Chefs' Warehouse (CHEF) risk factors, FY2025 10-K

Business and Macroeconomic Risk

1. 01Our success depends to a significant extent upon general economic conditions, including disposable income levels and changes in consumer discretionary spending
2. 02Our business is a low-margin business, and our profit margins may be sensitive to inflationary and deflationary pressures
3. 03Changes in our credit profile may affect our relationship with our suppliers, which could have a material adverse effect on our liquidity
4. 04We have significant competition from a variety of sources, and we may not be able to compete successfully
5. 05We rely on third-party suppliers, and our business may be affected by interruption of supplies or increases in product costs
6. 06Price reductions by our manufacturers of products that we sell could cause the value of our inventory to decline. Also, these price reductions could cause our customers to demand lower sales prices for these products, possibly decreasing our margins and profitability on sales
7. 07Increases in our labor costs, including as a result of labor shortages, the unionization of some of our associates, the price or unavailability of insurance and changes in government regulation could slow our growth or harm our business
8. 08Fuel cost volatility may have a material adverse effect on our business, financial condition or results of operations
9. 09A significant portion of our future growth is dependent upon our ability to expand our operations in our existing markets and to penetrate new markets either through organic growth or through acquisitions
10. 10which 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 charged before we acquired the business
11. 11We may have difficulty managing and facilitating our future growth
12. 12Our customers are generally not obligated to continue purchasing products from us
13. 13We 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 our customers are unable to pay their debts to us in a timely manner or at all
14. 14Adverse publicity about us, lack of confidence in our products or services and other risks could negatively affect our reputation and our business
15. 15New information or attitudes regarding diet and health or adverse opinions about the health effects of the products we distribute could result in changes in consumer eating habits, which could have a material adverse effect on our business, financial condition or results of operations
16. 16We rely on independent certifications for a number of our products
17. 17Our business operations and future development could be significantly disrupted if we lose key members of our management team
18. 18Our insurance policies and claims expenses could significantly reduce our profitability
19. 19Impairment charges for goodwill or long-lived assets could adversely affect our financial condition and results of operations
20. 20Changing rules, public disclosure regulations and stakeholder expectations on ESG-related matters create a variety of risks for our business
21. 21Significant public health epidemics or pandemics may adversely affect our business, results of operations and financial condition
22. 22Because our foodservice distribution operations are concentrated in certain culinary markets, we are susceptible to economic and other developments, or events, including adverse weather conditions, in these areas
23. 23Information technology system failures, cybersecurity incidents or other disruptions to our use of technology and networks could interrupt our operations and adversely affect our business
24. 24Our investments in information technology may not produce the benefits that we anticipate38% rewritten
25. 25Our failure to comply with data privacy regulations could adversely affect our business
26. 26We 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

Legal and Regulatory Risk

1. 27Product liability claims could have a material adverse effect on our business, financial condition or results of operations
2. 28If the products we distribute are alleged to cause injury or illness or fail to comply with governmental regulations, we may need to recall our products
3. 29We are subject to significant governmental regulation, and failure to comply could subject us to enforcement actions, recalls or other penalties, which could have a material adverse effect on our business, financial condition or results of operations
4. 30Climate change, or the legal, regulatory or market measures being implemented to address climate change, may have an adverse impact on our business40% rewritten
5. 31Adverse judgments or settlements resulting from legal proceedings in which we may be involved in the ordinary course of our business could reduce our profits or limit our ability to operate our business
6. 32Changes in applicable federal, state, provincial and local tax laws and regulations in the United States, Canada and the Middle East, and the resolution of tax disputes, may adversely impact our business, financial condition or results of operations

Financial Risk

1. 33Our substantial indebtedness may limit our ability to invest in the ongoing needs of our business
2. 34Our ability to raise capital in the future may be limited
3. 35We may be unable to obtain debt or other financing, including financing necessary to execute on our acquisition strategy, on favorable terms or at all

Risks Relating to Ownership of our Common Stock

1. 36Concentration of ownership among our existing executive officers, directors and their affiliates may prevent new investors from influencing significant corporate decisions26% rewritten