Chefs' Warehouse, Inc. Q1 FY2020 Earnings Call

Ladies and gentlemen, greetings, and welcome to the Chefs' Warehouse First Quarter 2020 Earnings Conference Call. As a reminder, this conference is being recorded. I'd now like to turn our conference over to your host, Alex Aldous, General Counsel, Corporate Secretary and Chief Government Relations Officer. Please go ahead, sir.

Good afternoon, 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 2020 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 2020 earnings call. First, let me begin by saying that all of us at The Chefs' Warehouse hope that everyone on this call and the entire investor community remains safe and healthy during this time. As a company, our primary focus is the health and safety of our team members, customers, and supplier partners. Our thoughts and prayers are with those impacted by this unprecedented health and economic crisis. This is a tough time for our industry, but I am confident we will get through this together. First quarter started off with strong organic revenue and gross profit growth in both January and February. In addition to solid growth from Sid Wainer and Cambridge Packing, both acquired in the period. The COVID-19 pandemic started to impact our business slightly in late February and early March. The most material impact began in the final two weeks of March following the government shutdown of dining restaurants, bars, cafes, and events. During the quarter, organic net sales were 6.6% lower versus the prior year quarter. Specialty sales were down 7% organically over the prior year, which was driven by a reduction in unique customers of approximately 1.9%, lower placements of approximately 9.6%, and specialty cases lower by 5%. Organic pounds in center-of-the-plate were approximately 10% lower than the prior year quarter. Although we do not typically disclose monthly metrics, we feel it's important to communicate the path the company was on prior to the impact of COVID-19. Year-over-year volume metrics were particularly strong during the first two months of 2020 as specialty cases grew 10.8% organically versus the same period in 2019. March specifically, cases declined 28.4% versus March of 2019. Center-of-the-plate pounds were down slightly at 0.07, and in January and February combined versus the same two-month period the prior year, they declined 22.6% in March due to significant impact of the shelter-in-place orders in our key markets. Gross profit margins decreased approximately 105 basis points during the quarter; gross margin in the specialty category decreased 311 basis points as compared to the first quarter of 2019 while gross margin in the center-of-the-plate category increased 156 basis points year-over-year. Excluding the impact of one-time inventory reserve estimates due to COVID-19 impact, total gross profit margins decreased 17 basis points and specialty margins decreased 154 basis points. Jim will provide more detail on margins in a few moments. Now to move on to our current priorities and actions. Many of our customers have remained open for takeout service and delivery, and we are committed to supplying and supporting them during this unprecedented time. We have also partnered with multiple retail food outlets to supply both specialty and center-of-the-plate products. We have successfully launched Shop Like a Chef, our direct-to-consumer delivery site that we now operate alongside our Allen Brothers' great steakhouse, Premium Steak, and Seafood online platform. Like so many of our partners and customers, we have made the difficult decision to temporarily furlough certain employees so they can take advantage of the government support. We are providing health benefits for the period of furlough and expect to allocate 10% of the profits from our new Shop Like a Chef online store to our frontline furloughed employees and others in the foodservice industry who have been impacted. We hope to bring back as many furloughed employees as possible as the macro environment improves over the coming months. I would also like to express my deep thanks to the Chefs' Warehouse team for their flexibility and dedication to their team members and our customers and suppliers during this challenging time. Our team quickly pivoted to service food retail outlets and rapidly developed and executed a fast-growing online platform direct to consumers. While we expect to continue to innovate and develop new business lines, we are focused on being ready to supply and support our chefs and all food service customers as they begin to fully open over the coming weeks and months. And finally, as mentioned in recent public announcements, we have taken steps to strengthen our liquidity. Before I turn it over to Jim, I'd like to express our deepest sadness for those impacted during this unprecedented time. Our industry at its heart is about community. In times of happiness and success and in more trying times, like today, we are committed to being partners to chefs across the country and providing them with the highest quality ingredients and specialty food products. We are being diligent about finding creative solutions to support the restaurant industry in the coming weeks and months and know we will emerge from these trying times stronger than ever. With that, I'll turn it over to Jim to discuss more detailed financial information for the quarter and an update on our liquidity and cost-related actions. Jim?

Thank you, Chris, and good afternoon, everyone. Our net sales for the quarter ended March 27, 2020, increased approximately 5.2% to $375.4 million from $357 million in the first quarter of 2019. The increase in net sales was a result of a decline in organic sales of approximately 6.6% as well as the contribution of sales from acquisitions, which added approximately 11.8% to sales growth for the quarter. Net inflation was 0.2% in the first quarter, consisting of 2.1% deflation in our specialty category and inflation of 3.1% in our center-of-the-plate category versus the prior year quarter. Gross profit increased 0.8% to $90.9 million for the first quarter of 2020 and versus $90.2 million for the first quarter of 2019. Gross profit margins decreased approximately 105 basis points to 24.2%. Specialty deflation was driven by above-average decreases in dairy and specialty ingredient categories, partially offset by inflation in the cheese category. First quarter inflation in the center-of-the-plate category was primarily driven by a higher percentage of overall sales attributed to our prime and other premium cut sales in our Allen Brothers division. Gross profit dollar growth and margin were significantly impacted by a one-time reserve for inventory obsolescence of approximately $3.3 million due to the estimated impact of the forced shutdown due to COVID-19. Total operating expense increased approximately 28.4% to $107.9 million for the first quarter of 2020 from $84 million in the first quarter of 2019. An increase in reserves related to bad debt of approximately $15.8 million due to the COVID-19 shutdown was the primary driver of operating expenses in the quarter. On an adjusted basis and as a percentage of net sales, operating expenses were 27.9% for the first quarter of 2020 compared to 21.6% for the first quarter of 2019. Excluding the estimated impact of the shutdown on first quarter revenue and bad debt reserve, we estimate adjusted operating expenses as a percentage of net sales would have been relatively unchanged versus the prior year quarter. Operating loss for the first quarter of 2020 was $17 million compared to operating income of $6.2 million for the first quarter of 2019. The decrease in operating income was driven primarily by increased operating expenses, offset in part by higher gross profit. Income tax benefit was $8.1 million for the first quarter of 2020 compared to an expense of $0.4 million for the first quarter of 2019. Our GAAP net loss was $14.1 million or negative $0.48 of loss per diluted share for the first quarter of 2020 compared to net income of $1.1 million or $0.04 per diluted share for the first quarter of 2019. On a non-GAAP basis, adjusted EBITDA was a loss of $13.8 million for the first quarter of 2020 compared to income of $13.2 million for the first quarter of the prior year. Adjusted net loss was $17.7 million or $0.60 loss per diluted share for the first quarter of 2020 compared to adjusted net income of $1.4 million or $0.05 per diluted share for the prior year first quarter. Turning to our liquidity and cost-related actions taken to manage working capital through this unprecedented period. As mentioned in our March press release, we borrowed $100 million on our asset-based loan facility. And as of April 30, 2020, we have approximately $200 million in cash on the balance sheet and approximately $33 million in availability on our asset-backed loan facility. We are working closely with both our customers and supplier partners on actively managing receivables, payables, and inventory as we navigate this challenging near-term period for all involved. Going forward, we expect to manage working capital via flexible arrangements and help ensure success for all stakeholders as we return to a more normal business environment. We have reduced costs considerably through multiple actions, including but not limited to temporary furloughs of certain employees, layoffs and the reduction of volume-driven operational hours and costs. Temporary salary reductions across multiple work groups, including a 50% reduction in salaries of the executive leadership team, renegotiation and termination of certain lease contracts, and general reductions in G&A spend. We feel the actions we have taken to date on cost and liquidity will allow us to manage the business for an extended period during this unprecedented time. We may take additional actions depending on how the business environment develops over the coming weeks and months, and we continue to evaluate potential additional sources of capital that we may deem appropriate at some point in the future. As mentioned in our press release dated March 18, 2020, we have suspended our 2020 full-year guidance due to the uncertain economic environment created by the COVID-19 forced shutdown. We hope to provide more color as we gain more clarity on the length of the economic downturn. Thank you. And at this point, we will open it up to questions.

We'll take our first question from Chris Mandeville from Jefferies.

I appreciate the color on the maneuvers made to reduce costs in the near-term and near to intermediate term, for that matter. But maybe can we just step back and try and review your cost structure, maybe give us a better sense of really your split between fixed versus variable? And one of the last comments you just made about how you feel comfortable with your liquidity over an extended period of time. I guess, I'm just curious if you could put a finer point on that in regards to what you're really expecting from what is an extended period of time really translate into. I'll start there.

Sure. So Chris, the first part of your question, I think similar to what you've heard and seen from the other distributors that are public, we have a similar cost structure, basically 2/3 variable and 1/3 fixed. So not materially different from other competitors, etc. In terms of the near-term cost actions, we have considerably ramped down the variable cost structure to the extent that there's a 60% reduction in our variable cost, which translates to about a 40% reduction in our overall operating spend. Now the way we look at the rest of the year, we don't, obviously, we don't know, but we would expect to layer in additional variable costs that are volume-related as the business environment starts to open up. But once again, we're not predicting anything; that's just how we're modeling it. In terms of liquidity, you can see from our prepared remarks and the release, between cash on the balance sheet and the remaining availability on our asset-based loan, we're at about 40% of prior year revenue, which I think is a fairly strong liquidity position. And we expect to be able to manage through this crisis. We've noted in our 10-Q that we expect to be able to manage the business for the 12-month period, kind of our standard disclosure. And so we're staying with that disclosure. I think we can manage beyond that. And that's based on a number of different models that we've run. So I'll leave it there.

Okay. That's helpful. And then I guess, just in terms of that pulling back of your variable costs. And I think you said that equates something about a 40% reduction to OpEx. I mean, how much of that was actually captured within Q1 versus what we should be anticipating in Q2? And then I guess just thinking about generally trying to find ourselves a bottom here. Are you expecting based on what you're seeing today that Q2 is the most severe in terms of sales and EBITDA declines?

Yes. Virtually none of it was captured in Q1. The ramp down in costs, we probably had a little bit in terms of volume-based hours in the operations. But the significant actions that we took primarily started to impact in April. So I wouldn't put too much of that in Q1 at all. And then I think, look, we can't obviously predict the future, but we've seen incremental increases in volume and weekly revenue on a weekly basis. So I think you could extrapolate as things start to open up that we would expect Q2 to be the low point.

Okay. Just the last one for me, and I'll hop back in the queue. Just in terms of having found that maybe most severe of sales bottoms in the latter portion of March. Can you just help size that up for us on really where you guys dropped relative to where we might be sitting today in early May?

Yes, when everything was shut down, we really had no business, and it felt like a major shock. However, each week has shown improvement. I’m looking for the positives at this point. Our focus is on independent restaurants in major cities like California, New York, and Chicago, all of which were ordered to shelter at home. Our clients weren't serving food, only takeout, and we made a significant transition to establish a business I’ve always envisioned. Although we consider Chefs' Warehouse to be more than just a typical distributor, acting instead as a food marketing company, we represent nearly 2,000 amazing artisan producers from around the globe. I've wanted to develop a hybrid model, and we are quite different from large broadliners, from our truck sizes to our market approach, utilizing chefs as salespeople. It was a remarkable opportunity to launch Shop Like a Chef. Our IT department and leadership team managed to pivot within a week, creating an entirely new business during the pandemic that keeps growing, and we are improving every day. We are optimistic about this being a sister business to CW. Recently, we achieved a day with sales at 50% of last year's volume, which is impressive considering our customers are mostly closed. Our talented team has successfully generated new business and assisted customers with takeout to reach those 50% days. We're eager to resume regular operations and hope for a medical breakthrough soon. Cities are starting to open up, and we are looking forward to Southern Florida reaching at least 25% capacity. New York, California, and Chicago remain closed, but we are hopeful about the potential for increased business even in these challenging conditions.

Okay. So maybe I could take one last one in there based on the comment there and how we are reopening the country on a state-by-state basis. Can you just remind us a little bit in terms of what your sales exposure is by region or just give us kind of the top 2 or 3 markets and give us some perspective on diversification today versus what we saw back in '08 and '09 time frame?

Yes. Well, back in '08, '09, obviously, New York was a much larger part of our business. And today, it's still our biggest business, but we're much more diversified throughout New England, throughout the whole West Coast, throughout the middle of the country. So it's a much more balanced portfolio of customers and business volume.

Our next question comes from Joshua Long from Piper Sandler.

Great. I wanted to think you might be able to first provide some context or around what we're hearing in terms of the potential disruption here on the protein side. I mean, you guys having your own house brands there. I think you have a unique perspective on that. And I wanted to see if that was something that is starting to work its way through to your system now, given that you're at the higher end and a lot of the commentary has been focused maybe on more of the lower end on the beef protein in particular. And then expanding more globally as we think about all of those goods that you bring into your warehouses and connect with your chef partners from around the world, what kind of disruption do you expect as we start to open things up and admittedly were on the front end of this reopening cycle? Should we start thinking about or having that conversation around potential disruptions in all of those products and items you're sourcing from artisan partners around the world going forward?

Sure. Well, amazingly, our producers overall, all state opened. So we import, obviously, a lot from Italy and France. And our category management team, the daily call I have said, basically, they're all producing and they have products. So I think it's more logistically. I think there's been some disruption maybe with, obviously, air freight got very expensive. The good news is that we didn't really need a lot of that product during this pandemic. The bad news is that the freight got expensive. And obviously, that will keep coming down as there's more and more flights and more and more ships that are coming in. But that hasn't really been something that's been a real issue for us. I mean, on the protein side, I know it's been in the papers a lot. I know that the pork side, which is not a huge part of our business, is really disrupted. Our team did a great job getting ahead on the beef side. So we went into the shortage really well prepared, I think, better than most. A lot of products, as you said, our high-end cuts, are prime and our real premium beef cuts, we were pretty prepared with a good amount of inventory. So I give the credit to our talented protein team for really getting ahead of it. And I don't have a crystal ball, but I don't think it's going to be a disruption for a very, very long time. So I think we're fine with it. I know that you hear Wendy's has no hamburger and there's a shortage on the shelves in the supermarkets. But I think we did a great job to, for the current outlook, we're well positioned for that.

Great. And I wanted to also then dig into some of the integration work that had been going on with the recent acquisitions. And clearly, I think it's probably no understatement that the integration process during a crisis like this has got to be even more challenging. But as you think about what you've been able to accomplish and then just the high-quality brands and teams that you've now got as part of your family, how do you expect that integration process to go forward? Just looking out over the next quarter or two, obviously, it will help as things start to reopen. But just from a back-of-house piece that we don't typically get to see, was this period particularly disruptive? Or was a lot of the work behind the scenes more or less slowing as expected?

Yes, we've all been working, mostly remotely, on upgrading our systems in preparation for the country's reopening. This aspect hasn't been our highest priority regarding integration deadlines, but the companies are functioning well. While further integration would be beneficial, our primary focus during the pandemic has been on enhancing our B2C business, which the team managed to do exceptionally well. We even established a new business during one of the most challenging times in my career. Now, we're shifting our attention back to reopening and the integration schedule. However, this is not our immediate focus; our priority remains on reopening our operations, serving our customers, and ensuring our employees' safety. We're committed to protecting our workforce and financial stability so that we are prepared when we can resume normal operations, hopefully, soon.

Great. Thank you for that. And maybe pivoting a little bit to the last piece where we're getting to the reopening and having things come back online, a common theme that we've been talking about and hearing is just the kind of accelerated adoption of digital or technological tool sets. Obviously, you've been able to build out a very fun, interesting, and meaningful piece here on the B2C side, but curious on how you think about technology going forward and maybe just a recap of where it was heading into the current period. And if there's an opportunity to lean into that as businesses turn back on.

Sure. During this time, we've gained valuable insights about online operations and our unique relationships with customers at The Chefs' Warehouse. If we were to categorize ourselves with other broadliners, we identify as a specialty broadliner. Our customer base is distinct because we cater to many smaller independent restaurants as well as some of the world's finest restaurants and hotels. We are focused on enhancing our online ordering systems and our go-to-market strategy has always centered on a team approach. Our talented team members are experts in various categories like seafood, meat, specialty products, groceries, and dairy. The emphasis on takeout has accelerated, which is unlikely to change, and it will enhance our online business capabilities moving forward. Although the pandemic has highlighted our reliance on technology, it also reminds us that we are fundamentally in the people business. We are incorporating technology in our warehouses and investing in automation, allowing our customer service and sales teams to focus more on client engagement and product presentations. This approach has led to significant cross-selling opportunities. In the first two months, we recorded approximately 10% organic growth in specialty sales. We were maximizing our efforts and benefiting from our investments in people and processes. As business operations resume, we plan to continue investing in technology and increasing our online order customer base while also expanding category sales, as ultimately, it’s about generating gross profit dollars.

Our next question comes from Kelly Bania of BMO Capital.

Kelly Bania here. Wanted to just ask a couple of questions about your customer base and just how they're managing through this. And if you have any anecdotal or metrics to share about what percent are kind of operating and doing takeout or delivery of some sort? And then also as these states open back up, so, obviously, Texas, I think, capacity restrictions of the 25%, I guess we'll see what happens in New York and California, but, and other parts. But what are you hearing from your customers? Are they going to be opening up as soon as they can? Do they feel like they need to wait until they can operate at full capacity? Just what are you hearing from your customer base?

Yes, Kelly, I believe it's a varied situation across different places. For example, in California, which has had much better weather than the East Coast recently, the circumstances differ from those in colder regions. Some customers are managing to operate at 25% capacity. What continues to amaze me is the entrepreneurial spirit of our customer base. While many might assume that numerous restaurants are closing, the reality is that restaurants frequently close and also new ones open. It's not the case that everyone is destined to become a financial analyst or investment banker; many people pursue their passion in the restaurant industry. Looking back at past downturns, such as the financial crash, we see that when rents decreased and failing restaurants left the market, new ones emerged with lower cost structures. Currently, lease negotiations are happening across the board, and those establishments capable of operating profitably at 25% capacity are likely to reopen. Additionally, many are preparing for a return to full capacity. The rise of takeout initially provided a lifeline for restaurants that were closed, allowing them to start serving customers safely, with contactless options. I anticipate that many of those restaurants will open at 25%, then ramp up to 50%, and eventually operate at full capacity. Some areas that are already open have increased their outdoor seating significantly. The timing is fortuitous with the warmer spring weather, especially in places like Florida and California, where additional seating is being set up in parking lots, using tents and canopies. This creates a much safer environment for customers, who can enjoy the fresh air while maintaining space from others. Smaller, independent restaurants are likely to be among the first to operate at 25% capacity due to their ability to manage costs effectively, often because they are family-run businesses. That's the trend I'm observing from the segments that have already begun to operate.

Okay. That's really helpful. And I guess on the direct-to-consumer initiative, can you help us think about how that's going? What you're seeing? And it sounds like this is more not only just a temporary strategy but could be a longer-term part of the company. And so as we think about that, like, what are you thinking could be the EBITDA margin profile of that business longer term?

Yes, it's a bit too soon to provide a forecast. At this point, we've managed to keep many people employed and foster creativity within our leadership team, which is crucial for our B2B operations. The positive response we've received has been beyond our expectations. While I have always wanted to pursue this direction, I never anticipated launching it in the midst of a pandemic. When we established the Chefs' Warehouse brand, we envisioned a consumer-oriented business like Shop Like a Chef, and I still believe that opening outlets is a possibility in the future. However, we're still working through the complexities of home delivery, which makes it difficult to predict our EBITDA. We've learned from other companies that deliver to consumers how critical it is to offer time slots and focus on packaging. Currently, we're in the early stages. Despite our success, our model will need to adapt, and our packaging will also have to evolve. From my extensive experience in the industry, I’ve always understood that our customers are eager to access exceptional products, and there's significant value in offering items in bulk. We do not aim to compete with retailers like Walmart or supermarkets; instead, we want to leverage our strengths, which include our knowledgeable staff, expertise in food logistics, and understanding of our customers and their needs. We strategically entered neighborhoods where our customers' customers reside, anticipating that they would want to buy our products, especially during this time when home cooking has surged. Offering our delicious stuffed tortellinis and raviolis from Northern Italy is appealing, and having a diverse selection of olive oils enhances our offerings. We are just beginning this journey, and our team is enthusiastic about advancing to the next level. If there is any silver lining, it's reminiscent of how Newton formulated his theory of gravity during a plague, as Chefs' Warehouse developed Shop Like a Chef during this pandemic.

And you mentioned just I think just alternative revenue streams in general. I mean, can you help us think about grocery and the opportunity there? And is there anything else that you're thinking about?

We currently envision our 40,000 customers reopening. It’s remarkable that this week, we achieved 50% of last year’s volume despite our customers mostly being closed. This demonstrates our team's creativity, including our sales team and leadership, in finding business opportunities. Our customers have indicated a strong demand, with lines extending outside, leading us to launch our first store as a Chefs' Warehouse outlet. It sold almost 5,000 boxes, amounting to about $200,000 in sales, which reflects the busy conditions at supermarkets and Costco. We've discovered various new channels for sales, which many have since replicated, referring to them as "grocerets." While some of these trends may fade, restaurants will recognize the need for alternative income sources. If I had to predict, business might not flourish for a while, especially with tourism down. However, restaurants are starting to generate volume. They won’t return to pre-pandemic operations until circumstances change, but I anticipate a significant increase in takeout, which will offset sit-down losses. It won’t be universal, especially in areas that aren't residential, but there’s substantial new business in takeout that I believe will persist. From my own experience, as I prepared meals at home, I ended up opting for takeout more frequently in the last two weeks. People will inevitably grow weary of cooking and cleaning up. As individuals return to busier routines, the norm will shift back towards convenience. Although many will still cook, takeout will play an increasingly vital role in restaurant offerings. It’s interesting to note that many restaurateurs were immigrants when I began this venture, and now their children are involved in the industry as well. I don’t foresee them leaving for careers on Wall Street or returning to medical school. This is their passion, and they will seek to innovate and generate revenue streams within the hospitality sector.

And when we think about the expense reductions that you've made so far in this quarter, I guess, obviously, a lot will just depend on where volume goes from here, but how do we think about as that, as things do open up and ramp back up, how to think about what kind of expenses will need to be added back in that ramp? And any help you can in kind of thinking through how to model that would be helpful.

Yes. Kelly, obviously, it's going to depend on the pace and level of ramp. But as volume increases, as our routes increase, we'll layer in the volume-driven variable costs ratably with, and then things like commissions will increase. So it will pick more of a natural kind of cadence as depending on the cadence of business, which we don't have a whole lot of visibility into right now.

Yes. Yes. I think you've heard it from the other calls we've all gotten down into the business at a deeper level. It was a chance to really understand as much as we understand our business, it really gave us insights on where we could be more efficient and what costs we really don't need to add back. And I think, again, you look for silver linings in such a nightmare. And I think Kelly, that's really, another part of the silver lining is that we'll be able to actually come back and operate leaner, smarter and be able to obviously come back to where we were in a more efficient fashion, understanding where our inefficiencies might have existed before. And obviously, business was growing 7% to 10%, and obviously, you always want to be as profitable as possible, but I think you always learn something when you're loaded to ground and you're in a situation where you've got to squeeze every penny. And I think as business comes on, I think we'll be smarter in how we add that cost.

Our next question comes from Ben Klieve of National Securities.

Just a couple of quick ones here. First, wondering if we can get a bit of granularity on the weekly improvements that you have described over the past few weeks. To what degree do you see the improved performance being attributable to your emerging Shop Like a Chef initiative versus improvement from your legacy business as restaurants begin to increasingly be able to take, to go and deliver the orders, things of that nature?

So Ben, thanks for the question. So just in terms of the cadence, the March 16 when everything fell off a cliff, we saw volume decrease as much as 60% to 70%. And then through April, you saw a gradual build to kind of a mid-30 to kind of 40%. And then as Chris mentioned, in the last couple of weeks, we've had days where we were in the high 40s or even a day or two at 50%. So that's been kind of the cadence that we've seen since March 16. And I'm sorry, what was the second part of your question?

Really, kind of, what is driving that? Is that the Shop Like a Chef initiative that's beginning to materialize? Or is that, is it largely attributable to your legacy customers that are ramping back up?

Yes. It was really materially driven by, as our customers, as Chris mentioned, started to open up for takeout and delivery and curbside service. Obviously, our Shop Like a Chef and our Allen Brothers steak retail business really grew, but was not the preponderance of that growth.

Got it. Perfect. And then lastly, can you discuss the growth initiatives in Texas and L.A.? How is the COVID-19 situation affecting those? Additionally, could you share your overall thoughts on the full-year CapEx, providing either quantitative data or at least directional insight into the CapEx number?

Yes. So we had originally guided in the kind of $40 million range with the bulk of that being in the second half of the year. We expected to build out the LA facility that we've invested in. Given the COVID-19 situation, we have temporarily delayed that. So we brought our guidance down. I think you'll see in our 10-Q to the kind of $10 million to $12 million range right now, and that's mainly it and maintenance CapEx and some, and about $3 million of CapEx that we actually had in the first quarter. So right now, we still plan to expand in L.A., but given the situation, it's temporarily on hold.

And that does conclude our question-and-answer session.

Well, thanks, everybody, for joining.

Ladies and gentlemen, that does conclude our call today. We do appreciate your participation. Have a great night. And at this time, you may disconnect. Thank you.