Chefs' Warehouse Inc (CHEF) 2022 Q1 法說會逐字稿

Greetings and welcome to The Chefs' Warehouse First Quarter 2022 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Alex Aldous, General Counsel, Corporate Secretary, and Chief Government Relations Officer. Please go ahead, sir.

Thank you, Operator. Good morning, everyone. With me on today's call are Chris Pappas, Founder, Chairman and CEO; and Jim Leddy, our CFO. By now you should have access to our first quarter 2022 earnings press release, it can also be found at www.chefswarehouse.com under the Investor Relations section.

Throughout this conference call, we will be presenting non-GAAP financial measures, including among others, historical and estimated EBITDA and adjusted EBITDA, as well as both historical and estimated adjusted net income and adjusted earnings per share. These measurements are not calculated in accordance with GAAP, and may be calculated differently in similarly titled non-GAAP financial measures used by other companies. Quantitative reconciliations of our non-GAAP financial measures to their most directly comparable GAAP financial measures appear in today's press release.

Before we begin our formal remarks, I need to remind everyone that part of our discussion today will include forward-looking statements, including statements regarding our estimated financial performance. Such forward-looking statements are not guarantees of future performance and therefore, you should not put undue reliance on them. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. Some of these risks are mentioned in today's release. Others are discussed in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which are available on the SEC website.

Today, we are going to provide a business update and go over our first quarter results in detail. Then we will open up the call for questions. With that, I will turn the call over to Chris Pappas. Chris?

Thank you, Alex, and thank you all for joining our first quarter 2022 earnings call. As expected, 2022 started off with seasonally moderate business activity in January, which was also slightly impacted by the Omicron variant. Revenue trends grew steadily in February and March across our markets, as consumer demand for dining out continue to show strength. Moderately improving labor markets facilitated new customer openings and increased restaurant capacity. This combined with milder winter weather in the Northeast contributed to weekly sequential sales improvements heading into quarter end.

A few highlights from the first quarter as compared to the first quarter of 2021 include: 62.9% organic growth in net sales. Specialty sales were up 70.3% organically over prior year, which was driven by unique customer growth of approximately 29.4% placement growth of 41.6% and specialty case growth of 47.3%. Organic pounds and center-of-the-plate were approximately 26% higher in the prior year first quarter.

Gross profit margins increased approximately 191 basis points. Gross margin in the specialty category increased 213 basis points as compared to the first quarter of 2021, while gross margin in the center-of-the-plate category increased 111 basis points year-over-year. Jim will provide more details on gross profit and margins in a few moments.

In April, our team completed a number of key projects that will contribute to our future growth and profitability in the coming months and years. On the distribution center front, we completed the retrofit of our new 230,000 square foot facility in Southern California. We have begun the process of moving in and expect to be fully operational in May. This facility will combine specialty and produce operations with meat and seafood processing capability within the same footprint. Our new South Florida distribution center will operate with a similar design and we expect to begin operations in the third quarter of this year.

On the technology and digital front, we introduced our new Chefs' Warehouse website and mobile app to a select group of customers. And we will go live with a full scale rollout over the next few weeks. This digital platform provides an improved online experience for customers as well as enhanced data analytics and tools for our teams focused on driving sales and customer satisfaction.

I would like to thank our team members, our customers, and our supplier partners who are contributing to a successful start to 2022. All of the Chef's stakeholders have been key players in our ability to navigate the fluid dynamics coming out of COVID, including supply chain challenges, volatile food inflation, and an ever evolving labor environment. I'm grateful to all the people who make up Chef's Warehouse and their ability to add key talent and partners. And at the same time, continued to strengthen our position in the industry.

We are proud to announce that we have recently been certified by the renowned independent survey company, great place to work. There are global authority on workplace culture and deploy a rigorous methodology to gather and evaluate employee feedback focused on identifying companies, who have built high trust and high performing cultures. We have never been strong or more focused or more excited about our future. We look forward to performing as the leading national marketer and distributor, especially food products to the chef-driven customer base that continue grow with Chef's Warehouse.

With that, I'll turn it over to Jim to discuss more detailed financial information for the quarter and an update on our liquidity. Jim?

Thank you, Chris, and good morning, everyone. I'll now provide a comparison of our current quarter operating results versus the prior year quarter and provide an update on our balance sheet and liquidity.

Our net sales for the quarter ended March 25, 2022, increased approximately 82.8% to $512.1 million from $280.2 million in the first quarter of 2021. The growth in net sales was a result of an increase in organic sales of approximately 62.9%, as well as the contribution of sales from acquisitions, which added approximately 19.9% to sales growth for the -- growth for the quarter.

Net inflation was 21.7% in the first quarter consisting of 14.9% inflation in our specialty category, an inflation of 28.5% in our center-of-the-plate category versus the prior year quarter. Gross profit increased 99.4% to $117.5 million for the first quarter of 2022 versus $58.9 million for the first quarter of 2021. Gross profit margins increased approximately 191 basis points to 22.9%. Year-over-year inflation was broad based across all specialty and center-of-the-plate categories.

Selling general and administrative expenses increased approximately 37.2% to $110.1 million for the first quarter of 2022 from $80.2 million for the first quarter of 2021. The primary drivers of higher expenses were higher compensation and distribution costs associated with year-over-year volume growth, route expansion and increased fuel costs.

Adjusted operating expenses increased 40.4% versus the prior year first quarter. And as a percentage of net sales, adjusted operating expenses were 18.8% for the first quarter of 2022, compared to 24.4% for the first quarter of 2021. Operating income for the first quarter of 2022 was $6.3 million compared to an operating loss of $20.1 million for the first quarter of 2021. The increase in operating income was driven primarily by higher gross profit, partially offset by higher operating costs.

Income tax expense was $0.5 million for the first quarter of 2022, compared to income tax benefit of $7 million for the first quarter of 2021. Our GAAP net income was $1.4 million or $0.04 income per diluted share for the first quarter of 2022, compared to a net loss of $17.9 million or $0.49 loss per diluted share for the first quarter of 2021.

On a non-GAAP basis, we had positive adjusted EBITDA of $21.5 million for the first quarter of 2022, compared to negative adjusted EBITDA of $9.5 million for the prior year first quarter. Adjusted net income was $3.6 million or $0.10 income per diluted share for the first quarter of 2022, compared to adjusted net loss of $17.1 million or $0.50 loss per diluted share for the first -- for the prior year first quarter.

Turning to the balance sheet and an update on our liquidity, at the end of the first quarter, we had total liquidity of $205.6 million comprised of $79.4 million in cash and $126.2 million of availability under our ABL facility. As of March 25, 2022, net debt was approximately $319.1 million inclusive of all cash and cash equivalents.

Turning to our guidance for 2022, based on the current trends in the business, we are updating and raising our financial guidance to be as follows. We estimate the net sales for the full year of 2022 will be in the range of $2.13 billion to $2.23 billion, gross profit to be between USD 500 million and USD 524 million, and adjusted EBITDA to be between USD 103 million and USD 112 million.

Our full year estimated diluted share count is approximately 42.5 million shares. We currently expect our senior unsecured convertible notes to be diluted for the full year and accordingly, those shares that could be issued upon conversion of the notes are included in the fully diluted share count.

Thank you. And at this point, we will open it up to questions. Operator?

(Operator Instructions) Our first question is coming from the line of Alex Slagle with Jefferies.

Just looking at the full year revenue guidance, assumes I guess the remaining 3 quarters of the year make up 76% or 77% of the total at the midpoint, it seems a little conservative given how demands trended to start the year. So curious if your assumptions consider some choppiness in the back half, or if there's anything one-time in nature that elevated the first quarter, which I don't -- doesn't look to be the case?

Thanks for the question, Alex. Yes, the guidance raise mainly reflects the strength we saw in the first quarter. I think certainly trends right now would be towards the upper end of our guidance. But I think given that it's just the first quarter, we're just a few quarters out of COVID and there seems to be some uncertainty in the -- from a macro perspective, in the markets and in commentary around the economy. We're just hearing a little bit on the conservative side. I would say that recent trends are consistent with what we saw in February and March. But so -- that's really what's reflected in the guidance right now.

Makes sense. And on the labor fund, if you could just help us understand where you are in terms of hiring versus where you want to be and if there's any measurable level of productivity impact on your margins that you think kind of goes away in the second quarter or third quarter?

Yes. Well, I mean, the labor market continues to be challenging. I think our team has done a phenomenal job to get us where we are right now. So optimistically, I think, it has gotten better. So I will think it would continue to slowly get better, but we have the team to service our customers and we expect, like Jim said, the whole macro global issues of the world, we can't control them, we can't forecast. But business was very strong in March and April continues to be very strong and we continue to hire. So I think having a talent officer and having teams that I work with very closely, it's a #1 focus really is making sure that we're able to hire the best availability of talent out there. And I think we've done -- the team has done a phenomenal job doing that and I would expect it to continue.

Our next question is come from the line of Peter Saleh with BTIG.

Great. Congrats on a great quarter. I wanted to ask about the business spending if you guys have any sense on how that's performing kind of year-over-year, and maybe any sort of regionality that you're seeing along those lines on business spending?

When you say business spending, Peter, you mean businesses outspending in restaurants?

No. Maybe just more, more corporate events, conferences and dinners out, do you guys have any sense on how that's been performing, we expected that to really start to kicking the gear especially into March?

Yes. I think, it's obviously contributing to our good quarter. But I still think it's in the first innings. What we're hearing from customers is that people are starting to book, there's places, I know, you can't get a wedding on a weekend until 2024. So that's a great sign. I mean, I think when -- a few months into the pandemic, we thought that there'd be a cure, there'd be an end day, and then it'd be the biggest party ever. And that unfortunately didn't happen. This thing keeps dragging on, and you get waves. So I think people feel comfortable right now with -- as much comfortable as you can, right, with all the therapeutics and hospitals and doctors learning how to deal with this. And hopefully, we don't get a more serious variant and it seems like life is normalizing.

We hear -- I mean, what we're seeing is from our country clubs and our caterers and people aren't back in the office full time. But it's starting to get there. We hear anywhere from 30% to 50%. So we're extremely optimistic -- cautiously optimistic though. And I think that's part of the conundrum right now is that, we see strong demand. We see a lot of customers coming back. Our customer counts going up. The weakest sector is probably still the corporate side of business feeders. People are not back in the office full time. So that business -- but I think a lot of that is transferring out to a local restaurant. So we're benefiting from that. So I think we're prepared for dining to come back and events to come back. And I think slower is a little better allowing labor to come back as well. So we have real positive signs from Vegas and places like Miami that slowdown, but never close. We see hotels there extremely busy. So it seems like it's just picking up steam and hopefully, nothing derails it.

Great, and good to hear. And then Chris, I think on your prepared remarks, you had mentioned maybe a modest improvement in labor and some you're seeing more restaurant openings. Can you elaborate on that maybe where are you seeing some of these restaurant openings? Is this kind of broad base? Is it more regional and just maybe the magnitude would be helpful.

Sure. I think it is broad based. I think many restaurants depending on where they were and the type of restaurants really never open. So finally, we're starting to see many of those restaurants starting to open from March of 2020 and a tremendous amount of green shoots as a -- I think I said over a year or so ago, any good location is going to be taken by a good operator, especially, if they can get a deal where they don't have to build a whole infrastructure of restaurants mainly cosmetic. So we're starting to see a lot of those leases turn. A lot of those restaurants start to open and just the book of openings coming from our thousands of customers that we have, it just shows optimism. It shows that they expect business to continue to improve.

And I think it's spread out, Peter. I mean, I think the places that are still probably the slowest to come back is the midtowns of some of the major cities, where they still don't have the volume, but thank God, for New York, the theater industry pulls so many people in. We're hearing about tourists coming back again. A lot of our clients in the theater district are doing record numbers more than 2019, which shows you kind of the demand is there for people to get back and start enjoying themselves in the city. So I think it's pretty spread out.

Our next question is come from the line of Andrew Wolf with CLK.

Can we talk about some of the inflation trends out there, both in terms of product costs, maybe you can talk about and by your 2 major divisions and also labor, any signs of normalization, maybe even sequentially, like it looks like maybe the beef market sequentially have stopped inflating. Any -- just how you're feeling about -- Jim, as you alluded to with a slightly conservative guidance, how you're feeling about those trends as you know create guidance and think about the business?

Yes, sure. So we mentioned when we reported in February, thanks for the question, Andy, that we kind of built in, on average, moderate deflation versus the third quarter and fourth quarter price environment that we saw in 2021. Sequentially, what we saw in the first quarter was kind of what we expected on the center-of-the-plate prices, they're sequentially down about 4% versus the fourth quarter. But specialty and produce prices were, at least in our markets, sequentially up 4%. So we ended up with a very similar price environment and inflation environment in Q1 that we had seen in Q3 and Q4.

And then we still expect that prices will remain elevated, and that's how we built our guidance. But given the second half of the year, potential for moderate deflation still exists. If it doesn't play out that way, I think we'll be fine in terms of continuing to generate the gross profit dollar growth that we need to operate the business and generate the results that we've been generating. So really, our guidance change reflects the sequential impact from Q4 into Q1, and then really not much of a change in our assumptions on the back half of the year.

What about the labor…

I'll add a little bit to that, Andy, as well that we were -- we anticipated some moderate deflation, and obviously, that's a crystal ball. As Jim said, some -- we have gotten some relief on certain proteins. But I'm starting to be more in the camp that I don't think we're going to get much. Even though logistically, I think you might get some relief in trucking. I think between the war and other factors in the world, I'm starting to think maybe that, unfortunately, we will have -- we're going to have inflation. We're not going to get much of a break. Like Jim said, our team is geared up to deal with whatever comes at us, the way we price and our algorithms and every team is on full alert to try to continue to deal with it and pass on the inflation.

From the labor front, I think it's market-by-market. Some markets are worse than others. And some markets were doing really well and bringing people back to work and getting really good employees. And then other markets are seem to be tougher for various reasons. So it's overdriving right now, you are competing. We have seen more people, thank God, come back into the marketplace, but it's still a headwind.

Our next questions come from the line of Fred Wightman with Wolfe Research.

Maybe just to follow-up on that inflation commentary from a second ago, I mean, are you concerned about pushback either from restaurant operators or consumers? I understand that there's a little bit of relief on the protein side, but some of that specialty inflation is continuing. Chris, it also seems like you're not expecting that to go away. So do you think or are you seeing or feeling any pushback, I guess, ultimately from the consumer about those prices?

Yes. I hate to say, we're the frog boiling in water. I mean, I dine out every day. So I monitor sometimes I'm amazed when I get the check. But again, our customers, they're very resourceful. We're still not back to full menus. A lot of it is because they don't have the labor. A lot of it is the supply chains. And a lot of it is because of the massive inflation. So restauranteurs again, are very creative to survive. So you're seeing more pastas, you're seeing more stews, where you might see 3 different cuts of meat on a menu. You might see 1 or 2 maybe with a hamburger. So maybe you won't see a strip and a rib-eye were -- very expensive things. We're seeing different dishes with maybe it's pasta with different types of clams and scallops and products that are available. So it's definitely influencing menus and restaurants are trying to be competitive, and keep prices where they think are affordable to keep the traffic in. And then we have our high-end.

And one of the reasons I've always love this business for almost 40 years is that I always felt there were consumers that were willing to spend, whether it's business people or affluent business people or consumers or travelers or celebratory meals. And that market seems to be really strong. And they're passing on the prices, and it doesn't seem like there's a lot of pushback because you can't get a seat in one of the great restaurants still. So I'm pleasantly -- I don't want to say surprised because we've been doing this so long. But it gives me a little more shut eye at night knowing that those consumers are out there and have been for almost 40 years. And people were still willing to pay for a great experience and a great meal and the demand for great ingredients is as high as ever.

Makes sense. And just maybe a follow-up on your labor and staffing comments. I mean, if we think about some of the onetime costs and hiring inefficiencies that the industry has been dealing with given sort of that tightness, as that labor continues to improve and that pool continues to widen. Do you think that some of those inefficiencies go away? Or do you think that something has sort of changed structurally from an onboarding perspective?

I think it was challenging before the pandemic, and now it's just exasperated. I mean, these are hard job, right, whether it's at the restaurant, in the kitchen or whether it's in our side, driving trucks and working night shifts, they've always been tough jobs. We're all paying more for the same job. So I think that's helped. I think it's becoming more like other parts of the world where it's not a temporary job, you people used to think that, people are working either as a waiter or they work in the night shift, and that's just temporary. And I think we realized that that's people's full-time jobs and they need to be able to make a certain amount of money and have certain benefits to be able to live, especially in the cities.

So I'm hopeful that this increase that has happened, we're seeing it. I hope it's forever that with the raises have come people that are not quitting and are showing up, and it's cutting down the turnover, which is extremely expensive, right, to train people. It's a big factor in our overall expense. So I'm cautiously optimistic that people are coming back to these jobs because they're better paying. But at the same time, we're traveling the world, looking for products that are high quality that needs less labor, because as I said, even before 2020 when the pandemic hit, labor was an issue and we were looking for super high-quality products that meet the standards of our chef-driven restaurants that required less labor. And they're high value, they're profitable for us, and we're going to continue to make sure we hunt out and get our manufacturers, producers to give us those items for our customers.

Our next question is come from the line of Ben Klieve with Lake Street Capital.

Congratulations on another really good quarter here. Just one question for me about kind of how you're assessing the M&A landscape today, especially how it's evolved over the past few quarters here as inflation has increased and maybe the higher quality available businesses have been acquired. So can you talk about how the quality of the business is available to you and the M&A world has evolved? And then also how multiples have maybe evolved here as inflation has become a more material event, maybe being offset here by the opportunities with the world kind of returning back to normal?

Sure. Great question. The pipeline was frothy going into the pandemic. So I think now it's even frothier because there was such a backup, not a lot of deals got done, obviously, in '20. We did a bunch, I think, in '21 going into '22. Optimistically, I think it's going to continue to be frothy. Multiples, we're pretty disciplined, I mean, we're not trying to be the biggest. We've always said it has to be a cultural fit. We're pretty disciplined in the multiples that we've paid historically, would be pay more for a great business that's growing and has something special. I think yes. But a lot of what we buy is -- are things that need to be modernized, either they need facilities or they need new systems. They're either a little tired or they've reached the maturity point. There's no -- it's a lot of family businesses where there's nobody really wants to go into the business.

So we pass on many, many deals we think that just too expensive. And I think there's plenty of money out there chasing deals. So it does get competitive on some of the deals. And our philosophy really is we don't -- we really don't need to do anything at this point. We have built such a great foundation to grow organically. But I think new territory, we'd like to acquire somebody because it really speeds up going into a territory, new categories also strengthening our offerings and allow us to grow more in what we call the hybrid model, which we've been doing very successfully with adding all these protein divisions now in produce.

So we're in a great position because we're not forced to do any deals, but I think that's -- I think, it is the Wild West for the next few years. I think you'll see a tremendous amount of deals getting done. And I think we'll do a lot of good smart deals. We'll do fold-ins with the new facilities we have that gives us the capacity, those are highly accretive. So I think you'll see us very active in that market. And I think there's some new territories that give us great opportunities that we've been looking at. And optimistically, I think we'll get deals done there. But we're remaining very, very disciplined in how we go about it.

Got it. Enough. That's all interesting color. That does it for me. Again, congratulations on a great quarter, and we'll get back in queue here.

Thanks, Ben.

Our next questions come from the line of Kelly Bania with BMO Capital Markets.

Chris and Jim, just curious, as you're sitting here today, how you think about that expectation to get back to 2019 volume levels, I think the plan was around by Q4. Just curious if that has accelerated a little bit here? Or you still want to keep that time line for case -- for volume to get back to '19 levels?

Yes. Thanks for the question, Kelly. Yes, we're definitely on the path to meet it and exceed it. I think as I mentioned earlier, we're trending towards the higher end of our guidance, while we're being a little conservative in our update. I think currently, we're around 95% of 2019 pro forma for the acquisitions in terms of aggregate volume. Obviously, some markets are higher, some markets are lower, but it's averaging out to that. And then when you add in the inflation versus 2019, you can get a sense of how we're trending overall. But I would say that we are in a slightly accelerated pace versus our original estimate to get there by the end of the year.

Perfect. That makes a lot of sense. And a lot of questions about labor, but I guess just another question there. When you speak to your core customers, do you have a sense for the extent to which labor is still a constraint on their volume and how you see that progressing?

Yes. I mean I think it's -- again, you got a lot of mix answers. I speak to sometimes a few hundred customers a month and a year. Not a problem. We're firing on all cylinders. We got labor. And we're going back to full capacity and 7 days and everything we've done. And then depending on other parts of the country, we hear that they're only opening for lunch, so many days to give staff a break because they're going full tilt at night and just too many hours and they don't want to have a staff that's not proper for that restaurant, so I still think it's mixed. But again, our high volume, our high-volume restaurants seem to be able to attract labor and doing big numbers again. So I think it's a little bit all over the place, Kelly.

Okay. That's helpful. And just questions on fuel. Obviously, a lot of questions. Several weeks ago, just about diesel costs. And can you just remind us how that's impacting you? What you're planning for the rest of the year, and to the extent to which you're passing that on to your customers?

Yes. Sure. So we went into -- when we were planning and building our guidance for '22, we had already factored in a pretty decent increase as we do every year, just from an assumption perspective in diesel prices. Obviously, what's played out has been -- has exceeded that. But again, no -- so part of it is mitigated just by the fact that we built a pretty good portion into our guidance and then our focus is, our operating teams, our commercial teams, are focused on generating the appropriate gross profit dollar growth to offset the input cost impacts that we see. Obviously, a very short-term kind of violent spike, like we saw in an over a couple of weeks, you can't completely mitigate.

But what you can do is adapt your pricing, your delivery model in each specific region to mitigate the next piece of that increase. And then really what we do is, we focus on the medium-term and the long-term, and that is making sure that we plan appropriately. And also, as we retire our trucks and we retire a pretty decent amount of our trucks coming off of leases or our own trucks that were retiring, and we're replacing them with new, more fuel-efficient trucks to the extent of 25% to 30% more fuel efficient. And obviously, that's a more medium to long-term impact, but it can definitely make an impact over a couple of months and even over a couple of years.

Okay. That's helpful. And just lastly, in terms of the Southern California facility, can you just elaborate a little bit more on the savings you expect there and maybe how many more facilities over the next several years, could look like the format of Southern California structure?

Yes, I'll let Jim will talk about savings, but really, I mean, this is the quadruple of our business in Southern California. So we've been highly restraint, we're getting by because we had room in our Vegas facility where we can store products and we had the trucks going back and forth every day. So it really helped us get through this period of being out of space. So I mean, these facilities, we're going to open these 2. We have another one, it can open probably next year in Northern California, but that's really for consolidating our processing for protein.

But Kelly, I mean, I've always wanted to build facilities like those. And finally, now we got 2 coming on almost at the same time. And we'll measure the savings of sharing the trucks, right? So we have all our categories and these new buildings. So the hope is that we will cut down on our trucking expense, we will need less trucks, right. One truck being able to go to a lot of customers with more of this -- more of the categories, so we can start eliminating some of those trucks that some customers we have poor trucks going to a day.

And sharing management, I think that's going to be a big savings, right. So you don't need 5 facility managers right now, in some markets we have 5 facilities. So I think that's really where the savings comes is in cutting down on fuel, cutting down on truck expense, cutting down on manpower, and cutting down on high -- higher paid management that you would have in multiple facilities. So that's really the exciting part of this. And also being able to satisfy customers and add obviously more dollars to the truck, which should be a much more profitable model.

Kelly, I'll just add that to Chris's point, it's really investment in growth. Our Florida facility, L.A., San Francisco, eventually we'll do something in New England and the Mid-Atlantic, but it also gives us the capacity to do fold-in acquisitions as we create that capacity in key markets like L.A. and Southern Florida. We have a lot more room to do fold-in acquisitions and create synergistic profitability.

Our next question is coming from the line of Todd Brooks with The Benchmark Company.

Two quick questions for you, one, and this follows up on the M&A discussion earlier, Chris, if you go back to what the historical kind of algorithm was for Chef, it was mid-single-digit growth from organic operations, mid-single-digit growth from acquisitions to get to that double-digit top line. With where we stand in the recovery and the opportunity to take, I would imagine, a solid amount of share coming out of the recovery. If you look at kind of that algorithm acquisitions, I know are long tailed and when you get them to the finish line to make central to them. But what do you feel like that organic growth piece looks like for the next couple of years given just emerging from the pandemic and your place in it and how much stronger you are as an operator versus your peers?

Yes. Good question, tough question, Todd. It's still so early coming out of this. But the plan was always to have mid to higher single-digit organic growth. I mean, If we can continue that, I think that's really healthy growth. Especially, with so much inflation now, it's really -- we're looking for case growth, piece gross, pound growth, and the combination -- you heard we speak for last 5 years, 10 years is the industry is going to consolidate for many, many reasons. And I think the pandemic is actually going to push that to go even faster. So I think that's why we've been -- have been talking about the talent that we've been adding. Even during the pandemic, we continue to hire, look for talent because we know we're going to need people to help manage these businesses and to help grow them.

And I think that's really, the big key is, getting the talent, getting the talent trained. Because I think the opportunity is bigger than I even imagined years ago, when I was looking to start to grow much more nationally. I think that the pandemic has actually reset it to where there will be even more consolidation for various reasons. We've between inflation and healthcare and labor, an industry that was consolidating, it's kind of consolidate more. I mean, you'll have green sprouts of maybe boutique little businesses with high margins. But in this competitive landscape, and put the fight to labor and real estate getting extremely expensive on the warehouse side, we call that the Amazon effect. I think it's going to really push.

So organically, it could accelerate the organic growth as well because we're going to be consolidating categories and we'll get that category push that we've seen over the last year that were started selling more proteins to our existing customers and vice versa. I think that's what was -- that's why we had industry-leading organic growth because it was being fueled by that hybrid sales. So I think the next 5 years going to be really interesting. Hopefully, this war ends soon and some of the trucking issues and container issues start to dissipate. And I think it's going to be a really exciting 4, 5 years.

That's great. And then my follow-up, Chris, I know you're plugged-in with a lot of the industry groups, and I know it looks like there's one last shot at getting some support out of Congress around the RRF and just actually getting the funding approved for the -- I think it's almost 180,000 restaurants that got shut out of the first iteration of the fund. Do you think it gets done with where we are in the recovery and on the off chance that it gets approved in the Senate? What does that mean for your customer base and those that were shut out, if they suddenly an influx of kind of support when they've fought their way through and they're on the front end of the recovery as well?

Yes, I mean, a great question. Again, food away from home when they say restaurants, I mean, it's just a vast field of operators. And I can honestly say that we're just not seeing a severe problem from our restaurant focus, the 50,000 plus customers that we have. I mean, I'm sure so many have been hurt. Obviously, many closed, but the ones that are operating right now. We can tell by our receivables as well. It just doesn't seem like there's a -- there's an issue. So I don't want to jinx myself, but it seems like it seems like they're back on their feet, obviously, hurting with labor being tough and it was tough business to begin with. But I'm just not sure really where that money is going to go because the rest of -- it might be a completely different subsection of clientele than the ones that we serve.

Yes, I was just wondering if it might go into actually accelerating second locations and things like that, more offense…

Well, they're opening like crazy, Todd. So I always get nervous when I see so many openings. So we've had a lot of openings coming.

Thank you. There are no further questions at this time. I would now like to turn the call back over to management for any closing comments.

Sure. Well, thank you for everyone joining our earnings call. The team put up a great quarter. It was not easy, but it just shows you the hard work and dedicated team at Chef's, what they could do less -- more with less. So thank you for joining the call and we look forward to our next earnings call. Thank you very much.

Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.