Legion Partners Issues Letter to The Chefs' Warehouse, Inc. Shareholders Calling for Urgently Needed Board Change

Core Viewpoint - Legion Partners Asset Management has nominated four candidates to the Board of Directors of The Chefs' Warehouse, Inc. to address the company's chronic underperformance and enhance profitability [1][2][3] Company Performance - The Chefs' Warehouse has shown long-term underperformance in share price compared to its peers and major indices, with a total shareholder return (TSR) of 17% over the past year, which is significantly lower than its core peers at 15% and other distribution peers at 9% [5][6][7] - The company has consistently failed to achieve its target adjusted EBITDA margin of 7%, with actual margins falling short over the years, including a projected 5.63% for 2023 [9][12] Board Composition and Accountability - The current Board is criticized for its lack of relevant experience and independence, with an average director tenure exceeding nine years, contributing to a culture of complacency [3][4] - The Board has not effectively held management accountable for achieving profitability targets, allowing nearly $800 million in capital to be deployed in a poorly conceived acquisition strategy [9][11] Future Potential - Despite past performance issues, there is optimism about the company's potential in specialty food distribution, with a target share price of over $85 in the next five years and an adjusted EBITDA of more than $320 million by fiscal 2028 [4][15] - Achieving a 7% adjusted EBITDA margin is seen as feasible through disciplined capital spending and limiting acquisitions [4][11] Nominees for Board Election - The four nominees proposed by Legion Partners possess extensive experience in operations, finance, and strategic planning, aimed at driving significant improvements in the company's governance and performance [13][14][16][20][22]