[Q2 2025 Financial and Operational Highlights](index=1&type=section&id=Q2%202025%20Financial%20and%20Operational%20Highlights) This section provides an overview of the company's financial performance and operational achievements for the second quarter of fiscal year 2025, including revenue growth, profitability, and expansion [Second Quarter 2025 Performance](index=1&type=section&id=Second%20Quarter%202025%20Performance) The company reported a 19.1% increase in total revenues to $307.9 million and a 3.5% growth in same-restaurant sales for Q2 2025, though net income decreased significantly to $2.1 million from $8.9 million year-over-year, and Adjusted EBITDA also declined to $30.4 million, while expanding its footprint by opening 17 new system-wide restaurants, reaching a milestone of 600 total locations - CEO Chris Tomasso highlighted three consecutive quarters of sequential improvement in same-restaurant traffic and sales growth, expressing confidence in the company's momentum for the remainder of 2025[4](index=4&type=chunk) Q2 2025 Key Financial Metrics (vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $307.9M | $258.6M | +19.1% | | System-wide Sales | $346.2M | $299.0M | +15.8% | | Same-Restaurant Sales Growth | 3.5% | N/A | - | | Same-Restaurant Traffic Growth | 2.0% | N/A | - | | Net Income | $2.1M | $8.9M | -76.4% | | Adjusted EBITDA* | $30.4M | $35.3M | -13.9% | | Restaurant Level Operating Profit Margin* | 18.6% | 21.9% | -3.3pp | - The company opened **17 new system-wide restaurants** across 8 states, reaching a total of **600 restaurants** (531 company-owned and 69 franchise-owned)[2](index=2&type=chunk)[6](index=6&type=chunk) [Fiscal Year 2025 Outlook](index=2&type=section&id=Fiscal%20Year%202025%20Outlook) First Watch raised its full-year 2025 Adjusted EBITDA guidance to a range of $119.0 million to $123.0 million, while confirming its outlook for total revenue growth of approximately 20.0%, positive low-single-digit same-restaurant sales growth, and the opening of 59 to 64 new system-wide restaurants Updated & Confirmed FY 2025 Guidance | Guidance Metric | 2025 Outlook | Status | | :--- | :--- | :--- | | Adjusted EBITDA | $119.0M - $123.0M | **Raised** | | Total Revenue Growth | ~20.0% | Confirmed | | Same-Restaurant Sales Growth | Positive low-single digits | Confirmed | | Same-Restaurant Traffic Growth | Flat-to-slightly positive | Confirmed | | New System-Wide Restaurants (Net) | 59 to 64 | Confirmed | | Capital Expenditures | $148.0M - $152.0M | Confirmed | | Blended Tax Rate | 35.0% - 40.0% | Confirmed | - The guidance for total revenue growth and Adjusted EBITDA includes the net impact of completed acquisitions, contributing approximately **4% to revenue growth** and **$7 million to Adjusted EBITDA**[7](index=7&type=chunk)[8](index=8&type=chunk) [Financial Statements and Non-GAAP Reconciliations](index=6&type=section&id=Financial%20Statements%20and%20Non-GAAP%20Reconciliations) This section presents consolidated financial statements and reconciles non-GAAP measures, offering a comprehensive view of performance [Consolidated Statements of Operations](index=9&type=section&id=Consolidated%20Statements%20of%20Operations) The Consolidated Statement of Operations for Q2 2025 shows total revenues of $307.9 million, up from $258.6 million in Q2 2024, but increased operating costs, particularly in labor and food, led to a decrease in income from operations to $7.3 million from $16.4 million, resulting in a net income of $2.1 million, or $0.03 per diluted share Q2 2025 vs Q2 2024 Statement of Operations (in thousands) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total Revenues | $307,887 | $258,561 | | Total Operating Costs & Expenses | $300,574 | $242,114 | | Income from Operations | $7,313 | $16,447 | | Net Income | $2,106 | $8,900 | | Diluted EPS | $0.03 | $0.14 | YTD 2025 vs YTD 2024 Statement of Operations (in thousands) | Line Item | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | | Total Revenues | $590,127 | $501,010 | | Total Operating Costs & Expenses | $581,701 | $472,277 | | Income from Operations | $8,426 | $28,733 | | Net Income | $1,277 | $16,114 | | Diluted EPS | $0.02 | $0.26 | [Non-GAAP Financial Measures](index=6&type=section&id=Non-GAAP%20Financial%20Measures) The company utilizes non-GAAP measures such as Adjusted EBITDA and Restaurant Level Operating Profit to supplement its GAAP financial statements, believing these metrics provide better visibility into core operating performance by excluding non-recurring items or those not indicative of ongoing operations, and are used for internal evaluation and decision-making - Management uses non-GAAP measures to provide investors with additional visibility, facilitate analysis of ongoing business operations, and identify operational trends[21](index=21&type=chunk) - Adjusted EBITDA is used internally to evaluate management's performance for incentive compensation and to benchmark against competitors[22](index=22&type=chunk) - Restaurant Level Operating Profit is used to evaluate the performance and profitability of each restaurant, informing decisions on future spending and operations[29](index=29&type=chunk) [Reconciliation of Net Income to Adjusted EBITDA](index=7&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20EBITDA) This section provides a detailed reconciliation from the GAAP measure of Net Income to the non-GAAP measure of Adjusted EBITDA, where for Q2 2025, Net Income of $2.1 million was adjusted for items like depreciation ($18.1M), interest ($4.0M), and taxes ($1.5M), among others, to arrive at an Adjusted EBITDA of $30.4 million Reconciliation to Adjusted EBITDA (in thousands) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Net Income** | **$2,106** | **$8,900** | | Depreciation and amortization | $18,136 | $14,536 | | Interest expense | $4,003 | $3,381 | | Income tax expense | $1,470 | $4,879 | | Stock-based compensation | $2,790 | $2,452 | | Other Adjustments | $1,874 | $1,178 | | **Adjusted EBITDA** | **$30,379** | **$35,325** | [Reconciliation of Income from Operations to Restaurant Level Operating Profit](index=8&type=section&id=Reconciliation%20of%20Income%20from%20Operations%20to%20Restaurant%20Level%20Operating%20Profit) This section reconciles the GAAP measure of Income from Operations to the non-GAAP measure of Restaurant Level Operating Profit, where for Q2 2025, Income from Operations of $7.3 million was adjusted for items such as General & Administrative expenses ($33.2M) and depreciation ($18.1M) to calculate a Restaurant Level Operating Profit of $56.8 million Reconciliation to Restaurant Level Operating Profit (in thousands) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Income from operations** | **$7,313** | **$16,447** | | *Less:* Franchise revenues | ($2,904) | ($3,104) | | *Add:* General and administrative | $33,185 | $27,189 | | *Add:* Depreciation and amortization | $18,136 | $14,536 | | *Add:* Other Adjustments | $1,046 | $878 | | **Restaurant level operating profit** | **$56,776** | **$55,946** | [Supporting Information](index=3&type=section&id=Supporting%20Information) This section provides essential context, including key metric definitions, forward-looking statements, and conference call details [Definitions of Key Metrics](index=4&type=section&id=Definitions%20of%20Key%20Metrics) This section defines key performance indicators used throughout the report, clarifying terms such as "System-wide sales," "Same-restaurant sales growth" (based on restaurants open for 18+ months), "Same-restaurant traffic growth," and the non-GAAP measures "Adjusted EBITDA" and "Restaurant level operating profit" - Same-restaurant sales growth is defined as the percentage change in year-over-year sales for company-owned restaurants open for **18 months or longer** The comparable base for Q2 2025 consisted of **382 restaurants**[11](index=11&type=chunk) - Same-restaurant traffic growth measures the percentage change in customer counts compared to the prior year for the same comparable restaurant base[12](index=12&type=chunk) - Non-GAAP definitions are provided for Adjusted EBITDA, Restaurant level operating profit, and their respective margins[13](index=13&type=chunk)[14](index=14&type=chunk)[15](index=15&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This section contains a standard safe harbor statement, warning that the press release includes forward-looking statements subject to risks and uncertainties, and lists numerous potential risk factors, such as changes in consumer preferences, economic conditions, and competition, that could cause actual results to differ from projections - The report contains forward-looking statements that are subject to known and unknown risks and uncertainties[18](index=18&type=chunk) - Key risk factors include vulnerability to changes in consumer preferences, economic conditions like inflation, inability to successfully open new restaurants, changes in food costs, and competition[18](index=18&type=chunk) [Conference Call and Webcast Information](index=3&type=section&id=Conference%20Call%20and%20Webcast%20Information) The company announced it will host a conference call and webcast on August 5, 2025, at 8:00 AM ET to discuss the Q2 2025 financial results, with the call hosted by CEO Chris Tomasso and CFO Mel Hope - A conference call and webcast to discuss Q2 2025 financial results will be hosted by CEO Chris Tomasso and CFO Mel Hope on **August 5, 2025, at 8:00 AM ET**[9](index=9&type=chunk)

Core Insights - First Watch Restaurant Group, Inc. reported a total revenue increase of 19.1% to $307.9 million for Q2 2025 compared to $258.6 million in the same period of 2024 [6] - The company opened 17 new system-wide restaurants across 8 states, bringing the total to 600 restaurants [6][3] - Adjusted EBITDA for Q2 2025 was $30.4 million, a decrease from $35.3 million in Q2 2024 [6][3] Financial Performance - Net income for Q2 2025 was $2.1 million, or $0.03 per diluted share, down from $8.9 million, or $0.14 per diluted share in Q2 2024 [6][3] - System-wide sales increased by 15.8% to $346.2 million compared to $299.0 million in the same period of 2024 [6] - Same-restaurant sales growth was reported at 3.5%, with same-restaurant traffic growth at 2.0% [6] Operational Highlights - The company anticipates stronger profitability in the second half of 2025 and has raised its annual outlook for adjusted EBITDA [3] - The income from operations margin decreased to 2.4% from 6.4% in the same period of 2024 [6] - Restaurant level operating profit margin decreased to 18.6% from 21.9% in the same period of 2024 [6] Future Outlook - The company has updated its guidance for the fiscal year 2025, projecting adjusted EBITDA in the range of $119.0 million to $123.0 million [7] - Total revenue growth is expected to be approximately 20.0%, with plans to open 59 to 64 new system-wide restaurants [7]

Core Insights - First Watch Restaurant Group, Inc. plans to release its second quarter 2025 financial results on August 5, 2025, before the market opens [1] - A conference call and webcast will be held on the same day at 8:00 AM ET, hosted by the CEO and CFO [2] Company Overview - First Watch is a leading Daytime Dining concept specializing in made-to-order breakfast, brunch, and lunch using fresh ingredients [3] - The company follows a "Follow the Sun" culinary philosophy, rotating its chef-driven menu five times a year to highlight seasonal flavors [3] - First Watch has raised over $1.7 million for community causes through its donations for every kid's meal served [3] - The company operates more than 580 restaurants across 31 states and has received numerous awards for its breakfast and brunch offerings [3]

Summary of First Watch Restaurant Group (FWRG) FY Conference Call Company Overview - First Watch Restaurant Group is a leader in the breakfast and brunch segment, operating nearly 600 locations in the US with plans to expand to at least 2,200 locations, indicating significant growth potential [3][5][34]. Core Insights and Arguments - **Sales Guidance and Traffic Trends**: The company anticipates flat to slightly positive traffic in 2025, a performance not commonly expected among peers. This confidence stems from improved in-restaurant dining and a successful third-party delivery channel [5][6]. - **Marketing Strategy**: First Watch has enhanced its marketing efforts by utilizing a robust customer data warehouse, allowing for targeted advertising and direct customer engagement. This includes social media and geographic marketing strategies [9][10][14]. - **Margin Pressures**: The company has faced margin pressures due to inflation in key commodities such as eggs, avocados, bacon, and coffee. The management believes that most of this inflation is transitory and expects a return to normalcy in commodity prices [8][17][21][26]. - **New Store Performance**: New stores are performing approximately 10% above the system average, with expectations of achieving $2.6 million in annual unit volumes (AUVs) by their third year of operation [38][39]. Additional Important Points - **Third-Party Delivery Partnerships**: The company has optimized its relationships with third-party delivery platforms, which has contributed to a rebound in traffic after initial challenges [15][16]. - **Customer Loyalty Initiatives**: First Watch has implemented a "Surprise and Delight" program to enhance customer loyalty, which includes complimentary offerings to regular customers [28][29][32]. - **Operational Efficiency**: The introduction of Key Data Systems (KDS) has improved operational efficiency by aligning service and production timelines, contributing to better speed of service [45][46]. - **Consumer Sentiment**: The current consumer environment is described as fragile, with customers seeking more certainty and comfort in their dining experiences [51][52]. Conclusion First Watch Restaurant Group is positioned for growth with a strong marketing strategy, effective management of commodity costs, and a focus on enhancing customer loyalty and operational efficiency. The company remains optimistic about its future despite current market challenges.

Group 1 - The company specializes in analyzing restaurant stocks in the U.S. market, covering various segments such as QSR, fast casual, casual dining, fine dining, and family dining [1] - Advanced analytical models and specialized valuation techniques are employed to provide detailed insights and actionable strategies for investors [1] - The founder actively engages in academic and journalistic initiatives, contributing to institutions that promote individual and economic freedom [1] Group 2 - The company has no stock, option, or similar derivative position in any of the companies mentioned, nor plans to initiate any such positions within the next 72 hours [2] - The article expresses the author's own opinions and is not receiving compensation from any company mentioned [2] - Seeking Alpha clarifies that past performance is not a guarantee of future results and that no investment recommendations are being made [3]

Core Insights - First Watch Restaurant Group, Inc. (FWRG) reported revenue of $282.24 million for the quarter ended March 2025, reflecting a year-over-year increase of 16.4% [1] - The company's EPS was -$0.01, a decline from $0.12 in the same quarter last year, indicating a significant EPS surprise of -125.00% against the consensus estimate of $0.04 [1] - The reported revenue was slightly below the Zacks Consensus Estimate of $282.33 million, resulting in a surprise of -0.03% [1] Financial Performance Metrics - Same-restaurant sales growth was reported at 0.7%, which fell short of the average estimate of 1.4% by four analysts [4] - Total system-wide restaurants stood at 584, matching the average estimate from four analysts [4] - Franchise-owned restaurants totaled 86, slightly above the average estimate of 85 based on three analysts [4] - Company-owned restaurants numbered 498, just below the average estimate of 499 from three analysts [4] - Franchise revenues were reported at $2.65 million, below the average estimate of $2.74 million, representing a year-over-year decline of 15.7% [4] - Restaurant sales revenue was $279.59 million, aligning with the average estimate from four analysts, and showing a year-over-year increase of 16.8% [4] Stock Performance - Shares of First Watch Restaurant Group have returned +15.3% over the past month, outperforming the Zacks S&P 500 composite's +11.5% change [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Financial Performance - First Watch Restaurant Group reported a quarterly loss of $0.01 per share, missing the Zacks Consensus Estimate of $0.04, and down from earnings of $0.12 per share a year ago, representing an earnings surprise of -125% [1] - The company posted revenues of $282.24 million for the quarter ended March 2025, which was a 0.03% miss against the Zacks Consensus Estimate, compared to year-ago revenues of $242.45 million [2] - Over the last four quarters, the company has surpassed consensus EPS estimates just once and topped consensus revenue estimates two times [2] Market Performance - First Watch Restaurant Group shares have remained flat since the beginning of the year, contrasting with the S&P 500's decline of -3.9% [3] - The current consensus EPS estimate for the coming quarter is $0.16 on revenues of $304.63 million, and for the current fiscal year, it is $0.36 on revenues of $1.21 billion [7] Industry Outlook - The Retail - Restaurants industry, to which First Watch belongs, is currently ranked in the bottom 23% of over 250 Zacks industries, indicating potential challenges ahead [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact First Watch's stock performance [5]

Financial Data and Key Metrics Changes - Total first quarter revenues were $282.2 million, an increase of 16.4% compared to the previous year [23] - Same restaurant sales growth was positive at 0.7%, while same restaurant traffic was down 0.7% [23] - Adjusted EBITDA was $22.8 million, with adjusted EBITDA margins slipping to 8.1% from 11.8% [27][28] Business Line Data and Key Metrics Changes - The company opened 13 new system-wide restaurants during the quarter, including 10 company-owned and 3 franchise-owned [28] - New restaurants contributed significantly to revenue, with 33 new company-owned restaurants opened in the last two quarters [25][28] - Restaurant level operating profit margin was 16.5%, down from 20.8% in the same quarter last year [26] Market Data and Key Metrics Changes - The company experienced a return to positive traffic in January and March, with April showing the best monthly same restaurant traffic result in over two years [10][11] - The New England market is highlighted as a significant opportunity for expansion, with new locations performing above expectations [14] Company Strategy and Development Direction - The company is focused on growth through new restaurant openings and enhanced marketing efforts to drive brand awareness [9][12] - Strategic acquisitions of franchise restaurants in North and South Carolina and Missouri were completed to bolster presence in key states [15][16] - The company aims for double-digit percentage unit growth targets and a capital allocation strategy targeting cash on cash returns of around 35% [15] Management's Comments on Operating Environment and Future Outlook - Management noted that the macro environment remains volatile, with shifting expectations for consumer demand and input costs [9][10] - Despite current margin pressures from inflation and commodity costs, management believes these challenges are transitory [20][28] - The company maintains a positive outlook for the second half of 2025, expecting to sustain positive same restaurant traffic [33] Other Important Information - The company reported a net loss of $829,000 for the quarter [28] - Commodity inflation is expected to peak in the second quarter, with full-year expectations remaining in the high single digits [29][30] Q&A Session Summary Question: Can you expand on the comment that sales turned positive in March and then traffic turned positive in April? - Management noted that traffic trends improved sequentially, with positive dine-in traffic improvement for all four quarters last year [36][39] Question: What gives you confidence in driving traffic through third-party actions at a lower margin? - Management expressed confidence in the effectiveness of their strategies to drive traffic, despite cost pressures [40][41] Question: Can you discuss the learnings from increased media spend and engagement? - Management highlighted improved traffic trends as a result of their marketing efforts, with ongoing adjustments based on data [48][50] Question: What are your thoughts on commodity costs peaking in Q2? - Management explained that crop-related factors and the rebuilding of egg flocks contribute to the expectation of peaking commodity costs [51][52] Question: Can you elaborate on the marketing support across the system? - Almost the entire system is receiving marketing support, with elevated levels in certain markets [55][56] Question: How is the Florida market performing relative to the system? - Florida has outperformed the rest of the country, with continued new restaurant openings [96][97]

Financial Data and Key Metrics Changes - Total first quarter revenues were $282.2 million, an increase of 16.4% compared to the previous year [21] - Same restaurant sales growth was positive at 0.7%, while same restaurant traffic was down by 0.7% [21] - Adjusted EBITDA was $22.8 million, with adjusted EBITDA margins slipping to 8.1% from 11.8% [26][27] Business Line Data and Key Metrics Changes - The company opened 13 new system-wide restaurants during the quarter, including 10 company-owned and 3 franchise-owned [27] - Restaurant level operating profit margin decreased to 16.5% from 20.8% year-over-year [25] - Food and beverage expenses rose to 23.8% of sales compared to 21.8% in the same quarter last year, driven by commodity inflation [24] Market Data and Key Metrics Changes - The company reported a significant opportunity for expansion in the New England market, with successful openings in Massachusetts and plans for further locations in New Hampshire and Tennessee [12][13] - The Florida market has outperformed the rest of the country, with continued new restaurant openings [92] Company Strategy and Development Direction - The company is focused on growth through new restaurant openings and enhancing customer experiences, with a target of 59 to 64 net new system-wide restaurants for the year [30] - Strategic marketing efforts have been enhanced to drive brand awareness and customer engagement, particularly through digital and social media [10][11] - The company aims to maintain a long-term target of 18-20% on restaurant level operating profit margins [110] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the volatile macro environment affecting consumer demand and input costs, but expressed optimism about achieving positive traffic growth for the year [6][19] - The company expects commodity inflation to peak in the second quarter, with a forecast of high single-digit inflation for the full year [28][30] - Management remains confident in the brand's competitive positioning and customer service experience despite current margin pressures [19][90] Other Important Information - The company completed the acquisition of 16 restaurants in North and South Carolina and three in Missouri, enhancing its presence in key states [13] - The company is implementing a "surprise and delight" initiative to enhance customer loyalty, which has had a short-term impact on margins [17][74] Q&A Session Summary Question: Can you expand on the comment that sales turned positive in March and then traffic turned positive in April? - Management noted that traffic trends improved sequentially, with positive dine-in traffic improvement for all four quarters last year [36] Question: Can you talk more about the trade-off between driving traffic through third-party actions and other initiatives at a lower margin? - Management expressed confidence in the effectiveness of their strategies to drive traffic, despite cost pressures [38] Question: What are the learnings from the increased media spend and engagement following new media efforts? - Management reported positive results from the new media efforts, contributing to improved traffic trends [44] Question: Can you comment on the peak of commodity costs in Q2? - Management indicated that the peak is expected due to crop-related issues and rebuilding of egg flocks, but does not foresee this as a permanent issue [46] Question: How is the Florida market performing relative to the system? - Management stated that Florida has been performing well and continues to open new restaurants there [92]

Financial Performance - Total revenues increased by 164% to $28224 million in Q1 2025 from $242449 million in Q1 2024[23] - System-wide sales increased 115% to $3230 million in Q1 2025 from $289581 million in Q1 2024[23] - Same-restaurant sales growth was 07%[23] - Restaurant level operating profit margin decreased to 165% in Q1 2025 from 208% in Q1 2024[23] - Adjusted EBITDA decreased to $22753 million in Q1 2025 from $28590 million in Q1 2024[23] - Net loss was $(08) million in Q1 2025, compared to a net income of $7214 million in Q1 2024[23] Expansion and Outlook - The company opened 13 system-wide restaurants and closed 1, resulting in 584 system-wide restaurants across 30 states[23] - The company projects total revenue growth of approximately 200% for fiscal year 2025[51] - The company anticipates opening 59 to 64 new system-wide restaurants, net of 3 company-owned closures[51] - Adjusted EBITDA is projected to be in the range of $1140 million to $1190 million[51]