More annual reports from The Chefs' Warehouse:
2023 ReportPeers and competitors of The Chefs' Warehouse:
United Natural FoodsUNITED 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 28, 2018 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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-Tduring the preceding 12 months (or for such shorter period that the registrant was required to submit 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 ☐ 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 29, 2018): $591,189,836Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.Class Outstanding at February 27, 2019Common Stock, $.01 par value per share 29,968,483 shares DOCUMENTS INCORPORATED BY REFERENCE Document Parts Into Which IncorporatedProxy Statement for the Annual Meeting of Stockholdersexpected to be held on May 17, 2019 (“Proxy Statement”) Part IIITotal number of pages: 79 1 THE CHEFS’ WAREHOUSE, INC.INDEX Description PageNumber Part I Item 1Business 5 Item 1ARisk Factors 14 Item 1BUnresolved Staff Comments 27 Item 2Properties 28 Item 3Legal Proceedings 29 Item 4Mine Safety Disclosures 29 Part II Item 5Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 30 Item 6Selected Financial Data 32 Item 7Management’s Discussion and Analysis of Financial Condition and Results of Operations 34 Item 7AQuantitative and Qualitative Disclosures About Market Risk 45 Item 8Consolidated Financial Statements and Supplementary Data 46 Item 9Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 71 Item 9AControls and Procedures 71 Item 9BOther Information 73 Part III Item 10Directors, Executive Officers and Corporate Governance 73 Item 11Executive Compensation 73 Item 12Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 73 Item 13Certain Relationships and Related Transactions, and Director Independence 73 Item 14Principal Accounting Fees and Services 73 Part IV Item 15Exhibits and Financial Statement Schedules 74 Item 16Form 10-K Summary 74 Signatures 792 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, 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, involves increased exposure to price volatility experiencedby 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;•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;3 •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 55,000 stock-keeping units (“SKUs”) from more than 2,200 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, Inc. (“AllenBrothers”) 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 26, 2014 to December 28, 2018, our net revenues increased from approximately $833 million to approximately $1.4billion. 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 26, 2014, 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 resulted in aggregate up-front cashconsideration of more than $188.3 million, which we funded with borrowings under our then existing senior secured credit facilities and the proceeds of ourcommon stock offering completed in December 2017.Excluding our direct-to-consumer business, we currently serve more than 34,000 customer locations in our sixteen primary geographic markets across theUnited States and Canada, including New York, Washington, D.C., Los Angeles, San Francisco, Las Vegas, Miami, Portland, Columbus, Cincinnati, Chicago,Vancouver, Edmonton, Toronto, Seattle, Sacramento, and Texas. By leveraging an experienced and sophisticated sales force of approximately 530 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 28 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, Portland, Columbus,Cincinnati, Chicago, Vancouver, Edmonton, Toronto, Seattle, Sacramento, and Texas, create and set the culinary trends for the rest of the United States andCanada and provide us with valuable insight into the latest culinary and menu practices. Furthermore, we believe our established relationships with many ofthe top chefs, culinary schools and dining establishments in these key culinary markets have benefited us when we entered into new markets where webelieve that chefs at our potential customers were generally knowledgeable of our brand and commitment to quality and excellence from their experienceworking in other markets 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 55,000 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 180different 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 2,200 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 34,000 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 ten 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 approximately530 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 96% in 2018, which we believe is among the highest rates in the foodservice distribution industry. With 28distribution 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 55,000 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 reflects this focus, as we have sought to complement our existing product offerings and enhance our product capabilities through the acquisition ofwholesale specialty distributors and high quality center-of-the-plate protein suppliers, manufacturers and distributors.Expand our Customer Base Within our Existing Markets. As of December 28, 2018, we served more than 34,000 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 fifteen acquisitions, which have increased ourpenetration in existing markets, expanded our footprint into new markets and enhanced our product capabilities.Our Markets and the Customers that We ServeExcluding our direct-to-consumer business, we distribute our specialty food products to over 34,000 distinct customer locations from distribution centerslocated in our primary markets, which include New York, Washington, D.C., Los Angeles, San Francisco, Las Vegas, Miami, Portland, Columbus, Cincinnati,Chicago, Vancouver, Edmonton, Toronto, Seattle, Sacramento, and Texas. We also serve customers in a number of other markets, including Philadelphia,Boston and Napa Valley. We believe that many of these markets set the culinary trends for the rest of the United States and Canada and provide us withvaluable insight into the latest culinary and menu trends. We have established collaborative professional and educational relationships with some of theUnited States’ and Canada’s most demanding chefs, which allows us to anticipate the needs of, and offer cost-effective food product solutions to, ourcustomers while allowing our customers to locate ingredients that will enable them to create unique and differentiated menu items. Our target customersinclude 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 meaningful customer concentration as our top ten customers accounted for less than 1.9% of totalnet sales for our 2018 fiscal year.7 Additionally, as a result of our acquisition of Allen Brothers in December 2013, we now also market certain of our center-of-the-plate proteins directly toconsumers 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 2015Texas Texas 2018We extend credit to virtually all of our non-direct-to-consumer customers on varying terms. Most of our customers have payment terms from 14-60 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 55,000 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.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 and8 ingredients, center-of-the-plate products and more traditional broadline staple food products provides our customers with foodservice distribution solutionsthat are efficient and cost effective.Our Sophisticated and Experienced Sales ProfessionalsWe employ a sophisticated and experienced sales force of approximately 530 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 our customers within a range of pricing options. The majority of our outside sales professionals are compensated on a commission basis,and their performance is measured primarily upon their gross profit dollars obtained. We have historically experienced low turnover among our seasonedsales 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 2,200 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 28 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 96% as of fiscal year ended December 28, 2018, which our management believes isamong the highest in the foodservice9 distribution industry. To achieve these high service levels, we have invested significantly in sophisticated warehousing, inventory control and distributionsystems, 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 two to three hour time window. For our direct-to-consumer business, we shipthrough nationally recognized couriers. We also use GPS and vehicle monitoring technology to regularly evaluate the condition of our delivery trucks andmonitor the performance of our drivers, by tracking their progress relative to their delivery schedule and providing information regarding hard braking, idlingand fast starts. Our use of this technology allows us to conduct proactive fleet maintenance, provide timely customer service and improve our riskmanagement.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 and efficient manner. Over recent years, we have made significantinvestments in distribution, sales, information and warehouse management systems and are in the process of implementing a fully-integrated ERP system. Oursystems improvements include the implementation of route optimization software, a warehouse management system at all specialty warehouses thatintegrates with pick-to-voice and directed put-away systems. We are driving increasing sales volume through our ecommerce platform and a new mobileordering tool which we believe will enable a much more seamless online customer experience. We also leverage a reporting and analytics platform thatprovides our sales team and management with the information required to drive efficiency and growth. We believe that our current systems are scalable andcan be leveraged together with targeted investments in new technology to provide the fuel to drive 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 28, 2018, we had 2,316 full-time employees, 188 of whom (approximately 8%) are currently represented by unions and operate undercollective bargaining agreements, which expire at various times between fiscal 2019 and 2020. We offer attractive compensation and benefit packages, andwe believe our relationship with our employees is satisfactory.10 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 certain chemicals presentin certain products that we distribute. Our Canadian warehouse, distribution facilities, repackaging activities and other operations also are subject toregulation 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.11 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 Investors section of our website (http://www.chefswarehouse.com) as soon as practicable after such material is electronically filed with, orfurnished 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 is publicly available on the Investor Relations section ofour 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 of Ethics or grant any waiver, including any implicitwaiver, from a provision of the Code of Ethics to our principal executive officer, principal financial officer, principal accounting officer or controller, orpersons performing similar functions, we intend to make any legally required disclosures regarding such amendments or waivers on the Investors section ofour website (http://www.chefswarehouse.com).The SEC also maintains an Internet website that contains reports, proxy and information statements and other information regarding issuers, including us,that file electronically with the SEC located at http://www.sec.gov.Executive OfficersName & Position Age Business ExperienceChristopher PappasPresident, Chief Executive Officer andChairman of the Board of Directors 59 Christopher Pappas is our founder and has served as our chief executive officer since 1985 and has beenour chairman since March 1, 2011. He has been our president since April 11, 2009 and before that was ourpresident from our formation to January 1, 2007. Prior to founding our company, Mr. Pappas playedbasketball professionally in Europe for several years following his graduation from Adelphi University in1981 with a Bachelor of Arts degree in Business Administration. Mr. Pappas currently oversees all of ourbusiness activities, with a focus on product procurement, sales, marketing and strategy development. Mr.Pappas's qualifications to serve on our board of directors include his extensive knowledge of our companyand the specialty food products distribution business and his years of leadership at the Company.12 John PappasVice Chairman and Director 55 John Pappas is a founder of our company and currently serves as our vice chairman, a position he has heldsince March 1, 2011. From our founding in 1985 to March 1, 2011, he served as our chief operating officer.He has 25 years of experience in logistics, facility management and global procurement and oversees ournetwork of distribution centers nationwide. Mr. Pappas is also active in the development of our corporatestrategy. Mr. Pappas's qualifications to serve on our board of directors include his extensive knowledge ofour company and the specialty food products distribution industry and his years of leadership at theCompany.James LeddyChief Financial Officer 55 James“Jim” Leddy is our chief financial officer and assistant secretary, positions he has held since hisappointment as of 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 previously served asinterim Chief Financial Officer at JetBlue Airways from November 2016 to February 2017 and served asSenior Vice President and Treasurer from 2012 to November 2016. Prior to joining JetBlue, Mr. Leddyserved as Senior Vice President, Treasury and Cash Management at NBCUniversal from 2008 until 2012,and as a Senior Technical Advisor at General Electric from 2003 until 2008. Previously, Mr. Leddy heldcorporate risk and treasury management positions at First Union National Bank and Dai-ichi Kangyo Bank.Mr. Leddy holds an M.B.A. in Finance and Management of Technology from the University of Connecticutand a B.A. in Economics from Fordham University.Alexandros AldousGeneral Counsel, Corporate Secretary& Chief Government Relations Officer 38 Alexandros Aldous is our General Counsel, Corporate Secretary & Chief Government Relations Officer,positions he has held since joining us in March 2011, our IPO on July 27, 2011, and March 8, 2017,respectively. Mr. Aldous's prior work experience includes working as an attorney with Barclays Capital, theinvestment banking division of Barclays Bank PLC, in London, where he focused primarily on mergers andacquisitions and capital markets, and prior to that, working as an attorney with Shearman & Sterling LLP, inNew York, where he focused primarily on mergers and acquisitions. Mr. Aldous is a member of theGovernment Relations Leadership Committee of the International Foodservice Distributors Association, amember of the Global Alumni Advisory Board of the American College of Greece, as well as a member ofthe Dean's Counsel of American University's School of International Service. Mr. Aldous earned a B.A. inClassics and Government from Colby College, a Juris Doctor and M.A. from American University and anLL.M. from the London School of Economics and Political Science. Mr. Aldous is licensed to practice lawin the State of New York, District of Columbia, and England and Wales.Timothy McCauleyChief Accounting Officer 54 Timothy McCauley has served as our chief accounting officer, since his appointment on February 16, 2018and previously served as our controller since joining the Company in May 2015. Mr. McCauley has over30 years of experience in accounting and finance roles across a variety of industries. Mr. McCauley’s priorwork experience includes serving as Vice President – Finance at MacDermid Inc., Corporate Controller atNorthern Tier Energy LP, Director of Financial Reporting and Investor Relations at Presstek, Inc. andFinance Director at Eastman Kodak Company. Prior to joining Eastman Kodak Company, Mr. McCauleyworked with PricewaterhouseCoopers for eleven years in their assurance and business advisory practice. Mr.McCauley holds a Bachelor of Science degree in Business - Accounting from the University of Connecticutand is a registered certified public accountant in the state of Connecticut.Patricia LecourasChief Human Resources Officer 63 Patricia Lecouras is our Chief Human Resources Officer. Ms. Lecouras was promoted to Chief HumanResources Officer on March 8, 2013. Ms. Lecouras joined our company from GE Capital CommercialFinance where she was vice president, human resources from 2001 to 2007. Prior to her time with GECapital Commercial Finance, Ms. Lecouras was with Nine West Shoes (f/k/a Fischer Camuto Corporation)and Xerox. Ms. Lecouras's professional experience is multi-disciplinary and includes prior experienceworking in finance and tax-related functions. She also has earned a six sigma master black belt certification.Ms. Lecouras holds a Bachelor of Arts degree in Psychology and Social Work from Skidmore College.13 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 which could adversely impact our business and 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.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 the14 operations of the acquired business are being integrated with our operations. Achieving the benefits of acquisitions depends on timely, efficient andsuccessful execution of a number of post-acquisition events, including successful integration of the acquired 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. We have an integration team which is dedicated to onboarding new acquisitions and integratinginformation technology systems as quickly and efficiently as possible. We believe that having a team dedicated to integration helps make sure the people,processes and products we add through acquisitions are consistent with our historical business and allows our management team to focus its attention on ourday-to-day operations. If the integration team does not improve our integration process, the integration of acquisitions could divert the attention ofmanagement, and any difficulties or problems encountered in the integration process could have a material adverse effect on our business, financial conditionor 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.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.15 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. Accordingly, if we are unable to obtain the specialtyfood products or meat, poultry or seafood that comprise a significant percentage of our product portfolio in a timely manner and in the quantities and at theprices we request as a result of any of the foregoing factors or otherwise, we may be unable to fulfill our obligations to customers who may, as a result of anysuch failure, resort to other distributors for their food product needs or change the types of products they buy from us to products that are less profitable for us.16 Our increased distribution of center-of-the-plate products, like meat, poultry and seafood involves increased exposure to price volatility experienced bythose products.With our acquisitions of Michael’s Finer Meats, LLC (“Michael’s”), Allen Brothers, Del Monte Capitol Meat Co. and related entities (“Del Monte”) and FellsPoint Wholesale Meats, Inc. (“Fells Point”), a larger percentage of our revenues is expected to come from center-of-the-plate products. With our increaseddistribution of center-of-the-plate products like meat, poultry and seafood, we are more susceptible to increases in the prices of those products, and we cannotassure investors in our common stock that all or part of any increased costs experienced by us from time to time can be passed along to consumers of ourproducts, in a timely manner or at all. Conversely, rapid downward pricing for these products, including as a result of restrictions on the exporting of U.S. beefproducts or lower demand internationally for U.S. beef products, may result in our lowering our prices to our customers even though our inventory on hand isat a higher cost. The supply and market price of our center-of the plate products are typically more volatile than most of our core specialty products and aredependent upon a variety of factors over which we have no control, including the relative cost of feed and energy, weather, livestock diseases, governmentregulation 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 category 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 to comply with existing or new laws and regulations could result in administrative penalties and injunctive relief, civilremedies, fines, interruption of operations, recalls of products or seizures of properties, potential criminal sanctions and personal injury or other damageclaims. These remedies, changes in the applicable laws and regulations or discovery of currently unknown conditions could increase costs, limit businessoperations and reduce profitability.17 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 center-of-the-plate protein items, arepriced on a cost plus a dollar markup, which helps mitigate the negative impact of deflation. If our product mix changes, we may face increased risks ofcompression of our margins, 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 to effectively price our specialty food products or center-of-the-plate products, to quickly respond to inflationary and deflationary costpressures and to reduce our 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 26.5% of our net sales in our 2018fiscal 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 acquisition of M.T. Food Service, Inc. (“MT Food”), we now havesignificant operations in Chicago, Illinois. Deterioration in the economic conditions of our key markets generally, or in the local economy of the New Yorkmetropolitan area, San Francisco Bay, Los Angeles, California, or Chicago, Illinois areas, specifically, could affect our business, financial condition or resultsof operations in a materially 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 suchevents across numerous locations. In some cases, these customers may not be able to re-open their restaurants, and consequently make payment to us forproducts previously provided, if the weather event or other catastrophic event is severe, particularly if they lacked sufficient insurance or their insuranceclaims are not processed quickly.18 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, like many of our independent restaurant and fine dining establishment customers, may be impacted moreseverely and more quickly than larger businesses. Consequently, the ability of such businesses to repay their obligations to us may deteriorate, and in somecases this deterioration may occur quickly, which could adversely impact our business, financial condition or results of operations.19 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, center-of-the-plate protein items or services that arecomparable or superior to those provided by us at prices that are lower than the prices we charge or adapt more quickly than we do to evolving culinarytrends or changing market requirements. It is also possible that alliances among competitors may develop and rapidly acquire significant market share.Accordingly, we cannot assure our investors that we will be able to compete effectively against current and future competitors, and increased competitionmay result in price reductions, reduced gross margins and loss of market share, any of which could have a material adverse effect on our business, financialcondition 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 28, 2018, we had approximately $284.1 million of total indebtedness. We had approximately$239.7 million of outstanding indebtedness under the Term Loan Facility and $44.2 million outstanding under the ABL Facility, each as described in“Management’s Discussion and Analysis of Financial Condition and Results of Operations”. In addition, at December 28, 2018, we had $0.2 millionoutstanding under capital leases and other financing agreements.20 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; 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, we would be indefault, which would permit the holders of our indebtedness to accelerate the maturity of the indebtedness and could cause defaults under any indebtednesswe may incur in the future. Any default under our indebtedness requiring the repayment of outstanding borrowings would have a material adverse effect onour business, financial condition and results of operations. If we are unable to refinance or repay our indebtedness as it becomes due, we may becomeinsolvent 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.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 disruptions21 in the capital and credit markets as a result of uncertainty, changing or increased regulation, reduced alternatives or failures of significant financialinstitutions could adversely affect our access to liquidity needed for our business. Any disruption could require us to take measures to conserve cash until themarkets stabilize or until alternative credit arrangements or other funding for our business can be arranged. Such measures could include deferring capitalexpenditures (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 center-of-the-plate category, we have aggressively invested in the development and implementation of new information technology. Wemay not be able to implement these technological changes in the time frame we have planned, and any delays in implementation could negatively impactour business, financial condition or results of operations. In addition, the costs to make these changes may exceed our estimates and will likely exceed anybenefits that we realize during the early stages of implementation. Even if we are able to implement the changes as planned, and within our cost estimates, wemay not be able achieve the expected efficiencies, cost savings and operational enhancements from these investments which could have an adverse effect onour 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 materially adverse manner. Any claims of intellectual propertyinfringement, even those without merit, could be expensive and time consuming to defend, require us to rebrand our services, if feasible, divert management’sattention and resources or require us to enter into royalty or licensing agreements in order to obtain the right to use a third party’s intellectual property. Anyroyalty or licensing agreements, if required, may not be available to us on acceptable terms or at all. A successful claim of infringement against us couldresult in our being required to pay significant damages, enter into costly license or royalty agreements, or stop the sale of certain products or services, any ofwhich could have a negative impact on our business, financial condition or results of operations and could harm our future prospects.22 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.We maintain a self-insured group medical program. The program contains individual stop loss thresholds of $175 thousand 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. We record a liability for medical claims during the period in which they occur, as well as an estimate of incurred but notreported claims. Management determines the adequacy of these accruals based on a monthly evaluation of our historical claims experience and medical costtrends. Projections of future loss expenses are inherently uncertain because of the random nature of insurance claims occurrences and could be significantlyaffected if future occurrences and claims differ from these assumptions and historical trends. If we suffer a substantial loss that is not covered by our self-insurance reserves, the loss and attendant expenses could harm our business and operating results.We are self-insured for workers’ compensation and automobile liability to deductibles or self-insured retentions of $500 thousand for workers compensationand $250 thousand for automobile liability per occurrence. The amounts in excess of our deductibles are fully insured by third party insurers. Liabilitiesassociated with this program are estimated in part by considering historical claims experience and cost trends. Projections of future loss expenses areinherently uncertain because of the random nature of insurance claims occurrences and could be significantly affected if future occurrences and claims differfrom 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 category) are, as a percentage of revenues,higher than other industries, we may be significantly harmed by labor cost increases.Our operations are dependent upon our experienced and sophisticated sales professionals, warehouse personnel and drivers, and, in our center-of-the platefacilities, on the experienced butchers we employ. Qualified individuals have historically been in short supply and an inability to attract and retain them maylimit our ability to expand our operations in existing markets, as well as our ability to penetrate new markets. We can make no assurances that we will be ableto attract and retain qualified individuals in the future. Additionally, the cost of attracting and retaining qualified individuals may be higher than wecurrently anticipate, and as a result, our profitability could decline. We are subject to the risk of employment-related litigation, which we believe increased asa result of our expansion in California resulting from the Del Monte acquisition and our large workforce in23 New York, at both the state and federal levels, including claims styled 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 insurable risks.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 28, 2018, we had 2,316 full-time employees, 188 of whom (approximately 8%) are represented by unions and are operating under collectivebargaining agreements which expire at various times between fiscal 2019 and 2020. We have in the past been the focus of union negotiating efforts, and it islikely that we will be the focus of similar efforts in the 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.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 greatly24 expands 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;•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; and25 •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 February 27, 2019, our executive officers, directors and their affiliates beneficially owned, in the aggregate, approximately 16.0% of our outstandingshares of common stock. In particular, Christopher Pappas, our president and chief executive officer, and John Pappas, our vice chairman, beneficially ownedapproximately 14.8% of our outstanding shares of common stock as of February 27, 2019. As a result of their significant individual ownership levels, thesestockholders will be able to exercise a significant level of control over all matters requiring stockholder approval, including the election of directors,amendment of our certificate of incorporation and approval of significant corporate transactions. This control could have the effect of delaying or preventinga change of control of our company or changes in management and will make the approval of certain transactions difficult or impossible without the supportof 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 five million 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.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:26 •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.Item 1B. UNRESOLVED STAFF COMMENTSNone.27 Item 2. PROPERTIESThe following table sets forth the location, purpose and approximate size of our distribution and corporate facilities as of February 27, 2019:Name/Location Owned/Leased Purpose Approximate Size (Sq. Feet)Bronx, NY Leased Distribution Center 231,100Chicago, IL Leased Distribution Center 127,300Carrollton, TX Leased Distribution Center 125,000Union City, CA Leased Distribution Center 117,400City of Industry, CA Leased Distribution Center 82,700Las Vegas, NV Leased Distribution Center 74,000Columbus, OH Leased Processing/Distribution 60,900Cincinnati, OH Owned Distribution Center 59,500Hanover, MD Leased Distribution Center 55,600Portland, OR Leased Distribution Center 55,500Mississauga, ON Leased Distribution Center 51,300Brisbane, CA Leased Processing/Distribution 50,000Baltimore, MD Leased Processing/Distribution 49,000Houston, TX Leased Distribution Center 40,500Downey, CA Subleased (1) Distribution Center 40,300Hayward, CA Subleased (1) Distribution Center 40,000Swedesboro, NJ Leased Distribution Center 38,400West Sacramento, CA Leased Processing/Distribution 37,900Ridgefield, CT Leased Headquarters 29,200Pembroke Park, FL Leased Distribution Center 27,000Richmond, BC Leased Distribution Center 24,900American Canyon, CA Leased Processing/Distribution 24,000San Francisco, CA Leased Processing/Distribution 23,700Marina, CA Leased Processing/Distribution 21,000San Antonio, TX Leased Distribution Center 19,000Tempe, AZ Leased Distribution Center 14,500Dallas, TX Leased Distribution Center 14,000West Sacramento, CA Leased Maintenance Building 12,000Edmonton, AB Leased Distribution Center 11,500Hanover, MD Leased Warehouse 10,700Kent, WA Leased Distribution Center 10,500Chicago, IL Owned Processing Facility 10,000Chicago, IL Leased Processing/Distribution 6,900Pembroke Park, FL Leased Warehouse 6,700Calgary, AB Leased Distribution Center 5,000Total Square Feet 1,607,000(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.28 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.29 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. As of February 27, 2019, there were 82 holders ofrecord 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 27, 2013 throughDecember 28, 2018 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 27, 2013 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.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 27, 2013 December 27,2013 December 26,2014 December 25,2015 December 30,2016 December 29,2017 December 28,2018The Chefs’ Warehouse, Inc. $100.00 $75.60 $59.61 $55.42 $70.35 $107.52NASDAQ Composite Index $100.00 $115.64 $121.46 $130.69 $166.08 $158.41S&P Smallcap Food Distributor Index $100.00 $99.24 $67.70 $106.42 $73.29 $46.5430 ISSUER 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 29, 2018 to October 26, 2018 — $— — —October 27, 2018 to November 23, 2018 1,014 36.36 — —November 24, 2018 to December 28, 2018 987 36.76 — —Total 2,001 $36.56 — —(1)During the thirteen weeks ended December 28, 2018, we withheld 2,001 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.31 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 28, 2018 have beenderived from our audited consolidated financial statements. The data set forth below is qualified by reference to, and should be read in conjunction with ourconsolidated financial statements and their notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” includedelsewhere in this Annual Report on Form 10-K. Our consolidated statement of operations for the year ended December 30, 2016 contained a 53rd week whileall 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 28, 2018 December 29, 2017 December 30,2016 December 25,2015 December 26, 2014Net sales $1,444,609 $1,301,520 $1,192,866 $1,046,878 $832,709Cost of sales 1,077,562 972,142 891,649 778,167 627,551 Gross profit 367,047 329,378 301,217 268,711 205,158Operating expenses (1) 318,289 288,251 253,978 228,311 172,148 Operating income 48,758 41,127 47,239 40,400 33,010Interest expense, net (2) 20,745 22,709 41,632 12,984 8,167Loss (gain) on asset disposal 169 10 (69) (295) (5) Income before income taxes 27,844 18,408 5,676 27,711 24,848Provision for income taxes (3) 7,442 4,042 2,653 11,502 10,633Net income $20,402 $14,366 $3,023 $16,209 $14,215 Basic net income per share $0.71 $0.55 $0.12 $0.63 $0.58Diluted net income per share $0.70 $0.54 $0.12 $0.63 $0.57Weighted average common sharesoutstanding: Basic 28,703 26,118 25,919 25,532 24,638Diluted 29,679 27,425 26,030 26,509 24,845 Balance Sheet Data (at end of period) Cash and cash equivalents $42,410 $41,504 $32,862 $2,454 $3,328Working capital $203,193 $188,567 $157,117 $125,371 $111,947Total assets $732,398 $687,749 $633,538 $579,803 $374,266Long-term debt, net of current portion $278,169 $313,995 $317,725 $267,349 $135,800Total liabilities $423,722 $439,148 $439,778 $391,839 $227,472Total stockholders’ equity $308,676 $248,601 $193,760 $187,964 $146,794(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”).Among other changes to the U.S. Internal Revenue Code, the Tax Act reduced the U.S. federal corporate top tax rate from 35.0% to 21.0%.32 Acquisitions Affecting Comparability of Operating ResultsThe Company has made several acquisitions throughout the five-year period ended December 28, 2018. For acquisitions affecting the comparability of mostrecent three fiscal years, refer to the “Significant Acquisitions” section of “Management’s Discussion and Analysis of Financial Condition and Results ofOperations” included elsewhere in this Annual Report on Form 10-K. Acquisitions affecting comparability of the previous periods are described below.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 supplied 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 at2.50% 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 center-of-the-plate category and thebusiness of any protein companies subsequently acquired by the Company over the six years following the closing. The fair value of the Del Montecontingent earn-out liability was zero as of December 28, 2018.33 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 55,000 SKUs, ranging fromhigh-quality specialty foods and ingredients to basic ingredients and staples and center-of-the-plate proteins. We serve more than 34,000 customer locations,primarily located in our sixteen geographic markets across the United States and Canada, and the majority of our customers are independent restaurants andfine dining 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 wholesale specialty distributors andhigh quality center-of-the-plate protein suppliers, manufacturers and distributors; the expansion of our existing distribution centers; our entry into newdistribution centers, including the construction of new distribution centers in Chicago, San Francisco, Toronto and, in 2019, Dallas; and the import and saleof our proprietary brands. Through these efforts, we believe that we have been able to expand our customer base, enhance and diversify our productselections, broaden our geographic penetration and increase our market share. We believe that as a result of these efforts, we have increased sales from $1.19billion in fiscal 2016 to $1.44 billion in fiscal 2018.Significant AcquisitionsOn August 25, 2017, we entered into an asset purchase agreement to acquire substantially all of the assets of Fells Point, a specialty protein manufacturer anddistributor based in the metro Baltimore and Washington DC area. The final purchase price for the transaction was approximately $34.1million, including $29.7 million paid in cash at closing, $3.3 million consisting of 185,442 shares of our common stock and $1.1 million paid uponsettlement of a net working capital true-up. We are also required to pay additional contingent consideration, if earned, in the form of an earn-out amountwhich could total approximately $12.0 million. The payment of the earn-out liability is subject to the successful achievement of annual Adjusted EBITDAtargets for the Fells Point business over a period of four years following closing. On October 2, 2018, the Company paid $3.0 million to the former owners ofFells Point related to their successful attainment of the targeted EBITDA in the first year of their earn-out agreement.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.Debt TransactionsOn 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 secured34 notes, term loan, and revolving credit facility. The refinancing met the requirements of a debt extinguishment for accounting purposes and the loss onextinguishment 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 April 26, 2017, our New Markets Tax Credit Loan (“NMTC Loan”) matured 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.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.On June 29, 2018, we entered into a credit agreement with a group of lenders to increase our asset based loan facility to $150.0 million, up from $75.0million. We incurred transaction costs of $0.9 million which were capitalized as deferred financing fees. On July 6, 2018, we drew $47.1 million on the assetbased loan facility and made an equivalent prepayment on our senior secured term loan.On November 16, 2018, we repriced our senior secured term loan from 400 basis points to 350 basis points over LIBOR. In connection with the repricing, wepaid debt financing costs of $0.6 million which were capitalized as deferred financing charges and we wrote off unamortized deferred financing fees of $1.1million.Conversion of Subordinated NotesOn April 6, 2015, the Del Monte Capitol Meat Company, LLC, a wholly owned subsidiary of the Company, issued $36.8 million principal amount ofconvertible subordinated notes with a six-year maturity bearing interest at 2.5% and a conversion price of $29.70 per share to certain of the Del Monteentities as partial consideration in the Del Monte acquisition. On July 25, 2018, the holders converted these notes and related accrued interest of $0.3million into 1,246,272 shares of the Company’s common stock.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 1.6 million square feet in 28 distribution facilities at December 28, 2018. Fromfiscal 2016 through the end of fiscal 2018, 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 who35 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 center-of-the-plate protein items, are priced on a “cost plus”markup, which helps 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.•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).•Interest expense. Interest expense consists primarily of interest on our outstanding indebtedness and, as applicable, the amortization or write-off ofdeferred financing fees.36 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 28, 2018 December 29, 2017 December 30, 2016Net sales 100.0% 100.0% 100.0%Cost of sales 74.6% 74.7% 74.7%Gross profit 25.4% 25.3% 25.3%Operating expenses 22.0% 22.1% 21.3%Operating income 3.4% 3.2% 4.0%Interest and other expense 1.4% 1.7% 3.5%Income before income taxes 1.9% 1.4% 0.5%Provision for income taxes 0.5% 0.3% 0.2%Net income 1.4% 1.1% 0.3%Fiscal Year Ended December 28, 2018 compared to Fiscal Year Ended December 29, 2017Net SalesNet sales for the fifty-two weeks ended December 28, 2018 increased approximately 11.0% to $1.44 billion from $1.30 billion for the fifty-two weeks endedDecember 29, 2017. Organic growth contributed $62.2 million, or 4.8% to sales growth in the year. The remaining sales growth of $80.9 million, or 6.2%resulted from acquisitions. Organic case count grew approximately 6.2% in our specialty category. In addition, growth in specialty unique customers andplacements grew 5.1% and 4.2%, respectively, compared to the prior year. Pounds sold in our center-of-the-plate category increased 2.6% compared to theprior year. Estimated inflation was 1.9% in our specialty category and estimated deflation was 0.7% in our center-of-the-plate category compared to the prioryear period. Gross ProfitGross profit increased approximately 11.4% to $367.0 million for the fifty-two weeks ended December 28, 2018 from $329.4 million for the fifty-two weeksended December 29, 2017 primarily due to the increased sales volumes discussed above. Gross profit margin increased approximately 10 basis points to25.4% in fiscal 2018 from 25.3% in fiscal 2017. This increase in gross profit margin related to the approximately 71 basis points increase in the Company’scenter-of-the plate category margin, partially offset by an approximate 50 basis points decrease in the Company’s specialty category margin compared tomargins in the fifty-two weeks ended December 29, 2017.Operating ExpensesTotal operating expenses increased by approximately 10.4% to $318.3 million for the fifty-two weeks ended December 28, 2018 from $288.3 million for thefifty-two weeks ended December 29, 2017. As a percentage of net sales, operating expenses decreased 11 basis points to 22.0% for fiscal 2018 from 22.1% forfiscal 2017. The increase in operating expenses relates primarily to the increased sales volumes and includes a $1.4 million non-cash charge for the change inthe fair value of the Company’s earn-out liabilities. The decrease in our operating expense as a percentage of sales is attributable to our continuing operatingexpense leverage, partially offset by the impact of changes in the fair value of the Company’s earn-out liabilities which were $1.4 million in fiscal 2018versus a credit of $0.6 million in fiscal 2017.Operating IncomeOperating income increased approximately 18.6% to $48.8 million for the fifty-two weeks ended December 28, 2018 compared to $41.1 million for the fifty-two weeks ended December 29, 2017. The increase in operating income was driven primarily by higher higher gross profit, as discussed above, offset in partby increased operating expenses. As a percentage of net sales, operating income was 3.4% in fiscal 2018 compared to 3.2% in fiscal 2017. The increase inoperating income as a percentage37 of sales was driven primarily by the 10 basis point increase gross profit margin and the 11 basis point decrease in operating expenses discussed above.Interest and Other ExpenseInterest and other expense decreased $1.8 million to $20.9 million for the fiscal year ended December 28, 2018, from $22.7 million for the fiscal year endedDecember 29, 2017. This decrease was primarily due to lower effective interest rates charged on the Company’s outstanding debt and the conversion of theconvertible subordinated notes on July 25, 2018, partially offset by a $1.1 million write off of deferred financing fees in fiscal 2018.Provision for Income TaxesOur effective income tax rate was 26.7% and 22.0% for the fiscal years ended December 28, 2018 and December 29, 2017, respectively. The lower effectivetax rate in fiscal 2017 is due primarily to the impacts of the Tax Act which created a one-time income tax benefit of $3.6 million from the remeasurement ofthe Company’s deferred tax assets and liabilities in the fourth quarter of fiscal 2017. Among other changes to the U.S. Internal Revenue Code, the Tax Actreduced the U.S. federal corporate top tax rate from 35.0% to 21.0%. Net IncomeReflecting the factors described in more detail above, net income increased $6.0 million to $20.4 million for the fiscal year ended December 28, 2018,compared to $14.4 million for the fiscal year ended December 29, 2017.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 pointsto 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 theCompany’s specialty category margin, partially offset by an approximate 41 basis points decrease in the center-of-the plate category margin compared tomargins in the fifty-three weeks 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 forthe fifty-three weeks ended December 30, 2016. As a percentage of net sales, operating expenses increased 80 basis points to 22.1% forfiscal 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 reductionof 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 38 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% infiscal 2017 compared to 4.0% in fiscal 2016. The decrease in operating income as a percentage of sales was driven primarily by the increase in operatingexpenses discussed above.Interest and Other ExpenseInterest and 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 yearended December 30, 2016. This decrease was primarily due to the prior year $22.3 million debt extinguishment loss associated with the Company’s debtrefinancing in 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.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.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”). On June 27, 2016, theCompany drew $14.0 million from the DDTL to help pay fund the acquisition of M.T. Food Service, Inc. On September 14, 2016, the Company entered intoan amendment 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 $25.0 million of the outstanding balance of the Term Loans. Additionally, the Term Loan Facility includes an accordionwhich permits the Company to request that the lenders extend additional Term Loans in an aggregate principal amount of up to $50.0 million (less theaggregate amount of certain indebtedness incurred to finance acquisitions) plus an unlimited amount subject to the Company’s consolidated Total LeverageRatio 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 wellas the prior term loan and revolving credit facility. Remaining funds will be used for capital expenditures, permitted acquisitions, working capital andgeneral corporate purposes of the Company.On December 13, 2017, the Company completed a repricing of the Term Loan Facility to reduce the Applicable Rate (as defined in the Term Loan CreditAgreement) from 475 basis points to 400 basis points over LIBOR. In connection with the repricing, the Company paid debt financing costs of $0.8 millionwhich were capitalized as deferred financing charges. On July 6, 2018, the Company made a $47.1 million prepayment and is no longer required to makequarterly amortization payments on the Term Loan Facility. On November 16, 2018, the Company completed a repricing of the Term Loan Facility to reducethe Applicable Rate from 400 basis points to 350 basis points over LIBOR. In connection with the repricing, the Company paid debt financing costs of $0.6million which were capitalized as deferred financing charges. The Company wrote off unamortized deferred financing fees of $1.1 million as a result of thisrepricing.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 the39 Company, in each case plus an applicable margin percentage. The interest rate on this facility at December 28, 2018 was 5.8% and the final maturity of theTerm Loan Facility is June 22, 2022.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 28, 2018, the Companywas in compliance with all debt covenants under the Term Loan Facility.Asset Based Loan FacilityOn June 29, 2018, the Company entered into a credit agreement (the “ABL Credit Agreement”) with a group of lenders for which BMO Harris Bank, N.A. actsas administrative agent. The ABL Credit Agreement replaces the Company’s prior asset based loan facility (the “Prior ABL”). The ABL Credit Agreementprovides for an asset based loan facility (the “ABL Facility”) in the aggregate amount of up to $150.0 million, up from $75.0 million under the Prior ABL.Availability under the ABL Facility will be limited to a borrowing base equal to the lesser of: (i) the aggregate amount of commitments or (ii) the sum ofspecified percentages of eligible receivables and eligible inventory, minus certain availability reserves. The co-borrowers under the ABL Facility are entitledon one or more occasions, subject to the satisfaction of certain conditions, to request an increase in the commitments under the ABL Facility in an aggregateprincipal amount of up to $25.0 million. The ABL Facility matures on the earlier of June 29, 2023 and 90 days prior to the maturity date of the Company’sTerm Loan Facility.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 particularlydescribed in the ABL Credit Agreement. The ABL Facility will require compliance with a minimum consolidated fixed charge coverage ratio of 1:1 if theamount of availability under the ABL Facility falls below the greater of $10.0 million or 10% of the borrowing base. Borrowings under the ABL Facility willbe used, and are expected to be used, for capital expenditures, permitted acquisitions, working capital and general corporate purposes of the Company.On July 6, 2018, the Company borrowed $47.1 million under the ABL Facility and made an equivalent prepayment on its senior secured term loan. There was$44.2 million outstanding under the ABL Facility as of December 28, 2018, bearing an interest rate of 3.7%.As of December 28, 2018, the Company was in compliance with all debt covenants and the Company had reserved $15.8 million of the ABL Facility for theissuance of letters of credit. As of December 28, 2018, funds totaling $90.0 million were available for borrowing under the ABL Facility.Convertible Subordinated Notes On April 6, 2015, Del Monte Capitol Meat Company, LLC, a wholly-owned subsidiary of the Company issued $36.8 million principal amount of convertiblesubordinated notes with a six-year maturity bearing interest at 2.5% and a conversion price of $29.70 per share to certain of the Del Monte entities as partialconsideration in the Del Monte acquisition. On July 25, 2018, the holders converted these notes and related accrued interest of $0.3million into 1,246,272 shares of the Company’s common stock.LiquidityOur capital expenditures, excluding cash paid for acquisitions, were approximately $19.8 million for fiscal 2018. We believe our capital expenditures,excluding cash paid for acquisitions, for fiscal 2019 will be approximately $24.0 million to $26.0 million. The increase in projected capital expenditures infiscal 2019 as compared to fiscal 2018 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.40 Cash FlowsNet cash provided by operations was $45.1 million for fiscal 2018, a increase of $13.6 million from the $31.5 million provided by operations for fiscal 2017.The primary reasons for the increase in net cash provided by operations were increased cash generated through net income from operations, partially offset byincreased cash used in working capital changes. During fiscal 2018, cash generated through net income increased by $15.5 million. The primary cause forthe increase was an increase in operating income and a decrease in interest expense. The decrease in cash provided by changes in working capital wasprimarily due to decreases in cash provided by accounts receivable and prepaid expenses and other current assets of $5.9 million and $4.6 million,respectively, partially offset by increases in cash provided by inventory and accounts payable of $5.5 million and $3.3 million, respectively.Net 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 usedfor inventory changes of $18.8 million and accounts receivable changes of $11.1 million, offset by an increase in cash provided by prepaid expenses andother current assets changes of $11.9 million (exclusive of the tax impact of the loss on debt extinguishment, a financing activity ) and an increase incash provided by accounts payable changes of $11.3 million.Net cash used in investing activities was $33.7 million for fiscal 2018, a decrease of $8.7 million from the net cash used in investing activities of $42.4million for fiscal 2017. The decrease in net cash used was primarily due to less cash paid for acquisitions, partially offset by higher capital expendituresrelated to the implementation of the Company’s Enterprise Resource Planning system and buildout of distribution centers in Portland, OR, Dallas, TX andToronto, Canada.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 financing activities was $10.4 million in fiscal 2018, a decrease of $29.9 million from the $19.4 million provided by financing activities infiscal 2017. This decrease was mainly due to net proceeds of $34.0 million from our equity offering in December 2017, partially offset by lower debtprincipal payments due to the repayment of the NMTC Loan in the second quarter of 2017.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.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 by ourdirect-to-consumer business in the fourth quarter of our fiscal year. Despite a significant portion of these sales occurring in the fourth quarter, there areoperating expenses, principally advertising and promotional expenses, throughout the year.41 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 28, 2018: Payments Due by Period (1) Total Less than OneYear 1-3Years 4-5Years Thereafter (In thousands)Inventory purchase commitments $40,957 $40,957 $— $— $—Indebtedness $283,930 $— $— $283,930 $—Capital lease and other financing obligations $243 $82 $116 $45 $—Pension exit liabilities $2,308 $139 $308 $351 $1,510Long-term operating leases $147,675 $24,666 $42,965 $32,714 $47,330 Total $475,113 $65,844 $43,389 $317,040 $48,840(1)Interest on our various outstanding debt instruments is included in the above table, except for our Term Loan Facility and ABL Facility, which havevariable interest rates. At December 28, 2018, we had borrowings of $239.7 million under our Term Loan Facility and $44.2 million under our ABLFacility. During the fiscal year ended December 28, 2018, the weighted average interest rate on our Term Loan Facility was 5.9% and we incurredinterest expense of $15.9 million. During the fiscal year ended December 28, 2018, the weighted average interest rate on our ABL Facility was 3.5%and we incurred interest expense of $0.8 million. 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 $15.8 million and $10.2 million at December 28, 2018 and December 29, 2017, respectively.Substantially all of our assets are pledged as collateral to secure our borrowings under our credit facilities.Off-Balance Sheet ArrangementsAs of December 28, 2018, 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 inventory balance adjustments for excess and obsolete inventory, (iii) valuing goodwill and intangible assets, (iv)vendor rebates and other promotional incentives, (v) self-insurance reserves, and (vi) accounting for income taxes and (vii) contingent earn-out liabilities. Forall financial statement periods presented, there have been no material modifications to the application of these critical accounting policies.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 cancelled42 orders. We also estimate receivables that will ultimately be uncollectible based upon historical write-off experience. Our estimate could require change basedon changing circumstances, including changes in the economy or in the particular circumstances of individual customers. Accordingly, we may be requiredto increase or decrease our allowance. Our accounts receivable balance was $161.8 million and $142.2 million, net of the allowance for doubtful accounts of$7.5 million and $8.0 million, as of December 28, 2018 and December 29, 2017, respectively.Inventory ValuationWe adjust our inventory balances for excess and obsolete inventories. These adjustments are primarily based upon inventory age, specifically identifiedinventory items and overall economic conditions. A sudden and unexpected change in consumer preferences or change in overall economic conditions couldresult in a significant change to these adjustments that could require a corresponding charge to earnings. We actively manage our inventory levels as we seekto minimize 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. In the fourth quarter of 2018, we reevaluated our operating segments to align with how our chiefoperating decision maker evaluates performance and allocates resources. This analysis resulted in a change from two reporting units, Protein and Specialty,to three reporting units, East Coast, Midwest and West Coast.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 three reporting units, East Coast, Midwest and WestCoast.We test for goodwill impairment at the reporting unit level based on a discounted cash flow approach. The quantitative analysis consists of a comparison ofthe carrying value of 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.We performed a qualitative impairment test on the Protein and Specialty reporting units immediately preceding the change in reporting units and concludedthere was no impairment. As of December 28, 2018, our annual assessment indicated that no impairment of goodwill existed, as the fair value of eachreporting unit exceeded its carrying value. Total goodwill as of December 28, 2018 and December 29, 2017 was $184.3 million and $173.2 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 2018 or 2017 indicating that the carrying value of our finite-livedintangible assets are not recoverable. Total finite-lived intangible assets as of December 28, 2018 and December 29, 2017 were $130.0 million and $140.3million, 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 Accounting Standards Codification Subtopic 705-20 “Costs of Sales and Services—Accounting for Consideration Received from a Vendor” and generally record consideration received under these incentives as a reduction of cost of sales;however, in certain circumstances, we record marketing-related consideration as a reduction of marketing costs incurred. We may receive consideration in theform of cash and/or invoice deductions.43 We record consideration that we receive for volume and growth rebates and annual incentives as a reduction of cost of sales. We systematically and rationallyallocate the consideration for those incentives to each of the underlying transactions that results in progress by us toward earning the incentives. If theincentives 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 sales.Self-Insurance ReservesWe maintain a self-insured group medical program. The program contains individual stop loss thresholds of $175 thousand 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.We are self-insured for workers’ compensation and automobile liability to deductibles or self-insured retentions of $500 thousand for workers’ compensationand $250 thousand for automobile liability per occurrence. The amounts in excess of our deductibles are fully insured by third party insurers. Liabilitiesassociated with this program are estimated in part by considering historical claims experience and cost trends. Projections of future loss expenses areinherently uncertain because of the random nature of insurance claims occurrences and could be significantly affected if future occurrences and claims differfrom 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.44 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 29, 2018, 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 28, 2018, we had an aggregate $283.9 million of indebtedness outstanding under the ABL Credit Facility and Term Loan Facility that boreinterest at variable rates. A 100 basis point increase in market interest rates would decrease our after tax earnings by approximately $2.1 million per annum,holding other variables constant.45 Item 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAIndex to the Consolidated Financial StatementsPage Report of Independent Registered Public Accounting Firm 47 Consolidated Balance Sheets at December 28, 2018 and December 29, 2017 48 Consolidated Statements of Operations and Comprehensive Income for the Fiscal Years Ended December 28, 2018, December 29, 2017 andDecember 30, 2016 49 Consolidated Statements of Changes in Stockholders’ Equity for the Fiscal Years Ended December 28, 2018, December 29, 2017 and December30, 2016 50 Consolidated Statements of Cash Flows for the Fiscal Years Ended December 28, 2018, December 29, 2017 and December 30, 2016 51 Notes to Consolidated Financial Statements 5246 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 28, 2018and December 29, 2017, the related consolidated statements of operations and comprehensive income, stockholders’ equity, and cash flows for each of thethree years in the period ended December 28, 2018, 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 28, 2018 and December 29, 2017, and the results of their operations and theircash flows for each of the three years in the period ended December 28, 2018, 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 28, 2018 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 1, 2019 expressed an unqualified opinionthereon.Change in Accounting PrincipleAs discussed in Note 1 to the financial statements, on December 30, 2017 the entity adopted new accounting guidance related to revenue from contracts withcustomers. Our opinion is not modified with respect to this matter.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 1, 201947 THE CHEFS’ WAREHOUSE, INC.CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except share data) December 28, 2018 December 29, 2017ASSETS Current assets: Cash and cash equivalents$42,410 $41,504Accounts receivable, net of allowance of $7,460 in 2018 and $8,026 in 2017161,758 142,170Inventories, net112,614 102,083Prepaid expenses and other current assets11,953 11,083Total current assets328,735 296,840 Equipment and leasehold improvements, net72,807 68,378Software costs, net12,469 6,034Goodwill184,280 173,202Intangible assets, net130,033 140,320Other assets4,074 2,975Total assets$732,398 $687,749 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable$87,799 $70,019Accrued liabilities24,810 21,871Accrued compensation12,872 12,556Current portion of long-term debt61 3,827Total current liabilities125,542 108,273 Long-term debt, net of current portion278,169 313,995Deferred taxes, net9,601 6,015Other liabilities and deferred credits10,410 10,865Total liabilities423,722 439,148 Commitments and contingencies Stockholders’ equity: Preferred Stock - $0.01 par value, 5,000,000 shares authorized, no shares issued and outstanding at December 28,2018 and December 29, 2017— —Common Stock - $0.01 par value, 100,000,000 shares authorized, 29,968,483 and 28,442,208 shares issued andoutstanding at December 28, 2018 and December 29, 2017, respectively300 284Additional paid in capital207,326 166,997Accumulated other comprehensive loss(2,221) (1,549)Retained earnings103,271 82,869Total stockholders’ equity308,676 248,601Total liabilities and stockholders’ equity$732,398 $687,749 See accompanying notes to the consolidated financial statements.48 THE CHEFS’ WAREHOUSE, INC.CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME(Amounts in thousands, except share and per share amounts) Fiscal Years Ended December 28, 2018 December 29, 2017 December 30, 2016Net sales$1,444,609 $1,301,520 $1,192,866Cost of sales1,077,562 972,142 891,649Gross profit367,047 329,378 301,217Operating expenses318,289 288,251 253,978Operating income48,758 41,127 47,239Interest expense20,745 22,709 41,632Loss (gain) on asset disposal169 10 (69)Income before income taxes27,844 18,408 5,676Provision for income taxes7,442 4,042 2,653Net income$20,402 $14,366 $3,023Other comprehensive income: Foreign currency translation adjustments(672) 637 763Comprehensive income$19,730 $15,003 $3,786Net income per share: Basic$0.71 $0.55 $0.12Diluted$0.70 $0.54 $0.12Weighted average common shares outstanding: Basic28,703,265 26,118,482 25,919,480Diluted29,678,919 27,424,526 26,029,609 See accompanying notes to the consolidated financial statements.49 THE CHEFS’ WAREHOUSE, INC.CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITYFor the Fiscal Years Ended December 28, 2018, December 29, 2017, and December 30, 2016(Amounts in thousands, except share amounts) Common Stock Shares Amount AdditionalPaid inCapital AccumulatedOtherComprehensiveLoss RetainedEarnings TotalBalance 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 — — 3,018Shares issued for Fells Pointacquisition185,442 2 3,298 — — 3,300Public offering of common stock1,900,000 19 34,001 — — 34,020Cumulative 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 $248,601Net income— — — — 20,402 20,402Stock compensation310,451 3 4,091 — — 4,094Conversion of subordinated notes1,246,272 13 37,002 — — 37,015Cumulative translation adjustment— — — (672) — (672)Shares surrendered to pay withholdingtaxes(30,448) — (764) — — (764)Balance December 28, 201829,968,483 $300 $207,326 $(2,221) $103,271 $308,676 See accompanying notes to the consolidated financial statements.50 THE CHEFS’ WAREHOUSE, INC.CONSOLIDATED STATEMENTS OF CASH FLOWSFor the Years Ended December 28, 2018, December 29, 2017, and December 30, 2016(Amounts in thousands) December 28, 2018 December 29, 2017 December 30, 2016Cash flows from operating activities: Net income$20,402 $14,366 $3,023Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization10,296 8,516 7,082Amortization of intangible assets11,910 12,033 11,433Provision for allowance for doubtful accounts3,790 4,061 3,224Deferred rent770 285 1,568Deferred taxes2,554 (703) 2,991Amortization of deferred financing fees3,155 2,084 1,807Loss on debt extinguishment— — 22,310Stock compensation4,094 3,018 2,579Change in fair value of earn-outs1,448 (579) (10,031)Loss (gain) on asset disposal169 10 (69)Changes in assets and liabilities, net of acquisitions: Accounts receivable(19,466) (13,611) (2,503)Inventories(6,330) (11,783) 7,038Prepaid expenses and other current assets120 4,762 (7,168)Accounts payable and accrued liabilities13,677 10,406 (941)Other liabilities(911) (1,130) (2,314)Other assets(596) (238) (1,115)Net cash provided by operating activities45,082 31,497 38,914 Cash flows from investing activities: Capital expenditures(19,817) (12,311) (16,623)Cash paid for acquisitions, net of cash received(13,901) (30,095) (19,742)Proceeds from asset disposals30 — 550Net cash used in investing activities(33,688) (42,406) (35,815) Cash flows from financing activities: Proceeds from the issuance of common stock, net of issuance costs— 34,020 —Proceeds from senior secured notes— — 315,810Payment of debt, capital lease and other financing obligations(49,360) (12,830) (158,880)Payment for debt extinguishment— — (21,219)Borrowings under asset based loan facility47,100 24,000 33,200Payments under asset based loan facility(2,916) (24,000) (126,582)Payment of deferred financing fees(1,502) (761) (7,782)Cash paid for contingent earn-out obligation(3,000) (500) (6,743)Surrender of shares to pay withholding taxes(764) (500) (569)Net cash (used in ) provided by financing activities(10,442) 19,429 27,235 Effect of foreign currency on cash and cash equivalents(46) 122 74Net change in cash and cash equivalents906 8,642 30,408Cash and cash equivalents at beginning of year41,504 32,862 2,454Cash and cash equivalents at end of year$42,410 $41,504 $32,862See accompanying notes to the consolidated financial statements.51 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 in the United States. The Company’s customer base consists primarily of menu-driven independent restaurants, fine diningestablishments, country clubs, hotels, caterers, culinary schools, bakeries, patisseries, chocolatiers, cruise lines, casinos and specialty food 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 Fiscal 2018Clarifying 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 Company adopted this guidance as of December 30, 2017.Revenue 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. The Company adopted this guidanceas of December 30, 2017 using the modified retrospective approach. Under this approach, prior financial statements are not restated and a cumulative effectadjustment is recognized upon adoption. The cumulative effect adjustment was immaterial to the Company’s financial statements. In addition, the Companymade an accounting policy election to adopt the permitted practical expedient that allows an entity to expense the incremental costs of acquiring a contractas incurred if the amortization period is one year or less.Guidance Not Yet AdoptedMeasurement of Credit Losses on Financial Instruments: In June 2016 and as further amended in November 2018, the FASB issued guidance which requiresentities to use a forward looking expected loss model to estimate credit losses. It also requires additional disclosure related to credit quality of trade and otherreceivables, including information related to management’s estimate of credit allowances. The guidance is effective for fiscal years beginning after December15, 2019. The Company expects to adopt this guidance when effective and adoption is not expected to have a material effect on the Company’s consolidatedfinancial statements.Implementation Costs Incurred in a Cloud Computing Arrangement Service Contract: In August 2018, the FASB issued guidance that aligns therequirements for capitalizing implementation costs incurred in a cloud computing arrangement service contract with the requirements for capitalizingimplementation costs incurred to obtain or develop internal-use software. The guidance is effective for fiscal years beginning after December 15, 2019. Earlyadoption is permitted. The Company adopted this guidance prospectively on December 29, 2018 and adoption did not have a material impact on theCompany’s consolidated financial statements.Comprehensive Income: In February 2018, the FASB issued guidance that permits an entity to reclassify the stranded tax effects in accumulated othercomprehensive income resulting from the enactment of H.R. 1, originally known as the Tax Cuts and Jobs Act (the “Tax Act”), to retained earnings. Theguidance also requires companies to disclose the accounting policy for52 releasing disproportionate tax effects from accumulated other comprehensive income. The guidance is effective for fiscal years beginning after December 15,2018. Early adoption is permitted. The Company adopted this guidance on December 29, 2018 and adoption did not have a material impact on theCompany’s consolidated financial statements.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. The Company implemented a software platform to facilitate compliance with the newstandard and updated related business processes and controls. This new guidance is effective for fiscal years beginning after December 15, 2018. Earlyadoption is permitted. In July 2018, the FASB issued new guidance that provided for a new optional transition method that allows entities to initially applythe new lease standard at the adoption date and recognize a cumulative-effect adjustment to opening retained earnings. Under this approach, comparativeperiods are not restated. The Company adopted this guidance on December 29, 2018, using the optional transition method. Upon adoption, the Companyexpects to recognize operating lease liabilities of approximately $120,000 to $130,000 based on the present value of lease payments of the Company’soperating lease portfolio as of the adoption date. The discount rate used is based on the Company’s incremental borrowing rate as the Company does nothave the necessary information to determine the rate implicit in each lease. The Company’s capital leases will be accounted for as finance leases uponadoption and the Company does not expect any significant changes to the accounting of such leases. Adoption is not expected to have a material impact onthe Company’s consolidated statements of operations or debt covenants.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.Note 2 – Summary of Significant Accounting Policies Revenue Recognition Revenues from product sales are recognized at the point at which control of each product is transferred to the customer. The Company’s contracts containperformance obligations which are satisfied when customers have physical possession of each product. The majority of customer orders are fulfilled within aday and customer payment terms are typically 20 to 60 days from delivery. Shipping and handling activities are costs to fulfill the Company’s performanceobligations. These costs are expensed as incurred and presented within operating expenses on the consolidated statements of operations. The Company offerscertain sales incentives to customers in the form of rebates or discounts. These sales incentives are accounted as variable consideration. The Companyestimates these amounts based on the expected amount to be provided to customers and records a corresponding reduction in revenue. The Company doesnot expect a significant reversal in the amount of cumulative revenue recognized. Sales tax billed to customers is not included in revenue but rather recordedas a liability owed to the respective taxing authorities at the time the sale is recognized.The following table presents the Company’s net sales disaggregated by principal product category: December 28, 2018 December 29, 2017 December 30, 2016Center-of-the-Plate$629,038 43.5% $580,025 44.6% $540,550 45.3%Dry Goods253,176 17.5% 224,323 17.2% 202,225 17.0%Pastry199,990 13.8% 176,672 13.6% 162,059 13.6%Cheeses and Charcuterie151,640 10.5% 133,024 10.2% 129,980 10.9%Dairy and Eggs106,768 7.4% 90,613 7.0% 73,500 6.2%Oils and Vinegars76,313 5.3% 71,962 5.5% 64,574 5.4%Kitchen Supplies27,684 2.0% 24,901 1.9% 19,978 1.6%Total$1,444,609 100% $1,301,520 100% $1,192,866 100%53 The Company determines its product category classification based on how the Company currently markets its products to its customers. The Company’sdefinition of its principal product categories may differ from the way in which other companies present similar information.Deferred RevenueCertain customer arrangements in the Company’s direct-to-consumer business, prepaid gift plans and gift card purchases, result in deferred revenues whencash payments are received in advance of performance. The Company recognizes revenue on its prepaid gift plans when control of each product is transferredto the customer. Performance obligations under the Company’s prepaid gift plans are satisfied within a period of twelve months or less. Gift cards issued bythe Company do not have expiration dates. The Company records a liability for unredeemed gift cards at the time gift cards are sold and the liability isreduced when the card is redeemed, the value of the card is escheated to the appropriate government agency, or through breakage. Gift card breakage isestimated based on the Company’s historical redemption experience and expected trends in redemption patterns. Amounts recognized through breakagerepresent the portion of the gift card liability that is not subject to unclaimed property laws and for which the likelihood of redemption is remote. Thecompany recorded deferred revenues, reflected as accrued liabilities on the Company’s consolidated balance sheets, of $1,496 and $1,283 as of December 28,2018 and December 29, 2017, respectively.Right of ReturnThe Company’s standard terms and conditions provide customers with a right of return if the goods received are not merchantable. Customers are eitherissued a replacement order at no cost, or are issued a credit for the returned goods. The Company recorded a refund liability of $303 as of December 28, 2018.Refund liabilities are reflected as accrued liabilities on the consolidated balance sheets. The Company recognized a corresponding asset of $191 asof December 28, 2018 for its right to recover products from customers on settling its refund liabilities. This asset is reflected as inventories, net on theconsolidated balance sheets.Contract CostsSales commissions are expensed when incurred because the amortization period is one year or less. These costs are presented within operating expenses onthe Company’s consolidated statements of operations. 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 $79,143, $70,108 and $62,062 for fiscal 2018, 2017 and 2016,respectively. Protein processing costs included in operating expenses were $13,086, $13,058 and $12,273 for fiscal 2018, 2017 and 2016, 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.54 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 adjustsinventory balances for excess and obsolete inventories to approximate their net realizable value. Vendor Rebates and Other Promotional 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 28, 2018, December 29, 2017 and December 30, 2016, the recorded purchase incentivestotaled approximately $19,731, $17,265 and $13,670, 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, in certaininstances, 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-use software are capitalized only to the extent that they allow the software to perform a task that it previously did not perform. Internal use software isamortized on a straight-line basis over a three to seven year period. Capitalized costs include direct acquisitions as well as software and software developmentacquired under capitalized leases and internal labor where appropriate. Capitalized software purchases and related development costs, net of accumulatedamortization, were $12,469 at December 28, 2018 and $6,034 at December 29, 2017. 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 2018, 2017 or 2016. Debt Issuance Costs Certain up-front costs associated with the Company’s asset based loan facility are capitalized and included in other non-current assets in the consolidatedbalance sheets. The Company had $1,765 and $1,284 of such unamortized costs as of December 28, 2018 and December 29, 2017, respectively. Costsassociated with the issuance of other debt instruments are capitalized and55 presented as a direct deduction from the carrying amount of the underlying debt liability. The Company had $5,893 and $8,027 of such unamortized costs asof December 28, 2018 and December 29, 2017, respectively. These costs are amortized over the terms of the related debt instruments by the effective interestrate method. Amortization of debt issuance costs was $3,155, inclusive of a $1,081 write-off of unamortized deferred financing fees as a result of theCompany’s debt repricing, more fully described in Note 9 “Debt Obligations,” for the fiscal year ended December 28, 2018, $2,084 for the fiscal year endedDecember 29, 2017 and $1,807 for the fiscal year ended December 30, 2016. 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 2018, 2017 or 2016 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.” In the fourth quarter of 2018, the Company reevaluated its operating segments to align with how the Company’s chief operatingdecision maker evaluates performance and allocates resources. This analysis resulted in a change from two reporting units, Protein and Specialty,to three reporting units, East Coast, Midwest and West Coast. The Company performed a qualitative impairment test on the Protein and Specialty reportingunits immediately preceding the change in reporting units and concluded there was no impairment. For the fiscal years ended December 28, 2018 andDecember 29, 2017, the Company tested goodwill for impairment using a quantitative analysis. The quantitative analysis consists of a comparison of thecarrying value of the Company’s reporting units, including goodwill, to the estimated fair value of the reporting units that was determined using a discountedcash flow methodology. A goodwill impairment loss, if any, would be recognized for the amount by which the reporting unit’s carrying value exceeded itsfair value. There have been no events or changes in circumstances during fiscal 2018, 2017 or 2016 indicating that 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 $1,097, $1,172 and $1,049, respectively, for fiscal 2018, 2017 and 2016. 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 estimates itsability to recover deferred tax assets within the jurisdiction from which they arise. This evaluation considers several factors, including results of recentoperations, future taxable income, scheduled reversal of deferred tax liabilities, and tax planning strategies. The Company follows certain provisions of ASC740, “Income Taxes” which established a single model to address accounting for uncertain tax positions and clarifies the accounting for income taxes byprescribing a minimum recognition threshold that a tax position is required to meet before being recognized in the financial statements. The Companyevaluates uncertain tax positions, if any, by determining if it is more likely than not to be sustained upon examination by the tax authorities. The Companyrecords56 uncertain tax positions when it is estimable and probable that such liabilities have been incurred. The Company, when required, will accrue interest andpenalties related to income tax matters in income tax expense. 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, including theuse of Monte Carlo simulations, and weighs the probability of these outcomes. The ultimate settlement of contingent earn-out liabilities relating to businesscombinations may be for amounts which are materially different from the amounts initially recorded and may cause volatility in the Company’s results ofoperations. Stock-Based Compensation The Company measures stock-based compensation at the grant date based on the fair value of the award. Restricted stock awards (“RSAs”) and performanceshare units are valued based on the fair value of the stock on the grant date. The related compensation expense is recognized over the service period on astraight-line basis. Compensation expense on performance share units reflects the estimated probable outcome at the end of the performance period. The fairvalue of stock options with market conditions is determined based on a Monte Carlo simulation in order to simulate a range of possible future stock prices forthe Company’s s stock. For awards subject to graded vesting, the Company ensures that the compensation expense recognized is at least equal to the vestedportion 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 $500 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.57 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 28, 2018 December 29, 2017 December 30, 2016Net income per share: Basic$0.71 $0.55 $0.12Diluted$0.70 $0.54 $0.12Weighted average common shares: Basic28,703,265 26,118,482 25,919,480Diluted29,678,919 27,424,526 26,029,609Reconciliation of net income per common share: Fiscal Year Ended December 28, 2018 December 29, 2017 December 30, 2016Numerator: Net income$20,402 $14,366 $3,023Add effect of dilutive securities Interest on convertible notes, net of tax362 536 —Adjusted net income$20,764 $14,902 $3,023Denominator: Weighted average basic common shares outstanding28,703,265 26,118,482 25,919,480Dilutive effect of stock options and unvested common shares270,520 68,670 110,129Dilutive effect of convertible notes705,134 1,237,374 —Weighted average diluted common shares outstanding29,678,919 27,424,526 26,029,609 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 28, 2018 December 29, 2017 December 30, 2016Restricted Share Awards (“RSAs”)42 84,511 92,812Stock options— 201,799 209,071Convertible 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 were estimated using Level 3 inputs. Long-term earn-out liabilitieswere $2,792 and $5,228 as of December 28, 2018 and December 29, 2017, respectively, and are reflected as other liabilities and deferred credits on theconsolidated balance sheets. The remaining short-term earn-out liabilities are reflected as accrued liabilities on the consolidated balance sheets. The fairvalue of contingent consideration was determined based on a probability-based approach which includes projected results, percentage probability ofoccurrence and58 the application of a discount rate to present value the payments. A significant change in projected results, discount rate, or probabilities of occurrence couldresult in a significantly higher or lower fair value measurement. Changes in the fair value of contingent earn-out liabilities are reflected in operatingexpenses on the consolidated statements of operations.The following table presents the changes in Level 3 contingent earn-out liabilities: Del Monte MT Food Fells Point Other Acquisitions TotalBalance December 30, 2016$1,362 $500 $— $— $1,862Acquisitions— — 4,445 — 4,445Payments— (500) — — (500)Changes in fair value(713) — 134 — (579)Balance December 29, 2017649 — 4,579 — 5,228Acquisitions— — — 1,414 1,414Payments— — (3,000) — (3,000)Changes in fair value(649) — 2,070 27 1,448Balance December 28, 2018$— $— $3,649 $1,441 $5,090 Fair Value of Financial Instruments The carrying amounts reported in the Company’s consolidated balance sheets for accounts receivable and accounts payable approximate fair value due tothe immediate to short-term nature of these financial instruments. The fair values of the asset based loan facility and term loan approximated their bookvalues as of December 28, 2018 and December 29, 2017 as these instruments had variable interest rates that reflected current market rates available to theCompany.The following table presents the carrying value and fair value of the Company’s convertible subordinated notes (more fully described in Note 9). Inestimating the fair value of these convertible subordinated notes, the Company utilized Level 3 inputs including prevailing market interest rates to estimatethe debt portion of the instrument and a Black Scholes valuation model to estimate the fair value of the conversion option. The Black Scholes model utilizesthe market price of the Company’s common stock, estimates of the stock’s volatility and the prevailing risk free interest rate in calculating the fair valueestimate. On July 25, 2018, these notes were converted into 1,246,272 shares of the Company’s common stock. December 28, 2018 December 29, 2017 Carrying Value Fair Value Carrying Value Fair ValueConvertible Secured Notes$— $— $36,750 $38,091 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.During the year ended December 28, 2018, the Company paid approximately $13,401 on several small strategic acquisitions. Concurrent with theseacquisitions, the Company entered into four warehouse facility leases expiring in two to five years that are owned by former owners, two of whom are currentemployees. The Company paid rent of $671 for these facilities during the year ended December 28, 2018. 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 final59 purchase price for the transaction was approximately $34,124, including $29,722 paid in cash at closing, $3,300 consisting of 185,442 shares of theCompany’s common stock and $1,102 paid upon settlement of a net working capital true-up.During the first quarter of 2018, the Company finalized a valuation of the tangible and intangible assets of Fells Point as of the acquisition date. As a result,the Company recorded a measurement period adjustment that increased goodwill by $2,300 and decreased customer relationships and trademarks by$1,500 and $800, respectively. These assets are valued at fair value using Level 3 inputs. Customer relationships and trademarks are being amortizedover 15 and 20 years, respectively. Goodwill is being amortized over 15 years for tax purposes. The goodwill recorded primarily reflects the value ofacquiring an established meat processor to grow the Company’s center-of-the-plate category in the Northeast and Mid-Atlantic regions, as well as anyintangible assets that do not qualify for separate recognition.Concurrent with the acquisition, the Company entered into a five-year lease for a warehouse facility located in Baltimore, MD that is owned by the formerowners of Fells Point, some of whom are current employees. The Company paid rent of $258 and $86 during the year ended December 28, 2018 andDecember 29, 2017, respectively.On October 2, 2018, the Company paid $3,000 to the former owners of Fells Point related to their successful attainment of the targeted EBITDA in their earn-out agreement.The table below sets forth the purchase price allocation of these acquisitions: Fells Point Other AcquisitionsCurrent assets (includes cash acquired)$6,971 $8,423Customer relationships13,600 4,060Trademarks7,300 —Non-compete agreement400 —Goodwill9,035 7,839Fixed assets2,459 1,736Current liabilities(1,196) (6,635)Earn-out liability(4,445) (1,414)Other long-term liabilities— (608)Total consideration$34,124 $13,401Note 6 – Inventories Inventories consist primarily of finished product. Our different entities record inventory using a mixture of first-in, first-out and average cost, which webelieve approximates first-in, first-out. Inventory is reflected net of adjustments for shrinkage, excess and obsolescence totaling $1,921 and $1,934 atDecember 28, 2018 and December 29, 2017, respectively.Note 7 – Equipment and Leasehold Improvements Equipment and leasehold improvements as of December 28, 2018 and December 29, 2017 consisted of the following: Useful Lives December 28, 2018 December 29, 2017Land Indefinite $1,170 $1,170Buildings 20 years 1,292 1,292Machinery and equipment 5-10 years 17,837 16,183Computers, data processing and other equipment 3-7 years 11,244 9,924Leasehold improvements 7-22 years 60,565 53,653Furniture and fixtures 7 years 3,268 3,100Vehicles 5-7 years 2,769 2,570Other 7 years 95 95Construction-in-process 15,757 15,030 113,997 103,017Less: accumulated depreciation (41,190) (34,639)Equipment and leasehold improvements, net $72,807 $68,37860 Construction-in-process at December 28, 2018 consists primarily of the implementation of the Company’s Enterprise Resource Planning (“ERP”) system, andthe buildout of the Company’s headquarters in Ridgefield, CT and distribution center in Dallas, TX. The roll-out of the ERP system and facilities build outsare expected to continue through fiscal 2019. The Company expects the cost to complete these projects to be approximately $4,500. Construction-in-processat December 29, 2017 related primarily to the implementation of the Company’s ERP system and the build out of the Company’s distribution center in SanFrancisco, CA. No interest expense was capitalized during the fiscal years ended December 28, 2018, December 29, 2017 and December 30, 2016,The Company had $388 and $530 of equipment and vehicles financed by capital leases at December 28, 2018 and December 29, 2017, respectively. TheCompany recorded depreciation of $52, $64 and $71 on these assets for the fiscal years ended December 28, 2018, December 29, 2017 and December 30,2016, respectively. Depreciation expense, excluding capital leases, was $7,090, $6,644 and $5,679 for the fiscal years ended December 28, 2018, December 29, 2017 andDecember 30, 2016, respectively. Amortization expense on software was $3,154, $1,808 and $1,332 for the fiscal years ended December 28, 2018, December 29, 2017 and December 30, 2016,respectively.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.Note 8 – Goodwill and Other Intangible Assets The changes in the carrying amount of goodwill are presented as follows:Carrying amount as of December 30, 2016$163,784Goodwill adjustments3,418Business combinations5,946Foreign currency translation54Carrying amount as of December 29, 2017173,202Goodwill adjustments3,283Business combinations7,839Foreign currency translation(44)Carrying amount as of December 28, 2018$184,280The goodwill adjustments during the fiscal year ended December 28, 2018 and December 29, 2017 mostly relate to the acquisitions of Fells Point and M.T.Food Service, Inc., respectively.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 28, 2018and December 29, 2017 consisted of the following: Weighted-AverageRemainingAmortization Period GrossCarryingAmount AccumulatedAmortization Net AmountDecember 28, 2018 Customer relationships 137 months $119,488 $(36,185) $83,303Non-compete agreements 54 months 7,579 (7,251) 328Trademarks 213 months 59,862 (13,460) 46,402Total $186,929 $(56,896) $130,033 December 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) $140,32061 Amortization expense for other intangibles was $11,910, $12,033 and $11,433 for the fiscal years ended December 28, 2018, December 29, 2017 andDecember 30, 2016, respectively. As of December 28, 2018, estimated amortization expense for other intangible assets for each of the next five fiscal years and thereafter is as follows: 2019$11,423202011,150202111,146202210,36620239,341Thereafter76,607Total$130,033Note 9 – Debt Obligations Debt obligations as of December 28, 2018 and December 29, 2017 consisted of the following: December 28, 2018 December 29, 2017Senior secured term loan $239,745 $288,435Convertible subordinated notes — 36,750Capital lease and other financing obligations 193 664Asset based loan facility 44,185 —Deferred finance fees and original issue discount (5,893) (8,027)Total debt obligations 278,230 317,822Less: current installments (61) (3,827)Total debt obligations excluding current installments $278,169 $313,995 Maturities of the Company’s debt for each of the next five years and thereafter at December 28, 2018 are as follows:2019$612020492021422022283,96720234Thereafter—Total$284,123 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 Term Loan Credit Agreement provides for a senior securedterm loan B facility (the “Term Loan 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 the Term Loan Facility (including the DDTL), the “Term Loans”). On June 27, 2016, the Company drew $14,000 from the DDTLto help pay for the MT Food acquisition. On September 14, 2016, the Company entered into an amendment to the Term Loan Credit Agreement under whichthe remaining portion of the DDTL was terminated, the Company’s interest rate schedule was modified and the Company repaid $25,000 of the outstandingbalance of the Term Loans. Borrowings under the Term Loan Facility were used to repay the Company’s senior secured notes, as well as the prior term loanand revolving credit facility. Remaining funds were used for capital expenditures, permitted acquisitions, working capital and general corporate purposes ofthe Company. Additionally, the Term Loan Facility includes an accordion which permits the Company to request that the lenders extend additional TermLoans in an aggregate principal amount of up to $50,000 (less the aggregate amount of certain indebtedness incurred to finance acquisitions) plus anunlimited amount subject to the Company’s Total Leverage Ratio not exceeding 4.90:1.00 on a pro forma basis.62 On December 13, 2017, the Company completed a repricing of the Term Loan Facility to reduce the Applicable Rate (as defined in the Term Loan CreditAgreement) from 475 basis points to 400 basis points over LIBOR. In connection with the repricing, the Company paid debt financing costs of $761 whichwere capitalized as deferred financing charges. On July 6, 2018, the Company made a $47,100 prepayment and is no longer required to make quarterlyamortization payments on the Term Loan Facility. On November 16, 2018, the Company completed a repricing of the Term Loan Facility to reduce theApplicable Rate from 400 basis points to 350 basis points over LIBOR. In connection with the repricing, the Company paid debt financing costs of $626which were capitalized as deferred financing charges. The Company wrote off unamortized deferred financing fees of $1,081 as a result of this repricing.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. Theinterest rate on this facility at December 28, 2018 was 5.8% and the final maturity of the Term Loan Facility is June 22, 2022.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 28, 2018, the Companywas in compliance with all debt covenants under the Term Loan Facility.Asset Based Loan FacilityOn June 29, 2018, the Company entered into a credit agreement (the “ABL Credit Agreement”) with a group of lenders for which BMO Harris Bank, N.A. actsas administrative agent. The ABL Credit Agreement replaces the Company’s prior asset based loan facility (the “Prior ABL”). The ABL Credit Agreementprovides for an asset based loan facility (the “ABL Facility”) in the aggregate amount of up to $150,000, up from $75,000 under the Prior ABL. Availabilityunder the ABL Facility will be limited to a borrowing base equal to the lesser of: (i) the aggregate amount of commitments or (ii) the sum of specifiedpercentages of eligible receivables and eligible inventory, minus certain availability reserves. The co-borrowers under the ABL Facility are entitled on one ormore occasions, subject to the satisfaction of certain conditions, to request an increase in the commitments under the ABL Facility in an aggregate principalamount of up to $25,000 The ABL Facility matures on the earlier of June 29, 2023 and 90 days prior to the maturity date of the Company’s senior securedterm loan.The interest rates per annum applicable to loans, other than swingline loans, under the ABL Credit Facility will be, at the co-borrowers’ option, equal toeither 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 Company will pay certain recurring fees with respect to the ABL Facility, including fees on theunused commitments of the lenders. The ABL Facility contains customary affirmative covenants, negative covenants and events of default as moreparticularly described in the ABL Credit Agreement. The ABL Facility will require compliance with a minimum consolidated fixed charge coverage ratio of1:1 if the amount of availability under the ABL Facility falls below $10,000 or 10% of the borrowing base. Borrowings under the ABL Facility will be used,and are expected to be used, for capital expenditures, permitted acquisitions, working capital and general corporate purposes of the Company. The Companyincurred transaction costs of $877 which were capitalized as deferred financing fees to be amortized over the term of the ABL Facility. On July 6, 2018, theCompany borrowed $47,100 under the ABL Facility and made an equivalent prepayment on its Term Loan Facility. There was $44,185 outstanding underthe ABL Facility as of December 28, 2018, bearing an interest rate of 3.7%.As of December 28, 2018, the Company was in compliance with all debt covenants and the Company had reserved $15,800 of the ABL Facility for theissuance of letters of credit. As of December 28, 2018, funds totaling $90,015 were available for borrowing under the ABL Facility.Convertible Subordinated Notes On April 6, 2015, Del Monte Capitol Meat Company, LLC, a wholly-owned subsidiary of the Company, issued $36,750 principal amount of convertiblesubordinated notes with a six-year maturity bearing interest at 2.5% and a conversion price of $29.70 per share to certain entities as partial consideration inthe acquisition of Del Monte Capitol Meat Co. and certain related entities. On July 25, 2018, the holders converted these notes and related accrued interestof $265 into 1,246,272 shares of the Company’s common stock.63 Note 10 – Stockholders’ EquityOn December 19, 2017, the Company completed a public offering of 1,900,000 shares of our common stock which resulted in net proceeds to us ofapproximately $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.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”), RSAs, restricted share units, performance awards, or other stock-based awards. Stock option exercise prices are fixed bythe 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 in the case of substituteawards. 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. The Committee willdetermine the expiration date of each stock option and SAR, but in no case shall the stock option or SAR be exercisable after the expiration of ten years fromthe date of the grant. The Company plans to issue new shares upon exercise of any stock options. The Equity Plan provided 1,750,000 shares available forgrant, of which no more than 1,000,000 could be for Incentive Stock Options. As of December 28, 2018, there were 243,257 shares available for grant. Stock compensation expense was $4,094, $3,018 and $2,579 for the fiscal years ended December 28, 2018, December 29, 2017 and December 30, 2016,respectively. The related tax benefit for stock-based compensation was $864, $1,283 and $1,469 for the fiscal years ended December 28, 2018, December 29,2017 and December 30, 2016, respectively. The following table reflects the activity of RSAs during the fiscal years ended December 28, 2018 and December 29, 2017: Shares Weighted AverageGrant Date Fair ValueUnvested 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 $16.69Granted 311,957 23.62Vested (113,482) 17.60Forfeited (1,506) 17.13Unvested at December 28, 2018 526,730 $20.60The fair value of RSAs vested during the fiscal years ended December 28, 2018, December 29, 2017 and December 30, 2016, were $2,936, $1,703 and$1,779, respectively.These awards are a mix of time and performance-based grants awarded to key employees and non-employee directors which will vest over periods of oneto four years. The performance-based RSAs cliff vest, if at all, after the conclusion of a three-year performance period. The number of performance-based RSAsthat ultimately vest is based on the Company’s attainment of certain adjusted EBITDA and return on invested capital targets.At December 28, 2018, the total unrecognized compensation cost for these unvested RSAs was $5,126 to be recognized over a weighted-average period ofapproximately 1.9 years. Of this total, $2,753 related to RSAs with time-based vesting provisions to be recognized over a weighted average period of 1.9years and $2,373 related to RSAs with performance-based vesting provisions to be recognized over a weighted average period of 1.9 years.64 The following table summarizes stock option activity during the fiscal years ended December 28, 2018 and December 29, 2017: Shares WeightedAverageExercise Price AggregateIntrinsicValue Weighted AverageRemaining ContractualTerm (in years)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 8.2Granted — — Exercised — — Forfeited — — Outstanding December 28, 2018 191,808 $20.23 $2,129 7.2Exercisable at December 28, 2018 — — $— 0During 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 market condition threshold was met during fiscal 2018. The Company recognized expense of$601, $557 and $557 on stock options during the fiscal years ended December 28, 2018, December 29, 2017 and December 30, 2016, respectively.At December 28, 2018, the total unrecognized compensation cost for these options was $114 to be recognized over a weighted-average period ofapproximately 0.2 years.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 28, 2018, 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 Total2019 $1,626 $9,502 $12,446 $1,092 $24,6662020 1,275 10,114 11,016 642 23,0472021 850 9,688 8,983 397 19,9182022 852 9,655 7,169 162 17,8382023 485 9,576 4,806 9 14,876Thereafter 942 44,034 2,354 — 47,330Total minimum lease payments $6,030 $92,569 $46,774 $2,302 $147,675Total rent expense for operating leases for the fiscal years ended December 28, 2018, December 29, 2017 and December 30, 2016 was $29,202, $26,678 and$24,202, respectively. 65 Note 12 – Income TaxesThe provision for income taxes consists of the following for the fiscal years ended December 28, 2018, December 29, 2017 and December 30, 2016: December 28, 2018 December 29, 2017 December 30, 2016Current income tax expense (benefit): Federal $2,945 $3,342 $(491)State 1,943 1,403 153Total current income tax expense (benefit) 4,888 4,745 (338)Deferred income tax expense (benefit): Federal 2,363 (1,059) 2,441Foreign (472) 215 49State 663 141 501Total deferred income tax expense (benefit) 2,554 (703) 2,991Total income tax expense $7,442 $4,042 $2,653Income tax expense for the fiscal years ended December 28, 2018, December 29, 2017 and December 30, 2016 differed from amounts computed using thestatutory federal income tax rate due to the following reasons: December 28, 2018 December 29, 2017 December 30, 2016Statutory U.S. Federal tax $5,847 $6,443 $1,987Differences due to: State and local taxes, net of federal benefit 1,906 1,112 470Foreign tax rate differential (224) (82) (168)Impact of the Tax Act — (3,573) —Other (87) 142 364Income tax expense $7,442 $4,042 $2,653 Deferred tax assets and liabilities at December 28, 2018 and December 29, 2017 consist of the following: December 28, 2018 December 29, 2017Deferred tax assets: Receivables and inventory $3,978 $3,969Accrued expenses 1,835 1,542Self-insurance reserves 2,050 2,179Net operating loss carryforwards 1,749 1,191Stock compensation 1,670 1,017Other 803 1,696Total deferred tax assets 12,085 11,594Deferred tax liabilities: Property & equipment (3,446) (1,701)Intangible assets (13,197) (10,784)Contingent earn-out liabilities (3,179) (3,646)Prepaid expenses and other (1,052) (1,189)Total deferred tax liabilities (20,874) (17,320)Valuation allowance (812) (289)Total net deferred tax liability $(9,601) $(6,015) 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%.66 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 2015 through 2018 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 2018. For state tax purposes, the 2014 through 2018 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 28, 2018, the Company had a valuation allowance of $812 which consisted of a full valuation allowance on the Company’s Canada netoperating loss carryforward of $1,091 because it is not expected to be realizable in the future, offset by a $401 reduction in deferred tax liabilities related toindefinite-lived intangible assets acquired in 2013, and a valuation allowance of $122 against the Company’s state net operating loss carryforwards. TheCompany’s Canada net operating loss carryforward expires at various dates between fiscal 2036 and 2038 and the Company’s state net operating losscarryforwards expire at various dates between fiscal 2019 and 2038.For financial reporting purposes, net loss from operations before income taxes for our foreign subsidiaries was $3,223, $1,520 and $1,181 for the fiscal yearsended December 28, 2018, December 29, 2017 and December 30, 2016, 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.As of December 28, 2018 and December 29, 2017, the Company did not have any material uncertain tax positions. Note 13 – Supplemental Disclosures of Cash Flow Information December 28, 2018 December 29, 2017 December 30, 2016Cash paid for income taxes, net of cash received $4,825 $333 $6,368Cash paid for interest, net of loss on debt extinguishment $16,955 $20,796 $17,790Non-cash investing and financing activities: Sinking funds used to retire debt $— $2,939 $—Conversion of subordinated notes and accrued interest intocommon stock $37,015 $— $—Common stock issued for acquisitions $— $3,300 $—Acquisition purchase price payable $— $— $500Contingent earn-out liabilities for acquisitions $1,414 $4,445 $500 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. The Company provides discretionary matching contributions equal to 50 percent of the employee’s contribution amount, up to a maximumof six percent of the employee’s annual salary, capped at $2.5 per associate per year. Matching contributions begin vesting after two years and are fullyvested after three years. Employee contributions are fully vested when made. Under the 401(k) Plan there is no option available to the employee to receive orpurchase the Company’s common stock. Matching contributions under the 401(k) Plan were $1,097 for fiscal 2018, $1,172 for fiscal 2017 and $1,049 forfiscal 2016. Note 15 – Related Parties The Chefs’ Warehouse Mid-Atlantic, LLC, a subsidiary of the Company, leases a distribution facility that is 100% owned by entities controlled byChristopher Pappas, the Company’s chairman, president and chief executive officer, and John Pappas, the Company’s vice chairman and one of its directors,and are deemed to be affiliates of these individuals. Expense related to this facility was $533 for the fiscal years ended December 28, 2018, December 29,2017 and December 30, 2016. This lease expires on September 30, 2019.67 Each of Christopher Pappas and John Pappas owns 8.33% of a New York City-based restaurant customer of the Company and its subsidiaries that purchasedan aggregate of approximately $61, $121 and $109 of products from the Company during fiscal 2018, fiscal 2017 and fiscal 2016, respectively. Messrs.Pappas have no other interest in the restaurant other than these equal interests and are not involved in the day-to-day operation or management of thisrestaurant. The Company paid $119, $137 and $315 to Architexture Studios, Inc. for interior decorating and design including the purchase of furniture and leaseholdimprovements primarily for our Ridgefield, Las Vegas, San Francisco and Chicago facilities during fiscal years 2018, 2017 and 2016, respectively. Thisentity is owned by 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, was a member of the board of directorsthrough September 20, 2018. The Company purchased approximately $662, $701 and $722 worth of products from ConAgra Foods, Inc. through September20, 2018 of fiscal 2018, and during fiscal years 2017 and 2016, respectively.Christopher Pappas’s brother, John Pappas, is one of the Company’s employees and a member of the Company’s Board of Directors. The Company paid JohnPappas approximately $755, $593 and $597 in total compensation for fiscal 2018, fiscal 2017 and fiscal 2016, respectively. John Pappas did not receive anycompensation in fiscal 2018, fiscal 2017 or fiscal 2016 for his service on the Company’s Board of Directors. John Pappas’s brother-in-law, ConstantinePapataros, is one of the Company’s employees. The Company paid him approximately $194, $188 and $194 in total compensation during fiscal 2018, fiscal2017 and fiscal 2016, respectively.John DeBenedetti was a prior owner of Del Monte and served on the Company’s board of directors through April 20, 2018 at which point he ceased to be arelated party. John DeBenedetti, indirectly through TJ Investments, LLC, owns an 8.33% ownership interest in Old World Provisions, which has beensupplying products to the Company since the Del Monte acquisition. The Company purchased approximately $474, $1,713 and $269 of products from OldWorld Provisions during the sixteen weeks ended April 20, 2018 and fiscal years 2017 and 2016, respectively. Mr. J. DeBenedetti was not involved in theday-to-day management of Old World Provisions. With the acquisition of Del Monte, the Company leased two warehouse facilities from certain prior ownersof Del Monte, including John DeBenedetti. The first property is located in American Canyon, CA and is owned by TJ Management Co. LLC, an entity owned50% by John DeBenedetti. The Company paid rent on this facility totaling $73, $219 and $210 during the sixteen weeks ended April 20, 2018 and fiscalyears 2017 and 2016, respectively. The second property is located in West Sacramento, CA and is owned by David DeBenedetti and Victoria DeBenedetti,the parents of John DeBenedetti. The Company paid rent on this facility totaling $78, $234 and $225 during the sixteen weeks ended April 20, 2018 andfiscal years 2017 and 2016, respectively. Tara Brennan, a former employee and domestic partner of John DeBennedetti, was employed by the Companythrough January 18, 2018 and was paid approximately $24 for fiscal 2018, $180 for fiscal 2017 and $184 for fiscal 2016. 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 $946 and $858 at December 28, 2018 and December 29, 2017, respectively. 68 The Company’s self-insurance reserves for its automobile liability program totaled $1,436 and $1,078 at December 28, 2018 and December 29, 2017,respectively. Self-insurance reserves for workers’ compensation totaled $8,812 and $9,594 at December 28, 2018 and December 29, 2017, respectively. Workforce As of December 28, 2018, approximately 8% of the Company’s employees are represented by unions, all of whom are operating under collective bargainingagreements which expire at various times between fiscal 2019 and 2020. Approximately 1% of the Company’s employees are under a collective bargainingagreement that expires in fiscal 2019. Note 17 – Valuation ReservesThe following tables summarize the activity in our valuation accounts during the fiscal years ended December 28, 2018, December 29, 2017 andDecember 30, 2016: Balance at Beginning ofPeriod Additions Charged toExpense Deductions Balance at End ofPeriodAllowance for doubtful accounts December 28, 2018 $8,026 $3,790 $(4,356) $7,460December 29, 2017 6,848 4,061 (2,883) 8,026December 30, 2016 5,803 3,224 (2,179) 6,848Allowance for deferred tax assets December 28, 2018 $289 $523 $— $812December 29, 2017 — 289 — 289December 30, 2016 — — — —Note 18 – Quarterly Results (unaudited) The quarterly results of the Company for the fiscal years ended December 28, 2018 and December 29, 2017 are as follows: Fiscal 2018 Q1 Q2 Q3 Q4Net sales $318,615 $370,442 $361,496 $394,056Gross profit 79,522 93,240 91,993 102,292Operating profit 5,740 14,948 10,268 17,802Income before income taxes 761 9,537 5,592 11,954Net income 544 6,819 4,157 8,882Basic net income per share 0.02 0.24 0.14 0.30Diluted net income per share 0.02 0.24 0.14 0.30 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 (loss) before income taxes (2,812) 6,283 4,891 10,046Net income (loss) (1,642) 3,674 2,851 9,483Basic net income (loss) per share (0.06) 0.14 0.11 0.36Diluted net income (loss) per share (0.06) 0.14 0.11 0.35(1)Beginning in the third quarter of 2017 the Company began to reflect the results of the Fells Point acquisition.69 (2)The fourth quarter of 2017 includes a tax benefit of $3,573 related to the enactment of the Tax Act. Among other changes to the U.S. InternalRevenue Code, the Tax Act reduced the U.S. federal corporate top tax rate from 35.0% to 21.0%.Note 19 – Subsequent EventsPursuant to an asset purchase agreement, on February 25, 2019, the Company acquired substantially all of the assets of a specialty protein manufacturer anddistributor based in northern California. The purchase price for the transaction was approximately $31,700, including $27,700 paid in cash at closing and a$4,000 convertible note maturing on June 29, 2023 and bearing interest of 4.5% per annum. The interest rate charged on the note will increase to 5.0% afterthe two-year anniversary of the closing date. The Company will also pay contingent consideration, if earned, in the form of an earn-out which could totalapproximately $9,000 upon successful achievement of certain gross profit targets.70 Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURENot applicable. Item 9A.CONTROLS AND PROCEDURESDisclosure Controls and Procedures. The Company, under the supervision and with the participation of its management, including the Chief Executive Officer and the Chief Financial Officer,evaluated the effectiveness of the design and operation of the Company's "disclosure controls and procedures" (as defined in Rule 13a-15(e) under theSecurities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on that evaluation, the ChiefExecutive Officer and the Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of December 28, 2018. 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 28, 2018. 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 28,2018. 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 47 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.71 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 28, 2018, 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 28, 2018,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 28, 2018 and December 29, 2017, the related consolidated statements of operations and comprehensiveincome, stockholders’ equity, and cash flows for each of the three years in the period ended December 28, 2018, and the related notes and our report datedMarch 1, 2019 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 1, 201972 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 2019 Annual Meeting of Stockholders to be held on May 17, 2019, 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 2019 Annual Meeting of Stockholders to beheld on May 17, 2019, 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” and “Proposal 4-Approval of the 2019Omnibus Equity Incentive Plan” in our definitive Proxy Statement for our 2019 Annual Meeting of Stockholders to be held on May 17, 2019, which weintend to file within 120 days after our fiscal year-end, is incorporated herein by reference.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 2019 Annual Meeting of Stockholders to be held on May 17, 2019, 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 2019 Annual Meeting of Stockholders to be held on May 17, 2019, which we intend to file within120 days after our fiscal year-end, is incorporated herein by reference.73 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.74 INDEX OF EXHIBITS ExhibitNo. Description 2.1 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). 2.2 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). 2.3 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). 2.4 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). 2.5 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). 2.6 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). 2.7 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). 2.8 Earn-Out Agreement, dated August 25, 2017 by and among Fells Point, LLC, Fells Point Wholesale Meats, Inc., Erik M. Oosterwijkand Leendert H. Pruissen (incorporated by reference to Exhibit 2.1 to the Company’s 8-K filed on August 25, 2017). 75 2.9 Asset Purchase Agreement dated as of August 25, 2017, by and among Fells Point, LLC, a Delaware limited liability company,Fells Point Wholesale Meats, Inc., a Maryland close corporation, Erik M. Oosterwijk, and Leendert H. Pruissen (incorporated byreference to Exhibit 10.1 to the Company’s 8-K filed on August 25, 2017) (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). 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 January 30, 2017 (incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filedon January 31, 2017). 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 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). 10.2 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). 10.3 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). 10.4 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). 10.5* 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). 10.6* 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). 10.7* 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). 10.8* 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). 10.9* 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). 10.10* 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). 76 10.11 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). 10.12* 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). 10.13* 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). 10.14 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). 10.15* 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). 10.16 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). 10.17 Form of Restricted Share Award Agreement (Directors) (incorporated by reference to Exhibit 10.25 to the Company’s Form 10-Kfiled on March 10, 2017). 10.18* 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). 10.19 Form of Performance Restricted Share Award Agreement (Officers and Employees), for awards granted starting March 6, 2017(incorporated by reference to Exhibit 10.27(b) to the Company’s Form 10-K filed on March 10, 2017). 10.20* 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). 10.21* Form of LTIP award agreement (incorporated by reference to Exhibit 10.8 to the Company's Form 10-Q filed on May 6, 2015). 10.22 Credit Agreement, dated as of June 22, 2016, by and among Dairyland USA Corporation and Chefs’ Warehouse Parent, LLC, asBorrowers, and The Chefs’ Warehouse, Inc. and the other Loan Parties party thereto, as Guarantors, the Lenders party thereto andJefferies Finance LLC, as administrative agent and collateral agent (the “Term Loan Facility”) (incorporated by reference toExhibit 10.2 to the Company’s Form 8-K filed on June 22, 2016). 10.23 Amendment No. 1, dated as of September 14, 2016, to the Term Loan Facility (incorporated by reference to Exhibit 10.1 to theCompany’s Form 8-K filed on September 15, 2016). 10.24 Amendment No. 2, dated as of September 1, 2017, to the Term Loan Facility (incorporated by reference to Exhibit 10.2 to theCompany’s Form 10-Q filed on November 8, 2017). 10.25† Amendment No. 3, dated as of December 13, 2017, to the Term Loan Facility. 10.26 Amendment No. 4, dated as of November 16, 2018, to the Term Loan Facility (incorporated by reference to Exhibit 10.1 to theCompany’s Form 8-K filed on November 19, 2018). 77 10.27 Credit Agreement, dated as of June 29, 2018, by and among Chefs’ Warehouse Parent, LLC and Dairyland USA Corporation, asBorrowers, and The Chefs’ Warehouse, Inc., The Chefs’ Warehouse Mid-Atlantic, LLC, Bel Canto Foods, LLC, The Chefs’Warehouse West Coast, LLC, The Chefs’ Warehouse Of Florida, LLC, Michael’s Finer Meats, LLC, Michael’s Finer MeatsHoldings, LLC, The Chefs’ Warehouse Midwest, LLC, Fells Point Holdings, LLC and other Loan Parties party thereto asGuarantors, the Lenders party thereto and BMO Harris Bank N.A., as Administrative Agent and Swing Line Lender (incorporatedby reference to Exhibit 10.1 to the Company’s Form 8-K filed on July 2, 2018). 10.28* Offer Letter, dated October 17, 2017, by and between The Chefs’ Warehouse, Inc. and James Leddy (incorporated by reference toExhibit 99.2 to the Company’s Form 8-K filed on October 17, 2017). 10.29 Separation and Release of Claims Agreement, dated October 17, 2017, by and between The Chefs’ Warehouse, Inc. and JohnAustin (incorporated by reference to Exhibit 99.2 to the Company’s Form 8-K filed on October 17, 2017). 10.30* Offer Letter, dated February 19, 2018, by and between The Chefs’ Warehouse Inc. and Tim McCauley (incorporated by reference toExhibit 99.2 to the Company’s Form 8-K filed on February 20, 2018). 10.31 Cooperation Agreement dated January 15, 2018, among The Chefs’ Warehouse, Inc., Legion Partners, L.P. I, Legion Partners, L.P.II, Legion Partners Special Opportunities, L.P. VII, Legion Partners, LLC, Legion Partners Asset Management, LLC, Legion PartnersHoldings, LLC, Christopher S. Kiper, and Raymond White (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-Kfiled on January 16, 2018). 10.32* 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). 10.33*† The Chefs’ Warehouse, Inc. 2018 Cash Incentive Plan. 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 Document78 *Management Contract or Compensatory Plan or Arrangement †Filed herewith 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 1, 2019. THE CHEFS’ WAREHOUSE, INC. March 1, 2019/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 1, 2019Christopher Pappas Chief Executive Officer(Principal Executive Officer) /s/ James Leddy Chief Financial Officer March 1, 2019James Leddy (Principal Financial Officer) /s/ Timothy McCauley Chief Accounting Officer March 1, 2019Timothy McCauley (Principal Accounting Officer) /s/ John Pappas Director and Vice Chairman March 1, 2019John Pappas /s/ Alan Guarino Director March 1, 2019Alan Guarino /s/ John A. Couri Director March 1, 2019John A. Couri /s/ Dominick C. Cerbone Director March 1, 2019Dominick C. Cerbone /s/ Joseph Cugine Director March 1, 2019Joseph Cugine /s/ Stephen Hanson Director March 1, 2019Stephen Hanson /s/ Katherine Oliver Director March 1, 2019Katherine Oliver /s/ Steven F. Goldstone Director March 1, 2019Steven F. Goldstone /s/ Christina Carroll Director March 1, 2019Christina Carroll /s/ David E. Schreibman Director March 1, 2019David E. Schreibman 79 EXECUTION COPYTHIRD AMENDMENT TO CREDIT AGREEMENTThis THIRD AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated as of December 13, 2017, by andamong DAIRYLAND USA CORPORATION, a New York corporation (“Dairyland”), CHEFS’ WAREHOUSE PARENT, LLC, aDelaware limited liability company (together with Dairyland, the “Borrowers”), THE CHEFS’ WAREHOUSE, INC., a Delawarecorporation (“Holdings”), the other Loan Parties party hereto, the Lenders party hereto and Jefferies Finance LLC (“Jefferies”), asadministrative agent for the Lenders (in such capacity, the “Administrative Agent”) and as collateral agent for the Secured Parties (insuch capacity, the “Collateral Agent” or, as Administrative Agent or Collateral Agent, the “Agent”).W I T N E S S E T H:WHEREAS, the Borrowers, Holdings, the other Loan Parties party thereto, certain Lenders party thereto and the Agent,among others, are parties to that certain Credit Agreement, dated as of June 22, 2016 (as the same may be amended by thisAmendment and as otherwise amended, restated, amended and restated, supplemented or modified from time to time prior to the datehereof, the “Existing Credit Agreement”);WHEREAS, pursuant to and in accordance with Section 9.02 of the Existing Credit Agreement, the Borrowers haverequested that the Lenders amend, and the Lenders (including the Replacement Lenders (as defined below)) party hereto (collectively,the “Third Amendment Consenting Lenders”) have agreed to so amend, the Existing Credit Agreement in the manner set forth inSection 2 hereof to, among other things, reduce the interest rate applicable to the Term Loans;WHEREAS, the Agent and the Third Amendment Consenting Lenders are willing, on the terms and subject to the conditionsset forth below, to enter into the amendments, modifications and agreements set forth in this Amendment; andWHEREAS, the Third Amendment Consenting Lenders shall constitute the Required Lenders and, after giving effect to theoperation of Section 9.02(e) of the Existing Credit Agreement, the Third Amendment Consenting Lenders shall constitute all TermLoan Lenders.NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained and other good andvaluable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto, intending to be legally boundhereby, agree as follows:1.Defined Terms. Unless otherwise defined herein, capitalized terms used herein shall have the respective meaningsascribed thereto in the Existing Credit Agreement, as amended hereby (the “Amended Credit Agreement”).2.Amendments. Subject to the satisfaction of the conditions precedent set forth in Section 5 below, the Loan Parties, theThird Amendment Consenting Lenders and the Agent hereby agree as follows:a)Section 1.01 of the Existing Credit Agreement is hereby amended by adding the following defined term in correctalphabetical order:“Third Amendment” means that certain Third Amendment to Credit Agreement dated as of December 13,2017, by and among the Borrowers, Holdings, the other Loan Parties party thereto, the Lenders party thereto, theAdministrative Agent and the Collateral Agent.“Third Amendment Date” shall mean the “Third Amendment Date” as defined in the Third Amendment.b)Section 1.01 of the Existing Credit Agreement is hereby amended by amending and restating the followingdefined term to read in its entirety as follows:“Applicable Rate” means (a) for any day from the Effective Date through the date immediately preceding theFirst Amendment Date, (i) with respect to any Eurodollar Loan, 4.75% per annum or (ii) with respect to any ABR Loan,3.75% per annum, (b) for any day from the First Amendment Date through the day that immediately precedes theClosing Date Leverage Restoration Date, (i) with respect to any Eurodollar Loan, 5.75% per annum or (ii) with respectto any ABR Loan, 4.75% per annum, (c) for any day from the Closing Date Leverage Restoration Date through the daythat immediately precedes the Third Amendment Date, (i) with respect to any Eurodollar Loan, 4.75% per annum or (ii)with respect to any ABR Loan, 3.75% per annum, and (d) from and after the Third Amendment Date, (i) with respect toany Eurodollar Loan, 4.00% per annum or (ii) with respect to any ABR Loan, 3.00% per annum.c)Section 2.12(e) of the Existing Credit Agreement is hereby amended by replacing the reference therein to “firstanniversary of the Effective Date” with the following text: “six-month anniversary of the Third Amendment Date”. d)Section 9.01(a)(i) of the Existing Credit Agreement is hereby amended and restated in its entirety as follows:(i) if to any Loan Party, to the Borrower Representative at:The Chefs’ Warehouse, Inc. 100 East Ridge Road Ridgefield, CT 06877 Attention: Alexandros Aldous Telephone: (203) 894-1345, Ext. 10211 Facsimile: (203) 894-9108With a copy to:Shearman & Sterling LLP 599 Lexington Avenue New York, NY 10022 Attention: Gus Atiyah Telephone: (212) 848-5227 Facsimile: (646) 848-5227e)Section 9.02(e) of the Existing Credit Agreement is hereby amended by deleting clause (i) of the proviso includedtherein in its entirety and replacing it with the following:(i) another bank or other entity which is reasonably satisfactory to the Borrowers and the Administrative Agentshall agree, as of such date, to purchase for cash the Loans and other Obligations due to the Non-ConsentingLender pursuant to an Assignment and Assumption (or such other documentation reasonably acceptable to theBorrowers and the Administrative Agent) and to become a Lender for all purposes under this Agreement and toassume all obligations of the Non-Consenting Lender to be terminated as of such date and to comply with therequirements of clause (b) of Section 9.04 (provided that so long as the other requirements of this Section9.02(e) are satisfied, the failure of any Non-Consenting Lender to execute an Assignment and Assumption (orsuch other documentation reasonably acceptable to the Borrowers and the Administrative Agent) shall notrender such assignment and assumption invalid and the assignment effected thereby shall be in full force andeffect and shall be recorded in the Register), andf)Section 9.04(b)(ii)(C) of the Existing Credit Agreement is hereby amended and restated in its entirety as follows:(C) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment andAssumption (unless otherwise provided in Section 9.02(e) with respect to the replacement of a Non-ConsentingLender), together with a processing and recordation fee of $3,500; provided that the Administrative Agent may,in its sole discretion, elect to waive or reduce such processing fee in the case of any assignment; and3.Representations and Warranties. In order to induce the other parties hereto to enter into this Amendment in the mannerprovided herein, each Loan Party represents and warrants to the other parties hereto that the following statements are true and correct:a)each of the representations and warranties contained in the Loan Documents are true and correct in all materialrespects (provided that any representation or warranty that is qualified by materiality or Material Adverse Effect shall be trueand correct in all respects) on and as of the Third Amendment Date except to the extent that such representations andwarranties specifically refer to an earlier date, in which case they are true and correct in all material respects (or, in the case ofany representation or warranty qualified by materiality or Material Adverse Effect, in all respects) on and as of such earlier date;b)the transactions contemplated by this Amendment are within each Loan Party’s organizational powers and havebeen duly authorized by all necessary organizational actions and, if required, actions by equity holders;c)this Amendment has been duly executed and delivered by such Loan Party and constitute a legal, valid andbinding obligation of such Loan Party, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency,reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity,regardless of whether considered in a proceeding in equity or at law;d)the transactions contemplated by this Amendment (a) do not require any consent or approval of, registration orfiling with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in fullforce and effect and except for filings necessary to perfect Liens created pursuant to the Loan Documents, (b) will not violateany Requirement of Law applicable to any Loan Party or any of its Subsidiaries, (c) will not violate or result in a default underany indenture, agreement or other instrument binding upon any Loan Party or any of its Subsidiaries or the assets of any LoanParty or any of its Subsidiaries, or give rise to a right thereunder to require any payment to be made by any Loan Party or anyof its Subsidiaries, and (d) will not result in the creation or imposition of any Lien on any asset of any Loan Party or any of itsSubsidiaries, except Liens created pursuant to the Loan Documents, or subject to the Intercreditor Agreement, the ABL Loan Documents; ande)as of the date hereof and immediately after giving effect to this Amendment, no Default or Event of Default hasoccurred and is continuing.4.Additional Agreements. Each Person that executes and delivers a signature page to this Amendment in the capacity of aReplacement Lender irrevocably consents to the terms of this Amendment and the Amended Credit Agreement.5.Conditions to Effectiveness. The effectiveness of this Amendment is subject to the satisfaction of the following conditions(the date on which all such conditions are so satisfied is referred to herein as the “Third Amendment Date”):a)the Agent shall have received a certificate, dated the Third Amendment Date, executed by the President, a VicePresident or a Financial Officer of the Borrower Representative, certifying that, as of the Third Amendment Date, (i) that therepresentations and warranties contained in this Amendment and the other Loan Documents are true and correct in all materialrespects (provided that any representation or warranty that is qualified by materiality or Material Adverse Effect shall be trueand correct in all respects) on and as of such date except to the extent that such representations and warranties specifically referto an earlier date, in which case they are true and correct in all material respects (or, in the case of any representation orwarranty qualified by materiality or Material Adverse Effect, in all respects) on and as of such earlier date; (ii) that as of theThird Amendment Date and immediately after giving effect to this Amendment, no Default or Event of Default has occurredand is continuing; and (iii) this Amendment is effected in accordance with the terms of the Existing Credit Agreement, the ABLLoan Documents and the Intercreditor Agreement;b)Holdings and the Borrowers shall have paid to the Agent all fees, costs and expenses due and payable under thisAmendment (including under Section 10 hereof) and under that certain Engagement Letter, dated as of December 7, 2017, byand between Jefferies and Holdings;c)the Borrowers shall have paid to the Agent, for distribution to each Lender, all accrued but unpaid interest on theoutstanding Term Loans that has accrued through but excluding the Third Amendment Date (as calculated in accordance withthe Existing Credit Agreement);d)the Agent shall have received counterparts of this Amendment duly executed by (i) Holdings, the Borrowers,each other Loan Party and the Administrative Agent, (ii) Lenders constituting the Required Lenders (without giving effect tothe Non-Consenting Lender Replacement (as defined below)) and (iii) each Lender (after giving effect to the Non-ConsentingLender Replacement), including each Replacement Lender;e)the Agent and each Third Amendment Consenting Lender shall have received, at least two Business Days prior tothe Third Amendment Date, all documentation and other information required by regulatory authorities under applicable “knowyour customer” and anti-money laundering laws, including, without limitation, the Act, to the extent requested at least fourBusiness Days prior to the Third Amendment Date; andf)the Agent shall have received a certificate (in form reasonably satisfactory to the Agent) with respect to each LoanParty signed by the secretary or other Authorized Officer of such Loan Party and attaching and certifying to the accuracy of (i)the articles or certificate of organization or formation (or any comparable charter documents) of such Loan Party, (ii) thebylaws, operating agreements or other governing documents of such Loan Party, (iii) resolutions or consents of the governingbodies of such Loan Party, (iv) incumbencies evidencing the identity, authority and capacity of each Authorized Officer ofsuch Loan Party authorized to act in connection with this Amendment and the other Loan Documents to which such LoanParty is a party or is to be a party upon the Third Amendment Date and (v) a certificate of good standing (or comparablecertificate) with respect to such Loan Party issued by the secretary of state (or comparable government authority) of thejurisdiction of organization of such Loan Party.6.Lender Consents. If any Lender under the Existing Credit Agreement has failed to consent to this Amendment prior to3:00 p.m. (New York City time) on December 12, 2017 (each such non-consenting Lender, a “Non-Consenting Lender”), andLenders constituting the Required Lenders have so consented, then the Borrowers shall exercise their rights, effective as of the ThirdAmendment Date, to replace (such act of replacement, the “Non-Consenting Lender Replacement”) each such Non-ConsentingLender in accordance with Section 9.02(e) of the Existing Credit Agreement, and each such Non-Consenting Lender, upon receipt ofan amount equal to the sum of (i) the principal amount of the outstanding Term Loans of such Non-Consenting Lender immediatelyprior to the effectiveness of this Amendment (but, for the avoidance of doubt, without any prepayment premium thereon), (ii) allinterest, fees and other amounts accrued but unpaid to such Non-Consenting Lender by the Borrowers under the Existing CreditAgreement to and including the Third Amendment Date, including without limitation payments due to such Non-Consenting Lenderunder Sections 2.15 and 2.17 of the Existing Credit Agreement, and (iii) an amount, if any, equal to the payment which would havebeen due to such Non-Consenting Lender on the Third Amendment Date under Section 2.16 of the Existing Credit Agreement had theLoans of such Non-Consenting Lender been prepaid on the Third Amendment Date rather than sold to the replacement Lender, shallbe deemed to have assigned all of its rights and obligations under the Existing Credit Agreement to one or more assignee Lenders(each of whom shall have consented to this Amendment by delivering a signature page hereto prior to 3:00 p.m. (New York City time)on December 12, 2017 (each such assignee Lender, to the extent of such assigned interest, a “Replacement Lender”)). Each Lenderparty hereto hereby waives any requirement of the Borrowers to deliver any notice to Administrative Agent and/or any Lender inconnection with any assignment contemplated herein pursuant to Section 9.02(e) of the Existing Credit Agreement.7.GOVERNING LAW AND WAIVER OF JURY TRIAL.(a) This Amendment shall be governed by, and construed in accordance with, the laws of the State ofNew York without regard to conflict of law principles (other than sections 5‑1401 and 5-1402 of the New York General ObligationsLaw). (b) To the fullest extent permitted by applicable law, each Loan Party hereby irrevocably submits to the exclusivejurisdiction of any New York State court or federal court sitting in the County of New York and the Borough of Manhattan inrespect of any claim, suit, action or proceeding arising out of or relating to the provisions of this Amendment and irrevocably agreethat all claims in respect of any such claim, suit, action or proceeding may be heard and determined in any such court and that serviceof process therein may be made by certified mail, postage prepaid, to your address set forth above. Each Loan Party hereby waives,to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of venue of any suchclaim, suit, action or proceeding brought in any such court, and any claim that any such claim, suit, action or proceeding brought inany such court has been brought in an inconvenient forum. Each of the parties hereto agrees that a final judgment in any such actionor proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner providedby law. Nothing in this Amendment shall affect any right that the Agent or any Lender may otherwise have to bring any action orproceeding relating to this Amendment against any Loan Party or its properties in the courts of any jurisdiction.(c) Each Loan Party hereby irrevocably and unconditionally waives, to the fullest extent it may legally andeffectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arisingout of or relating to this Amendment in any court referred to in paragraph (b) of this Section. Each of the parties hereto herebyirrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action orproceeding in any such court.(d) Each party to this Amendment irrevocably consents to service of process in the manner provided for notices inSection 9.01 of the Existing Credit Agreement. Nothing in this Amendment will affect the right of any party to this Amendment toserve process in any other manner permitted by law.(e) EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BYAPPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLYOR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AMENDMENT, THE AMENDED CREDITAGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY ORTHEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HASREPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OFLITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THEOTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AMENDMENT BY, AMONG OTHERTHINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.8.Counterparts; Integration; Effectiveness. This Amendment may be executed in counterparts (and by different partieshereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute asingle contract. This Amendment constitutes the entire contract among the parties relating to the subject matter hereof and supersedeany and all previous agreements and understandings, oral or written, relating to the subject matter hereof. This Amendment shallbecome effective on the Third Amendment Date. Except as provided in Section 5, this Amendment shall become effective when itshall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereofwhich, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to thebenefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of thisAmendment by telecopy, e-mailed .pdf or any other electronic means that reproduces an image of the actual executed signature pageshall be effective as delivery of a manually executed counterpart of this Amendment. The words “execution,” “signed,” “signature,”“delivery,” and words of like import in or relating to any document to be signed in connection with this Amendment and thetransactions contemplated hereby shall be deemed to include Electronic Signatures, deliveries or the keeping of records in electronicform, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical deliverythereof or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law,including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures andRecords Act, or any other similar state laws based on the Uniform Electronic Transactions Act; provided that nothing herein shallrequire the Administrative Agent to accept electronic signatures in any form or format without its prior written consent.9.Reference to and Limited Effect on the Credit Agreement and the Other Loan Documents.a)On and after the Third Amendment Date, (x) each reference in the Amended Credit Agreement to “thisAgreement”, “hereunder”, “hereof”, “herein” or words of like import referring to the Existing Credit Agreement, and (B) eachreference in the other Loan Documents to the “Credit Agreement”, “thereunder”, “thereof”, “therein” or words of like importreferring to the Existing Credit Agreement shall mean and be a reference to the Amended Credit Agreement.b)Except as specifically amended by this Amendment, the Existing Credit Agreement and each of the other LoanDocuments shall remain in full force and effect and are hereby ratified and confirmed.c)The execution, delivery and performance of this Amendment shall not constitute a waiver of any provision of, oroperate as a waiver of any right, power or remedy of the Agent or Lender under, the Amended Credit Agreement or any of theother Loan Documents. d)Each Loan Party hereby (i) ratifies, confirms and reaffirms its liabilities, its payment and performance obligations(contingent or otherwise) and its agreements under the Existing Credit Agreement, the Amended Credit Agreement and theother Loan Documents and (ii) acknowledges, ratifies and confirms that such liabilities, obligations and agreements constitutevalid and existing Obligations under the Amended Credit Agreement, in each case, to the extent such Loan Party is a partythereto. In addition, each Loan Party hereby ratifies, confirms and reaffirms (i) the liens and security interests granted, createdand perfected under the Collateral Documents and any other Loan Documents and (ii) that each of the Collateral Documents towhich it is a party remain in full force and effect notwithstanding the effectiveness of this Amendment. Without limiting thegenerality of the foregoing, each Loan Party further agrees (A) that any reference to “Obligations” contained in any CollateralDocuments shall include, without limitation, the “Obligations” (as such term is defined in the Amended Credit Agreement) and(B) that the related guarantees and grants of security contained in such Collateral Documents shall include and extend to suchObligations. This Amendment shall not constitute a modification of the Existing Credit Agreement, except as specified underSection 2 hereto, or a course of dealing with the Agent or any Lender at variance with the Existing Credit Agreement such asto require further notice by the Agent or any Lender to require strict compliance with the terms of the Amended CreditAgreement and the other Loan Documents in the future, except as expressly set forth herein. This Amendment contains theentire agreement among the Loan Parties and the Third Amendment Consenting Lenders contemplated by this Amendment.No Loan Party has any knowledge of any challenge to the Agent’s or any Lender’s claims arising under the Loan Documentsor the effectiveness of the Loan Documents. The Agent and Lenders reserve all rights, privileges and remedies under the LoanDocuments. Nothing in this Amendment is intended, or shall be construed, to constitute a novation or an accord andsatisfaction of any of the Obligations, or otherwise with respect to the Existing Credit Agreement or any other Loan Document,or to constitute a mutual departure from the strict terms, provisions and conditions of the Existing Credit Agreement or anyother Loan Document other than with respect to the amendments set forth in Section 2 hereof, or to modify, affect or impair theperfection, priority or continuation of the security interests in, security titles to or other Liens on any Collateral for theObligations.e)Each Loan Party hereby acknowledges that it has reviewed the terms and provisions of this Amendment andconsents to the amendment of the Existing Credit Agreement effected pursuant to this Amendment.f)Each Loan Party that is not a Borrower acknowledges and agrees that (i) notwithstanding the conditions toeffectiveness set forth in this Amendment, such Loan Party is not required by the terms of the Existing Credit Agreement orany other Loan Document to consent to the amendments to the Existing Credit Agreement effected pursuant to thisAmendment and (ii) nothing in the Amended Credit Agreement, this Amendment or any other Loan Document shall bedeemed to require the consent of such Loan Party to any future amendments to the Amended Credit Agreement.g)The parties hereto acknowledge and agree that, for all purposes under the Amended Credit Agreement and theother Loan Documents, this Amendment constitutes a “Loan Document” under and as defined in the Amended CreditAgreement.10.Expenses. The Borrowers and Holdings agree, jointly and severally, to pay on demand all reasonable out-of-pocketcosts and expenses incurred by the Agent in connection with the preparation, negotiation and execution of this Amendment, including,without limitation, all attorney costs.11.Severability. Any provision of any this Amendment held to be invalid, illegal or unenforceable in any jurisdiction shall,as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legalityand enforceability of the remaining provisions thereof; and the invalidity of a particular provision in a particular jurisdiction shall notinvalidate such provision in any other jurisdiction.12.Headings. Section headings used herein are for convenience of reference only, are not part of this Amendment and shallnot affect the construction of, or be taken into consideration in interpreting, this Amendment.13.Conflicts. In the event of any conflict between the terms of this Amendment and the terms of the Amended CreditAgreement or any of the other Loan Documents, the terms of this Amendment shall govern.[SIGNATURE PAGES FOLLOW]IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by theirrespective proper and duly authorized officers as of the day and year first written above.CHEFS’ WAREHOUSE PARENT, LLC,as a BorrowerBy /s/ Alexandros Aldous Name: Alexandros Aldous Title: General Counsel and CorporateSecretaryDAIRYLAND USA CORPORATION, as a BorrowerBy /s/ Alexandros Aldous Name: Alexandros Aldous Title: General Counsel and CorporateSecretaryALLEN BROTHERS 1893, LLCBy /s/ Alexandros Aldous Name: Alexandros Aldous Title: General Counsel and CorporateSecretary BEL CANTO FOODS, LLCBy /s/ Alexandros Aldous Name: Alexandros Aldous Title: General Counsel and CorporateSecretary CHEFS’ WAREHOUSE TRANSPORTATION, LLCBy /s/ Alexandros Aldous Name: Alexandros Aldous Title: General Counsel and CorporateSecretary CW LV REAL ESTATE LLCBy /s/ Alexandros Aldous Name: Alexandros Aldous Title: General Counsel and CorporateSecretary DEL MONTE CAPITOL MEAT COMPANY HOLDINGS, LLCBy /s/ Alexandros Aldous Name: Alexandros Aldous Title: General Counsel and CorporateSecretary DEL MONTE CAPITOL MEAT COMPANY, LLCBy /s/ Alexandros Aldous Name: Alexandros Aldous Title: General Counsel and CorporateSecretary FELLS POINT, LLCBy /s/ Alexandros Aldous Name: Alexandros Aldous Title: General Counsel and CorporateSecretary FELLS POINT HOLDINGS, LLCBy /s/ Alexandros Aldous Name: Alexandros Aldous Title: General Counsel and CorporateSecretary MICHAEL’S FINER MEATS HOLDINGS, LLCBy /s/ Alexandros Aldous Name: Alexandros Aldous Title: General Counsel and CorporateSecretary MICHAEL’S FINER MEATS, LLCBy /s/ Alexandros Aldous Name: Alexandros Aldous Title: General Counsel and CorporateSecretary QZ ACQUISITION (USA), INC.By /s/ Alexandros Aldous Name: Alexandros Aldous Title: General Counsel and CorporateSecretary QZINA SPECIALTY FOODS (AMBASSADOR), INC.By /s/ Alexandros Aldous Name: Alexandros Aldous Title: General Counsel and CorporateSecretaryQZINA SPECIALTY FOODS NORTH AMERICA (USA), INC. By /s/ Alexandros Aldous Name: Alexandros Aldous Title: General Counsel and CorporateSecretary QZINA SPECIALTY FOODS, INC.By /s/ Alexandros Aldous Name: Alexandros Aldous Title: General Counsel and CorporateSecretaryQZINA SPECIALTY FOODS, INC.By /s/ Alexandros Aldous Name: Alexandros Aldous Title: General Counsel and CorporateSecretary THE CHEFS’ WAREHOUSE MIDWEST, LLCBy /s/ Alexandros Aldous Name: Alexandros Aldous Title: General Counsel and CorporateSecretaryTHE CHEFS’ WAREHOUSE MID-ATLANTIC, LLCBy /s/ Alexandros Aldous Name: Alexandros Aldous Title: General Counsel and CorporateSecretaryTHE CHEFS’ WAREHOUSE OF FLORIDA, LLCBy /s/ Alexandros Aldous Name: Alexandros Aldous Title: General Counsel and CorporateSecretaryTHE CHEFS’ WAREHOUSE PASTRY DIVISION, INC.By /s/ Alexandros Aldous Name: Alexandros Aldous Title: General Counsel and Corporate Secretary THE CHEFS’ WAREHOUSE WEST COAST, LLCBy /s/ Alexandros Aldous Name: Alexandros Aldous Title: General Counsel and CorporateSecretary THE CHEFS’ WAREHOUSE, INC.By /s/ Alexandros Aldous Name: Alexandros Aldous Title: General Counsel and CorporateSecretaryTHE GREAT STEAKHOUSE STEAKS, LLCBy /s/ Alexandros Aldous Name: Alexandros Aldous Title: General Counsel and CorporateSecretary JEFFERIES FINANCE LLC, as Administrative Agent and as Collateral AgentBy /s/ J. Paul McDonnell Name: J. Paul McDonnell Title: Managing DirectorUS-DOCS\94603815.7 THE CHEFS’ WAREHOUSE, INC.2018 CASH INCENTIVE PLAN1. Purpose of the Plan.The purpose of the Plan is to advance the interests of the Company and its stockholders by providing incentives in the form ofcash incentive awards to certain employees of the Company and its Subsidiaries. The Plan is intended to enable the Company to attractand retain talented employees and to motivate such employees to manage and grow the Company’s business and to attain theperformance goals articulated under the Plan. This Plan shall be administered pursuant to The Chefs’ Warehouse, Inc. 2011 OmnibusEquity Incentive Plan (the “2011 Incentive Plan”). Awards hereunder shall be “Performance Awards” as defined in Section 8 of the2011 Incentive Plan. It is the intention of the Company that all Awards hereunder to Covered Officers shall qualify for the“performance-based exception” to the deduction limitation imposed by Section 162(m) of the Code. All provisions hereof shall beinterpreted accordingly. Capitalized terms not otherwise defined herein shall have the meaning set forth in the 2011 Incentive Plan.2. Definitions.The following capitalized terms used in the Plan have the respective meanings set forth in this Section:(a)“Award” means a cash-based incentive award granted pursuant to the Plan.(b) “Board” means the Board of Directors of the Company.(c) “Code” means the Internal Revenue Code of 1986, as amended, or any successor thereto.(d) “Committee” means the Compensation and Human Capital Committee of the Board, or any successor thereto or anyother committee designated by the Board to assume the obligations of the Committee hereunder.(e) “Company” means The Chefs’ Warehouse, Inc., a Delaware corporation, and its Subsidiaries.(f) “Participant” means an employee of the Company or any of its Subsidiaries who is selected by the Committee toparticipate in the Plan pursuant to Section 4 of the Plan.(g) “Performance Period” means the Company’s 2018 fiscal year and/or any portion thereof or longer period designated bythe Committee.(h) “Plan” means The Chefs’ Warehouse, Inc. 2018 Cash Incentive Plan.(i) “Subsidiary” means a direct or indirect wholly-owned subsidiary of the Company.3. Administration.The Plan shall be administered by the Committee. The Committee shall have the authority to select the employees to be grantedAwards under the Plan, to determine the size and terms of an Award (subject to the limitations imposed on Awards in Section 5 below),to modify the terms of any Award that has been granted (including to modify the performance goals applicable to a particular Award,including as a result of a shift in focus or industry standards or to take into account acquisitions and divestitures), to determine the timewhen Awards will be made, the amount of any payments pursuant to such Awards, and the Performance Period to which they relate, toestablish performance goals in respect of such Performance Periods and to determine whether such performance goals were attained.The Committee is authorized to interpret the Plan, to establish, amend and rescind any rules and regulations relating to the Plan, and tomake any other determinations that it deems necessary or desirable for the administration of the Plan. The Committee may correct anydefect or omission or reconcile any inconsistency in the Plan in the manner and to the extent the Committee deems necessary ordesirable. Any decision of the Committee in the interpretation and administration of the Plan, as described herein, shall lie within its soleand absolute discretion and shall be final, conclusive and binding on all parties concerned. Determinations made by the Committeeunder the Plan need not be uniform and may be made selectively among Participants, whether or not such Participants are similarlysituated. The Committee shall have the right to deduct from any payment made under the Plan any federal, state, local or foreignincome or other taxes required by law to be withheld with respect to such payment. The Committee may delegate to one or moreemployees of the Company or any of its Subsidiaries, including, but not limited to the Company’s Chief Executive Officer, the authorityto take actions on its behalf pursuant to the Plan; provided, however, that only the Committee may determine Awards to executiveofficers.4. Eligibility and Participation.The Committee shall determine the executive officers and, upon the recommendation of the Chief Executive Officer, such other personswho shall be Participants for any Performance Period. Participants shall be selected from among the full-time, salaried employees of theCompany and any of its Subsidiaries. The designation of Participants may be made individually or by groups or classifications ofemployees, as the Committee deems appropriate. 5. Awards.(a) Determination of Target Cash Incentive Awards and Participants. At any time ending on or before the 90th calendar dayduring each Performance Period, the Committee shall designate all Participants and their target cash incentive awards for suchPerformance Period, and establish one or more performance goals.(b) Performance Goals. Awards under the Plan shall be conditioned on the attainment of written performance goals whichmay be corporate and/or individual goals and which shall be consistent with those performance goals set forth in Section 11.2 of the2011 Incentive Plan. Performance goals may be recommended by the Chief Executive Officer (other than with respect to his Award)and determined and approved by the Board or the Committee for any Performance Periods. The Committee shall determine whether andto what extent each performance goal has been met. In determining whether and to what extent a performance goal has been met, theCommittee shall consider the recommendation of the Chief Executive Officer (other than with respect to his Award) and may considersuch other matters as the Committee deems appropriate.(c) Weighting of Goals. The percentage of any Award payable pursuant to the Plan shall be based on the weights assigned tothe applicable performance goal by the Committee.(d) Target Cash Incentive Awards. The Committee shall determine and specify a target cash incentive award to be payablepursuant to an Award for each Participant.(e) Amount Payable. The amount payable pursuant to an Award shall be determined by the Committee in its sole discretionbased on the applicable target cash incentive award, the prescribed weighting of the performance goals, and the Committee’sdetermination of whether and to what extent each applicable performance goal has been met.(f) Performance Target Adjustment. The Committee shall adjust the performance target for the year to exclude losses orexpenses related to any of the following events that occur during the Performance Period: (i) asset write-downs, (ii) litigation or claimjudgments or settlements, (iii) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reportedresults, (iv) accruals and costs for reorganizations, business acquisitions, and restructuring programs, including legal, due diligence andintegration costs as well as transaction bonuses, (v) stock compensation expense, (vi) duplicate occupancy and facility consolidationcosts (vii) any extraordinary non-recurring items as described in Accounting Principles Board Opinion No. 30 and/or in management’sdiscussion and analysis of financial condition and results of operations appearing in the Company’s annual report to stockholders forthe applicable year, and (viii) the effect of adverse federal, governmental or regulatory action, or delays in federal, governmental orregulatory action; provided, that the Committee may then exercise its negative discretion to exclude items of income or gain or includeappropriate items of loss or expense in determining the final performance target on which the Awards will be paid.(g) Payment. As soon as practicable following the close of the Performance Period, the Committee shall certify whether theperformance targets have been achieved (within the meaning of Section 162(m) of the Code), and the amount of the Award so certifiedby the Committee shall be paid to the Participant on a date selected by the Company as soon thereafter as practicable but in no eventlater than the fifteenth day of the third month following the close of the Performance Period.(h) Prorated Payment. Participants in the Plan hired after December 26, 2016 will, in the Committee’s discretion, be eligible for aprorated payout based on full months of participation at the end of the Performance Period if the performance goals applicable to suchParticipant are achieved.(i) Termination of Employment. Any Participant whose employment is terminated for any reason (e.g., voluntary separation ortermination due to misconduct) prior to the payout of Awards under the Plan will not be eligible for distribution of Awards under thePlan.6. Amendments or Termination.The Committee has the right to amend or terminate this Plan in any manner it may deem appropriate in its discretion at any time,including, but not limited to, the ability to include or exclude any employee or group of employees from participation in the Plan,modify the award tiers or percentages or modify or waive performance goals; provided, however, that, in the case of any change to theperformance goals, any such change shall be communicated to Participants within 45 days of the effective date of such change;provided further, that, in the case of termination, any earned Awards under the Plan shall be paid to Participants on a prorated basis onthe date of termination of the Plan. Furthermore, this Plan does not, nor should any Participant imply that it shall, create a contractualrelationship or rights between the Plan, the Company or any Subsidiary thereof or any employee of the Company or any suchSubsidiary.7. No Right to Employment.Neither the Plan nor any action taken hereunder shall be construed as giving any Participant or other person any right to continue to beemployed by or perform services for the Company or any Subsidiary, and the right to terminate the employment of or performance ofservices by any Participant at any time and for any reason is specifically reserved to the Company and its Subsidiaries. 8. Nontransferability of Awards.An Award shall not be transferable or assignable by the Participant other than by will or by the laws of descent and distribution.9. Offset of Awards.Notwithstanding anything to the contrary herein, the Committee, in its sole discretion, may reduce any amounts otherwise payable toany Participant hereunder in order to satisfy any liabilities owed to the Company or any of its Subsidiaries by the Participant.Notwithstanding the foregoing, to the extent Section 409A of the Code is applicable to any Awards under the Plan, such offset shallonly be permitted and made in an amount up to that which is permitted under Section 409A of the Code.10. Adjustments Upon Certain Events.In the event of any material change in the business assets, liabilities or prospects of the Company, any division or any Subsidiary, theCommittee in its sole discretion and without liability to any person may make such adjustment, if any, as it deems to be equitable as toany affected terms of outstanding Awards.11. Recoupment of Award.Each Participant agrees that, if the Company shall so request, such Participant shall return to the Company all or a portion of anyAwards paid to such Participant pursuant to the Plan based upon financial information or performance metrics later found to bematerially inaccurate. The amount to be recovered shall be equal to the excess amount paid out over the amount that would have beenpaid out had such financial information or performance metric been fairly stated at the time the payout was made.12. No Limit on Other Compensation Arrangements.Nothing contained in the Plan shall prevent the Company from adopting or continuing in effect other or additional compensationarrangements, and such arrangements may be either generally applicable or applicable only in specific cases.13. Miscellaneous Provisions.The Company is the sponsor and legal obligor under the Plan and shall make all payments hereunder, other than any payments to bemade by any of the Subsidiaries (in which case payment shall be made by such Subsidiary, as appropriate). The Company shall not berequired to establish any special or separate fund or to make any other segregation of assets to ensure the payment of any amountsunder the Plan, and the Participants' rights to the payment hereunder shall be no greater than the rights of the Company's (orSubsidiary's) unsecured creditors. All expenses involved in administering the Plan shall be borne by the Company.14. Choice of Law.The Plan shall be governed by and construed in accordance with the laws of the State of Delaware applicable to contracts made and tobe performed in the State of Delaware.15. Effectiveness of the Plan.The Plan shall be effective as of the date of its adoption by the Committee. 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. 333-211827) and the Registration Statement on Form S-4 (No. 333-187349) of The Chefs’ Warehouse, Inc. of our reports dated March 1, 2019, 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 this Form 10-K of The Chefs’ Warehouse, Inc. for the fiscal year ended December 28, 2018./s/ BDO USA, LLPNew York, NYMarch 1, 2019 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 1, 2019 /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 1, 2019 /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 28, 2018 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 1, 2019By:/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 28, 2018 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 1, 2019By:/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.
Continue reading text version or see original annual report in PDF format above