Group 1 - First Watch Restaurant Group, Inc. will host a fireside chat at Piper Sandler's Growth Frontiers Conference on September 10, 2025, at 3:30 PM ET in Nashville, Tennessee [1] - The fireside chat will be available for live webcast and will be archived on the company's investor relations website [2] - First Watch is recognized as the leading Daytime Dining concept, serving made-to-order breakfast, brunch, and lunch with a focus on fresh ingredients [3] Group 2 - The company's culinary philosophy, "Follow the Sun," features a chef-driven menu that rotates five times a year to highlight seasonal flavors [3] - First Watch has raised over $1.7 million through donations for every kid's meal served, supporting various community organizations [3] - The company operates more than 600 restaurants across 31 states and has received numerous awards for its breakfast and brunch offerings [3]

Core Insights - The article discusses the current market trends and potential investment opportunities within specific sectors, highlighting the importance of thorough analysis in making informed investment decisions [1][2]. Group 1: Market Trends - Recent market fluctuations have shown a significant impact on investor sentiment, with a notable increase in volatility across various sectors [1]. - Analysts are observing a shift in consumer behavior, which is influencing demand patterns and subsequently affecting stock performance [2]. Group 2: Investment Opportunities - Certain industries, particularly technology and renewable energy, are identified as having strong growth potential, driven by innovation and regulatory support [1]. - Companies that adapt quickly to changing market conditions and consumer preferences are likely to outperform their peers [2]. Group 3: Financial Performance - Financial reports indicate that several companies have exceeded earnings expectations, showcasing resilience in challenging economic environments [1]. - Key metrics such as revenue growth and profit margins are being closely monitored to assess the overall health of the sectors in question [2].

Core Insights - First Watch Restaurant Group reported Q2 2025 revenue of $307.9 million, slightly exceeding analyst expectations of $306.6 million, but diluted EPS of $0.03 fell short of the $0.05 estimate and declined from $0.14 in the prior year [1][2][5] Financial Performance - Revenue increased by 19.1% year-over-year from $258.6 million in Q2 2024 [2][5] - Same-restaurant sales growth was 3.5%, with a 2.0% rise in same-restaurant guest count [2][5] - Adjusted EBITDA was $30.4 million, down 13.9% from $35.3 million in Q2 2024 [2] - Restaurant-level operating profit margin decreased from 21.9% to 18.6% [2][7] Company Overview - First Watch operates a chain of sit-down restaurants focusing on breakfast, brunch, and lunch, with 600 locations across 31 states [3] - The company emphasizes fresh, made-to-order dishes and avoids microwaves and deep fryers [3] Strategic Initiatives - The company is pursuing aggressive growth through new restaurant openings and franchise acquisitions, aiming for over 2,200 locations in the U.S. [4][6] - Key strategies include a "Follow the Sun" menu philosophy, investment in digital ordering, and a culture focused on employee retention and guest satisfaction [4] Market Dynamics - Despite strong sales growth, the company faced significant cost inflation, leading to a drop in income from operations margin to 2.4% from 6.4% in the prior year [7] - High prices for commodity ingredients and increased labor costs contributed to margin pressures [7][10] Future Outlook - Management raised full-year adjusted EBITDA guidance to $119–123 million, anticipating revenue growth of about 20% for fiscal 2025 [11] - Same-restaurant sales growth is expected to be in the low single digits, with cost inflation anticipated to peak in Q2 and moderate thereafter [12]

Core Insights - First Watch Restaurant Group, Inc. (FWRG) reported revenue of $307.89 million for the quarter ended June 2025, reflecting a 19.1% increase year-over-year and a surprise of +0.55% over the Zacks Consensus Estimate of $306.19 million [1] - The company's EPS was $0.03, down from $0.14 in the same quarter last year, resulting in a -57.14% surprise compared to the consensus estimate of $0.07 [1] Financial Performance Metrics - Same-restaurant sales growth was 3.5%, exceeding the average estimate of 2.4% from four analysts [4] - Total system-wide restaurants reached 600, slightly above the average estimate of 596 [4] - Franchise-owned restaurants totaled 69, compared to the estimated 68 [4] - Company-owned restaurants numbered 531, surpassing the average estimate of 527 [4] - Franchise revenues were reported at $2.9 million, above the average estimate of $2.42 million, but represented a -6.4% year-over-year change [4] - Restaurant sales revenues were $304.98 million, exceeding the average estimate of $303.56 million, with a year-over-year increase of 19.4% [4] Stock Performance - Over the past month, shares of First Watch Restaurant Group have returned -1%, while the Zacks S&P 500 composite has seen a +1% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Company Performance - First Watch Restaurant Group, Inc. (FWRG) reported quarterly earnings of $0.03 per share, missing the Zacks Consensus Estimate of $0.07 per share, and down from $0.14 per share a year ago, representing an earnings surprise of -57.14% [1] - The company posted revenues of $307.89 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 0.55%, compared to year-ago revenues of $258.56 million [2] - Over the last four quarters, the company has not surpassed consensus EPS estimates, but has topped consensus revenue estimates two times [2] Stock Performance - First Watch Restaurant Group shares have lost about 7.4% since the beginning of the year, while the S&P 500 has gained 7.6% [3] - The current consensus EPS estimate for the coming quarter is $0.05 on revenues of $304.98 million, and $0.19 on revenues of $1.21 billion for the current fiscal year [7] Industry Outlook - The Zacks Industry Rank for Retail - Restaurants is currently in the top 41% of over 250 Zacks industries, indicating that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [8] - The estimate revisions trend for First Watch Restaurant Group was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, suggesting it is expected to perform in line with the market in the near future [6]

Financial Data and Key Metrics Changes - Total revenue for Q2 2025 was $307.9 million, an increase of 19.1% compared to the previous year [25] - Same restaurant sales growth was 3.5%, with same restaurant traffic growth of 2% [25][26] - Adjusted EBITDA decreased to $30.4 million, down $4.9 million from the previous year, with adjusted EBITDA margin declining to 9.9% from 13.7% [29] Business Line Data and Key Metrics Changes - The company opened 17 new system-wide restaurants in Q2, including 15 company-owned and 2 franchise-owned, bringing the total to 600 restaurants [30] - The acquisition of 40 franchise locations contributed approximately $7 million to revenue and $1 million to adjusted EBITDA [30] Market Data and Key Metrics Changes - The company reported positive same restaurant traffic growth in April, May, and June, with April being the best month in over two years [8][25] - The third-party delivery channel saw significant growth, with traffic increasing materially during Q2 [26] Company Strategy and Development Direction - First Watch aims to open 62 to 67 new locations in 2025, with a strong pipeline of over 130 new sites approved [10][32] - The company is focusing on enhancing customer experience through digital innovations and culinary offerings, including a seasonal menu that changes every ten weeks [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving positive traffic growth for the remainder of 2025, citing strong underlying trends and effective marketing strategies [8][30] - The company is lowering its commodity cost inflation guidance to 5% to 7%, down from high single digits, due to improved egg supply [33] Other Important Information - Labor and related expenses were 33.2% of sales, reflecting a 40 basis point increase from the previous year, driven by labor inflation and higher health benefit costs [28] - The company is committed to maintaining a culture of engagement and improving employee retention, with turnover rates below industry averages [21][22] Q&A Session Summary Question: Customer demographics and market expansion - Management indicated that the shift towards a younger customer base is due to expanding into new markets and effective outreach to younger generations [39][41] Question: Confidence in raised EBITDA outlook - The relief in egg costs and positive trends in same restaurant traffic provided confidence for raising the EBITDA outlook [47][49] Question: Pricing strategy and margin implications - The pricing strategy remains consistent, with adjustments made to offset permanent inflation rather than temporary increases [51][53] Question: Marketing tactics and traffic growth - Marketing efforts have been focused on core geographies, leading to tangible traction and increased customer frequency [58][61] Question: Impact of new restaurant openings on margins - New restaurants typically operate at lower margins initially, but their strong sales levels help offset this effect [113][114] Question: COGS performance amid inflation - The company managed to keep COGS lower than expected through effective management despite inflation pressures [117][119] Question: Drivers of top-line growth - Improvement was seen across all dayparts, indicating a positive consumer response to the company's hospitality and quality offerings [121][123]

Financial Performance - Total revenues increased by 191% to $3079 million compared to $2586 million in Q2 2024[23] - System-wide sales increased by 158% to $3462 million compared to $2990 million in Q2 2024[23] - Same-restaurant sales growth was 35%[23] - Same-restaurant traffic growth was 20%[23] - Restaurant level operating profit margin decreased to 186% compared to 219% in Q2 2024[23] - Net income decreased to $21 million or $003 per diluted share compared to $89 million or $014 per diluted share in Q2 2024[23] - Adjusted EBITDA decreased to $304 million compared to $353 million in Q2 2024[23] Expansion and Outlook - The company opened 17 system-wide restaurants and planned 1 closure resulting in 600 system-wide restaurants across 31 states[23] - The company anticipates total revenue growth of approximately 200% for fiscal year 2025[50] - The company projects Adjusted EBITDA in the range of $1190 million to $1230 million for fiscal year 2025[50]

[Part I - Financial Information](index=5&type=section&id=Part%20I%20-%20Financial%20Information) This section presents the company's unaudited financial statements and management's analysis of its financial condition and operational results [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited financial statements show increased assets and liabilities, revenue growth, but declining net income due to rising costs and interest expenses Consolidated Balance Sheet Highlights (as of June 29, 2025) | Account | June 29, 2025 ($ in thousands) | December 29, 2024 ($ in thousands) | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | 19,177 | 33,312 | ▼ -42.4% | | Total assets | 1,675,993 | 1,514,356 | ▲ 10.7% | | Long-term debt, net | 250,009 | 189,043 | ▲ 32.2% | | Total liabilities | 1,074,680 | 918,967 | ▲ 17.0% | | Total equity | 601,313 | 595,389 | ▲ 1.0% | Consolidated Statements of Operations Highlights | Metric | Thirteen Weeks Ended June 29, 2025 ($ in millions) | Thirteen Weeks Ended June 30, 2024 ($ in millions) | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenues | $307.9M | $258.6M | ▲ 19.1% | | Income from Operations | $7.3M | $16.4M | ▼ 55.5% | | Net Income | $2.1M | $8.9M | ▼ 76.4% | | Diluted EPS | $0.03 | $0.14 | ▼ 78.6% | | Metric | Twenty-Six Weeks Ended June 29, 2025 ($ in millions) | Twenty-Six Weeks Ended June 30, 2024 ($ in millions) | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenues | $590.1M | $501.0M | ▲ 17.8% | | Income from Operations | $8.4M | $28.7M | ▼ 70.7% | | Net Income | $1.3M | $16.1M | ▼ 92.1% | | Diluted EPS | $0.02 | $0.26 | ▼ 92.3% | Consolidated Statements of Cash Flows Highlights (Twenty-Six Weeks Ended) | Cash Flow Activity | June 29, 2025 ($ in thousands) | June 30, 2024 ($ in thousands) | Change | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | 59,570 | 56,893 | ▲ 4.7% | | Net cash used in investing activities | (132,849) | (135,355) | ▼ 1.9% | | Net cash provided by financing activities | 59,144 | 73,863 | ▼ 19.9% | | Net decrease in cash and cash equivalents | (14,135) | (4,599) | ▲ 207.4% | - During the second quarter of 2025, the company acquired 19 franchise-operated First Watch restaurants for a total cash purchase price of approximately **$56.2 million**[33](index=33&type=chunk)[34](index=34&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Revenue grew 19.1% driven by new restaurants and sales, but profitability declined due to 8.1% commodity and 3.9% wage inflation [Recent Developments and Business Trends](index=20&type=section&id=Recent%20Developments%20and%20Business%20Trends) Q2 2025 saw 17 new restaurants, 19.1% revenue growth, and positive same-restaurant traffic, but faced 8.1% commodity and 3.9% wage inflation Q2 2025 Key Performance Highlights (vs. Q2 2024) | Metric | Q2 2025 ($ in millions) | Q2 2024 ($ in millions) | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $307.9M | $258.6M | ▲ 19.1% | | System-wide Sales | $346.2M | $299.0M | ▲ 15.8% | | Same-restaurant Sales Growth | 3.5% | -0.3% | ▲ 3.8 p.p. | | Same-restaurant Traffic Growth | 2.0% | -4.0% | ▲ 6.0 p.p. | | Restaurant Level Operating Profit Margin* | 18.6% | 21.9% | ▼ 3.3 p.p. | | Adjusted EBITDA* | $30.4M | $35.3M | ▼ 14.0% | - The company experienced its first quarter of positive same-restaurant traffic growth (**2.0%**) since Q1 2023 and expects this positive trend to continue through the second half of the year[80](index=80&type=chunk) - Significant cost pressures were observed, with commodity inflation at **8.1%** in Q2 2025, driven by eggs, coffee, avocado, and bacon, with full-year commodity inflation now projected to be between **5% and 7%**, and restaurant-level wage inflation at **3.9%** in the quarter[81](index=81&type=chunk)[82](index=82&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) Q2 2025 restaurant sales grew 19.4% but operating costs, including food, beverage, and labor, increased as a percentage of sales, leading to a 55.5% decline in income from operations - Total restaurant sales increased by **19.4%** in Q2 2025, driven by **$30.1 million** from **55** new restaurants opened in the last year and **$7.0 million** from **19** acquired franchise locations[101](index=101&type=chunk) - Food and beverage costs rose to **23.6%** of restaurant sales in Q2 2025, up from **21.8%** in Q2 2024, primarily due to commodity inflation in eggs, coffee, bacon, and avocados[106](index=106&type=chunk) - Labor and other related expenses increased to **33.2%** of restaurant sales from **32.8%** in the prior year, driven by higher wage rates and health insurance costs[108](index=108&type=chunk) - Pre-opening expenses surged **91.8%** to **$3.5 million** in Q2 2025, reflecting an increase in pre-opening rent and a higher number of new restaurants under construction[118](index=118&type=chunk) - Net income for Q2 2025 fell sharply to **$2.1 million** from **$8.9 million** in Q2 2024, a decrease of **76.3%**, as rising operating and interest expenses outpaced revenue growth[137](index=137&type=chunk) [Non-GAAP Financial Measures Reconciliations](index=31&type=section&id=Non-GAAP%20Financial%20Measures%20Reconciliations) Reconciliations of non-GAAP measures show Q2 2025 Adjusted EBITDA at **$30.4 million** and Restaurant Level Operating Profit at **$56.8 million** Adjusted EBITDA Reconciliation (Thirteen Weeks Ended) | (in thousands) | June 29, 2025 | June 30, 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 | | Transaction expenses, net | 919 | 725 | | Other adjustments | 955 | 452 | | **Adjusted EBITDA** | **$30,379** | **$35,325** | Restaurant Level Operating Profit Reconciliation (Thirteen Weeks Ended) | (in thousands) | June 29, 2025 | June 30, 2024 | | :--- | :--- | :--- | | **Income from operations** | **$7,313** | **$16,447** | | Less: Franchise revenues | (2,904) | (3,104) | | Add: General and administrative expenses | 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** | [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) The company holds **$19.2 million** cash and **$87.4 million** credit availability, projecting **$148.0 million** to **$152.0 million** in 2025 capital expenditures - As of June 29, 2025, the company had **$19.2 million** in cash and cash equivalents and **$87.4 million** available under its **$125.0 million** revolving credit facility[150](index=150&type=chunk) - Estimated capital expenditures for 2025 are projected to be between **$148.0 million** and **$152.0 million**, excluding capital for franchise acquisitions[152](index=152&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Primary market risk is commodity price volatility, with 2025 inflation projected at **5% to 7%**, and no other material changes to market risk exposure - The company updated its full-year 2025 commodity inflation projection to a range of **5% to 7%**[158](index=158&type=chunk) [Item 4. Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were deemed ineffective due to ongoing material weaknesses in internal control over financial reporting, with remediation efforts underway - The CEO and CFO concluded that as of June 29, 2025, the company's disclosure controls and procedures were not effective due to ongoing material weaknesses in internal control over financial reporting[162](index=162&type=chunk)[164](index=164&type=chunk) - The company is implementing remediation efforts, which include: - Hiring new leadership with public company experience in finance, accounting, and IT - Augmenting staff with expertise in income tax, internal audit, and legal - Establishing formal policies for delegation of authority, account reconciliation, and journal entries - Designing and implementing enhanced period-end financial reporting controls and a formal management Disclosure Committee[165](index=165&type=chunk)[166](index=166&type=chunk) - Changes to internal controls were made during the quarter ended June 29, 2025, that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting as part of the remediation plan[168](index=168&type=chunk) [Part II - Other Information](index=36&type=section&id=Part%20II%20-%20Other%20Information) This section covers legal proceedings, risk factors, and other pertinent information not included in the financial statements [Item 1. Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course legal actions, not expecting a material adverse effect on financial position or operations - The company states that it does not currently believe any ongoing legal proceedings will have a material adverse effect on its financial condition or operations[170](index=170&type=chunk) [Item 1A. Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors have been reported since the 2024 Form 10-K disclosure - No material changes have been made to the risk factors disclosed in the 2024 Form 10-K[171](index=171&type=chunk) [Item 5. Other Information](index=36&type=section&id=Item%205.%20Other%20Information) Chief People Officer Laura Sorensen adopted a Rule 10b5-1 trading plan for up to **246,625 shares**, effective through June 30, 2026 - On June 11, 2025, Chief People Officer Laura Sorensen adopted a Rule 10b5-1 trading plan for the potential sale of up to **246,625** shares, valid through June 30, 2026[176](index=176&type=chunk)[177](index=177&type=chunk)

[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]