Baron Funds Comments on The Chef's Warehouse

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Aug 17, 2016

The Chef’s Warehouse, Inc. (CHEF, Financial), the leading food service distributor to high-end independent restaurants, fell in the quarter after the company reported mixed results. Though its core specialty business was strong, with organic growth of 7.5%, its nascent protein business had integration issues and suffered margin pressure. The company’s results have been spotty, which has led to volatile stock performance. . . strong in the first quarter, but now weak in the second. We believe that the company will work through these growing pains and will show more consistent results and earn higher margins. We remain excited about the company’s unique market position and its opportunity to consolidate the fine dining distribution niche. If they execute, the company should show sustainable continued profit growth and be rewarded with a higher trading multiple.

From Baron Funds' Small Cap Fund second quarter 2016 shareholder letter.