we have entered into a collective bargaining agreementwith our union employees in New York, Chicago and Maryland. Although we have not experienced a work stoppage to date, if we are unable to successfullynegotiate union contracts, or renewals of existing contracts, if additional employees were to unionize or if we acquire additional businesses with unionizedemployees, we could be subject to work stoppages and increases in labor costs, either of which could have a material adverse effect on our business, financialcondition or results of operations.We are subject to significant governmental regulation, and failure to comply could subject us to enforcement actions, recalls or other penalties, whichcould have a material adverse effect on our business, financial condition or results of operations.Our business is highly regulated at the federal, state and local levels, and our specialty food products, meat, poultry and seafood products and distributionoperations require various licenses, permits and approvals. For example:•the products we distribute in the United States are subject to regulation and inspection by the FDA and the USDA, and the products we distribute inCanada are subject to regulation by Health Canada and the Canadian Food Inspection Agency;•our warehouse, distribution facilities, repackaging activities and other operations also are subject to regulation and inspection, as applicable, by theFDA, the USDA, Health Canada, the Canadian Food Inspection Agency and state and provincial health authorities; and•our U.S. and Canadian trucking operations are subject to regulation by, as applicable, the U.S. Department of Transportation, the U.S. FederalHighway Administration, Transport Canada, the Surface Transportation Board and provincial transportation authorities.Our suppliers are also subject to similar regulatory requirements and oversight. The failure to comply with applicable regulatory requirements could result incivil or criminal fines or penalties, product recalls, closure of facilities or operations, the loss or revocation of any existing licenses, permits or approvals orthe failure to obtain additional licenses, permits or approvals in new jurisdictions where we intend to do business, any of which could have a material adverseeffect on our business, financial condition or results of operations.25In addition, as a distributor and repackager of specialty food products and meat, poultry and seafood products, we are subject to increasing governmentalscrutiny of and public awareness regarding food safety and the manufacture, sale, packaging, storage and marketing of natural, organic and other foodproducts. Compliance with these laws may impose a significant burden upon our operations. If we were to distribute foods that are or are perceived to becontaminated, or otherwise not in compliance with applicable laws, any resulting product recalls could have a material adverse effect on our business,financial condition or results of operations. In January 2011, President Obama signed into law the FDA Food Safety Modernization Act, which greatlyexpands the FDA’s authority over food safety, including giving the FDA power to order the recall of unsafe foods, increase inspections at food processingfacilities, issue regulations regarding the sanitary transportation of food, enhance tracking and tracing requirements and order the detention of food that it hasreason to believe is adulterated or misbranded, among other provisions. The FDA has taken a number of steps to implement the law, including, among others,the issuance of final regulations on preventive controls, produce safety, and foreign supplier verification programs to strengthen the oversight of importedfoods. These actions have resulted in increased compliance costs that are likely to continue. We cannot assure investors in our common stock that theseactions will not adversely impact us or others in our industry further, including suppliers of the products we sell, many of whom are small-scale producerswho may be unable or unwilling to bear the expected increases in costs of compliance and as a result cease operations or seek to pass along these costs to us.Additionally, concern over climate change, including the impact of global warming, has led to significant U.S. and international legislative and regulatoryefforts to limit greenhouse gas, or GHG, emissions. Increased regulation regarding GHG emissions, especially diesel engine emissions, could imposesubstantial costs upon us. These costs include an increase in the cost of the fuel and other energy we purchase and capital costs associated with updating orreplacing our vehicles prematurely.Until the timing, scope and extent of such regulation becomes known, we cannot predict its effect on our business, financial condition or results ofoperations. It is reasonably possible, however, that such regulation could impose material costs on us which we may be unable to pass on to our customers.Federal, state, provincial and local tax rules in the United States and Canada may adversely impact our business, financial condition or results ofoperations.We are subject to federal, state and local taxes in the United States, as well as federal, provincial and local taxes in Canada. Although we believe that our taxestimates are reasonable, if the Internal Revenue Service (“IRS”) or any other taxing authority disagrees with the positions we have taken on our tax returns,we could face additional tax liability, including interest and penalties. If material, payment of such additional amounts upon final adjudication of anydisputes could have a material impact on our business, financial condition or results of operations.Complying with new tax rules, laws or regulations could impact our business, financial condition or results of operations, and increases to federal, provincialor state statutory tax rates and other changes in tax laws, rules or regulations may increase our effective tax rate. Any increase in our effective tax rate couldhave a material impact on our business, financial condition or results of operations.The price of our common stock may be volatile and our stockholders could lose all or part of their investment.Volatility in the market price of our common stock may prevent our stockholders from being able to sell their shares at or above the price the stockholderspaid for their shares. The market price of our common stock could fluctuate significantly for various reasons, which include the following:•our quarterly or annual earnings or those of other companies in our industry;•changes in laws or regulations, or new interpretations or applications of laws and regulations, that are applicable to our business;•the public’s reaction to our press releases, our other public announcements and our filings with the SEC;•changes in accounting standards, policies, guidance, interpretations or principles;•additions or departures of our senior management personnel;•sales of common stock by our directors and executive officers;•adverse market reaction to any indebtedness we may incur or securities we may issue in the future;•actions by stockholders;•the level and quality of research analyst coverage for our common stock, changes in financial estimates or investment recommendations bysecurities analysts following our business or failure to meet such estimates;•the financial disclosure we may provide to the public, any changes in such disclosure or our failure to meet projections included in our publicdisclosure;26•various market factors or perceived market factors, including rumors, whether or not correct, involving us, our customers, our distributors or suppliersor our competitors;•introductions of new products or new pricing policies by us or by our competitors;•acquisitions or strategic alliances by us or our competitors;•short sales, hedging and other derivative transactions in our common stock;•the operating and stock price performance of other companies that investors may deem comparable to us; and•other events or factors, including changes in general conditions in the United States and global economies or financial markets (including thoseresulting from acts of God, war, incidents of terrorism or responses to such events).Concentration of ownership among our existing executive officers, directors and their affiliates may prevent new investors from influencing significantcorporate decisions.As of March 5, 2018, our executive officers, directors and their affiliates beneficially owned, in the aggregate, approximately 23.5% of our outstanding sharesof common stock. In particular, Christopher Pappas, our president and chief executive officer, and John Pappas, our vice chairman, beneficially ownedapproximately 18.7% of our outstanding shares of common stock as of March 5, 2018. Additionally, upon the closing of our acquisition of Del Monte onApril 6, 2015, the shareholders of Del Monte received approximately 1.1 million shares of our common stock, or 3.9% of our outstanding common stock as ofMarch 5, 2018, as well as $36.8 million in convertible subordinated notes, which notes may be converted into shares of our common stock by such holders atany time at a per share price of $29.70. As a result of their significant individual ownership levels, these stockholders will be able to exercise a significantlevel of control over all matters requiring stockholder approval, including the election of directors, amendment of our certificate of incorporation andapproval of significant corporate transactions. This control could have the effect of delaying or preventing a change of control of our company or changes inmanagement and will make the approval of certain transactions difficult or impossible without the support of these stockholders.If securities analysts or industry analysts downgrade our stock, publish negative research or reports or do not publish reports about our business, our stockprice and trading volume could decline.The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us, our business andour industry. If one or more analysts adversely change their recommendation regarding our stock or our competitors’ stock, our stock price may likelydecline. If one or more analysts cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turncould cause our stock price or trading volume to decline.We do not intend to pay dividends for the foreseeable future and our stock may not appreciate in value.We currently intend to retain our future earnings, if any, to finance the operation and growth of our business and do not expect to pay any cash dividends inthe foreseeable future. As a result, the success of an investment in shares of our common stock will depend upon any future appreciation in its value. There isno guarantee that shares of our common stock will appreciate in value or that the price at which our stockholders have purchased their shares will be able tobe maintained.Our issuance of preferred stock or debt securities could adversely affect holders of our common stock and discourage a takeover.Our board of directors is authorized to issue up to 5,000,000 shares of preferred stock without any action on the part of our stockholders. Our board ofdirectors also has the power, without stockholder approval, to set the terms of any series of preferred stock that may be issued, including voting rights,dividend rights, preferences over our common stock with respect to dividends or in the event of a dissolution, liquidation or winding up and other terms. Inthe event that we issue preferred stock in the future that has preference over our common stock with respect to payment of dividends or upon our liquidation,dissolution or winding up, or if we issue preferred stock with voting rights that dilute the voting power of our common stock, the rights of the holders of ourcommon stock or the market price of our common stock could be adversely affected. In addition, the ability of our board of directors to issue shares ofpreferred stock without any action on the part of our stockholders may impede a takeover of us and prevent a transaction favorable to our stockholders.Additionally, in the future, we may need to raise additional funds or pay all, or a portion, of the acquisition price for a business we acquire through theissuance of new debt, including longer-term, fixed-rate debt. If we issue new debt securities, the debt holders may have rights senior to those of our commonstockholders to make claims on our assets, and the terms of any debt could restrict our operations, including our ability to pay dividends on our commonstock.27Some provisions of our charter documents and Delaware law may have anti-takeover effects that could discourage an acquisition of us by others, even if anacquisition would be beneficial to our stockholders, and may prevent attempts by our stockholders to replace or remove our current management.Provisions in our certificate of incorporation and bylaws as well as provisions of the Delaware General Corporation Law could make it more difficult for athird party to acquire us or increase the cost of acquiring us, even if doing so would benefit our stockholders, including transactions in which stockholdersmight otherwise receive a premium for their shares. These provisions include:•authorizing the issuance of “blank check” preferred stock, the terms of which may be established and shares of which may be issued withoutstockholder approval;•prohibiting stockholder action by written consent, thereby requiring all stockholder actions to be taken at a meeting of our stockholders;•eliminating the ability of stockholders to call a special meeting of stockholders; and•establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon atstockholder meetings.28Item 1B. UNRESOLVED STAFF COMMENTSNone.Item 2. PROPERTIESThe following table sets forth the location, purpose and approximate size of our distribution and corporate facilities as of March 5, 2018: Name/Location Owned/Leased Purpose Approximate Size(Sq. Feet)Bronx, NY Leased Distribution Center 231,100Chicago, IL Leased Distribution Center 127,800Union City, CA Leased Distribution Center 117,400City of Industry, CA Leased Distribution Center 81,600Las Vegas, NV Leased Distribution Center 74,000Columbus, OH Leased Processing Facility/Distribution Center 60,900Cincinnati, OH Owned Distribution Center 59,500Hanover, MD Leased Distribution Center 55,600Portland, OR Leased Distribution Center 55,500Brisbane, CA Leased Processing Facility/Distribution Center 50,000Baltimore, MD Leased Distribution Center 50,000Downey, CA Subleased (1) Distribution Center 40,300Hayward, CA Subleased (1) Distribution Center 40,000West Sacramento, CA Leased Processing Facility/Distribution Center 37,900Hollywood, FL Leased Distribution Center 27,900Toronto, ON Leased Distribution Center 25,500Richmond, BC Leased Distribution Center 24,900American Canyon, CA Leased Processing Facility/Distribution Center 24,000San Francisco, CA Leased Processing Facility/Distribution Center 23,700Marina, CA Leased Processing Facility/Distribution Center 21,000Ridgefield, CT Leased Corporate Headquarters 20,000West Sacramento, CA Leased Maintenance Building 12,000Kent, WA Leased Distribution Center 10,500Chicago, IL Owned Processing Facility 10,000Edmonton, AB Leased Distribution Center 9,600Pembroke Park, FL Leased Distribution Center 6,700Tempe, AZ Leased Distribution Center 3,500West Bridgewater, MA Leased Distribution Center 1,400Total Square Feet 1,302,300(1)These are former distribution centers that are under non-cancelable operating leases that expire in fiscal 2019. We no longer conduct any of ouroperations out of these sites and we have entered into third-party sublease arrangements for each of them.We consider our properties to be in good condition generally and believe our facilities are adequate for our operations and provide sufficient capacity tomeet our anticipated requirements.29Item 3. LEGAL PROCEEDINGSFrom time to time, we are subject to various legal proceedings that arise from the normal course of business activities. If an unfavorable ruling were to occur,there exists the possibility of a material adverse impact on our results of operations, prospects, cash flows, financial position and brand. We are not currentlyaware of any pending or threatened legal proceeding against us that could have a material adverse effect on our business, operating results or financialcondition.Item 4. MINE SAFETY DISCLOSURESNot applicable.30PART IIItem 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITYSECURITIESThe Chefs’ Warehouse, Inc. Common StockOur common stock is publicly traded under the symbol “CHEF” on the NASDAQ Global Select Market. The following table sets forth the high and low saleprices for our common stock for the fiscal periods indicated as reported by the Nasdaq Stock Market during the indicated quarters. Common Stock Price High LowFiscal Year Ended December 29, 2017 First Quarter $16.90 $13.60Second Quarter $16.05 $13.00Third Quarter $19.80 $12.00Fourth Quarter $21.23 $16.60 Fiscal Year Ended December 30, 2016 First Quarter $20.23 $12.90Second Quarter $20.34 $14.82Third Quarter $16.72 $10.49Fourth Quarter $16.15 $10.80On March 8, 2018, the closing price of our common stock on the NASDAQ Global Select Market was $23.15 per share. As of March 5, 2018, there were 72holders of record of our common stock. This does not include the number of persons whose stock is in nominee or “street” name accounts through brokers.We have never paid a cash dividend on our common stock and do not anticipate paying any cash dividends on our common stock in the foreseeable future.Furthermore, we are prohibited from paying cash dividends under the terms of our senior secured credit facilities without the consent of the lendersthereunder.Performance GraphThe following graph compares the cumulative total stockholder return on our common stock during the period from December 28, 2012 throughDecember 29, 2017 with the cumulative total return on the NASDAQ Composite and the S&P Smallcap Food Distributor Index. The comparison assumes that$100 was invested on December 28, 2012 in our common stock and in each of the foregoing indices and assumes reinvestment of dividends, if any.The following performance graph and related information shall not be deemed “soliciting material” or to be “filed” with the Securities and ExchangeCommission, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or the Securities Exchange Actof 1934, each as amended, except to the extent that we specifically incorporate such information by reference into such filing.31COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURNAMONG THE CHEFS’ WAREHOUSE, INC.NASDAQ COMPOSITE INDEX AND THE S&P SMALLCAP FOOD DISTRIBUTOR INDEXAssumes $100 invested on December 28, 2012 December 28,2012 December 27,2013 December 26,2014 December 25,2015 December 30,2016 December 29,2017The Chefs’ Warehouse, Inc. $100.00 $163.16 $123.35 $97.26 $90.43 $114.78NASDAQ Composite Index $100.00 $159.55 $184.51 $193.79 $208.51 $264.99S&P Smallcap Food Distributor Index $100.00 $207.30 $205.72 $140.35 $220.60 $151.93ISSUER PURCHASES OF EQUITY SECURITIES Total Numberof SharesRepurchased(1) AveragePricePaid Per Share TotalNumber of SharesPurchased as Partof PubliclyAnnounced Plansor Programs MaximumNumber (orApproximateDollar Value) ofShares That MayYet Be PurchasedUnder the Plansor ProgramsSeptember 30, 2017 to October 27, 2017 90 $20.35 — —October 28, 2017 to November 24, 2017 1,109 18.35 — —November 25, 2017 to December 29, 2017 1,092 20.60 — —Total 2,291 $19.50 — — (1)During the thirteen weeks ended December 29, 2017, we withheld 2,291 shares of our common stock to satisfy tax withholding requirements upon thevesting of restricted shares of our common stock awarded to certain of our officers and key employees.Equity Compensation Plan InformationSee Part III, Item 12 for information regarding securities authorized for issuance under our equity compensation plans.32Item 6. SELECTED FINANCIAL DATAThe selected consolidated financial data presented below as of the end of each of the fiscal years in the five-year period ended December 29, 2017 have beenderived from our or our predecessor company’s audited consolidated financial statements. The data set forth below is qualified by reference to, and should beread in conjunction with our consolidated financial statements and their notes and “Management’s Discussion and Analysis of Financial Condition andResults of Operations” included elsewhere in this Annual Report on Form 10-K. Our consolidated statement of operations for the year ended December 30,2016 contained a 53rd week while all other years presented contained 52 weeks.Consolidated Statement of Operations Data:(Amounts presented in thousands, except for per share amounts) For the Fiscal Years EndedStatement of Operations Data: December 29, 2017 December 30,2016 December 25,2015 December 26,2014 December 27,2013Net sales $1,301,520 $1,192,866 $1,046,878 $832,709 $673,545Cost of sales 972,142 891,649 778,167 627,551 501,181 Gross profit 329,378 301,217 268,711 205,158 172,364Operating expenses (1) 288,251 253,978 228,311 172,148 135,783 Operating income 41,127 47,239 40,400 33,010 36,581Interest expense, net (2) 22,709 41,632 12,984 8,167 7,775Loss (gain) on sale of assets 10 (69) (295) (5) 8 Income before income taxes 18,408 5,676 27,711 24,848 28,798Provision for income taxes (3) 4,042 2,653 11,502 10,633 11,808Net income $14,366 $3,023 $16,209 $14,215 $16,990 Basic net income per share $0.55 $0.12 $0.63 $0.58 $0.78Diluted net income per share $0.54 $0.12 $0.63 $0.57 $0.77Weighted average common sharesoutstanding: Basic 26,118 25,919 25,532 24,638 21,767Diluted 27,425 26,030 26,509 24,845 21,995 Balance Sheet Data (at end of period) Cash and cash equivalents $41,504 $32,862 $2,454 $3,328 $20,014Working capital $188,567 $157,117 $125,371 $111,947 $117,504Total assets $687,749 $633,538 $579,803 $374,266 $351,971Long-term debt, net of current portion $313,995 $317,725 $267,349 $135,800 $140,847Total liabilities $439,148 $439,778 $391,839 $227,472 $219,906Total stockholders’ equity $248,601 $193,760 $187,964 $146,794 $132,065(1)Fiscal year 2016 includes income of $8,347 related to the revaluation of the Del Monte earn-out liabilities.(2)Fiscal year 2016 includes the impact of our debt restructuring resulting in a loss on extinguishment of debt of $22,310.(3)Fiscal year 2017 includes a tax benefit of $3,573 related to the enactment of H.R. 1, originally known as the Tax Cuts and Jobs Act, (the “Tax Act”).Acquisitions Affecting Comparability of Operating ResultsThe Company has made several acquisitions throughout the five-year period ended December 29, 2017. For acquisitions affecting the comparability of mostrecent three fiscal years, refer to the “Recent Acquisitions” section of “Management’s33Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this Annual Report on Form 10-K. Acquisitions affectingcomparability of the previous periods are described below.On December 11, 2013, we acquired substantially all the assets of Allen Brothers (and its subsidiaries) based in Chicago, Illinois. Founded in 1893, AllenBrothers is a leading processor and distributor of premium quality meats to many of the nation’s finest restaurants, hotels, casinos and country clubs. Inaddition, Allen Brothers supplies many of those same high quality products to over 100,000 consumers through a direct mail and e-commerce platform. Thetotal purchase price for the business is estimated to be approximately $30.7 million, which includes approximately $23.9 million paid at closing with cashproceeds from our September 2013 common stock offering. The remaining $6.7 million represents pension liabilities we assumed of $2.9 million andcontingent earn-out consideration of $6.0 million to be paid upon the achievement of certain performance milestones over the next four years following theclosing, offset by $2.1 million received as an adjustment to the purchase price. We paid a $1.5 million earn-out in fiscal 2015 and settled the remainingliability for $2.6 million in fiscal 2016.On May 1, 2013, we acquired 100% of the equity interests of Qzina, a British Columbia, Canada corporation based in Pompano Beach, Florida. Founded in1982, Qzina is a leading supplier of gourmet chocolate, dessert and pastry products dedicated to the pastry professional. Qzina currently supplies more than3,000 products to some of the finest restaurants, bakeries, patisseries, chocolatiers, hotels and cruise lines throughout the U.S. and Canada. The total purchaseprice paid for Qzina was $31.4 million, net of $0.6 million cash and was funded with borrowings under the revolving credit facility portion of our Amendedand Restated Credit Agreement. In the third quarter of 2014, the Company received a settlement of $0.5 million from the prior owners of Qzina directlyrelated to disputes regarding the working capital adjustment.34Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe following discussion should be read in conjunction with information included in Item 8 of this report. Unless otherwise indicated, the terms “Company”,“Chefs’ Warehouse”, “we”, “us”, and “our” refer to The Chefs’ Warehouse, Inc. and its subsidiaries.Overview and Recent DevelopmentsOverviewWe are a premier distributor of specialty foods in eight of the leading culinary markets in the United States. We offer more than 48,000 SKUs, ranging fromhigh-quality specialty foods and ingredients to basic ingredients and staples and center-of-the-plate proteins. We serve more than 30,000 customer locations,primarily located in our 15 geographic markets across the United States and Canada, and the majority of our customers are independent restaurants and finedining establishments. As a result of our acquisition of Allen Brothers, we also sell certain of our center-of-the-plate products directly to consumers.We believe several key differentiating factors of our business model have enabled us to execute our strategy consistently and profitably across our expandingcustomer base. These factors consist of a portfolio of distinctive and hard-to-find specialty food products, an extensive selection of center-of-the-plateproteins, a highly trained and motivated sales force, strong sourcing capabilities, a fully integrated warehouse management system, a highly sophisticateddistribution and logistics platform and a focused, seasoned management team.In recent years, our sales to existing and new customers have increased through the continued growth in demand for specialty food products and center-of-the-plate products in general; increased market share driven by our large percentage of sophisticated and experienced sales professionals, our high-qualitycustomer service and our extensive breadth and depth of product offerings, including, as a result of our acquisitions of Michael’s in August 2012, AllenBrothers in December 2013, Del Monte in April 2015 and Fells Point in August 2017, meat, seafood and other center-of-the-plate products, and, as a result ofour acquisition of Qzina in May 2013, gourmet chocolate, pastries and dessert; the acquisition of other specialty food and center-of-the-plate distributors; theexpansion of our existing distribution centers; our entry into new distribution centers, including the construction of a new distribution center in Chicago;and the import and sale of our proprietary brands. Through these efforts, we believe that we have been able to expand our customer base, enhance anddiversify our product selections, broaden our geographic penetration and increase our market share. We believe that as a result of these efforts, we haveincreased sales from $674 million in fiscal 2013 to $1.3 billion in fiscal 2017.Recent AcquisitionsOn August 25, 2017, we acquired substantially all of the assets of Fells Point, a specialty protein manufacturer and distributor based in the metro Baltimoreand Washington DC area. The aggregate purchase price for the transaction at acquisition date was approximately $33.0 million, including the impact of aninitial net working capital adjustment which is subject to a post-closing working capital adjustment true up. Approximately $29.7 million was paid in cash atclosing and the remaining $3.3 million consisted of 185,442 shares of the Company's common stock. We are also required to pay additional contingentconsideration, if earned, in the form of an earn-out amount which could total approximately $12.0 million. The payment of the earn-out liability is subject tothe successful achievement of annual Adjusted EBITDA targets for the Fells Point business over a period of four years following closing.On June 27, 2016, we acquired substantially all of the assets of MT Food, based in Chicago, Illinois. Founded in the mid-1990's, MT Food is a wholesaledistributor of dairy, produce, specialty and grocery items in the metro Chicago area. The purchase price for the transaction was $21.5 million, of which, $21.0million was paid in cash at closing with an additional $0.5 million payable eighteen months after the closing date. The aggregate purchase was paid throughcash-on-hand and the proceeds from a draw down on its delayed draw term loan facility. During the second quarter of fiscal 2017, we paid an earn-out of $0.5million to the former owners.On April 6, 2015, we acquired substantially all the equity interests of Del Monte for an aggregate purchase price of approximately $184.1 million. Foundedin 1926, Del Monte supplies high quality, USDA inspected beef, pork, lamb, veal, poultry and seafood products to Northern California. The funding of theacquisition consisted of the following:35•$123.9 million in cash, which was funded with cash-on-hand, borrowings under the revolving credit facility portion of our senior secured creditfacilities and the issuance of $25.0 million of additional senior secured notes that bear interest at 5.80% per annum due on October 17, 2020;•approximately 1.1 million shares of our common stock (valued at $22.17 per share);•$36.8 million in convertible subordinated notes issued to certain entities affiliated with Del Monte with a six-year maturity bearing interest at 2.50%with a conversion price of $29.70 per share; and•$1.3 million offset received as an adjustment to the purchase price.In addition, we have agreed to pay additional contingent consideration in the form of an earn-out of up to $24.5 million upon the successful achievement ofAdjusted EBITDA targets for the Del Monte entities and improvements in certain operating metrics for our existing protein business and the business of anyprotein companies subsequently acquired by the Company over the six years following the closing. The fair value of the Del Monte earn-out liability was$0.6 million as of December 29, 2017.Debt Restructuring and RepricingOn June 22, 2016, we refinanced our debt structure by entering into a new senior secured term loan. We used the proceeds to pay off our revolving creditfacility of $96.4 million, our previous term loan of $1.7 million and our senior secured notes of $125.0 million. We were required to pay the senior noteholders make-whole payments totaling $21.1 million for the early retirement of these notes. In addition, we wrote off deferred financing fees totaling $1.1million relating to the senior secured notes, term loan, and revolving credit facility. The refinancing met the requirements of a debt extinguishment foraccounting purposes and the loss on extinguishment of debt of $22.3 million, inclusive of the make-whole payments and write-off of deferred financing fees,is reflected in interest expense.On December 13, 2017, we repriced our senior secured term loan from 475 basis points to 400 basis points over LIBOR. In connection with the repricing, weincurred debt financing costs of $0.8 million which were capitalized as deferred financing fees.Equity OfferingOn December 19, 2017, we completed a public offering of 1,900,000 shares of our common stock which resulted in net proceeds to us of approximately $34.0million after deducting underwriters’ fees, commissions and transaction expenses. The net proceeds are currently being held as cash and cash equivalents foruse in general corporate purposes including as possible consideration for future acquisitions. Our Growth Strategies and OutlookWe continue to invest in our people, facilities and technology in an effort to achieve the following objectives and maintain our premier position within thespecialty foodservice distribution market:•sales and service territory expansion;•operational excellence and high customer service levels;•expanded purchasing programs and improved buying power;•product innovation and new product category introduction;•operational efficiencies through system enhancements; and•operating expense reduction through the centralization of general and administrative functions.Our growth has allowed us to improve upon our organization’s infrastructure, open new distribution facilities and pursue selective acquisitions. Over the lastseveral years, we have increased our distribution capacity to approximately 1.3 million square feet in 23 distribution facilities at December 29, 2017. Fromthe second half of fiscal 2013 through the end of fiscal 2017, we have invested significantly in acquisitions, infrastructure and management.Key Factors Affecting Our PerformanceDue to our focus on menu-driven independent restaurants, fine dining establishments, country clubs, hotels, caterers, culinary schools, bakeries, patisseries,chocolatiers, cruise lines, casinos and specialty food stores, our results of operations are materially impacted by the success of the food-away-from-homeindustry in the United States and Canada, which is materially impacted by general economic conditions, weather, discretionary spending levels andconsumer confidence. When economic conditions deteriorate, our customers' businesses are negatively impacted as fewer people eat away-from-home andthose who36do spend less money. As economic conditions begin to improve, our customers’ businesses historically have likewise improved, which contributes toimprovements in our business. Similarly, the direct-to-consumer business of our Allen Brothers subsidiary is significantly dependent on consumers’discretionary spending habits, and weakness or uncertainty in the economy could lead to consumers buying less from Allen Brothers.Volatile food costs may have a direct impact upon our profitability. Prolonged periods of product cost inflation may have a negative impact on our profitmargins and results of operations to the extent we are unable to pass on all or a portion of such product cost increases to our customers. In addition, productcost inflation may negatively impact consumer discretionary spending decisions within our customers’ establishments, which could adversely impact oursales. Conversely, our profit levels may be negatively impacted during periods of product cost deflation even though our gross profit as a percentage of salesmay remain relatively constant. However, some of our products, particularly certain of our protein items, are priced on a cost plus a dollar markup, whichhelps mitigate the negative impact of deflation.Given our wide selection of product categories, as well as the continuous introduction of new products, we can experience shifts in product sales mix thathave an impact on net sales and gross profit margins. This mix shift is most significantly impacted by the introduction of new categories of products inmarkets that we have more recently entered, the shift in product mix resulting from acquisitions, as well as the continued growth in item penetration onhigher velocity items such as dairy products.The foodservice distribution industry is fragmented but consolidating, and we have supplemented our internal growth through selective strategicacquisitions. We believe that the consolidation trends in the foodservice distribution industry will continue to present acquisition opportunities for us, whichmay allow us to grow our business at a faster pace than we would otherwise be able to grow the business organically.Performance IndicatorsIn addition to evaluating our income from operations, our management team analyzes our performance based on net sales growth, gross profit and gross profitmargin.•Net sales growth. Our net sales growth is driven principally by changes in volume and, to a lesser degree, changes in price related to the impact ofinflation in commodity prices and product mix. In particular, product cost inflation and deflation impacts our results of operations and, depending onthe amount of inflation or deflation, such impact may be material. For example, inflation may increase the dollar value of our sales, and deflation maycause the dollar value of our sales to fall despite our unit sales remaining constant or growing.•Gross profit and gross profit margin. Our gross profit and gross profit as a percentage of net sales, or gross profit margin, are driven principally bychanges in volume and fluctuations in food and commodity prices and our ability to pass on any price increases to our customers in an inflationaryenvironment and maintain or increase gross profit margin when our costs decline. Our gross profit margin is also a function of the product mix of ournet sales in any period. Given our wide selection of product categories, as well as the continuous introduction of new products, we can experienceshifts in product sales mix that have an impact on net sales and gross profit margins. This mix shift is most significantly impacted by the introductionof new categories of products in markets that we have more recently entered, impact of product mix from acquisitions, as well as the continued growthin item penetration on higher velocity items such as dairy products.Key Financial Definitions•Net sales. Net sales consist primarily of sales of specialty products, center-of-the-plate proteins and other food products to independently-ownedrestaurants and other high-end foodservice customers, which we report net of certain group discounts and customer sales incentives. Net sales alsoinclude sales by our Allen Brothers subsidiary that are direct-to-consumers.•Cost of sales. Cost of sales include the net purchase price paid for products sold, plus the cost of transportation necessary to bring the product to ourdistribution facilities. Our cost of sales may not be comparable to other similar companies within our industry that include all costs related to theirdistribution network and protein processing costs in their costs of sales rather than as operating expenses.•Operating expenses. Our operating expenses include warehousing, processing and distribution expenses (which include salaries and wages, employeebenefits, facility and distribution fleet rental costs and other expenses related to warehousing, processing and delivery) and selling, general andadministrative expenses (which include selling, insurance, administrative, wage and benefit expenses, share-based compensation expense and changesin the fair value of our contingent earn-out liabilities).37•Interest expense. Interest expense consists primarily of interest on our outstanding indebtedness and, as applicable, the amortization or write-off ofdeferred financing fees.Results of Operations The following table presents, for the periods indicated, certain income and expense items expressed as a percentage of net sales: Fiscal Year Ended December 29, 2017 December 30, 2016 December 25, 2015Net sales 100.0% 100.0% 100.0%Cost of sales 74.7% 74.7% 74.3%Gross profit 25.3% 25.3% 25.7%Operating expenses 22.1% 21.3% 21.8%Operating income 3.2% 4.0% 3.9%Other expense 1.7% 3.5% 1.2%Income before income taxes 1.4% 0.5% 2.6%Provision for income taxes 0.3% 0.2% 1.1%Net income 1.1% 0.3% 1.5%Fiscal Year Ended December 29, 2017 compared to Fiscal Year Ended December 30, 2016The fiscal year ended December 29, 2017 consisted of 52 weeks as compared to the fiscal year ended December 30, 2016, which consisted of 53 weeks.Net SalesNet sales for the fifty-two weeks ended December 29, 2017 increased approximately 9.1% to $1.30 billion from $1.19 billion for the fifty-three weeks endedDecember 30, 2016. Organic growth contributed $86.9 million or 7.3% to sales growth in the year. The remaining sales growth resulted from the acquisitionof MT Food on June 27, 2016, $23.2 million or 1.9%, and the acquisition of Fells Point on August 25, 2017, $22.6 million or 1.9%, partially offset by the53rd week in fiscal 2016, which contributed approximately $24.1 million, or 2.0%, to net sales in fiscal 2016. Internally calculated inflation wasapproximately 3.2% for the fiscal year ended December 29, 2017, compared to internally calculated deflation for fiscal 2016 of approximately 1.2%. Gross ProfitGross profit increased approximately 9.3% to $329.4 million for the fifty-two weeks ended December 29, 2017 from $301.2 million for the fifty-three weeksended December 30, 2016 primarily due to the increased sales volumes discussed above. Gross profit margin increased approximately 6 basis points to 25.3%in fiscal 2017 from 25.3% in fiscal 2016. This increase in gross profit margin related to the approximately 22 basis points increase in the Company’sspecialty division margin, partially offset by an approximate 41 basis points decrease in the protein division margin compared to margins in the fifty-threeweeks ended December 30, 2016.Operating ExpensesTotal operating expenses increased by approximately 13.5% to $288.3 million for the fifty-two weeks ended December 29, 2017 from $254.0 million for thefifty-three weeks ended December 30, 2016. As a percentage of net sales, operating expenses increased 80 basis points to 22.1% for fiscal 2017 from 21.3%for fiscal 2016. The increase in our operating expense ratio is largely attributable to the impact of prior year gains upon the reduction of the Company’s earn-out liabilities, 80 basis points, and higher distribution costs, 19 basis points.Operating IncomeOperating income decreased approximately 12.9% to $41.1 million for the fifty-two weeks ended December 29, 201738compared to $47.2 million for the fifty-three weeks ended December 30, 2016. As a percentage of net sales, operating income was 3.2% in fiscal 2017compared to 4.0% in fiscal 2016. The decrease in operating income as a percentage of sales was driven primarily by the increase in operating expensesdiscussed above.Other ExpenseTotal other expense decreased $18.8 million to $22.7 million for the fiscal year ended December 29, 2017, from $41.6 million for the fiscal year endedDecember 30, 2016. This decrease was primarily due to the prior year $22.3 million debt extinguishment loss associated with the Company's debt refinancingin June 2016. This decrease is partially offset by increased interest expense due to higher levels of debt associated with that refinancing.Provision for Income TaxesOur effective income tax rate was 22.0% and 46.7% for the fiscal years ended December 29, 2017 and December 30, 2016, respectively. The decrease ineffective tax rate in fiscal 2017 is due primarily to the impacts of the Tax Act which created an income tax benefit of $3.6 million from the remeasurement ofthe Company's deferred tax assets and liabilities. The Company's effective income tax rate for fiscal 2017 exclusive of the impact of the Tax Act would havebeen 41.4%.Net IncomeReflecting the factors described in more detail above, net income increased $11.3 million to $14.4 million for the fiscal year ended December 29, 2017,compared to $3.0 million for the fiscal year ended December 30, 2016.Fiscal Year Ended December 30, 2016 compared to Fiscal Year Ended December 25, 2015The fiscal year ended December 30, 2016 consisted of 53 weeks as compared to the fiscal year ended December 25, 2015, which consisted of 52 weeks.Net SalesNet sales for the fifty-three weeks ended December 30, 2016 increased approximately 13.9% to $1.19 billion from $1.05 billion for the fifty-two weeks ended December 25, 2015. The increase in net sales was primarily the result of the Del Monte acquisition on April 6,2015, the MT Food acquisition on June 27, 2016, the 53rd week in fiscal 2016 and organic sales growth. Del Monte contributed approximately $48.6million, or 4.6%, MT Food contributed $31.6 million, or 3.0%, and the extra week in fiscal 2016 contributed approximately $24.1 million, or 2.3%, to netsales growth for fifty-three weeks ended December 30, 2016. Organic growth contributed the remaining approximately $41.7 million, or 4.0%, of total netsales growth. Internally calculated deflation was approximately 1.2% for the fiscal year ended December 30, 2016, driven largely by our protein division.Internally calculated inflation for fiscal 2015 was approximately 3.0%.Gross ProfitGross profit increased approximately 12.1% to $301.2 million for the fifty-three weeks ended December 30, 2016 from $268.7 million for the fifty-two weeksended December 25, 2015 primarily due to the increased sales volumes discussed above. Gross profit margin decreased approximately 42 basis pointsto 25.3% in fiscal 2016 from 25.7% in fiscal 2015. This decrease in gross profit margin related to the higher mix of protein sales in fiscal 2016 due to theacquisition of Del Monte in the second quarter of 2015 and the relative performance of Del Monte and Allen Brothers during the period. Gross profit marginsdecreased approximately 34 basis points in the Company’s specialty division and 23 basis points in the protein division compared to margins in the fifty-twoweeks ended December 25, 2015.Operating ExpensesTotal operating expenses increased by approximately 11.2% to $254.0 million for the fifty-three weeks ended December 30, 2016 from $228.3 million forthe fifty-two weeks ended December 25, 2015. As a percentage of net sales, operating expenses decreased 52 basis points to 21.3% forfiscal 2016 from 21.8% for fiscal 2015. The increase in our operating expenses is largely attributable to the acquisitions of Del Monte and MT Food whichaccounted for year-on-year increases of $12.2 million and $5.2 million, respectively, higher warehousing and distribution costs of $4.6 million and $3.4million, respectively, due to increased sales levels, the impact of the 53rd week in fiscal 2016 of approximately $4.8 million and increased amortizationexpense of $2.0 million, partially offset by the reduction in the fair value of earn-out obligations of $10.0 million in 2016.39Operating IncomeOperating income increased approximately 16.9% to $47.2 million for the fifty-three weeks ended December 30, 2016 compared to $40.4 million forthe fifty-two weeks ended December 25, 2015. As a percentage of net sales, operating income was 4.0% in fiscal 2016 compared to 3.9% in fiscal 2015.The increase in operating income as a percentage of sales was driven primarily from the reduction in operating expenses as a percentage of sales discussedabove.Other ExpenseTotal other expense increased $28.9 million to $41.6 million for the fiscal year ended December 30, 2016, from $12.7 million for the fiscal yearended December 25, 2015. This increase was primarily due to the refinancing of the Company’s debt on June 22, 2016. As part of the refinancing, theCompany retired its previous revolving credit facility, term loan and senior secured notes. The Company was required to pay the senior note holders make-whole payments totaling $21.1 million for the early retirement of these notes. In addition, the Company wrote off deferred financing fees totaling $1.1million relating to the senior secured notes, term loan, and revolving credit facility. This retirement was accounted for as a debt extinguishment and the losson debt extinguishment of $22.3 million, inclusive of the make-whole payments and write-off of deferred financing fees is reflected in interest expense inthe fifty-three weeks ended December 30, 2016. In addition, the Company had higher overall debt levels in fiscal 2016 as a result of financing the Del Monteacquisition in the second quarter of fiscal 2015.Provision for Income TaxesOur effective income tax rate was 46.7% and 41.5% for the fiscal years ended December 30, 2016 and December 25, 2015, respectively. The increase ineffective tax rate in fiscal 2016 is due primarily to the impact of the debt extinguishment in fiscal 2016, which significantly reduced our taxable income andamplified the impacts of permanent differences on our effective tax rate. Adjusted to remove the impact of the debt extinguishment, our effective tax rate forfiscal 2016 was approximately 41.3%.Net IncomeReflecting the factors described in more detail above, net income decreased $13.2 million to $3.0 million for the fiscal year ended December 30, 2016,compared to $16.2 million for the fiscal year ended December 25, 2015.Liquidity and Capital ResourcesWe finance our day-to-day operations and growth primarily with cash flows from operations, borrowings under our senior secured credit facilities and otherindebtedness, equity financing, operating leases, and trade payables.Our New Markets Tax Credit loan (“NMTC Loan”) matured on April 26, 2017 and was repaid in full, including all accrued interest, for $11.0 million ofwhich, $8.1 million was paid in cash and $2.9 million was paid from the associated sinking fund.Senior Secured Term Loan Credit FacilityOn June 22, 2016, Chefs’ Warehouse Parent, LLC (“CW Parent”) and Dairyland USA Corporation (“Dairyland”), as co-borrowers, and The Chefs’ Warehouse,Inc. (the “Company”) and certain other subsidiaries of the Company, as guarantors, entered into a credit agreement (the “Term Loan Credit Agreement”) witha group of lenders for which Jefferies Finance LLC (“Jefferies”) acts as administrative agent and collateral agent. The Term Loan Credit Agreement providesfor a senior secured term loan B facility (the “Term Loan Facility”) in an aggregate amount of $305.0 million with a $50.0 million six-month delayed drawterm loan facility (the “DDTL”; the loans outstanding under the Term Loan Facility (including the DDTL), the “Term Loans”). Additionally, the Term LoanFacility includes an accordion which permits the Company to request that the lenders extend additional Term Loans in an aggregate principal amount of upto $50.0 million (less the aggregate amount of certain indebtedness incurred to finance acquisitions) plus an unlimited amount subject to the Company’sTotal Leverage Ratio not exceeding 4.90:1.00 on a pro forma basis. Borrowings under the Term Loan Facility were used to repay the Company’s seniorsecured notes, as well as the prior term loan and revolving credit facility. Remaining funds will be used for capital expenditures, permitted acquisitions,working capital and general corporate purposes of the Company. On June 27, 2016, the Company drew $14.0 million from the DDTL to help pay for the MTFood acquisition. On September 14, 2016, the Company entered into an amendment to the Term Loan Credit Agreement under which the remaining portionof the DDTL was terminated, the Company’s interest rate schedule was modified and the Company repaid $25.0 million of the outstanding balance of theTerm Loans.40The final maturity of the Term Loan Facility is June 22, 2022. Subject to adjustment for prepayments, the Company is required to make quarterlyamortization payments on the Term Loans in an amount equal to 0.25% of the aggregate principal amount of the Term Loans.The interest rates per annum applicable to Term Loans, will be, at the co-borrowers’ option, equal to either a base rate or an adjusted LIBOR rate for one, two,three, six or (if consented to by the lenders) twelve-month interest periods chosen by the Company, in each case plus an applicable margin percentage.On December 13, 2017, we repriced our senior secured term loan from 475 basis points to 400 basis points over LIBOR. In connection with the repricing, weincurred financing costs of $0.8 million which were capitalized as deferred financing fees. The interest rate on this facility at December 29, 2017 was 5.57%.The Term Loan Facility contains customary affirmative covenants, negative covenants (including restrictions, subject to customary exceptions, on incurringdebt or liens, paying dividends, repaying payment subordinated and junior lien debt, disposing assets, and making investments and acquisitions), and eventsof default for a term loan B facility of this type, as more particularly described in the Term Loan Credit Agreement.As of December 29, 2017, the Company was in compliance with all debt covenants under the Term Loan Facility.Asset Based Loan FacilityOn June 22, 2016, the Company entered into a credit agreement (the “ABL Credit Agreement”) with a group of lenders for which JPMorgan Chase Bank,N.A., acts as administrative agent and collateral agent. The ABL Credit Agreement provides for an asset based loan facility (the “ABL Facility”) in theaggregate amount of up to $75.0 million. Availability under the ABL Facility will be limited to a borrowing base consisting of the difference of (a) the lesserof: (i) the aggregate amount of commitments or (ii) the sum of specified percentages of eligible receivables and eligible inventory, minus certain availabilityreserves minus (b) outstanding borrowings. The co-borrowers under the ABL Facility are entitled on one or more occasions, subject to the satisfaction ofcertain conditions, to request an increase in the commitments under the ABL Facility in an aggregate principal amount of up to $25.0 million. The ABLFacility matures on June 22, 2021.The interest rates per annum applicable to loans, other than swingline loans, under the ABL Facility will be, at the co-borrowers’ option, equal to either a baserate or an adjusted LIBOR rate for one, two, three, six or (if consented to by the lenders) twelve-month, interest periods chosen by the Company, in each caseplus an applicable margin percentage. The Company will pay certain recurring fees with respect to the ABL Facility, including fees on the unusedcommitments of the lenders.The ABL Facility contains customary affirmative covenants, negative covenants and events of default as more particularly described in the ABL CreditAgreement. The ABL Facility will require compliance with a minimum consolidated fixed charge coverage ratio of 1:1 if the amount of availability under theABL Facility falls below a specified dollar amount or percentage of the borrowing base.There were no outstanding balances under the ABL Facility as of December 29, 2017. Borrowings under the ABL Facility will be used, and are expected to beused, for capital expenditures, permitted acquisitions, working capital and general corporate purposes of the Company. As of December 29, 2017, theCompany was in compliance with all debt covenants and the Company had reserved $10.2 million of the ABL facility for the issuance of letters of credit. Asof December 29, 2017, funds totaling $64.8 million were available for borrowing under the ABL facility.Convertible Subordinated Notes On April 6, 2015, the Company issued $36.8 million principal amount of convertible subordinated notes with a six-year maturity bearing interest at 2.5% anda conversion price of $29.70 per share (the “Convertible Subordinated Notes”) to certain of the Del Monte entities as partial consideration in the Del Monteacquisition. Interest is paid annually in cash. The holders of the Convertible Subordinated Notes may, in certain instances beginning one year after issuance,redeem the Convertible Subordinated Notes for cash or shares of the Company’s common stock. Moreover, the Company may pay the outstanding principalamount due and owing under the Convertible Subordinated Notes at maturity in either cash or shares of the Company’s common stock. The ConvertibleSubordinated Notes, which are subordinate to the Company’s and its subsidiaries’ senior debt, are convertible into shares of the Company’s common stock bythe holders at any time at a conversion price of $29.70. 41LiquidityOur capital expenditures, excluding cash paid for acquisitions, were approximately $12.3 million for fiscal 2017. We believe our capital expenditures,excluding cash paid for acquisitions, for fiscal 2018 will be in the range of $14.0 million to $16.0 million. The increase in projected capital expenditures infiscal 2018 as compared to fiscal 2017 is the result of planned expansions of several of our distribution facilities and renovations to our corporateheadquarters. Recurring capital expenditures will be financed with cash generated from operations and borrowings under our ABL Facility. Our plannedcapital projects will provide both new and expanded facilities and improvements to our technology that we believe will produce increased efficiency and thecapacity to continue to support the growth of our customer base. Future investments and acquisitions will be financed through either internally generatedcash flow, borrowings under our senior secured credit facilities in place at the time of the potential investment or acquisition or through the issuance ofequity or debt securities, including, but not limited to, longer-term, fixed-rate debt securities and shares of our common stock.On December 19, 2017, we completed a public offering of 1,900,000 shares of our common stock which resulted in net proceeds to us of approximately $34.0million after deducting underwriters’ fees, commissions and transaction expenses. The net proceeds are currently being held as cash and cash equivalents foruse in general corporate purposes including as possible consideration for future acquisitions. On August 25, 2017, the Company entered into an asset purchase agreement to acquire substantially all of the assets of Fells Point, a specialty proteinmanufacturer and distributor based in the metro Baltimore and Washington DC area. The aggregate purchase price for the transaction at acquisition date wasapproximately $33.0 million, including the impact of an initial net working capital adjustment which is subject to a post-closing working capital adjustmenttrue up. Approximately $29.7 million was paid in cash at closing and the remaining $3.3 million consisted of 185,442 shares of the Company's commonstock. The Company will also pay additional contingent consideration, if earned, in the form of an earn-out amount which could total approximately $12.0million. The payment of the earn-out liability is subject to the successful achievement of annual Adjusted EBITDA targets for the Fells Point business over aperiod of four years following closing.On June 27, 2016, we acquired substantially all of the assets of MT Food, based in Chicago, Illinois. Founded in the mid-1990's, MT Food is a wholesaledistributor of dairy, produce, specialty and grocery items in the metro Chicago area. The purchase price for the transaction was $21.5 million, of which, $21.0million was paid in cash at closing with an additional $0.5 million payable eighteen months after the closing date and an earn-out of $0.5 million paidduring the second quarter of fiscal 2017. The aggregate purchase price paid by the Company was paid through cash-on-hand and the proceeds from a drawdown on its delayed draw term loan facility.On April 26, 2017, our NMTC Loan matured and was repaid in full, including all accrued interest, for $11.0 million, of which, $8.1 million was paid in cashand $2.9 million was paid from the associated sinking fund.In July 2015, we closed on a sale-leaseback transaction of our new Las Vegas, NV distribution facility. The property was sold for $14.6 million, whichapproximated its cost. The related on-going lease will be accounted for as an operating lease.On April 6, 2015, we acquired substantially all the equity interests of Del Monte for an aggregate purchase price of approximately $184.1 million. Foundedin 1926, Del Monte supplies high quality, USDA inspected beef, pork, lamb, veal, poultry and seafood products to Northern California. The funding of theacquisition consisted of the following:•$123.9 million in cash, which was funded with cash-on-hand, borrowings under the revolving credit facility portion of our senior secured creditfacilities and the issuance of $25.0 million of additional senior secured notes that bear interest at 5.80% per annum due on October 17, 2020;•approximately 1.1 million shares of our common stock (valued at $22.17 per share);•$36.8 million in convertible subordinated notes issued to certain entities affiliated with Del Monte with a six-year maturity bearing interest at 2.50%with a conversion price of $29.70 per share; and•$1.3 million offset received as an adjustment to the purchase price.In addition, we have agreed to pay additional contingent consideration in the form of an earn-out of up to $24.5 million upon the successful achievement ofAdjusted EBITDA targets for the Del Monte entities and improvements in certain operating metrics for our existing protein business and the business of anyprotein companies subsequently acquired by the Company over the six years following the closing. The fair value of the Del Monte earn-out liability was$0.6 million as of December 29, 2017.42Cash FlowsNet cash provided by operations was $31.5 million for fiscal 2017, a decrease of $7.4 million from the $38.9 million provided by operations for fiscal 2016.The primary reasons for the decrease in net cash provided by operations were decreased cash generated through net income from operations and increasedcash used in working capital changes. During fiscal 2017 net income increased by $11.3 million. Exclusive of the impact of the fiscal year 2016 loss onextinguishment of debt of $22.3 million and $10.0 million fair-value adjustment to the Company's Allen Brothers and Del Monte earn-out liabilities,partially offset by their aggregate tax impact of $5.1 million, and the fiscal 2017 one-time income tax benefit of $3.6 million due to the Tax Act, net incomefrom operations increased by $0.6 million. The decrease in cash provided by changes in working capital was primarily due to increases in cash used forinventory changes of $18.8 million and accounts receivable changes of $11.1 million, offset by an increase in cash provided by prepaid expenses and othercurrent assets changes of $11.9 million (exclusive of the tax impact of the loss on debt extinguishment, a financing activity ) and an increase in cashprovided by accounts payable changes of $11.3 million.Net cash provided by operations was $38.9 million for fiscal 2016, an increase of $1.2 million from the $37.7 million provided by operations for fiscal 2015.The primary reasons for the increase in net cash provided by operations were increased cash generated through net income from operations partially offset bycash used in working capital changes. During fiscal 2016 net income decreased by $13.2 million. The primary cause for this decrease in net income was a losson extinguishment of debt of $22.3 million, partially offset by the related tax impact on the loss of approximately $9.3 million. Exclusive of the net impactof the loss on extinguishment, which is a cash flow from financing activities, net income from operations decreased by $0.2 million. Embedded within the netincome from operations decrease, non-cash charges decreased by $2.8 million, representing an overall decrease of cash provided by operations through netincome of $3.0 million. The primary cause for this decrease was the $10.0 million fair-value adjustment to the Company’s Allen Brothers and Del Monteearn-out liabilities partially offset by the related tax impact of $4.2 million, organic growth as well as the cash generating impacts of the Del Monte and MTFood acquisitions. The decrease in cash provided by changes in working capital was primarily due to an increase in cash used for accounts payable changesof $16.3 million and an increase in cash used for prepaid expenses and other current assets changes of $8.5 million (exclusive of the tax impact of the loss ondebt extinguishment, a financing activity), offset by increases in cash provided by inventory changes of $13.1 million and accounts receivable changesof $8.6 million.Net cash used in investing activities was $42.4 million for fiscal 2017, an increase of $6.6 million from the net cash used in investing activities of $35.8million for fiscal 2016. The increase in net cash used was primarily due to higher cash paid for acquisitions, resulting from the Fells Point acquisition in 2017partially offset by the cash paid for the MT Food acquisition in 2016, and lower capital expenditures the result of completing construction of our new SanFrancisco, CA distribution facility.Net cash used in investing activities was $35.8 million for fiscal 2016, a decrease of $93.5 million from the net cash used in investing activities of $129.3million for fiscal 2015. The decrease in net cash used was primarily due to lower cash paid for acquisitions, resulting from the Del Monte acquisition in 2015partially offset by the cash paid for the MT Food acquisition in 2016, and lower capital expenditures the result of completing construction of our Bronx, NYand Las Vegas, NV distribution facilities offset, in part, by the sale of one of our owned facilities in fiscal 2015.Net cash provided from financing activities was $19.4 million in fiscal 2017, a decrease of $7.8 million from the $27.2 million provided from financingactivities in fiscal 2016. This decrease primarily resulted from our fiscal 2016 debt restructuring and the payment of $6.7 million in contingent earn-outconsideration related to the Allen Brothers and Del Monte acquisitions, partially offset by $34.0 million in net proceeds from our equity offering inDecember 2017.Net cash provided from financing activities was $27.2 million in fiscal 2016, a decrease of $63.8 million from the $91.0 million provided from financingactivities in fiscal 2015. This decrease primarily resulted from the debt issued in 2015 to pay for the Del Monte acquisition and payments made to pay off ourrevolving credit facility in fiscal 2016, the result of improved cash flow from operations and lower capital expenditures.SeasonalityExcluding our direct-to-consumer business, we generally do not experience any material seasonality. However, our sales and operating results may vary fromquarter to quarter due to factors such as changes in our operating expenses, management’s ability to execute our operating and growth strategies, personnelchanges, demand for our products, supply shortages, weather patterns and general economic conditions.Our direct-to-consumer business is subject to seasonal fluctuations, with direct-to-consumer center-of-the-plate protein sales typically higher during theholiday season in our fourth quarter; accordingly, a disproportionate amount of operating cash flows43from this portion of our business is generated by our direct-to-consumer business in the fourth quarter of our fiscal year. Despite a significant portion of thesesales occurring in the fourth quarter, there are operating expenses, principally advertising and promotional expenses, throughout the year.InflationOur profitability is dependent on, among other things, our ability to anticipate and react to changes in the costs of key operating resources, including foodand other raw materials, labor, energy and other supplies and services. Substantial increases in costs and expenses could impact our operating results to theextent that such increases cannot be passed along to our customers. The impact of inflation on food, labor, energy and occupancy costs can significantlyaffect the profitability of our operations.Commitments and Significant Contractual ObligationsThe following table summarizes our contractual obligations and commercial commitments at December 29, 2017. Payments Due by Period (1) Total Less than OneYear 1-3Years 4-5Years Thereafter (In thousands)Inventory purchase commitments $37,929 $37,929 $— $— $—Indebtedness $325,185 $3,179 $6,358 $315,648 $—Capital lease obligations and software financing $664 $647 $10 $7 $—Pension exit liabilities $2,438 $130 $288 $329 $1,691Long-term operating leases $125,118 $20,831 $35,379 $26,988 $41,920 Total $491,334 $62,716 $42,035 $342,972 $43,611(1)Interest on our various outstanding debt instruments is included in the above table, except for our senior secured credit facility, which has a variableinterest rate. At December 29, 2017, we had borrowings of $288.4 million under our senior secured credit facility. During the fiscal year endedDecember 29, 2017, the weighted average interest rate on our senior secured credit facility was 6.45% and we incurred interest expense of $19.0million. See Note 9 “Debt Obligations” to our consolidated financial statements for further information.Cash to be paid for income taxes is excluded from the table above.We had outstanding letters of credit of approximately $10.2 million and $8.3 million at December 29, 2017 and December 30, 2016, respectively.Substantially all of our assets are pledged as collateral to secure our borrowings under our Credit Facilities.Off-Balance Sheet ArrangementsAs of December 29, 2017, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K.Critical Accounting PoliciesThe preparation of our consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities,revenues and expenses, and related disclosure of contingent assets and liabilities. The SEC has defined critical accounting policies as those that are bothmost important to the portrayal of our financial condition and results and require our most difficult, complex or subjective judgments or estimates. Based onthis definition, we believe our critical accounting policies include the following: (i) determining our allowance for doubtful accounts, (ii) inventoryvaluation, with regard to determining our reserve for excess and obsolete inventory, (iii) valuing goodwill and intangible assets, (iv) vendor rebates and otherpromotional incentives, (v) self-insurance reserves, and (vi) accounting for income taxes and (vii) contingent earn-out liabilities. For all financial statementperiods presented, there have been no material modifications to the application of these critical accounting policies.44Allowance for Doubtful AccountsWe analyze customer creditworthiness, accounts receivable balances, payment history, payment terms and historical bad debt levels when evaluating theadequacy of our allowance for doubtful accounts. In instances where a reserve has been recorded for a particular customer, future sales to the customer areeither conducted using cash-on-delivery terms or the account is closely monitored so that agreed-upon payments are received prior to orders being released.A failure to pay results in held or cancelled orders. We also estimate receivables that will ultimately be uncollectible based upon historical write-offexperience. Our estimate could require change based on changing circumstances, including changes in the economy or in the particular circumstances ofindividual customers. Accordingly, we may be required to increase or decrease our allowance. Our accounts receivable balance was $142.2 million and$128.0 million, net of the allowance for doubtful accounts of $8.0 million and $6.8 million, as of December 29, 2017 and December 30, 2016, respectively.Inventory ValuationWe maintain reserves for slow-moving and obsolete inventories. These reserves are primarily based upon inventory age plus specifically identified inventoryitems and overall economic conditions. A sudden and unexpected change in consumer preferences or change in overall economic conditions could result in asignificant change in the reserve balance and could require a corresponding charge to earnings. We actively manage our inventory levels as we seek tominimize the risk of loss and have consistently achieved a relatively high level of inventory turnover.Valuation of Goodwill and Intangible AssetsWe are required to test goodwill for impairment at least annually and between annual tests if events occur or circumstances change that would more likelythan not reduce the fair value of a reporting unit below its carrying amount. We have elected to perform our annual tests for indications of goodwillimpairment during the fourth quarter of each fiscal year. We test for goodwill impairment at the reporting unit level, as we aggregate our component unitsinto two reporting units, Protein and Specialty, based on a discounted cash flow approach. The quantitative analysis consists of a comparison of the carryingvalue of the our reporting units, including goodwill, to the estimated fair value of the reporting units. A goodwill impairment loss, if any, would berecognized for the amount by which the reporting unit's carrying value exceeded its fair value.When analyzing whether to aggregate the business components into single reporting units, management considers whether each component has similareconomic characteristics. We have evaluated the economic characteristics of our different geographic markets, including our recently acquired businesses,along with the similarity of the operations and margins, nature of the products, type of customer and methods of distribution of products and the regulatoryenvironment in which we operate and concluded that the business components can be combined into two reporting units, Protein and Specialty.As of December 29, 2017, our annual assessment indicated that no impairment of goodwill existed, as the fair value of each reporting unit exceeded theircarrying value. Total goodwill as of December 29, 2017 and December 30, 2016 was $173.2 million and $163.8 million, respectively.Intangible assets with finite lives are tested for impairment whenever events or changes in circumstances indicate that the carrying value may not berecoverable. Cash flows expected to be generated by the related assets are estimated over the assets useful lives based on updated projections. If theevaluation indicates that the carrying amount of the asset may not be recoverable, the potential impairment is measured based on a projected discounted cashflow model. There have been no events or changes in circumstances during fiscal 2017 or 2016 indicating that the carrying value of our finite-livedintangible assets are not recoverable. Total finite-lived intangible assets as of December 29, 2017 and December 30, 2016 were $140.3 million and $131.1million, respectively.The assessment of the recoverability of goodwill and intangible assets will be impacted if estimated future cash flows are not achieved.Vendor Rebates and Other Promotional IncentivesWe participate in various rebate and promotional incentives with our suppliers, including volume and growth rebates, annual incentives and promotionalprograms. In accounting for vendor rebates, we follow the guidance in ASC 605-50 (Emerging Issues Task Force, or EITF, No. 02-16, Accounting by aCustomer (Including a Reseller) for Certain Consideration Received from a Vendor and EITF No. 03-10, Application of Issue No. 02-16 by Resellers to SalesIncentives Offered to Consumers by Manufacturers).45We generally record consideration received under these incentives as a reduction of cost of goods sold; however, in certain circumstances, we recordmarketing-related consideration as a reduction of marketing costs incurred. We may receive consideration in the form of cash and/or invoice deductions.We record consideration that we receive for volume and growth rebates and annual incentives as a reduction of cost of goods sold. We systematically andrationally allocate the consideration for those incentives to each of the underlying transactions that results in progress by us toward earning the incentives. Ifthe incentives are not probable and reasonably estimable, we record the incentives as the underlying objectives or milestones are achieved. We record annualincentives when we earn them, generally over the agreement period. We record consideration received to promote and sell the suppliers’ products as areduction of our costs, as the consideration is typically a reimbursement of costs incurred by us. If we received consideration from the suppliers in excess ofour costs, we record any excess as a reduction of cost of goods sold.Self-Insurance ReservesEffective October 1, 2011, we began maintaining a self-insured group medical program. The program contains individual stop loss thresholds of $175thousand per incident and aggregate stop loss thresholds based upon the average number of employees enrolled in the program throughout the year. Theamount in excess of the self-insured levels is fully insured by third party insurers. Liabilities associated with this program are estimated in part by consideringhistorical claims experience and medical cost trends. Projections of future loss expenses are inherently uncertain because of the random nature of insuranceclaims occurrences and could be significantly affected if future occurrences and claims differ from these assumptions and historical trends.Effective August 1, 2012, we became self-insured for workers’ compensation and automobile liability to deductibles or self-insured retentions of $350thousand for workers' compensation and $250 thousand for automobile liability per occurrence. The amounts in excess of our deductibles are fully insured bythird party insurers. Liabilities associated with this program are estimated in part by considering historical claims experience and cost trends. Projections offuture loss expenses are inherently uncertain because of the random nature of insurance claims occurrences and could be significantly affected if futureoccurrences and claims differ from these assumptions and historical trends.Income TaxesThe determination of our provision for income taxes requires significant judgment, the use of estimates and the interpretation and application of complex taxlaws. Our provision for income taxes primarily reflects a combination of income earned and taxed in the various U.S. federal and state jurisdictions.Jurisdictional tax law changes, increases or decreases in permanent differences between book and tax items, accruals or adjustments of accruals forunrecognized tax benefits, and our change in the mix of earnings from these taxing jurisdictions all affect the overall effective tax rate.Contingent Earn-out LiabilitiesWe account for contingent consideration relating to business combinations as a liability and an increase to goodwill at the date of the acquisition andcontinually remeasure the liability at each balance sheet date by recording changes in the fair value through our Consolidated Statements of Operations. Wedetermine the fair value of contingent consideration based on future operating projections under various potential scenarios, including the use of MonteCarlo simulations, and weight the probability of these outcomes. The ultimate settlement of contingent earn-out liabilities relating to business combinationsmay be for amounts which are materially different from the amounts initially recorded and may cause volatility in our results of operations.Management has discussed the development and selection of these critical accounting policies with our board of directors, and the board of directors hasreviewed the above disclosure. Our consolidated financial statements contain other items that require estimation, but are not as critical as those discussedabove. These other items include our calculations for bonus accruals, depreciation and amortization. Changes in estimates and assumptions used in these andother items could have an effect on our consolidated financial statements.Recent Accounting PronouncementsSee Note 1 “Operations and Basis of Presentation” to our consolidated financial statements for a full description of recent accounting pronouncementsincluding the respective expected dates of adoption and expected effects on our consolidated financial statements.46Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKInterest Rate RiskOn June 22, 2016, the Borrowers and the Guarantors entered into the Term Loan Agreement with the lenders from time to time party thereto, Jefferies, asAdministrative Agent, and the other parties thereto. Also on June 22, 2016, the Borrowers and Guarantors entered into the ABL Credit Agreement. Each of theTerm Loan Agreement and the ABL Credit Agreement, is described in more detail above under the caption “Liquidity and Capital Resources” in“Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our primary market risks are related to fluctuations in interestrates related to borrowings under our current credit facilities.As of December 29, 2017, we had an aggregate $288.4 million of indebtedness outstanding under the ABL Credit Facility and Term Loan Facility and $0.6million under a software financing agreement that bore interest at variable rates. A 100 basis point increase in market interest rates would decrease our aftertax earnings by approximately $2.3 million per annum, holding other variables constant.47Item 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAIndex to the Consolidated Financial StatementsPage Report of Independent Registered Public Accounting Firm 49 Consolidated Balance Sheets at December 29, 2017 and December 30, 2016 50 Consolidated Statements of Operations and Comprehensive Income for the Fiscal Years Ended December 29, 2017, December 30, 2016 andDecember 25, 2015 51 Consolidated Statements of Changes in Stockholders’ Equity for the Fiscal Years Ended December 29, 2017, December 30, 2016 and December25, 2015 52 Consolidated Statements of Cash Flows for the Fiscal Years Ended December 29, 2017, December 30, 2016, and December 25, 2015 53 Notes to Consolidated Financial Statements 5448Report of Independent Registered Public Accounting FirmShareholders and Board of DirectorsThe Chefs’ Warehouse, Inc.Ridgefield, CTOpinion on the Consolidated Financial StatementsWe have audited the accompanying consolidated balance sheets of The Chefs’ Warehouse Inc. (the “Company”) and subsidiaries as of December 29, 2017and December 30, 2016, the related consolidated statements of operations and comprehensive income, stockholders’ equity, and cash flows for each of thethree years in the period ended December 29, 2017, and the related notes. In our opinion, the consolidated financial statements present fairly, in all materialrespects, the financial position of the Company and subsidiaries at December 29, 2017 and December 30, 2016, and the results of their operations and theircash flows for each of the three years in the period ended December 29, 2017, in conformity with accounting principles generally accepted in the UnitedStates of America.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company'sinternal control over financial reporting as of December 29, 2017 based on criteria established in Internal Control - Integrated Framework (2013) issued bythe Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated March 9, 2018 expressed an unqualified opinionthereon.Basis for OpinionThese consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’sconsolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board(United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and theapplicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performingprocedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures thatrespond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financialstatements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating theoverall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ BDO USA, LLPWe have served as the Company's auditor since 2006.New York, NYMarch 9, 201849THE CHEFS’ WAREHOUSE, INC.CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except share data) December 29, 2017 December 30, 2016ASSETS Current assets: Cash and cash equivalents$41,504 $32,862Accounts receivable, net of allowance of $8,026 in 2017 and $6,848 in 2016142,170 128,030Inventories, net102,083 87,498Prepaid expenses and other current assets11,083 16,101Total current assets296,840 264,491 Equipment and leasehold improvements, net68,378 62,183Software costs, net6,034 5,927Goodwill173,202 163,784Intangible assets, net140,320 131,131Other assets2,975 6,022Total assets$687,749 $633,538 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable$70,019 $65,514Accrued liabilities21,871 17,546Accrued compensation12,556 9,519Current portion of long-term debt3,827 14,795Total current liabilities108,273 107,374 Long-term debt, net of current portion313,995 317,725Deferred taxes, net6,015 6,958Other liabilities and deferred credits10,865 7,721Total liabilities439,148 439,778 Commitments and contingencies Stockholders’ equity: Preferred Stock - $0.01 par value, 5,000,000 shares authorized, no shares issued and outstanding at December 29,2017 and December 30, 2016— —Common Stock - $0.01 par value, 100,000,000 shares authorized, 28,442,208 and 26,280,469 shares issued andoutstanding at December 29, 2017 and December 30, 2016, respectively284 263Additional paid in capital166,997 127,180Accumulated other comprehensive loss(1,549) (2,186)Retained earnings82,869 68,503Total stockholders’ equity248,601 193,760Total liabilities and stockholders’ equity$687,749 $633,538 See accompanying notes to the consolidated financial statements.50THE CHEFS’ WAREHOUSE, INC.CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME(Amounts in thousands, except share and per share amounts) Fiscal Years Ended December 29, 2017 December 30,2016 December 25, 2015Net sales$1,301,520 $1,192,866 $1,046,878Cost of sales972,142 891,649 778,167Gross profit329,378 301,217 268,711Operating expenses288,251 253,978 228,311Operating income41,127 47,239 40,400Interest expense22,709 41,632 12,984Loss (gain) on sale of assets10 (69) (295)Income before income taxes18,408 5,676 27,711Provision for income taxes4,042 2,653 11,502Net income$14,366 $3,023 $16,209Other comprehensive income: Foreign currency translation adjustments637 763 (2,256)Comprehensive income$15,003 $3,786 $13,953Net income per share: Basic$0.55 $0.12 $0.63Diluted$0.54 $0.12 $0.63Weighted average common shares outstanding: Basic26,118,482 25,919,480 25,532,172Diluted27,424,526 26,029,609 26,508,994 See accompanying notes to the consolidated financial statements.51THE CHEFS’ WAREHOUSE, INC.CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITYFor the Fiscal Years Ended December 29, 2017, December 30, 2016, and December 25, 2015(Amounts in thousands, except share amounts) Common Stock Shares Amount AdditionalPaid inCapital AccumulatedOtherComprehensiveLoss RetainedEarnings TotalBalance December 26, 201425,031,267 $250 $97,966 $(693) $49,271 $146,794Net income— — — — 16,209 16,209Shares issued for Del Monteacquisition1,113,636 11 24,678 — — 24,689Stock compensation196,950 2 3,537 — — 3,539Excess tax benefits on stockcompensation— — 81 — — 81Cumulative translation adjustment— — — (2,256) — (2,256)Shares surrendered to pay withholdingtaxes(51,178) — (1,092) — — (1,092)Balance December 25, 201526,290,675 $263 $125,170 $(2,949) $65,480 $187,964Net income— — — — 3,023 3,023Stock compensation25,895 — 2,579 — — 2,579Cumulative translation adjustment— — — 763 — 763Shares surrendered to pay withholdingtaxes(36,101) — (569) — — (569)Balance December 30, 201626,280,469 $263 $127,180 $(2,186) $68,503 $193,760Net income— — — — 14,366 14,366Stock compensation110,331 — 3,018 — — 3,018Public offering of common stock1,900,000 19 34,001 34,020Shares issued for Fells Pointacquisition185,442 2 3,298 — — 3,300Cumulative translation adjustment— — — 637 — 637Shares surrendered to pay withholdingtaxes(34,034) — (500) — — (500)Balance December 29, 201728,442,208 $284 $166,997 $(1,549) $82,869 $248,601 See accompanying notes to the consolidated financial statements.52THE CHEFS’ WAREHOUSE, INC.CONSOLIDATED STATEMENTS OF CASH FLOWSFor the Years Ended December 29, 2017, December 30, 2016, and December 25, 2015(Amounts in thousands) December 29, 2017 December 30, 2016 December 25, 2015Cash flows from operating activities: Net income$14,366 $3,023 $16,209Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization8,516 7,082 5,960Amortization of intangible assets12,033 11,433 9,453Provision for allowance for doubtful accounts4,061 3,224 2,909Deferred rent285 1,568 850Deferred taxes(703) 2,991 (809)Amortization of deferred financing fees2,084 1,807 1,228Loss on debt extinguishment— 22,310 —Stock compensation3,018 2,579 3,539Change in fair value of earn-outs(579) (10,031) 558Gain on asset disposal10 (69) (295)Changes in assets and liabilities, net of acquisitions: Accounts receivable(13,611) (2,503) (11,055)Inventories(11,783) 7,038 (6,109)Prepaid expenses and other current assets4,762 (7,168) 1,314Accounts payable and accrued liabilities10,406 (941) 15,351Other liabilities(1,130) (2,314) (471)Other assets(238) (1,115) (905)Net cash provided by operating activities31,497 38,914 37,727 Cash flows from investing activities: Capital expenditures(12,311) (16,623) (21,656)Cash paid for acquisitions, net of cash received(30,095) (19,742) (123,831)Proceeds from asset disposals— 550 16,187Net cash used in investing activities(42,406) (35,815) (129,300) Cash flows from financing activities: Proceeds from the issuance of common stock, net of issuance costs34,020 — —Proceeds from senior secured notes— 315,810 25,000Payment of debt and capital lease obligations(12,830) (158,880) (23,893)Payment for debt extinguishment— (21,219) —Borrowing under revolving credit line24,000 33,200 209,982Payments under revolving credit line(24,000) (126,582) (116,600)Payment of deferred financing fees(761) (7,782) (1,012)Cash paid for contingent earn-out obligation(500) (6,743) (1,420)Surrender of shares to pay withholding taxes(500) (569) (1,092)Excess tax benefits on stock compensation— — 81Net cash provided by financing activities19,429 27,235 91,046 Effect of foreign currency on cash and cash equivalents122 74 (347)Net change in cash and cash equivalents8,642 30,408 (874)Cash and cash equivalents at beginning of year32,862 2,454 3,328Cash and cash equivalents at end of year$41,504 $32,862 $2,454See accompanying notes to the consolidated financial statements.53THE CHEFS’ WAREHOUSE, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands, except share and per share amounts)Note 1 - Operations and Basis of Presentation Description of Business and Basis of Presentation The financial statements include the consolidated accounts of The Chefs’ Warehouse, Inc. (the “Company”), and its wholly-owned subsidiaries. TheCompany’s quarterly periods end on the thirteenth Friday of each quarter. Every six to seven years the Company will add a fourteenth week to its fourthquarter to more closely align its year end to the calendar year. The consolidated statement of operations for the fiscal year ended December 30, 2016contained a 53rd week while all other years presented contained 52 weeks. The Company operates in one reportable segment, food product distribution,which is concentrated on the East and West Coasts of the United States. The Company’s customer base consists primarily of menu-driven independentrestaurants, fine dining establishments, country clubs, hotels, caterers, culinary schools, bakeries, patisseries, chocolatiers, cruise lines, casinos and specialtyfood stores. Consolidation The consolidated financial statements include all the accounts of the Company and its direct and indirect wholly-owned subsidiaries. All significantintercompany accounts and transactions have been eliminated. Guidance Adopted in 2017Subsequent Measurement of Inventory: In July 2015, the Financial Accounting Standards Board (“FASB”) issued guidance to simplify the subsequentmeasurement of inventory. This guidance requires that inventory be measured at the lower of cost or net realizable value. The Company adopted thisguidance prospectively. Adoption of this guidance did not impact the Company's consolidated financial statements.Improvements to Employee Share-Based Payment Accounting: In March 2016, the FASB issued guidance to simplify the accounting for employee share-based payments. The main provisions are to recognize excess tax benefits in the income statement rather than to additional paid-in capital, allow an entity toaccount for forfeitures as they occur, allow an entity to withhold employee shares up to the individual's maximum statutory tax rate without triggeringliability classification of the award, present excess tax benefits as an operating cash flow and to present cash payments for employee tax withholding onvested stock awards as a financing cash flow. The guidance also requires that any unrecognized tax benefits that were not previously recognized be recordedthrough a cumulative-effect adjustment to retained earnings in the period in which the guidance is adopted. Upon adoption, the Company made anaccounting policy election to account for forfeitures as they occur and began recognizing any excess tax benefits through current year earnings. There wereno previously unrecognized tax benefits that required a cumulative-effect adjustment to retained earnings. Adoption of this guidance did not have a materialimpact on the Company's consolidated financial statements.Restricted Cash: In November 2016, the FASB issued guidance which includes guidance to clarify how companies present and classify restricted cash orrestricted cash equivalents in the statement of cash flows. The guidance requires that a statement of cash flows explain the change during the period in thetotal of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. Adoption of this guidance did not impact theconsolidated financial statements as the Company does not have restricted cash.Simplifying the Test for Goodwill Impairment: In January 2017, the FASB issued guidance which simplifies goodwill impairment testing by removing Step 2from the goodwill impairment test which required companies to assign the fair value of a reporting unit to its underlying assets and liabilities. Instead, anentity should recognize an impairment charge for the amount by which the carry amount of a reporting unit exceeds its fair value. Adoption of this guidancedid not impact the Company's consolidated financial statements.Scope of Modification Accounting: In May 2017, the FASB issued guidance which clarifies when to account for a change to the terms or conditions of ashare-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, orthe classification of the award (as equity or liability) changes as a result of the change in terms or conditions. Adoption of this guidance did not impact theconsolidated financial statements as the Company did not have any share-based payment award modifications.54Guidance Not Yet AdoptedRevenue from Contracts with Customers: In May 2014, the FASB issued guidance to clarify the principles for recognizing revenue. This guidance includesthe required steps to achieve the core principle that an entity should recognize revenue to depict the transfer of promised goods or services to customers in anamount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. On August 12, 2015, the FASB votedto defer the effective date by one year to December 15, 2017 for interim and annual reporting periods beginning after that date. Early adoption is permittedbut not before the original effective date (annual periods beginning after December 15, 2016).The Company has completed its analysis on the impact this guidance has on its customer contracts, sales incentive programs, gift card programs, informationsystems, business processes, and financial statement disclosures. The new revenue recognition model provides guidance on the identification of multipleperformance obligations embedded within customer contracts. The Company's customer contracts include performance obligations which are satisfied aseach product is delivered to the customer. Thus revenues will be recognized at a point in time. Under the new standard such performance obligations aresatisfied at the point at which the Company transfers control to the customer. This is consistent with the Company's current practice of recognizing revenueupon delivery to the customer, with the exception of the Company's current practice of recognizing revenue at shipping point on direct-to-consumer sales.The impact of the change in revenue recognition timing of its direct-to-consumer sales is immaterial.The new standard includes the concept of variable consideration and requires companies to include variable consideration in the transaction price to theextent it is probable that there will not be a significant reversal in the amount of cumulative revenue recognized when the uncertainty is resolved. Althoughthe Company's sales incentive programs fall under the scope of this new guidance, it will not have a significant impact on the amount or timing of revenuerecognition.The new standard addresses current diversity in practice in regards to the derecognition of unredeemed gift card liabilities that are not subject to unclaimedproperty laws. The new guidance requires companies to recognize revenue on such liabilities through breakage or when the likelihood of customerredemption becomes remote. This is consistent with the Company's existing method of recognizing breakage revenue on these liabilities.The Company expects to adopt this guidance when effective using the modified retrospective approach. Under this approach, prior financial statementswould not be restated and a cumulative effect adjustment, if any, will be recorded as an adjustment to retained earnings. The cumulative effect adjustment isimmaterial to our financial statements. Adoption will result in expanded disclosures on revenue recognition policies, disaggregated revenues and contractliabilities.Leases: In February 2016, the FASB issued guidance to increase the transparency and comparability among organizations by recognizing right-of-use assetsand lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Current GAAP does not require lessees to recognizeassets and liabilities arising from operating leases on the balance sheet. This new guidance is effective for fiscal years beginning after December 15, 2018.Early adoption is permitted. The Company expects to adopt this guidance when effective and is in the early stages of implementation. Adoption will have amaterial impact on the Company's consolidated financial statements, primarily to the consolidated balance sheets and related disclosures, as a result ofrecognizing right-of-use assets and lease liabilities arising from its operating leases.Clarifying the Definition of a Business: In January 2017, the FASB issued guidance which clarifies whether transactions should be accounted for asacquisitions of assets or businesses. The guidance requires an entity to determine if substantially all of the fair value of the assets acquired is concentrated ina single identifiable asset or a group of similar identifiable assets. If this criterion is met, the new guidance would define this as an asset acquisition.Furthermore, the guidance requires a business to include, at a minimum, an input and substantive process that together significantly contribute to the abilityto create outputs. The guidance is effective for fiscal years beginning after December 15, 2017. The Company expects to adopt this guidance when effectiveand adoption is not expected to have a material effect on its financial statements.Use of Estimates The preparation of the Company’s consolidated financial statements in conformity with generally accepted accounting principles requires it to makeestimates and assumptions that affect reported amounts of assets, liabilities, revenues, expenses and disclosure of contingent assets and liabilities. Estimatesare used in determining, among other items, the allowance for doubtful accounts, reserves for inventories, self-insurance reserves for group medical insurance,workers’ compensation insurance and automobile liability insurance, future cash flows associated with impairment testing for intangible assets (includinggoodwill) and long-lived assets, useful lives for intangible assets, stock-based compensation, contingent earn-out liabilities and tax reserves. Actual resultscould differ from estimates.55Note 2 – Summary of Significant Accounting Policies Revenue Recognition Revenue from the sale of a product is recognized at the point at which the product is delivered to the customer. The Company grants certain customers salesincentives, such as rebates or discounts and treats these as a reduction of sales at the time the sale is recognized. Sales tax billed to customers is not includedin revenue but rather recorded as a liability owed to the respective taxing authorities at the time the sale is recognized. Cost of Sales The Company records cost of sales based upon the net purchase price paid for a product, including applicable freight charges incurred to deliver the productto the Company’s warehouse. Operating Expenses Operating expenses include the costs of facilities, product shipping and handling costs, warehousing costs, protein processing costs, selling and generaladministrative activities. Shipping and handling costs included in operating expenses were $70,108, $62,062 and $54,172 for fiscal 2017, 2016 and 2015,respectively. Protein processing costs included in operating expenses were $18,660, $17,320 and $14,626 for fiscal 2017, 2016 and 2015, respectively. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of less than three months to be cash equivalents. The Company periodicallymaintains balances at financial institutions which may exceed Federal Deposit Insurance Corporation insured limits. The Company has not experienced anylosses in such accounts and believes it is not exposed to any significant risks on its cash in bank accounts. Accounts Receivable Accounts receivable consist of trade receivables from customers and are recorded net of an allowance for doubtful accounts. The allowance for doubtfulaccounts is determined based upon a number of specific criteria, such as whether a customer has filed for or been placed into bankruptcy, has had accountsreferred to outside parties for collections or has had accounts significantly past due. The allowance also covers short paid invoices the Company deems to beuncollectable as well as a portion of trade accounts receivable balances projected to become uncollectable based upon historic patterns. Inventories Inventories consist primarily of finished goods, food and related food products held for resale and are valued at the lower of cost or market. Our differententities record inventory using a mixture of first-in, first-out and average cost, which we believe approximates first-in, first-out. The Company maintainsreserves for slow-moving and obsolete inventories. Purchase Incentives The Company receives consideration and product purchase credits from certain vendors that the Company accounts for as a reduction of cost of sales. Thereare several types of cash consideration received from vendors. The purchase incentive is primarily in the form of a specified amount per pound or per case, oran amount for year-over-year growth. For the years ended December 29, 2017, December 30, 2016 and December 25, 2015, the recorded purchase incentivestotaled approximately $17,265, $13,670 and $11,109, respectively. Concentrations of Credit Risks Financial instruments that subject the Company to concentrations of credit risk consist of cash, temporary cash investments and trade receivables. TheCompany’s policy is to deposit its cash and temporary cash investments with major financial institutions. The Company distributes its food and relatedproducts to a customer base that consists primarily of leading menu-driven independent restaurants, fine dining establishments, country clubs, hotels,caterers, culinary schools, bakeries, patisseries, chocolatiers, cruise lines, casinos and specialty food stores. To reduce credit risk, the Company performsongoing credit evaluations of its customers’ financial conditions. The Company generally does not require collateral. However, the Company,56in certain instances, has obtained personal guarantees from certain customers. There is no significant balance with any individual customer. Equipment and Leasehold Improvements The Company records equipment and leasehold improvements at cost. Equipment that has been financed through capital leases is recorded at the presentvalue of the minimum lease payments, which approximates cost. Equipment and leasehold improvements, including capital lease assets, are depreciated on astraight-line basis based upon estimated useful life. Software Costs The Company capitalizes certain computer software licenses and software implementation costs that are included in software costs in its consolidated balancesheets. These costs were incurred in connection with developing or obtaining computer software for internal use if it has a useful life in excess of one year, inaccordance with Accounting Standards Codification (ASC) 350-40 “Internal-Use Software.” Subsequent additions, modifications or upgrades to internal-usesoftware are capitalized only to the extent that they allow the software to perform a task that it previously did not perform. Internal use software is amortizedon a straight-line basis over a three to seven year period. Capitalized costs include direct acquisitions as well as software and software development acquiredunder capitalized leases and internal labor where appropriate. Capitalized software purchases and related development costs, net of accumulatedamortization, were $6,034 at December 29, 2017 and $5,927 at December 30, 2016. Impairment of Long-Lived Assets Long-lived assets, other than goodwill, are reviewed for impairment in accordance with ASC 360-10-35-15, “Impairment or Disposal of Long-Lived Assets”which only requires testing whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. If anyindicators are present, a recoverability test is performed by comparing the carrying amount of the asset to the net undiscounted cash flows expected to begenerated from the asset. If the net undiscounted cash flows do not exceed the carrying amount (i.e., the asset is not recoverable), an additional step isperformed that determines the fair value of the asset and the Company records an impairment, if any. The Company has not recorded any impairment of long-lived assets in fiscal 2017, 2016 or 2015. Debt Issuance Costs Certain up-front costs associated with the Company's revolving credit facilities are capitalized and included in other non-current assets in the consolidatedbalance sheets. The Company had $1,284 and $1,632 of such unamortized costs as of December 29, 2017 and December 30, 2016, respectively. Costsassociated with the issuance of other debt instruments are capitalized and presented as a direct deduction from the carrying amount of the underlying debtliability. The Company had $8,027 and $8,979 of such unamortized costs as of December 29, 2017 and December 30, 2016, respectively. These costs areamortized over the terms of the related debt instruments by the effective interest rate method. Amortization of debt issuance costs was $2,084 for the fiscalyear ended December 29, 2017, $1,807 for the fiscal year ended December 30, 2016 and $1,228 for the fiscal year ended December 25, 2015. Intangible Assets The intangible assets recorded by the Company consist of customer relationships, covenants not to compete and trademarks which are amortized over theiruseful lives on a schedule that approximates the pattern in which economic benefits of the intangible assets are consumed. Intangible assets with finite livesare tested for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If any indicators are present, arecoverability test is performed by comparing the carrying amount of the asset to the net undiscounted cash flows expected to be generated from the asset.Undiscounted cash flows expected to be generated by the related assets are estimated over the assets’ useful lives based on updated projections. If theevaluation indicates that the carrying amount of the asset may not be recoverable, the potential impairment is measured based on a projected discounted cashflow model. There have been no events or changes in circumstances during fiscal 2017, 2016 or 2015 indicating that the carrying value of our finite-livedintangible assets are not recoverable.Goodwill Goodwill is the excess of the acquisition cost of businesses over the fair value of identifiable net assets acquired in accordance with ASC 350, “Intangibles-Goodwill and Other.” The Company has two reporting units – Protein and Specialty. For the fiscal57years ended December 29, 2017 and December 30, 2016, the Company tested goodwill for impairment using a quantitative analysis. The quantitativeanalysis consists of a comparison of the carrying value of the Company’s reporting units, including goodwill, to the estimated fair value of the reporting unitsthat was determined using a discounted cash flow methodology. A goodwill impairment loss, if any, would be recognized for the amount by which thereporting unit's carrying value exceeded its fair value. There have been no events or changes in circumstances during fiscal 2017, 2016 or 2015 indicatingthat goodwill may be impaired.The Company’s use of a discounted cash flow methodology includes estimates of future revenue based upon budget projections and growth rates which takeinto account estimated inflation rates. The Company also develops estimates for future levels of gross and operating profits and projected capitalexpenditures. This methodology also includes the use of estimated discount rates based upon industry and competitor analysis as well as other factors. Theestimates that the Company uses in its discounted cash flow methodology involve many assumptions by management that are based upon future growthprojections. Employee Benefit Programs The Company sponsors a defined contribution plan covering substantially all full-time employees (the “401(k) Plan”). The Company recognized expenserelated to the 401(k) Plan totaling $1,172, $1,049 and $858, respectively, for fiscal 2017, 2016 and 2015. Income Taxes The Company accounts for income taxes in accordance with ASC 740, “Income Taxes.” Deferred tax assets or liabilities are recorded to reflect the future taxconsequences of temporary differences between the financial reporting basis of assets and liabilities and their tax basis at each year-end. These amounts areadjusted, as appropriate, to reflect enacted changes in tax rates expected to be in effect when the temporary differences reverse. The Company follows certainprovisions of ASC 740, “Income Taxes” which established a single model to address accounting for uncertain tax positions and clarifies the accounting forincome taxes by prescribing a minimum recognition threshold that a tax position is required to meet before being recognized in the financial statements. TheCompany evaluates uncertain tax positions, if any, by determining if it is more likely than not to be sustained upon examination by the tax authorities. TheCompany records uncertain tax positions when it is estimable and probable that such liabilities have been incurred. The Company, when required, will accrueinterest and penalties related to income tax matters in income tax expense.On December 22, 2017, the President enacted H.R. 1, originally known as the Tax Cuts and Jobs Act (the “Tax Act”). Among other changes to the U.S.Internal Revenue Code, the Tax Act reduces the U.S. federal corporate top tax rate from 35 percent to 21 percent. The Company must remeasure its netdeferred tax assets and liabilities using the Federal Tax Rate that will apply when these amounts are expected to reverse. The effect of the remeasurement isreflected entirely in the interim period that includes the enactment date and is allocated directly to income tax expense from continuing operations. Commitments and Contingencies The Company is subject to various claims and contingencies related to lawsuits, taxes and environmental matters, as well as commitments under contractualand other commercial obligations. The Company recognizes liabilities for contingencies and commitments when a loss is probable and can be reasonablyestimated. Contingent Earn-out Liabilities The Company accounts for contingent consideration relating to business combinations as a liability and an increase to goodwill at the date of the acquisitionand continually remeasures the liability at each balance sheet date by recording changes in the fair value through the Consolidated Statements of Operations.The Company determines the fair value of contingent consideration based on future operating projections under various potential scenarios and weighs theprobability of these outcomes. The ultimate settlement of contingent earn-out liabilities relating to business combinations may be for amounts which arematerially different from the amounts initially recorded and may cause volatility in the Company’s results of operations. Stock-Based Compensation The Company measures stock-based compensation at the grant date based on the fair value of the award. Restricted stock awards and performance share unitsare valued based on the fair value of the stock on the grant date. The related compensation expense is recognized over the service period on a straight-linebasis. Compensation expense on performance share units reflects the estimated probable outcome at the end of the performance period. The fair value of stockoptions with market58conditions is determined based on a Monte-Carlo simulation in order to simulate a range of possible future stock prices for the Company's s stock. For awardssubject to graded vesting, the Company ensures that the compensation expense recognized is at least equal to the vested portion of the award. Self-Insurance Reserves The Company maintains a self-insured group medical program. The program contains individual stop loss thresholds of $175 per incident and aggregate stoploss thresholds based upon the average number of employees enrolled in the program throughout the year. The amount in excess of the self-insured levels isfully insured by third party insurers. Liabilities associated with this program are estimated in part by considering historical claims experience and medicalcost trends. Projections of future loss expenses are inherently uncertain because of the random nature of insurance claims occurrences and could besignificantly affected if future occurrences and claims differ from these assumptions and historical trends. The Company maintains an insurance program for its automobile liability and workers' compensation insurance subject to deductibles or self-insuredretentions of $350 for workers' compensation and $250 for automobile liability per occurrence. The amounts in excess of the deductibles are fully insured bythird party insurers. Liabilities associated with this program are estimated in part by considering historical claims experience and cost trends. Projections offuture loss expenses are inherently uncertain because of the random nature of insurance claims occurrences and could be significantly affected if futureoccurrences and claims differ from these assumptions and historical trends. Assets and Liabilities Measured at Fair ValueThe Company accounts for certain assets and liabilities at fair value. The Company categorizes each of its fair value measurements in one of the followingthree levels based on the lowest level input that is significant to the fair value measurement in its entirety: Level 1 - Inputs to the valuation methodology are unadjusted quoted prices in active markets for identical assets. Level 2 - Observable inputs other than quoted prices in active markets for identical assets and liabilities include the following:a)quoted prices for similar assets in active markets;b)quoted prices for identical or similar assets in inactive markets;c)inputs other than quoted prices that are observable for the asset; andd)inputs that are derived principally from or corroborated by observable market data by correlation or other means.If the asset has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset. Level 3 - Inputs to the valuation methodology are unobservable (i.e., supported by little or no market activity) and significant to the fair value measure.Note 3 – Net Income per Share The following table sets forth the computation of basic and diluted earnings per share: Fiscal Year Ended December 29, 2017 December 30, 2016 December 25, 2015Net income per share: Basic$0.55 $0.12 $0.63Diluted$0.54 $0.12 $0.63Weighted average common shares: Basic26,118,482 25,919,480 25,532,172Diluted27,424,526 26,029,609 26,508,994 59Reconciliation of net income per common share: Fiscal Year Ended December 29, 2017 December 30, 2016 December 25, 2015Numerator: Net income$14,366 $3,023 $16,209Add effect of dilutive securities Interest on convertible notes, net of tax536 — 403Adjusted net income$14,902 $3,023 $16,612Denominator: Weighted average basic common shares outstanding26,118,482 25,919,480 25,532,172Dilutive effect of unvested common shares68,670 110,129 79,385Dilutive effect of convertible notes1,237,374 — 897,437Weighted average diluted common shares outstanding27,424,526 26,029,609 26,508,994 Potentially dilutive securities that have been excluded from the calculation of diluted net income per common share because the effect is anti-dilutive are asfollows: Fiscal Year Ended December 29, 2017 December 30, 2016 December 25, 2015Restricted Share Awards (RSAs)84,511 92,812 34,526Stock options201,799 209,071 —Convertible subordinated notes— 1,237,374 — Note 4 – Fair Value Measurements Assets and Liabilities Measured at Fair Value The Company's contingent earn-out liabilities are measured at fair value. These liabilities are reflected as accrued liabilities and other liabilities and deferredcredits on the balance sheet. The fair value of contingent consideration was determined based on a probability-based approach which includes projectedresults, percentage probability of occurrence and the application of a discount rate to present value the payments. A significant change in projected results,discount rate, or probabilities of occurrence could result in a significantly higher or lower fair value measurement.The following table presents the changes in Level 3 contingent earn-out liabilities: Allen Brothers Del Monte MT Food Fells Point TotalBalance December 25, 2015$4,344 $13,792 $— $— $18,136Opening liability— — 500 — 500Gain on settlement(1,684) — — — (1,684)Payments(2,660) (4,083) — — (6,743)Changes in fair value— (8,347) — — (8,347)Balance December 30, 2016— 1,362 500 — 1,862Opening liability— — — 4,445 4,445Payments— — (500) — (500)Changes in fair value— (713) — 134 (579)Balance December 29, 2017$— $649 $— $4,579 $5,228 Changes in fair value and gain on settlement are included in operating expenses within our consolidated statements of operations.60Fair Value of Financial Instruments The carrying amounts reported in the Company’s consolidated balance sheets for accounts receivable and accounts payable approximate fair value, due tothe immediate to short-term nature of these financial instruments. The fair values of the revolving credit facility and term loan approximated their bookvalues as of December 29, 2017 and December 30, 2016 as these instruments had variable interest rates that reflected current market rates available to theCompany. The fair value of these debt instruments were estimated using Level 3 inputs. The following tables presents the carrying value and fair value of the Company’s convertible subordinated notes (more fully described in Note 9). Inestimating the fair value of these convertible secured notes, the Company utilized Level 3 inputs including, prevailing market interest rates to estimate thedebt portion of the instrument and a Black Scholes valuation model to estimate the fair value of the conversion option. The Black Scholes model utilizes themarket price of the Company’s common stock, estimates of the stock’s volatility and the prevailing risk free interest rate in calculating the fair value estimate. December 29, 2017 December 30, 2016 Carrying Value Fair Value Carrying Value Fair ValueConvertible Secured Notes$36,750 $38,091 $36,750 $35,557 Note 5 – Acquisitions The Company accounts for acquisitions in accordance with ASC 805 “Business Combinations.” Assets acquired and liabilities assumed are recorded in theaccompanying consolidated balance sheets at their estimated fair values, as of the acquisition date. Results of operations are included in the Company’sfinancial statements from the date of acquisition. For the acquisitions noted below, the Company used the income approach to determine the fair value of thecustomer relationships, the relief from royalty method to determine the fair value of trademarks and the comparison of economic income using thewith/without approach to determine the fair value of non-compete agreements. The Company used Level 3 inputs to determine the fair value of all theseintangible assets. Fells PointOn August 25, 2017, the Company entered into an asset purchase agreement to acquire substantially all of the assets of Fells Point, a specialty proteinmanufacturer and distributor based in the metro Baltimore and Washington DC area. The aggregate purchase price for the transaction at acquisition date wasapproximately $33,022, including the impact of an initial net working capital adjustment which is subject to a post-closing working capital adjustment trueup. Approximately $29,722 was paid in cash at closing and the remaining $3,300 consisted of 185,442 shares of the Company's common stock.The Company will also pay additional contingent consideration, if earned, in the form of an earn-out amount which could total approximately $12,000. Thepayment of the earn-out liability is subject to the successful achievement of annual Adjusted EBITDA targets for the Fells Point business over a period of fouryears following closing. At December 29, 2017 and August 25, 2017, the Company estimated the fair value of this contingent earn-out liability to be $4,579and $4,445, respectively. The Company is in the process of finalizing a valuation of the tangible and intangible assets of Fells Point as of the acquisitiondate. These assets will be valued at fair value using Level 3 inputs. Customer lists, trademarks, and non-compete agreements are expected to be amortizedover 15, 20 and 6 years, respectively. Goodwill for the Fells Point acquisition will be amortized over 15 years for tax purposes. The goodwill recordedprimarily reflects the value of acquiring an established meat processor to grow the Company's protein business in the Northeast and Mid Atlantic regions, aswell as any intangible assets that do not qualify for separate recognition. During the fiscal year ended December 29, 2017, the Company recognizedprofessional fees of $168 in operating expenses related to the Fells Point acquisition.On August 25, 2017, the Company entered into a five-year lease for a warehouse facility located in Baltimore, MD that is owned by the former owners of FellsPoint, some of whom are current employees. The Company paid rent of $86 during the year ended December 29, 2017. For the year ended December 29,2017, the Company reflected net sales and income before taxes of $22,583 and $1,604, respectively, for Fells Point in its consolidated statement ofoperations.The table below presents unaudited pro forma consolidated income statement information of the Company for the year ended December 29,2017 and December 30, 2016 as if Fells Point acquisition had occurred at December 26, 2015. The pro forma results were prepared from financial informationobtained from the sellers of the business, as well as information obtained during the due diligence process associated with the acquisition. The pro formainformation is not necessarily61indicative of the Company’s results of operations had the Fells Point acquisition been completed on the above date, nor is it necessarily indicative of theCompany’s future results. The pro forma information does not reflect any cost savings from operating efficiencies or synergies that could result from the FellsPoint acquisition, any incremental costs for Fells Point transitioning to become a public company, and also does not reflect additional revenue opportunitiesfollowing the acquisition. The pro forma information reflects amortization and depreciation of the Fells Point acquisition at their respective fair values basedon available information and the estimated change in the fair value of the earn-out liability due to accretion. Fiscal Year Ended (unaudited) December 29, 2017 December 30, 2016Net sales $1,340,820 $1,252,293Income before income taxes 20,130 9,492MT Food On June 27, 2016, the Company acquired substantially all of the assets of MT Food, based in Chicago, Illinois. Founded in the mid 1990's, MT Food is awholesale distributor of dairy, produce, specialty and grocery items in the metro Chicago area. The purchase price for the transaction was $21,500, of which,$21,000 was paid in cash at closing with an additional $500 payable eighteen months after the closing date. The aggregate purchase price paid by theCompany was paid through cash-on-hand and the proceeds from a draw down on its delayed draw term loan facility. During the second quarter of fiscal 2017,the Company paid an earn-out of $500 to the former owners.During the second quarter of 2017, the Company obtained additional information related to the fair value of intangible assets, deferred taxes, inventories,accounts receivable acquired and liabilities owed. As a result, the Company recorded a measurement period adjustment resulting in a net increase in goodwillof $3,418 and a decrease in customer relationships of $2,700. The Company has finalized a valuation of the tangible and intangible assets of MT Food as ofthe acquisition date. These assets are valued at fair value using Level 3 inputs. Customer relationships are being amortized over 15 years. Goodwill for theMT Food acquisition will be amortized over 15 years for tax purposes. The goodwill recorded primarily reflects the value of acquiring an establisheddistributor to leverage the Company’s existing products and distribution center in the markets served by MT Food, as well as any intangible assets that donot qualify for separate recognition.The table below sets forth the purchase price allocation of the Fells Point and MT Food acquisitions: Fells Point MT FoodCurrent assets (includes cash acquired) $6,971 $6,132Customer relationships 15,100 7,600Trademarks 8,100 —Non-compete agreement 400 —Goodwill 5,732 11,976Fixed assets 2,459 261Current liabilities (1,295) (3,969)Earn-out liability (4,445) (500)Total consideration $33,022 $21,500The Company occasionally makes small tuck-in acquisitions that are immaterial, both individually and in the aggregate. Therefore, the gross increases ingoodwill and intangible assets per the above table may not agree to the gross increases of these assets as shown in Note 8 “Goodwill and Other IntangibleAssets.”Note 6 – Inventories Inventories consist of finished product. Our different entities record inventory using a mixture of first-in, first-out and average cost, which we believeapproximates first-in, first-out. Inventory is reflected net of reserves for shrinkage and obsolescence totaling $1,934 and $2,122 at December 29, 2017 andDecember 30, 2016, respectively.62Note 7 – Equipment and Leasehold Improvements Equipment and leasehold improvements as of December 29, 2017 and December 30, 2016 consisted of the following: Useful Lives December 29, 2017 December 30, 2016Land Indefinite $1,170 $1,170Buildings 20 years 1,292 1,292Machinery and equipment 5-10 years 16,183 13,404Computers, data processing and other equipment 3-7 years 9,924 9,367Leasehold improvements 7-22 years 53,653 47,971Furniture and fixtures 7 years 3,100 3,011Vehicles 5-7 years 2,570 2,445Other 7 years 95 95Construction-in-process 15,030 11,359 103,017 90,114Less: accumulated depreciation and amortization (34,639) (27,931)Equipment and leasehold improvements, net $68,378 $62,183 Construction-in-process at December 29, 2017 consists primarily of the implementation of the Company’s Enterprise Resource Planning (“ERP”) system andthe build out of the Company's distribution center in Union City, CA. The build out of the Company's Union City distribution center is expected to becompleted during the first quarter of fiscal 2018 and the roll-out of the ERP system is expected to continue through 2019. The Company expects the cost tocomplete these projects to be approximately $3,200. Construction-in-process at December 30, 2016 related primarily to the implementation of theCompany’s ERP system. The Company had $530 and $506 of equipment and vehicles financed by capital leases at December 29, 2017 and December 30, 2016, respectively. TheCompany recorded depreciation of $64, $71 and $96 on these assets for the fiscal years ended December 29, 2017, December 30, 2016 and December 25,2015, respectively. Depreciation expense, excluding capital leases, was $6,644, $5,679 and $4,536 for the fiscal years ended December 29, 2017, December 30, 2016 andDecember 25, 2015, respectively. Amortization expense on software was $1,808, $1,332 and $1,328 for the fiscal years ended December 29, 2017, December 30, 2016 and December 25, 2015,respectively. During the years ended December 29, 2017, December 30, 2016 and December 25, 2015, the Company incurred interest expense of $22,709, $41,632 and$12,984, respectively. The Company capitalized interest expense of $0, $0 and $739, respectively, during the same periods. Capitalized interest is related tothe build outs of the new distribution facilities in Bronx, NY and Las Vegas, NV. On September 26, 2016, the Company sold a parcel of land it owned in Las Vegas, for total cash consideration of $550. The Company recognized a pre-taxgain of $113 on the sale. On June 30, 2015, the Company closed on a sale-leaseback transaction of its new Las Vegas, NV distribution facility. The propertywas sold for $14,645, which approximated its cost. The related ongoing lease will be accounted for as an operating lease by the Company. Note 8 – Goodwill and Other Intangible Assets The changes in the carrying amount of goodwill are presented as follows:Carrying amount as of December 25, 2015$155,816Goodwill adjustments(614)Business combination8,559Foreign currency translation23Carrying amount as of December 30, 2016163,784Goodwill adjustments3,41863Business combinations5,946Foreign currency translation54Carrying amount as of December 29, 2017$173,202The goodwill adjustments during the fiscal year ended December 29, 2017 relate to the MT Food acquisition (see Note 5).Other intangible assets consist of customer relationships being amortized over a period ranging from four to twenty years, trademarks being amortized over aperiod of one to forty years, and non-compete agreements being amortized over a period of two to six years. Other intangible assets as of December 29, 2017and December 30, 2016 consisted of the following: Weighted-AverageRemainingAmortization Period GrossCarryingAmount AccumulatedAmortization Net AmountDecember 29, 2017 Customer relationships 145 months $117,006 $(27,704) $89,302Non-compete agreements 43 months 7,566 (6,946) 620Trademarks 221 months 60,734 (10,336) 50,398Total $185,306 $(44,986) $140,320 December 30, 2016 Customer relationships 151 months $104,381 $(19,981) $84,400Non-compete agreements 14 months 7,166 (5,587) 1,579Trademarks 231 months 52,574 (7,422) 45,152Total $164,121 $(32,990) $131,131 Amortization expense for other intangibles was $12,033, $11,433 and $9,453 for the fiscal years ended December 29, 2017, December 30, 2016 andDecember 25, 2015, respectively. As of December 29, 2017, estimated amortization expense for other intangible assets for each of the next five fiscal years and thereafter is as follows: 2018$11,938201911,300202011,027202111,027202210,247Thereafter84,781Total$140,320Note 9 – Debt Obligations Debt obligations as of December 29, 2017 and December 30, 2016 consisted of the following: December 29, 2017 December 30, 2016Senior secured term loan $288,435 $291,613Convertible notes 36,750 36,750New Markets Tax Credit loan — 11,000Capital leases and financed software 664 2,136Deferred finance fees and original issue discount (8,027) (8,979)Total debt obligations 317,822 332,520Less: current installments (3,827) (14,795)Total debt obligations excluding current installments $313,995 $317,725 64Maturities of the Company’s debt for each of the next five years and thereafter at December 29, 2017 is as follows:2018$3,82720193,18420203,184202139,9342022275,720Thereafter—Total$325,849 Senior Secured Term Loan Credit FacilityOn June 22, 2016, the Company refinanced its debt structure by entering into a credit agreement (the “Term Loan Credit Agreement”) with a group of lendersfor which Jefferies Finance LLC (“Jefferies”) acts as administrative agent and collateral agent. The Company used the proceeds to pay off its revolving creditfacility, its previous term loan, and its senior secured notes. The Term Loan Credit Agreement provides for a senior secured term loan B facility (the “TermLoan Facility”) in an aggregate amount of $305,000 with a $50,000 six-month delayed draw term loan facility (the “DDTL”; the loans outstanding under theTerm Loan Facility (including the DDTL), the “Term Loans”). Additionally, the Term Loan Facility includes an accordion which permits the Company torequest that the lenders extend additional Term Loans in an aggregate principal amount of up to $50,000 (less the aggregate amount of certain indebtednessincurred to finance acquisitions) plus an unlimited amount subject to the Company’s Total Leverage Ratio not exceeding 4.90:1.00 on a pro forma basis.Borrowings under the Term Loan Facility were used to repay the Company’s senior secured notes, as well as the prior term loan and revolving credit facility.Remaining funds will be used for capital expenditures, permitted acquisitions, working capital and general corporate purposes of the Company. On June 27,2016, the Company drew $14,000 from the DDTL to help pay for the MT Food acquisition. On September 14, 2016, the Company entered into anamendment to the Term Loan Credit Agreement under which the remaining portion of the DDTL was terminated, the Company’s interest rate schedule wasmodified and the Company repaid $25,000 of the outstanding balance of the Term Loans. On December 13, 2017, the Company completed a repricing of theTerm Loan Facility to reduce the Applicable Rate (as defined in the Term Loan Credit Agreement) from 475 basis points to 400 basis points over LIBOR. Inconnection with the repricing, the Company paid debt financing costs of $761 which were capitalized as deferred financing charges. The interest rate on thisfacility at December 29, 2017 was 5.57%.The final maturity of the Term Loan Facility is June 22, 2022. Subject to adjustment for prepayments, the Company is required to make quarterlyamortization payments on the Term Loans in an amount equal to 0.25% of the aggregate principal amount of the Term Loans.The interest rates per annum applicable to Term Loans, will be, at the co-borrowers’ option, equal to either a base rate or an adjusted LIBOR rate for one, two,three, six or (if consented to by the lenders) twelve-month interest periods chosen by the Company, in each case plus an applicable margin percentage.The Term Loan Facility contains customary affirmative covenants, negative covenants (including restrictions, subject to customary exceptions, on incurringdebt or liens, paying dividends, repaying payment subordinated and junior lien debt, disposing assets, and making investments and acquisitions), and eventsof default for a term loan B facility of this type, as more particularly described in the Term Loan Credit Agreement.As of December 29, 2017, the Company was in compliance with all debt covenants under the Term Loan Facility.Asset Based Loan FacilityOn June 22, 2016, the Company entered into a credit agreement (the “ABL Credit Agreement”) with a group of lenders for which JPMorgan Chase Bank,N.A., acts as administrative agent and collateral agent. The ABL Credit Agreement provides for an asset based loan facility (the “ABL Facility”) in theaggregate amount of up to $75,000. Availability under the ABL Facility will be limited to a borrowing base consisting of the difference of (a) the lesser of:(i) the aggregate amount of commitments or (ii) the sum of specified percentages of eligible receivables and eligible inventory, minus certain availabilityreserves minus (b) outstanding borrowings. The co-borrowers under the ABL Facility are entitled on one or more occasions, subject to the satisfaction ofcertain conditions, to request an increase in the commitments under the ABL Facility in an aggregate principal amount of up to $25,000. The ABL Facilitymatures on June 22, 2021.The interest rates per annum applicable to loans, other than swingline loans, under the ABL Credit Facility will be, at the co-65borrowers’ option, equal to either a base rate or an adjusted LIBOR rate for one, two, three, six or (if consented to by the lenders) twelve-month, interestperiods chosen by the Company, in each case plus an applicable margin percentage. The Company will pay certain recurring fees with respect to the ABLFacility, including fees on the unused commitments of the lenders.The ABL Facility contains customary affirmative covenants, negative covenants and events of default as more particularly described in the ABL CreditAgreement. The ABL Facility will require compliance with a minimum consolidated fixed charge coverage ratio of 1:1 if the amount of availability under theABL Facility falls below a specified dollar amount or percentage of the borrowing base.There were no outstanding balances under the ABL Facility as of December 29, 2017. Borrowings under the ABL Facility will be used, and are expected to beused, for capital expenditures, permitted acquisitions, working capital and general corporate purposes of the Company. As of December 29, 2017, theCompany was in compliance with all debt covenants and the Company had reserved $10,195 of the ABL facility for the issuance of letters of credit. As ofDecember 29, 2017, funds totaling $64,805 were available for borrowing under the ABL facility.New Markets Tax Credit Loan On April 26, 2012, Dairyland HP LLC (“DHP”), an indirectly wholly-owned subsidiary of the Company, entered into a financing arrangement under the NewMarkets Tax Credit (“NMTC”) program under the Internal Revenue Code of 1986, as amended, pursuant to which a subsidiary of Chase, provided to DHP an$11,000 construction loan (the “NMTC Loan”) to help fund DHPs expansion and build-out of the Bronx, New York facility and the rail shed located at thatfacility, which construction is required under the facility lease agreement. Borrowings under the NMTC Loan are secured by a first priority secured lien onDHPs leasehold interest in the Bronx, New York facility, including all improvements made on the premises, as well as, among other things, a lien on allfixtures incorporated into the project improvements. Under the NMTC Loan, DHP is obligated to pay (i) monthly interest payments on the principal balance then outstanding and (ii) the entire unpaid principalbalance then due and owing on April 26, 2017. So long as DHP is not in default, interest accrues on borrowings at 1.00% per annum. The Company mayprepay the NMTC Loan, in whole or in part, in $100 increments. DHP was in compliance with all debt covenants under the NMTC Loan during all periodspresented. The loan matured on April 26, 2017 and was repaid in full, including all accrued interest, for $11,009, of which, $8,070 was paid in cash and $2,939 was paidfrom the associated sinking fund.Convertible Subordinated Notes On April 6, 2015, the Company issued $36,750 principal amount of convertible subordinated notes with a six-year maturity bearing interest at 2.5% and aconversion price of $29.70 per share (the “Convertible Subordinated Notes”) to certain of the Del Monte entities as partial consideration in the Del Monteacquisition. The holders of the Convertible Subordinated Notes may, in certain instances beginning one year after issuance, redeem the ConvertibleSubordinated Notes for cash or shares of the Company’s common stock. Moreover, the Company may pay the outstanding principal amount due and owingunder the Convertible Subordinated Notes at maturity in either cash or shares of the Company’s common stock. The Convertible Subordinated Notes, whichare subordinate to the Company’s and its subsidiaries’ senior debt, are convertible into shares of the Company’s common stock by the holders at any time at aconversion price of $29.70. The Company incurred interest expense of $919 during the years ended December 29, 2017 and December 30, 2016.Note 10 – Stockholders’ EquityOn December 19, 2017, we completed a public offering of 1,900,000 shares of our common stock which resulted in net proceeds to us of approximately$34,020 after deducting underwriters’ fees, commissions and transaction expenses.Equity Incentive Plan The Company has adopted the 2011 Omnibus Equity Incentive Plan (the “Equity Plan”). The purpose of the Equity Plan is to promote the interests of theCompany and its stockholders by (i) attracting and retaining key officers, employees and directors; (ii) motivating such individuals by means of performancerelated incentives to achieve long-range performance goals; (iii) enabling such individuals to participate in the long-term growth and financial success of theCompany; (iv) encouraging ownership of stock in the Company by such individuals; and (v) linking their compensation to the long-term interests of theCompany and its stockholders.66The Equity Plan is administered by the Compensation Committee (the “Committee”) of the Board of Directors and allows for the issuance of stock options,stock appreciation rights (“SARs”), restricted share awards (“RSAs”), restricted share units, performance awards, or other stock-based awards. Stock optionexercise prices are fixed by the Committee but shall not be less than the fair market value of a common share on the date of the grant of the option, except inthe case of substitute awards. Similarly, the grant price of an SAR may not be less than the fair market value of a common share on the date of the grant. TheCommittee will determine the expiration date of each stock option and SAR, but in no case shall the stock option or SAR be exercisable after the expirationof ten years from the date of the grant. The Company plans to issue new shares upon exercise of any stock options. The Equity Plan provided 1,750,000shares available for grant, of which no more than 1,000,000 could be for Incentive Stock Options. As of December 29, 2017, there were 553,708 sharesavailable for grant. Stock compensation expense was $3,018, $2,579 and $3,539 for the fiscal years ended December 29, 2017, December 30, 2016 and December 25, 2015,respectively. The related tax benefit for stock-based compensation was $1,283, $1,469 and $588 for the fiscal years ended December 29, 2017, December 30,2016 and December 25, 2015, respectively. The following table reflects the activity of RSAs during the fiscal years ended December 29, 2017 and December 30, 2016: Shares Weighted AverageGrant Date Fair ValueUnvested at December 25, 2015 418,604 $18.54Granted 214,274 17.75Vested (108,400) 18.00Forfeited (190,425) 16.82Unvested at December 30, 2016 334,053 $18.69Granted 207,871 14.84Vested (116,442) 18.36Forfeited (95,721) 17.73Unvested at December 29, 2017 329,761 $16.69The fair value of RSAs vested during the fiscal years ended December 29, 2017, December 30, 2016 and December 25, 2015, were $1,703, $1,779 and$3,110, respectively.At December 29, 2017, the Company had 329,761 of unvested RSAs outstanding. At December 29, 2017, the total unrecognized compensation cost for theseunvested RSAs was $3,823 to be recognized over a weighted-average period of approximately 25 months. Of this total, $2,646 related to RSAs with time-based vesting provisions and $1,177 related to RSAs with performance-based vesting provisions. At December 29, 2017, unrecognized compensation costwas to be recognized over a weighted-average period of approximately 26 months for time-based vesting RSAs and 24 months for the performance-basedvesting RSAs.The following table summarizes stock option activity during the fiscal years ended December 29, 2017 and December 30, 2016: Shares WeightedAverageExercise Price AggregateIntrinsicValue Weighted AverageRemaining ContractualTerm (in years)Outstanding December 25, 2015 — $— $— 0Granted 259,577 20.23 Exercised — — Forfeited (50,506) 20.23 Outstanding December 30, 2016 209,071 $20.23 $— 9.2Granted — — Exercised — — Forfeited (17,263) 20.23 Outstanding December 29, 2017 191,808 $20.23 $33 8.2Exercisable at December 29, 2017 — — $— 067During March 2016, the Company granted 259,577 non-qualified stock options with market condition provisions to its employees at an exercise price of$20.23 and a weighted average grant date fair value of $9.44 using the following key assumptions: 2016 Market Stock OptionsExpected volatility of common stock (based on our historical stock price) 42.8%Risk-free interest rate (based on U.S. Treasury yields on the date of grant) 1.91%Expected term (median years until the simulated stock price exceeds target) 1.38These awards vest over a period of three years and require the Company’s stock to trade at or above $30 per share for twenty consecutive days within fouryears of issuance to meet the market condition threshold. The Company recognized expense of $557 and $559 on these options during fiscal year endedDecember 29, 2017 and December 30, 2016, respectively. At December 29, 2017, the total unrecognized compensation cost for these options was $715 to berecognized over a weighted-average period of approximately 14 months. The Company has not granted stock options prior to fiscal 2016.No compensation expense related to the Company’s RSAs or stock options has been capitalized.Note 11 – Leases The Company leases various warehouse and office facilities and certain vehicles and equipment under long-term operating lease agreements that expire atvarious dates, with related parties and with others. See Note 15 for additional discussion of related party transactions. The Company records operating leasecosts, including any determinable rent increases, on a straight-line basis over the lease term. As of December 29, 2017, the Company is obligated under non-cancelable operating lease agreements to make future minimum lease payments as follows: Related Party RealEstate Third PartyReal Estate Third PartyVehicles Third PartyOther Total2018 $1,230 $7,812 $10,312 $1,477 $20,8312019 1,250 6,885 9,283 1,110 18,5282020 1,270 7,271 7,843 467 16,8512021 1,290 6,834 6,169 251 14,5442022 1,224 6,504 4,632 84 12,444Thereafter 2,153 36,822 2,945 — 41,920Total minimum lease payments $8,417 $72,128 $41,184 $3,389 $125,118Total rent expense for operating leases for the fiscal years ended December 29, 2017, December 30, 2016 and December 25, 2015 was $26,678, $24,202 and$20,199, respectively. Note 12 – Income TaxesThe provision for income taxes consists of the following for the fiscal years ended December 29, 2017, December 30, 2016 and December 25, 2015: December 29, 2017 December 30, 2016 December 25, 2015Current income tax expense (benefit): Federal $3,342 $(491) $9,538State 1,403 153 2,773Total current income tax expense (benefit) 4,745 (338) 12,311Deferred income tax expense (benefit): Federal (1,059) 2,441 (725)Foreign 215 49 19State 141 501 (103)Total deferred income tax expense (benefit) (703) 2,991 (809)Total income tax expense $4,042 $2,653 $11,50268Income tax expense for the fiscal years ended December 29, 2017, December 30, 2016 and December 25, 2015 differed from amounts computed using thestatutory federal income tax rate due to the following reasons: December 29, 2017 December 30, 2016 December 25, 2015Statutory U.S. Federal tax $6,443 $1,987 $9,700Differences due to: State and local taxes, net of federal benefit 1,112 470 1,728Foreign tax rate differential (82) (168) (63)Impact of the Tax Act (3,573) — —Other 142 364 137Income tax expense $4,042 $2,653 $11,502 Deferred tax assets and liabilities at December 29, 2017 and December 30, 2016 consist of the following: December 29, 2017 December 30, 2016Deferred tax assets: Receivables and inventory $3,969 $5,230Accrued expenses 1,542 2,122Self-insurance reserves 2,179 2,515Net operating loss carryforwards 1,191 2,498Stock compensation 1,017 1,122Other 1,696 1,213Total deferred tax assets 11,594 14,700Deferred tax liabilities: Property & equipment (1,701) (1,759)Intangible assets (10,784) (12,962)Contingent earn-out liabilities (3,646) (5,020)Prepaid expenses and other (1,189) (1,917)Total deferred tax liabilities (17,320) (21,658)Valuation allowance (289) —Total net deferred tax liability $(6,015) $(6,958) As of December 29, 2017, the Company completed its accounting for the impacts of the Tax Act and recognized an income tax benefit of $3,573 in the fiscalquarter ended December 29, 2017 due to the remeasurement of the Company's deferred tax assets and liabilities. The Company's effective income tax rate forfiscal 2017 would have been 41.4% exclusive of the impact of the Tax Act. The Company's actual effective income tax rate for fiscal 2017 was 22.0%.The deferred tax provision results from the effects of net changes during the year in deferred tax assets and liabilities arising from temporary differencesbetween the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company filesincome tax returns in the U.S. Federal and various state and local jurisdictions as well as the Canadian Federal and provincial districts. For Federal income taxpurposes, the 2014 through 2017 tax years remain open for examination by the tax authorities under the normal three-year statute of limitations and the factthat we have not yet filed our tax return for 2017. For state tax purposes, the 2013 through 2017 tax years remain open for examination by the tax authoritiesunder a four-year statute of limitations. The Company records interest and penalties, if any, in income tax expense.At December 29, 2017, the Company recognized a valuation allowance of $289 which consisted of a full valuation allowance on its Canada net operatingloss carryforward of $593 because it is not expected to be realizable in the future offset by a reduction in deferred tax liabilities related to finite-livedintangible assets acquired from Qzina in 2013.For financial reporting purposes, net loss from operations before income taxes for our foreign subsidiaries was $691, $154 and $209 for the fiscal years endedDecember 29, 2017, December 30, 2016 and December 25, 2015, respectively. We had no foreign operations prior to fiscal 2013. It is our intention toindefinitely reinvest any earnings, therefore no U.S. taxes have been provided for these amounts. The amount of foreign accumulated earnings that have beenpermanently reinvested is immaterial.69As of December 29, 2017 and December 30, 2016, the Company did not have any uncertain tax positions. Note 13 – Supplemental Disclosures of Cash Flow Information December 29, 2017 December 30, 2016 December 25, 2015Cash paid for income taxes, net of cash received $333 $6,368 $11,047Cash paid for interest, net of loss on debt extinguishment $20,796 $17,790 $11,462Non-cash financing activity: Sinking funds used to retire debt $2,939 $— $—Non-cash investing activity: Common stock issued for acquisitions $3,300 $— $24,689Convertible notes issued for acquisitions $— $— $36,750Acquisition purchase price payable $— $500 $—Contingent earn-out liabilities for acquisitions $4,445 $500 $13,139 Note 14 – Employee Benefit Plans Employee Tax-Deferred Savings Plan The Company offers a 401(k) Plan to all full-time employees that provides for tax-deferred salary deductions for eligible employees. Employees may chooseto make voluntary contributions of their annual compensation to the 401(k) Plan, limited to an annual maximum amount as set periodically by the InternalRevenue Service. Beginning in 2013, the Company provided discretionary matching contributions equal to 50 percent of the employee’s contributionamount, up to a maximum of six percent of the employee’s annual salary, capped at $2.5 per associate per year. Matching contributions begin vesting aftertwo years and are fully vested after six. Employee contributions are fully vested when made. Under the 401(k) Plan there is no option available to theemployee to receive or purchase the Company’s common stock. Matching contributions under the 401(k) Plan were $1,172 for fiscal 2017, $1,049 for fiscal2016 and $858 for fiscal 2015. Note 15 – Related Parties The Company previously leased two warehouse facilities that are 100% owned by entities controlled by Christopher Pappas, the Company’s chairman,president and chief executive officer, John Pappas, the Company’s vice chairman and one of its directors, and Dean Facatselis, a former non-employeedirector of the Company and the brother-in-law of Messrs. Pappas, and are deemed to be affiliates of these individuals. Expense related to the above facilitieswas $533, $616 and $1,406 for the fiscal years ended December 29, 2017, December 30, 2016 and December 25, 2015, respectively. One of the facilities is adistribution facility leased by Chefs’ Warehouse Mid-Atlantic, LLC with a lease expiration date of September 30, 2019. The other facility is a distributionfacility which one of the Company’s subsidiaries, Dairyland, sublet from TCW Leasing Co., LLC (“TCW”), an entity controlled by the Company's founders.The Company exited this facility on February 29, 2016 and is no longer required to pay rent. Each of Christopher Pappas, John Pappas and Dean Facatselis owns 8.33% of a New York City-based restaurant customer of the Company and its subsidiariesthat purchased an aggregate of approximately $121, $109 and $117 of products from the Company during fiscal 2017, fiscal 2016 and fiscal 2015,respectively. Messrs. Pappas and Facatselis have no other interest in the restaurant other than these equal interests and are not involved in the day-to-dayoperation or management of this restaurant. The Company paid $137, $315 and $827 to Architexture Studios, Inc. for interior decorating and design including the purchase of furniture and leaseholdimprovements primarily for our Las Vegas, San Francisco and Chicago facilities during fiscal years 2017, 2016 and 2015, respectively. This entity is ownedby Julie Hardridge, the sister-in-law of Christopher Pappas.The Company purchases products from ConAgra Foods, Inc. of which Steve Goldstone, a Director of the Company, is the Chairman. Mr. Goldstone became adirector of the Company on March 7, 2016. The Company purchased approximately $701 and $722 worth of products from ConAgra Foods, Inc. for the fiscalyears ended December 29, 2017 and December 30, 2016.With the acquisition of Del Monte, the Company leased two warehouse facilities that the Company leases from certain prior owners of Del Monte. Two of theowners were current employees as of December 29, 2017, one of whom, John DeBenedetti,70serves on the Company’s board of directors. The first property is located in American Canyon, CA and is owned by TJ Management Co. LLC, an entityowned 50% by John DeBenedetti. The Company paid rent on this facility totaling $219, $210 and $156 during fiscal years 2017, 2016 and 2015,respectively. The second property is located in West Sacramento, CA and is owned by David DeBenedetti and Victoria DeBenedetti, the parents of JohnDeBenedetti. The Company paid rent on this facility totaling $234, $225 and $167 during fiscal years 2017, 2016 and 2015, respectively. John DeBenedettiand Victoria DeBenedetti were employees of a subsidiary of the Company as of December 29, 2017. John DeBenedetti, indirectly through TJ Investments, LLC, owns an 8.33% ownership interest in Old World Provisions, which supplies products to theCompany following the Del Monte acquisition. The Company purchased approximately $1,713, $1,269 and $963 of products from Old World Provisionsduring fiscal years 2017, 2016 and 2015, respectively. Mr. J. DeBenedetti is not involved in the day-to-day management of Old World Provisions.John Pappas’s brother-in-law, Constantine Papataros, is one of the Company’s employees. The Company paid him approximately $188, $194 and $169 intotal compensation during fiscal 2017, fiscal 2016 and fiscal 2015, respectively. Christopher Pappas’s brother, John Pappas, is one of the Company’semployees and a member of the Company’s Board of Directors. The Company paid John Pappas approximately $593, $597 and $882 in total compensationfor fiscal 2017, fiscal 2016 and fiscal 2015, respectively. John Pappas did not receive any compensation in fiscal 2017, fiscal 2016 or fiscal 2015 for hisservice on the Company’s Board of Directors. Tara Brennan, the domestic partner of John DeBennedetti, was an employee of the Company as ofDecember 29, 2017 and was paid approximately $180 and $184 in fiscal 2017 and 2016, respectively.An entity owned 50% by John Couri, a director of the Company, and of which Messrs. C. Pappas and S. Hanson (also directors of the Company) previouslyheld ownership interests, owns an interest in an aircraft that the Company used for business purposes in the course of its operations. Mr. Couri paid for hisownership interest in the aircraft himself and bears his share of all operating, personnel and maintenance costs associated with the operation of this aircraft.All payments were paid directly to an entity that manages the aircraft in which Mr. Couri has a de minimis indirect ownership interest. This related partyrelationship ended during the fourth quarter of fiscal 2016. The Company made payments of $36 in fiscal 2017 for use of such aircraft in the fourth quarter offiscal 2016. The Company made payments of $21 and $182 in fiscal 2016 and 2015, respectively, for use of such aircraft.Note 16 – Commitments and Contingencies Legal Contingencies The Company is involved in various legal proceedings. The Company establishes reserves for specific legal proceedings when it determines that thelikelihood of an unfavorable outcome is probable and the amount of loss can be reasonably estimated. Management has also identified certain other legalmatters where the Company believes an unfavorable outcome is reasonably possible and/or for which no estimate of possible losses can be made. TheCompany does not believe that there is a reasonable possibility of material loss or loss in excess of the amount that the Company has accrued. The Companyrecognizes legal fees related to any ongoing legal proceeding as incurred.Tax Audits The Company is involved in various tax matters, with respect to some of which the outcome is uncertain. These audits may result in the assessment ofadditional taxes that are subsequently resolved with authorities or potentially through the courts. Risk Management Programs The Company’s self-insurance reserves for its medical program totaled $858 and $773 at December 29, 2017 and December 30, 2016, respectively. The Company’s self-insurance reserves for its automobile liability program totaled $1,078 and $1,068 at December 29, 2017 and December 30, 2016,respectively. Self-insurance reserves for workers' compensation totaled $9,594 and $7,280 at December 29, 2017 and December 30, 2016, respectively. Workforce (unaudited) As of December 29, 2017, approximately 9.9% of the Company’s employees are represented by unions, all of whom are operating under a collectivebargaining agreement which expires on August 3, 2020. 71Note 17 – Valuation ReservesThe following tables summarize the activity in our valuation accounts during the fiscal years ended December 29, 2017, December 30, 2016 andDecember 25, 2015: Balance at Beginning ofPeriod Additions Charged toExpense Deductions Balance at End ofPeriodAllowance for doubtful accounts December 29, 2017 $6,848 $4,061 $(2,883) $8,026December 30, 2016 5,803 3,224 (2,179) 6,848December 25, 2015 4,675 2,909 (1,781) 5,803Inventory valuation reserve December 29, 2017 $2,122 $2,996 $(3,184) $1,934December 30, 2016 1,956 3,043 (2,877) 2,122December 25, 2015 1,130 3,288 (2,462) 1,956Allowance for deferred tax assets December 29, 2017 $— $289 $— $289December 30, 2016 — — — —December 25, 2015 — — — —Note 18 – Quarterly Results (unaudited) The quarterly results of the Company for the fiscal years ended December 29, 2017 and December 30, 2016 are as follows: Fiscal 2017 Q1 Q2 Q3 (1) Q4 (2)Net sales $287,690 $331,656 $325,076 $357,098Gross profit 73,904 82,596 80,905 91,973Operating profit 3,121 12,163 10,494 15,349Income before income taxes (2,812) 6,283 4,891 10,046Net income (1,642) 3,674 2,851 9,483Basic net income per share (0.06) 0.14 0.11 0.36Diluted net income per share (0.06) 0.14 0.11 0.35 Fiscal 2016 Q1 Q2 (3) Q3 (4) Q4 (5)Net sales $260,836 $291,209 $297,917 $342,904Gross profit 65,958 71,803 74,392 89,064Operating profit 5,360 11,188 8,286 22,404Income before income taxes 1,701 (14,479) 2,299 16,155Net income 993 (8,455) 1,343 9,142Basic net income per share 0.04 (0.33) 0.05 0.35Diluted net income per share 0.04 (0.33) 0.05 0.34(1)Beginning in the third quarter of 2017 the Company began to reflect the results of the Fells Point acquisition.(2)The fourth quarter of 2017 includes a tax benefit of $3,573 related to the enactment of the Tax Act.(3)The Company refinanced its debt structure by entering into a new senior secured term loan. Proceeds were used to pay off its revolving credit facilityand previous term loan resulting in a loss on extinguishment of debt of $22,310.(4)Beginning in the third quarter of 2016 the Company began to reflect the results of the MT Food acquisition.(5)The Company recorded income of $8,347 related to the revaluation of the Del Monte earn-out liabilities.72Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURENot applicable. Item 9A.CONTROLS AND PROCEDURESDisclosure Controls and Procedures. Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls andprocedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by thisAnnual Report on Form 10-K. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective, as ofthe end of the period covered by this report, to provide reasonable assurance that information we are required to disclose in reports that we file or submitunder the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such informationis accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timelydecisions regarding required disclosure. Management’s Annual Report on Internal Control Over Financial Reporting. The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a–15(f)and 15d–15(f) under the Exchange Act. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. The Company’s internal controlover financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance withauthorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorizedacquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate. Under the supervision of our Chief Executive Officer and Chief Financial Officer, our management assessed the effectiveness of the Company’s internalcontrol over financial reporting as of December 29, 2017. In making this assessment, management used the criteria set forth in Internal Control—IntegratedFramework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this assessment, our ChiefExecutive Officer and Chief Financial Officer have concluded that the Company’s internal control over financial reporting was effective as of December 29,2017. The Company’s financial statements included in this Annual Report on Form 10-K have been audited by BDO USA, LLP, an independent registered publicaccounting firm, as indicated in the report appearing on page 49 of this Form 10-K. BDO USA, LLP has also provided an attestation report on the Company’sinternal control over financial reporting. Changes In Internal Control Over Financial Reporting. There have been no changes in our internal control over financial reporting during the most recent fiscal quarter that have materially affected, or arereasonably likely to materially affect, our internal control over financial reporting.73Report of Independent Registered Public Accounting FirmShareholders and Board of DirectorsThe Chefs’ Warehouse, Inc.Ridgefield, CTOpinion on Internal Control over Financial ReportingWe have audited, The Chefs’ Warehouse, Inc. (the “Company’s”) internal control over financial reporting as of December 29, 2017, based on criteriaestablished in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the“COSO criteria). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 29, 2017,based on the COSO criteriaWe also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidatedbalance sheets of the Company as of December 29, 2017 and December 30, 2016, the related consolidated statements of operations and comprehensiveincome, stockholders’ equity, and cash flows for each of the three years in the period ended December 29, 2017, and the related notes and our report datedMarch 9, 2018 expressed an unqualified opinion thereon.Basis for OpinionThe Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness ofinternal control over financial reporting, included in the accompanying Item 9A, Management’s Report on Internal Control over Financial Reporting. Ourresponsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firmregistered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicablerules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB. Those standards require that we plan andperform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Ouraudit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing andevaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures aswe considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.Definition and Limitations of Internal Control over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate. /s/ BDO USA, LLP New York, NYMarch 9, 201874Item 9B.OTHER INFORMATIONNone. PART III Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEThe information set forth under the captions “Corporate Governance,” “Proposal 1 - Election of Directors” and “Section 16(a) Beneficial OwnershipReporting Compliance” in our definitive Proxy Statement for our 2018 Annual Meeting of Stockholders to be held on May 18, 2018, which we intend to filewithin 120 days after our fiscal year-end, is incorporated herein by reference. As provided in General Instruction G(3) to Form 10-K and Instruction 3 to Item401(b) of Regulation S-K, information regarding executive officers of our Company is provided in Part I of this Annual Report on Form 10-K under thecaption, “Executive Officers.”Item 11.EXECUTIVE COMPENSATIONThe information set forth under the caption “Executive Compensation” in our definitive Proxy Statement for our 2018 Annual Meeting of Stockholders to beheld on May 18, 2018, which we intend to file within 120 days after our fiscal year-end, is incorporated herein by reference. Item 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information set forth under the captions “Stock Ownership of Certain Beneficial Owners and Management” in our definitive Proxy Statement for our2018 Annual Meeting of Stockholders to be held on May 18, 2018, which we intend to file within 120 days after our fiscal year-end, is incorporated hereinby reference. The following table provides certain information with respect to equity awards under our equity compensation plans as of December 29, 2017: Plan CategoryNumber of securitiesto be issued uponexercise ofoutstanding options,warrants and rights Weighted-averageexercise price ofoutstanding options,warrants and rights Number of securitiesremaining availablefor future issuanceunder equitycompensation plans(excluding securitiesreflected in thesecond column)Plans approved by stockholders191,808 $20.33 361,900Plans not approved by stockholders— — —Total191,808 $20.33 361,900 75Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCEThe information set forth under the captions “Corporate Governance – Director Independence” and “Corporate Governance – Certain Relationships andRelated Transactions” in our definitive Proxy Statement for our 2018 Annual Meeting of Stockholders to be held on May 18, 2018, which we intend to filewithin 120 days after our fiscal year-end, is incorporated herein by reference. Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES The information set forth under the captions “Proposal 2 – Ratification of Independent Registered Public Accounting Firm – Fees Paid to BDO USA, LLP”and “Proposal 2 – Ratification of Independent Registered Public Accounting Firm – Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services” in our definitive Proxy Statement for our 2018 Annual Meeting of Stockholders to be held on May 18, 2018, which we intend to file within120 days after our fiscal year-end, is incorporated herein by reference.PART IV Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE The following documents are filed as part of this report:1.Financial Statements – See Index to the Consolidated Financial Statements at Item 8 of this Annual Report on Form 10-K.2.Financial Statement Schedules - Supplemental schedules are not provided because of the absence of conditions under which they are required orbecause the required information is given in the financial statements or notes thereto.3.Exhibits – The exhibits listed in the accompanying Index of Exhibits are filed as part of, or incorporated by reference into, this Annual Report onForm 10-K.Item 16.FORM 10-K SUMMARYNone.76INDEX OF EXHIBITS ExhibitNo. Description 2.1 Stock Purchase Agreement, dated as of April 27, 2012, among The Chefs’ Warehouse West Coast, LLC and Adelheid Putze andRudolf Putze (incorporated by reference to Exhibit 2.1 to the Company’s Form 8-K filed on April 30, 2012) (Pursuant to Item601(b)(2) of Regulation S-K, the schedules and exhibits to this agreement are omitted, but will be provided supplementally to theSecurities and Exchange Commission upon request). 2.2 Securities Purchase Agreement, dated as of August 10, 2012, among Chefs’ Warehouse Parent, LLC, The Chefs’ Warehouse Mid-Atlantic, LLC, Michael’s Finer Meats, LLC and the other parties party thereto (incorporated by reference to Exhibit 2.1 to theCompany’s Form 8-K filed on August 13, 2012) (Pursuant to Item 601(b)(2) of Regulation S-K, the schedules and exhibits to thisagreement are omitted, but will be provided supplementally to the Securities and Exchange Commission upon request). 2.3 Asset Purchase Agreement, dated as of December 31, 2012, among The Chefs’ Warehouse Midwest, LLC, QG Holding, Inc.,Queensgate Food Group, LLC, Mullaghan Properties, LLC, SP Beverage Co., LLC and the other parties party thereto (incorporatedby reference to Exhibit 2.1 to the Company’s Form 8-K filed on January 2, 2013) (Pursuant to Item 601(b)(2) of Regulation S-K, theschedules and exhibits to this agreement are omitted, but will be provided supplementally to the Securities and ExchangeCommission upon request). 2.4 Stock Purchase Agreement, dated as of May 1, 2013, among The Chefs’ Warehouse Pastry Division Canada ULC, the Shareholdersset forth therein, and Fulcrum Capital Partners Inc., as the Shareholders’ Representative (incorporated by reference to Exhibit 2.1 tothe Company’s Form 8-K filed on May 1, 2013) (Pursuant to Item 601(b)(2) of Regulation S-K, the schedules and exhibits to thisagreement are omitted, but will be provided supplementally to the Securities and Exchange Commission upon request). 2.5 Asset Purchase Agreement, dated as of December 11, 2013, by and among Allen Brothers 1893, LLC, Allen Brothers, Inc., TheGreat Steakhouse Steaks LLC, The Chefs’ Warehouse, Inc., and the other parties thereto (incorporated by reference to theCompany’s Form 8-K filed on December 17, 2013) (Pursuant to Item 601(b)(2) of Regulation S-K, the schedules and exhibits tothis agreement are omitted, but will be provided supplementally to the Securities and Exchange Commission upon request). 2.6 Asset Purchase Agreement, dated as of January 11, 2015, by and among The Chefs’ Warehouse, Inc., a Delaware corporation, DelMonte Capitol Meat Company, LLC, a Delaware limited liability company, T.J. Foodservice Co., Inc., a California corporation, TJSeafood, LLC, a California limited liability company, John DeBenedetti, Victoria DeBenedetti, Theresa Lincoln, and JohnDeBenedetti, as the Sellers’ Representative (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on January15, 2015) (Pursuant to Item 601(b)(2) of Regulation S-K, the schedules and exhibits to this agreement are omitted, but will beprovided supplementally to the Securities and Exchange Commission upon request). 2.7 Merger Agreement, dated as of January 11, 2015, by and among The Chefs’ Warehouse, Inc., a Delaware corporation, Del MonteMerger Sub, LLC, a Delaware limited liability company, Del Monte Capitol Meat Co., Inc., a California corporation, DavidDeBenedetti, Victoria DeBenedetti, DeBenedetti/Del Monte Trust, and John DeBenedetti, as the Sellers’ Representative(incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed on January 15, 2015) (Pursuant to Item 601(b)(2) ofRegulation S-K, the schedules and exhibits to this agreement are omitted, but will be provided supplementally to the Securitiesand Exchange Commission upon request). 2.8 Earn-Out Agreement, dated April 6, 2015 by and among The Chefs' Warehouse, Inc., Del Monte Capitol Meat Company, LLC, T.J.Foodservice Co., Inc., TJ Seafood, LLC, and John DeBenedetti, as the Sellers' Representative (incorporated by reference to Exhibit2.1 to the Company's 8-K filed on April 9, 2015)(Pursuant to Item 601(b)(2) of Regulation S-K, the schedules and exhibits to thisagreement are omitted, but will be provided supplementally to the Securities and Exchange Commission upon request). 772.9 Indemnification Agreement, dated April 6, 2015, by and among Del Monte Merger Sub, LLC, The Chefs' Warehouse, Inc., DelMonte Capitol Meat Company, LLC, DeBenedetti/Del Monte Trust, Victoria DeBenedetti, David DeBenedetti, Del Monte CapitolMeat Co., Inc., T.J. Foodservice Co., Inc., TJ Seafood, LLC, John DeBenedetti, Theresa Lincoln and John DeBenedetti, as theSelling Parties' Representative (incorporated by reference to Exhibit 2.2 to the Company's 8-K filed on April 9, 2015) (Pursuant toItem 601(b)(2) of Regulation S-K, the schedules and exhibits to this agreement are omitted, but will be provided supplementally tothe Securities and Exchange Commission upon request). 3.1 Certificate of Incorporation of the Company, dated as of July 27, 2011 (incorporated by reference to Exhibit 3.1 to the Company’sForm 8-K filed on August 2, 2011). 3.2 Bylaws of the Company, dated as of July 27, 2011 (incorporated by reference to Exhibit 3.2 to the Company’s Form 8-K filed onAugust 2, 2011). 4.1 Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Company’s S-1/A filed on July 1, 2011). 10.1 Agreement of Lease, dated as of April 26, 2012, between the City of New York, as Landlord, and Dairyland HP LLC, as Tenant(incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on April 30, 2012). 10.2 Amendment to Agreement of Lease, dated as of April 26, 2012, between the City of New York, as Landlord, and Dairyland HP LLC,as Tenant, dated February 27, 2013 (incorporated by reference to Exhibit 10.38 to the Company’s Form 10-K filed on March 13,2013). 10.3 Mortgage Note, dated as of April 26, 2012, between Dairyland HP LLC, as Maker, and Commercial Lending II LLC, as Payee(incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed on April 30, 2012). 10.4 Leasehold Mortgage and Security Agreement and Assignment of Leases and Rents, dated as of April 26, 2012, between DairylandHP LLC, as Mortgagor, and Commercial Lending II LLC, as Mortgagee (incorporated by reference to Exhibit 10.3 to theCompany’s Form 8-K filed on April 30, 2012). 10.5 Joint and Several Guaranty of Payment, dated as of April 26, 2012, among The Chefs’ Warehouse, Inc., Chefs’ Warehouse Parent,LLC, Dairyland USA Corporation, The Chefs’ Warehouse Mid-Atlantic, LLC, Bel Canto Foods, LLC, The Chefs’ Warehouse WestCoast, LLC, and The Chefs’ Warehouse of Florida, LLC (incorporated by reference to Exhibit 10.4 to the Company’s Form 8-Kfiled on April 30, 2012). 10.6 Lease between The Chefs’ Warehouse Leasing Co., LLC and Dairyland USA Corporation, dated as of December 29, 2004(incorporated by reference to Exhibit 10.2 to the Company’s Form S-1/A filed on June 8, 2011). 10.7 First Amendment of Lease dated as of January 1, 2015 between Dairyland USA Corporation and TCW Leasing Co., LLC, f/k/a TheChefs' Warehouse Leasing Co., LLC (incorporated by reference to Exhibit 10.12 to the Company's Form 10-Q filed on August 5,2015). 10.8 Lease Agreement, dated as of June 30, 2015, between CW LV Real Estate, LLC, The Chefs' Warehouse, Inc., Chefs' WarehouseParent, LLC and The Chefs' Warehouse West Coast, LLC, jointly and severally as the Tenant, and CW Nevada Landlord, LLC, asthe Landlord (incorporated by reference to Exhibit 10.3 to the Company's Form 8-K filed on July 7, 2015). 10.9* Employment Agreement between Christopher Pappas and The Chefs’ Warehouse, Inc., together with its subsidiaries, dated as ofAugust 2, 2011 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on August 2, 2011). 10.10* Amended and Restated Employment Agreement between John Pappas and The Chefs’ Warehouse, Inc., together with itssubsidiaries, dated as of January 12, 2012 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on January19, 2012).78 10.11* Offer letter between The Chefs’ Warehouse, Inc. and John D. Austin, dated May 29, 2012 (incorporated by reference to Exhibit 10.2to the Company’s Form 8-K filed on May 30, 2012). 10.12* Offer letter between Chefs’ Warehouse Holdings, LLC and Frank O’Dowd, dated as of January 28, 2007 (incorporated by referenceto Exhibit 10.11 to the Company’s Form S-1/A filed on June 8, 2011). 10.13* Offer letter between Chefs’ Warehouse Holdings, LLC and Patricia Lecouras, dated as of January 31, 2007 (incorporated byreference to Exhibit 10.16 to the Company’s Form 10-K filed on March 13, 2013). 10.14* Offer letter between Chefs’ Warehouse Holdings, LLC and Alexandros Aldous, dated as of February 18, 2011 (incorporated byreference to Exhibit 10.17 to the Company’s Form 10-K filed on March 13, 2013). 10.15* Severance Agreement, made as of August 1, 2014, by and between The Chefs’ Warehouse, Inc. and Alexandros Aldous(incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed on August 6, 2014). 10.16 Employment Agreement Pursuant to Purchase Agreements, dated as of April 6, 2015, by and between Del Monte Capitol MeatCompany, LLC, The Chefs' Warehouse, Inc. and John DeBenedetti (incorporated by reference to Exhibit 10.11 to the Company'sForm 10-Q filed on August 5, 2015). 10.17* The Chefs’ Warehouse, Inc. 2011 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.13 to the Company’sForm S-1/A filed on July 1, 2011). 10.18* The Chefs’ Warehouse, Inc. 2013 Cash Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filedon January 24, 2013). 10.19* The Chefs’ Warehouse, Inc. 2014 Cash Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filedon March 12, 2014). 10.20* The Chefs’ Warehouse, Inc. Executive Change in Control Plan (incorporated by reference to Exhibit 10.1 to the Company’s Form8-K filed on August 6, 2014). 10.21† Form of Non-Qualified Stock Option Agreement (Officers and Employees) (incorporated by reference to Exhibit 10.21 to theCompany's Form 10-K filed on March 10, 2017). 10.22* Form of Non-Qualified Stock Option Agreement (Directors) (incorporated by reference to Exhibit 10.15 to the Company’s Form S-1/A filed on July 1, 2011). 10.23* Form of Restricted Share Unit Award Agreement (Directors) (incorporated by reference to Exhibit 10.16 to the Company’s Form S-1/A filed on July 1, 2011). 10.24(a)* Form of Restricted Share Award Agreement (Officers and Employees) (incorporated by reference to Exhibit 10.17 to the Company’sForm S-1/A filed on July 1, 2011). 10.24(b)† Form of Restricted Share Award Agreement (Officers and Employees), for awards granted starting March 6, 2017 (incorporated byreference to Exhibit 10.24(b) to the Company's Form 10-K filed on March 10, 2017). 10.25† Form of Restricted Share Award Agreement (Directors) (incorporated by reference to Exhibit 10.25 to the Company's Form 10-Kfiled on March 4, 2017). 10.26* Form of Incentive Stock Option Agreement (incorporated by reference to Exhibit 10.19 to the Company’s Form S-1/A filed on July1, 2011). 7910.27(a)* Form of Performance Restricted Share Award Agreement (Officers and Employees) (incorporated by reference to Exhibit 10.3 to theCompany’s Form 8-K filed on January 19, 2012). 10.27(b)† Form of Performance Restricted Share Award Agreement (Officers and Employees), for awards granted starting March 6, 2017(incorporated by reference to Exhibit 10.27b to the Company's Form 10-K filed on March 10, 2017). 10.28 Form of Restricted Share Award Agreement for a Transaction Bonus Award Grant (incorporated by reference to Exhibit 10.6 to theCompany's Form 8-K filed on April 9, 2015). 10.29 Form of LTIP award agreement (incorporated by reference to Exhibit 10.8 to the Company's Form 10-Q filed on May 6, 2015). 10.30+ Amendment and Restatement Agreement, dated as of April 17, 2013, among Dairyland USA Corporation, The Chefs’ WarehouseMid-Atlantic, LLC, Bel Canto Foods, LLC, The Chefs’ Warehouse West Coast, LLC, and The Chefs’ Warehouse of Florida, LLC, asBorrowers, the financial institutions party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated byreference to Exhibit 10.1 to the Company’s Form 10-Q filed on May 7, 2013). 10.31 Amendment No. 1, dated as of July 23, 2014, to the Amended and Restated Credit Agreement dated as of April 17, 2013, by andamong Dairyland USA Corporation, The Chefs’ Warehouse Mid-Atlantic, LLC, Bel Canto Foods, LLC, The Chefs’ WarehouseWest Coast, LLC, and The Chefs’ Warehouse of Florida, LLC, as Borrowers, the other Loan Parties thereto, the Lenders partythereto, and JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent (incorporated by reference to Exhibit 10.1to the Company’s Form 8-K filed on July 28, 2014). 10.32 Amendment No. 2, dated as of November 4, 2014, to the Amended and Restated Credit Agreement dated as of April 17, 2013, byand among Dairyland USA Corporation, The Chefs’ Warehouse Mid-Atlantic, LLC, Bel Canto Foods, LLC, The Chefs’ WarehouseWest Coast, LLC, and The Chefs’ Warehouse of Florida, LLC, as Borrowers, the other Loan Parties thereto, the Lenders partythereto, and JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent (incorporated by reference to Exhibit 10.3to the Company’s Form 10-Q filed on November 5, 2014). 10.33 Amendment No. 3, dated as of December 3, 2014, to the Amended and Restated Credit Agreement dated as of April 17, 2013, byand among Dairyland USA Corporation, The Chefs’ Warehouse Mid-Atlantic, LLC, Bel Canto Foods, LLC, The Chefs’ WarehouseWest Coast, LLC, and The Chefs’ Warehouse of Florida, LLC, as Borrowers, the other Loan Parties thereto, the Lenders partythereto, and JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent (incorporated by reference to Exhibit 10.1to the Company’s Form 8-K filed on December 9, 2014). 10.34 Amendment No. 4, dated as of January 9, 2015, to the Amended and Restated Credit Agreement dated as of April 17, 2013, by andamong Dairyland USA Corporation, The Chefs’ Warehouse Mid-Atlantic, LLC, Bel Canto Foods, LLC, The Chefs’ WarehouseWest Coast, LLC, and The Chefs’ Warehouse of Florida, LLC, as Borrowers, the other Loan Parties thereto, the Lenders partythereto, and JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent (incorporated by reference to Exhibit 10.3to the Company’s Form 8-K filed on January 15, 2015). 10.35 Amendment No. 5, dated as of April 6, 2015, to the Amended and Restated Credit Agreement dated as of April 17, 2013, by andamong Dairyland USA Corporation, The Chefs’ Warehouse Mid-Atlantic, LLC, Bel Canto Foods, LLC, The Chefs’ WarehouseWest Coast, LLC, and The Chefs’ Warehouse of Florida, LLC, as Borrowers, the other Loan Parties thereto, the Lenders partythereto, and JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent (incorporated by reference to Exhibit 10.1to the Company’s Form 8-K filed with the Securities and Exchange Commission on April 9, 2015). 10.36 Amendment No. 6, dated as of July 1, 2015, to the Amended and Restated Credit Agreement dated as of April 17, 2013, by andamong Dairyland USA Corporation, The Chefs’ Warehouse Mid-Atlantic, LLC, Bel Canto Foods, LLC, The Chefs’ WarehouseWest Coast, LLC, and The Chefs’ Warehouse of Florida, LLC, as Borrowers, the other Loan Parties thereto, the Lenders partythereto, and JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent (incorporated by reference to Exhibit 10.1to the Company’s Form 8-K filed with the Securities and Exchange Commission on July 7, 2015).80 10.37 Amendment No. 7, dated as of August 26, 2015, to the Amended and Restated Credit Agreement dated as of April 17, 2013, by andamong Dairyland USA Corporation, The Chefs’ Warehouse Mid-Atlantic, LLC, Bel Canto Foods, LLC, The Chefs’ WarehouseWest Coast, LLC, and The Chefs’ Warehouse of Florida, LLC, as Borrowers, the other Loan Parties thereto, the Lenders partythereto, and JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent (incorporated by reference to Exhibit 10.1to the Company’s Form 10-Q filed with the Securities and Exchange Commission on November 4, 2015). 10.38† Amendment No. 8, dated as of December 18, 2015, to the Amended and Restated Credit Agreement dated as of April 17, 2013, byand among Dairyland USA Corporation, The Chefs’ Warehouse Mid-Atlantic, LLC, Bel Canto Foods, LLC, The Chefs’ WarehouseWest Coast, LLC, and The Chefs’ Warehouse of Florida, LLC, as Borrowers, the other Loan Parties thereto, the Lenders partythereto, and JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent. (incorporated by reference toExhibit10.38 to the Company's Form 10-K filed on March 10, 2017). 10.39† Amendment No. 9, dated as of February 26, 2016, to the Amended and Restated Credit Agreement dated as of April 17, 2013, byand among Dairyland USA Corporation, The Chefs' Warehouse Mid-Atlantic, LLC, Bel Canto Foods, LLC, The Chefs' WarehouseWest Coast, LLC, and The Chefs' Warehouse of Florida, LLC, as Borrowers, the other Loan Parties thereto, the Lenders partythereto, and JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent (incorporated by reference to Exhibit10.39 to the Company's Form 10-K filed on March 10, 2017). 10.40+ Amended and Restated Pledge and Security Agreement, dated April 17, 2013, by and among Dairyland USA Corporation, TheChefs’ Warehouse Mid-Atlantic, LLC, Bel Canto Foods, LLC, The Chefs’ Warehouse West Coast, LLC, The Chefs’ Warehouse ofFlorida, LLC, The Chefs’ Warehouse, Inc., Chefs’ Warehouse Parent, LLC, Michael’s Finer Meats, LLC, Michael’s Finer MeatsHoldings, LLC, The Chefs’ Warehouse Midwest, LLC, and the other Subsidiaries of The Chefs’ Warehouse, Inc. that become partythereto after the date thereof, as Grantors, and JPMorgan Chase Bank, N.A., as Collateral Agent (incorporated by reference toExhibit 10.2 to the Company’s Form 10-Q filed May 7, 2013). 10.41+ Note Purchase and Guarantee Agreement, dated as of April 17, 2013, by and among Dairyland USA Corporation, The Chefs’Warehouse Mid-Atlantic, LLC, Bel Canto Foods, LLC, The Chefs’ Warehouse West Coast, LLC, and The Chefs’ Warehouse ofFlorida, LLC, as Issuers, The Chefs’ Warehouse, Inc., Chefs’ Warehouse Parent, LLC, The Chefs’ Warehouse Midwest, LLC,Michael’s Finer Meats Holdings, LLC, and Michael’s Finer Meats, LLC, as the Initial Guarantors, The Prudential InsuranceCompany of America, Pruco Life Insurance Company, Prudential Arizona Reinsurance Captive Company, and PrudentialRetirement Insurance and Annuity Company (incorporated by reference to Exhibit 10.3 to the Company’s Form 10-Q filed May 7,2013). 10.42 Amendment No. 1, dated as of July 23, 2014, to the Note Purchase and Guarantee Agreement, dated as of April 17, 2013, by andamong Dairyland USA Corporation, The Chefs’ Warehouse Mid-Atlantic, LLC, Bel Canto Foods, LLC, The Chefs’ WarehouseWest Coast, LLC, and The Chefs’ Warehouse of Florida, LLC, as Issuers, The Chefs’ Warehouse, Inc., Chefs’ Warehouse Parent,LLC, The Chefs’ Warehouse Midwest, LLC, Michael’s Finer Meats Holdings, LLC, and Michael’s Finer Meats, LLC, as the InitialGuarantors, The Prudential Insurance Company of America, Pruco Life Insurance Company, Prudential Arizona ReinsuranceCaptive Company, and Prudential Retirement Insurance and Annuity Company (incorporated by reference to Exhibit 10.2 to theCompany’s Form 8-K filed on July 28, 2014). 10.43 Amendment No. 2, dated as of November 4, 2014, to the Note Purchase and Guarantee Agreement, dated as of April 17, 2013, byand among Dairyland USA Corporation, The Chefs’ Warehouse Mid-Atlantic, LLC, Bel Canto Foods, LLC, The Chefs’ WarehouseWest Coast, LLC, and The Chefs’ Warehouse of Florida, LLC, as Issuers, The Chefs’ Warehouse, Inc., Chefs’ Warehouse Parent,LLC, The Chefs’ Warehouse Midwest, LLC, Michael’s Finer Meats Holdings, LLC, and Michael’s Finer Meats, LLC, as the InitialGuarantors, The Prudential Insurance Company of America, Pruco Life Insurance Company, Prudential Arizona ReinsuranceCaptive Company, and Prudential Retirement Insurance and Annuity Company (incorporated by reference to Exhibit 10.4 to theCompany’s Form 10-Q filed November 5, 2014). 8110.44 Amendment No. 3, dated as of December 3, 2014, to the Note Purchase and Guarantee Agreement, dated as of April 17, 2013, byand among Dairyland USA Corporation, The Chefs’ Warehouse Mid-Atlantic, LLC, Bel Canto Foods, LLC, The Chefs’ WarehouseWest Coast, LLC, and The Chefs’ Warehouse of Florida, LLC, as Issuers, The Chefs’ Warehouse, Inc., Chefs’ Warehouse Parent,LLC, The Chefs’ Warehouse Midwest, LLC, Michael’s Finer Meats Holdings, LLC, and Michael’s Finer Meats, LLC, as the InitialGuarantors, The Prudential Insurance Company of America, Pruco Life Insurance Company, Prudential Arizona ReinsuranceCaptive Company, and Prudential Retirement Insurance and Annuity Company (incorporated by reference to Exhibit 10.2 to theCompany’s Form 8-K filed on December 9, 2014). 10.45 Amendment No. 4, dated as of January 9, 2015, to the Note Purchase and Guarantee Agreement, dated as of April 17, 2013, by andamong Dairyland USA Corporation, The Chefs’ Warehouse Mid-Atlantic, LLC, Bel Canto Foods, LLC, The Chefs’ WarehouseWest Coast, LLC, and The Chefs’ Warehouse of Florida, LLC, as Issuers, The Chefs’ Warehouse, Inc., Chefs’ Warehouse Parent,LLC, The Chefs’ Warehouse Midwest, LLC, Michael’s Finer Meats Holdings, LLC, and Michael’s Finer Meats, LLC, as the InitialGuarantors, The Prudential Insurance Company of America, Pruco Life Insurance Company, Prudential Arizona ReinsuranceCaptive Company, and Prudential Retirement Insurance and Annuity Company (incorporated by reference to Exhibit 10.4 to theCompany’s Form 8-K filed on January 15, 2015). 10.46 Supplemental Note Purchase and Guarantee Agreement and Amendment Agreement dated as of April 6, 2015, by and amongDairyland USA Corporation, The Chefs’ Warehouse Mid-Atlantic, LLC, Bel Canto Foods, LLC, The Chefs’ Warehouse West Coast,LLC, and The Chefs’ Warehouse of Florida, LLC, as Issuers, the Guarantors party thereto, The Prudential Insurance Company ofAmerica, Pruco Life Insurance Company, Prudential Arizona Reinsurance Captive Company, and Prudential Retirement Insuranceand Annuity Company (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed with the Securities andExchange Commission on April 9, 2015). 10.47 Amendment No. 6, dated as of July 1, 2015, to the Note Purchase and Guarantee Agreement, dated as of April 17, 2013, by andamong Dairyland USA Corporation, The Chefs’ Warehouse Mid-Atlantic, LLC, Bel Canto Foods, LLC, The Chefs’ WarehouseWest Coast, LLC, and The Chefs’ Warehouse of Florida, LLC, as Issuers, the Guarantors party thereto, The Prudential InsuranceCompany of America, Pruco Life Insurance Company, Prudential Arizona Reinsurance Captive Company, and PrudentialRetirement Insurance and Annuity Company (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed with theSecurities and Exchange Commission on July 7, 2015). 10.48† Amendment No. 7, dated as of December 18, 2015, to the Note Purchase and Guarantee Agreement, dated as of April 17, 2013, byand among Dairyland USA Corporation, The Chefs’ Warehouse Mid-Atlantic, LLC, Bel Canto Foods, LLC, The Chefs’ WarehouseWest Coast, LLC, and The Chefs’ Warehouse of Florida, LLC, as Issuers, the Guarantors party thereto, The Prudential InsuranceCompany of America, Pruco Life Insurance Company, Prudential Arizona Reinsurance Captive Company, and PrudentialRetirement Insurance and Annuity Company (incorporated by reference to Exhibit 10.48 to the Company's Form 10-K filed onMarch 10, 2017). 10.49† Amendment No. 8, dated as of February 26, 2016, to the Note Purchase and Guarantee Agreement, dated as of April 17, 2013, byand among Dairyland USA Corporation, The Chefs' Warehouse Mid-Atlantic, LLC, Bel Canto Foods, LLC, The Chefs' WarehouseWest Coast, LLC, and The Chefs' Warehouse of Florida, LLC, as Issuers, the Guarantors party thereto, The Prudential InsuranceCompany of America, Pruco Life Insurance Company, Prudential Arizona Reinsurance Captive Company, and PrudentialRetirement Insurance and Annuity Company (incorporated by reference to Exhibit 10.49 to the Company's Form 10-K filed onMarch 10, 2017). 10.50 Form of Note (incorporated by reference to Exhibit 10.4 to the Company’s Form 10-Q filed May 7, 2013). 10.51 Building Loan Agreement, dated as of April 26, 2012, between Commercial Lending II LLC, as Lender, and Dairyland HP LLC, asBorrower (incorporated by reference to Exhibit 10.5 to the Company’s Form 8-K/A filed on May 1, 2012). 8210.52+ Loan Agreement, dated as of April 26, 2012, among Dairyland HP LLC, as Borrower, The Chefs’ Warehouse, Inc., Chefs’Warehouse Parent, LLC, Dairyland USA Corporation, The Chefs’ Warehouse Mid-Atlantic, LLC, Bel Canto Foods, LLC, TheChefs’ Warehouse West Coast, LLC, and The Chefs’ Warehouse of Florida, LLC, as Guarantors, and Commercial Lending II LLC,as Lender (incorporated by reference to Exhibit 10.6 to the Company’s Form 8-K filed on April 30, 2012). 10.53 Form of Series B Note (incorporated by reference to Exhibit 10.3 to the Company's Form 8-K filed with the Securities andExchange Commission on April 9, 2015). 10.54 Convertible Subordinated Non-Negotiable Promissory Note, dated April 6, 2015, issued by Del Monte Capitol Meat Company,LLC to TJ Seafood, LLC. (incorporated by reference to Exhibit 10.4 to the Company's Form 8-K filed with the Securities andExchange Commission on April 9, 2015). 10.55 Convertible Subordinated Non-Negotiable Promissory Note, dated April 6, 2015, issued by Del Monte Capitol Meat Company,LLC to T.J. Foodservice Co., Inc. (incorporated by reference to Exhibit 10.5 to the Company's Form 8-K filed with the Securitiesand Exchange Commission on April 9, 2015). 10.56* Form of Indemnification Agreement by and between The Chefs’ Warehouse, Inc. and its directors and executive officers(incorporated by reference to Exhibit 10.24 to the Company’s Form S-1/A filed on July 14, 2011). 14.1 The Chefs’ Warehouse, Inc. Code of Business Conduct and Ethics (incorporated by reference to Exhibit 14.1 to the Company’sForm 10-Q filed on August 6, 2013). 23.1† Consent of the Independent Registered Public Accounting Firm. 21† Subsidiaries of the Company. 31.1† Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2† Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1† Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2† Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101.INS† XBRL Instance Document101.SCH† XBRL Schema Document101.CAL† XBRL Calculation Linkbase Document101.DEF† XBRL Definition Linkbase Document101.LAB† XBRL Label Linkbase Document101.PRE† XBRL Presentation Linkbase Document *Management Contract or Compensatory Plan or Arrangement †Filed herewith +Certain confidential portions of this exhibit were omitted by means of redacting a portion of the text. This exhibit has been filedseparately with the Securities and Exchange Commission accompanied by a confidential treatment request pursuant to Rule 24b-2 ofthe Securities Exchange Act of 1934, as amended. 83SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized on March 9, 2018. THE CHEFS’ WAREHOUSE, INC. March 9, 2018/s/ Christopher Pappas Christopher Pappas Chairman, President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of theregistrant and in the capacities and on the dates indicated.Signature Capacity Date /s/ Christopher Pappas Chairman, President and March 9, 2018Christopher Pappas Chief Executive Officer(Principal Executive Officer) /s/ James Leddy Chief Financial Officer March 9, 2018James Leddy (Principal Financial Officer) /s/ Timothy McCauley Chief Accounting Officer March 9, 2018Timothy McCauley (Principal Accounting Officer) /s/ John Pappas Director and Vice Chairman March 9, 2018John Pappas /s/ Alan Guarino Director March 9, 2018Alan Guarino /s/ John A. Couri Director March 9, 2018John A. Couri /s/ Dominick C. Cerbone Director March 9, 2018Dominick C. Cerbone /s/ Joseph Cugine Director March 9, 2018Joseph Cugine /s/ Stephen Hanson Director March 9, 2018Stephen Hanson /s/ John DeBenedetti Director March 9, 2018John DeBenedetti /s/ Katherine Oliver Director March 9, 2018Katherine Oliver /s/ Steven F. Goldstone Director March 9, 2018Steven F. Goldstone 84Exhibit 21The Chefs’ Warehouse, Inc. Entity Name State of OrganizationDairyland USA Corporation New YorkDairyland HP LLC (1) DelawareBel Canto Foods, LLC (1) New YorkChefs’ Warehouse Transportation, LLC (2) DelawareChefs’ Warehouse Parent, LLC DelawareThe Chefs’ Warehouse Mid-Atlantic, LLC (3) DelawareThe Chefs’ Warehouse West Coast, LLC (3) DelawareThe Chefs’ Warehouse of Florida, LLC (3) DelawareThe Chefs’ Warehouse Midwest, LLC (3) DelawareMichael’s Finer Meats Holdings, LLC (3) DelawareMichael’s Finer Meats, LLC (4) DelawareThe Chefs’ Warehouse Pastry Division, Inc. (3) DelawareThe Chefs’ Warehouse Pastry Division CanadaULC (5) British Columbia, CanadaQZ Acquisition (USA), Inc. (3) DelawareQzina Specialty Foods North America (USA), Inc.(6) DelawareQzina Specialty Foods, Inc. (7) FloridaQzina Specialty Foods, Inc. (7) WashingtonQzina Specialty Foods (Ambassador), Inc. (7) CaliforniaCW LV Real Estate LLC (8) DelawareAllen Brothers 1893, LLC (9) DelawareDel Monte Capitol Meat Company Holdings, LLC(3) DelawareDel Monte Capitol Meat Company, LLC (10) DelawareThe Great Steakhouse Steaks, LLC (11) DelawareFells Point Holdings, LLC (3) DelawareFells Point, LLC (12) DelawareSubsidiaries of the Registrant (1)Dairyland HP LLC and Bel Canto Foods, LLC are wholly-owned by Dairyland USA Corporation, which is wholly-owned by The Chefs’Warehouse, Inc. (2)Chefs’ Warehouse Transportation, LLC is wholly-owned by The Chefs’ Warehouse, Inc. (3)The Chefs’ Warehouse Mid-Atlantic, LLC, The Chefs’ Warehouse West Coast, LLC,The Chefs’ Warehouse of Florida, LLC, The Chefs’Warehouse Midwest, LLC, Michael’s Finer Meats Holdings, LLC, The Chefs’ Warehouse Pastry Division, Inc., QZ Acquisition (USA), Inc., DelMonte Capitol Meat Company Holdings, LLC and Fells Point Holdings, LLC are wholly-owned by Chefs’ Warehouse Parent, LLC, which iswholly-owned by The Chefs’ Warehouse, Inc. (4)Michael’s Finer Meats, LLC is wholly-owned by Michael’s Finer Meats Holdings, LLC, which is wholly-owned by Chefs’ Warehouse Parent,LLC, which is wholly-owned by The Chefs’ Warehouse, Inc. (5)The Chefs’ Warehouse Pastry Division Canada ULC is wholly-owned by The Chefs’ Warehouse Pastry Division, Inc., which is wholly-ownedby Chefs’ Warehouse Parent, LLC, which is wholly-owned by The Chefs’ Warehouse, Inc. (6)Qzina Specialty Foods North America (USA), Inc. is wholly-owned by QZ Acquisition (USA), Inc., which is wholly-owned by Chefs’Warehouse Parent, LLC, which is wholly-owned by The Chefs’ Warehouse, Inc. (7)Qzina Specialty Foods, Inc. (a Florida corporation), Qzina Specialty Foods, Inc. (a Washington corporation) and Qzina Specialty Foods(Ambassador), Inc. are wholly-owned by Qzina Specialty Foods North America (USA), Inc., which is wholly-owned by QZ Acquisition (USA),Inc., which is wholly-owned by Chefs’ Warehouse Parent, LLC, which is wholly-owned by The Chefs’ Warehouse, Inc. (8)CW LV Real Estate LLC is wholly-owned by The Chefs’ Warehouse West Coast, LLC, which is wholly-owned by Chefs’ Warehouse Parent,LLC, which is wholly-owned by The Chefs’ Warehouse, Inc. (9)Allen Brothers 1893, LLC is wholly-owned by The Chefs’ Warehouse Midwest, LLC, which is wholly-owned by Chefs’ Warehouse Parent,LLC, which is wholly-owned by The Chefs’ Warehouse, Inc. (10)Del Monte Capitol Meat Company, LLC is wholly-owned by Del Monte Meat Company Holdings, LLC, which is wholly-owned by Chefs’Warehouse Parent, LLC, which is wholly-owned by The Chefs’ Warehouse, Inc. (11)The Great Steakhouse Steaks, LLC is wholly owned by Allen Brothers 1893, LLC, which is wholly-owned by The Chefs’ Warehouse Midwest,LLC, which is wholly-owned by Chefs’ Warehouse Parent, LLC, which is wholly-owned by The Chefs’ Warehouse, Inc. (12)Fells Point, LLC is wholly owned by Fells Point Holdings, LLC, which is wholly-owned by Chefs’ Warehouse Parent, LLC, which is wholly-owned by The Chefs’ Warehouse, Inc.Exhibit 23.1Consent of Independent Registered Public Accounting FirmThe Chefs’ Warehouse, Inc.Ridgefield, CTWe hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-175974), the Registration Statement on Form S-3(No. 333-187348) and the Registration Statement on Form S-4 (No. 333-187349) of The Chefs’ Warehouse, Inc. of our reports dated March 9, 2018, relatingto the consolidated financial statements and the effectiveness of The Chefs’ Warehouse, Inc.’s internal control over financial reporting, which appear in theAnnual Report on Form 10-K of The Chefs’ Warehouse, Inc. for the fiscal year ended December 29, 2017./s/ BDO USA, LLPNew York, NYMarch 9, 2018Exhibit 31.1CERTIFICATIONSI, Christopher Pappas, certify that:1.I have reviewed this annual report on Form 10-K of The Chefs’ Warehouse, Inc.;2.Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessaryto make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to theperiod covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all materialrespects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as definedin Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)and Rule 15d-15(f)) for the registrant and have:(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known tous by others within those entities, particularly during the period in which this report is being prepared;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designedunder our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generally accepted accounting principles;(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusionsabout the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on suchevaluation; and(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’smost recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or isreasonably likely to materially affect, the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financialreporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalentfunction):(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting whichare reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’sinternal control over financial reporting.Dated: March 9, 2018 /s/ Christopher Pappas By:Christopher Pappas Chairman, President and Chief Executive Officer (Principal Executive Officer)Exhibit 31.2CERTIFICATIONSI, James Leddy, certify that:1.I have reviewed this annual report on Form 10-K of The Chefs’ Warehouse, Inc.;2.Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessaryto make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to theperiod covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report fairly present in all materialrespects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as definedin Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)and Rule 15d-15(f)) for the registrant and have:(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known tous by others within those entities, particularly during the period in which this report is being prepared;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designedunder our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generally accepted accounting principles;(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusionsabout the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on suchevaluation; and(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’smost recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or isreasonably likely to materially affect, the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financialreporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalentfunction):(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting whichare reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’sinternal control over financial reporting.Dated: March 9, 2018 /s/ James Leddy By:James Leddy Chief Financial Officer (Principal Financial Officer)Exhibit 32.1CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the annual report of The Chefs’ Warehouse, Inc. (the “Company”) on Form 10-K for the year ended December 29, 2017 as filed with theSecurities and Exchange Commission on the date hereof (the “Report”), I, Christopher Pappas, President and Chief Executive Officer of the Company, certify,pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.Date: March 9, 2018By:/s/ Christopher Pappas Christopher Pappas Chairman, President and Chief Executive Officer (Principal Executive Officer)A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff uponrequest.Exhibit 32.2CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the annual report of The Chefs’ Warehouse, Inc. (the “Company”) on Form 10-K for the year ended December 29, 2017 as filed with theSecurities and Exchange Commission on the date hereof (the “Report”), I, James Leddy, Chief Financial Officer of the Company, certify, pursuant to 18U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.Date: March 9, 2018By:/s/ James Leddy James Leddy Chief Financial Officer (Principal Financial Officer)A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff uponrequest.

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