Chefs' Warehouse did not wait long to expand its portfolio in 2013, strengthening its presence in the Midwest with the acquisition of an Ohio food distributor.
The Ridgefield-based distributor of specialty food products has acquired Queensgate Foodservice, a Cincinnati distributor of produce, meats and poultry, dairy, dry grocery and frozen foods to restaurants, caterers, hotels, country clubs and other businesses in Ohio, Kentucky and Indiana.
The purchase, for about $22 million, builds on the acquisition of two businesses in 2012 -- a Las Vegas specialty food importer and distributor in April and a food distributor in Columbus, Ohio, in August.
Chefs' Warehouse now carries and distributes more than 16,300 products to more than 10,500 customer locations in the United States.
"We believe that this acquisition is an exciting opportunity to strengthen our position in the Midwest and offers exciting synergies as we integrate this business with our existing operations," said Chris Pappas, chairman and chief executive officer, in prepared comments.
Queensgate is expected to finish 2012 with about $40 million in revenue and to contribute to the The Chefs' Warehouse's earnings in the last half of 2013, once the business is fully integrated.
The Chefs' Warehouse reported net income of $3.8 million or 18 cents per diluted share in the third quarter ended Sept. 28, compared with a net loss of $1.2 million or 6 cents per diluted share in the same period of 2011. Net sales were $124.8 million compared with $101.7 million in the same quarter a year ago.
Analysts who follow the company are generally upbeat about its prospects.
Through its strategic acquisitions, the company has become a leader in food distribution to high-end restaurants, caterers, hotels and country clubs, said Andrew Wolf, an analyst with BB&T Capital Markets, who has a "buy" rating on its stock.
"They are the best positioned distributor in their niche," he said, adding that it has succeeded in integrating its acquisitions and educating new businesses about its philosophy. "I've talked to their customers and they told me their employees bend over backwards."
The company has said it expects to lose $10 million to $15 million in revenue due to impact of Hurricane Sandy, but there will be no permanent effect, according to Scott Mushkin, an analyst with Jefferies, who also has a "buy" on its stock.
"Chef's unique business model and reasonable valuation keep us positive on the equity," he said.
Shares of Chef's Warehouse slipped 2 cents on Thursday to $15.46.