First Watch Restaurant Group, Inc. (FWRG) acquired three franchise-owned restaurants in Missouri, along with the development rights for the area. The move is expected to support the company’s growth strategy through increased control over operations and future expansion.The company will share more details about the transaction when it announces results for the fiscal first quarter ended March 30, 2025.FWRG Bolsters Portfolio With Latest AcquisitionsThe company added Lee’s Summit, West Columbia and South Col ...

Latest Franchisee Deal Underscores Long-term Growth StrategyBRADENTON, Fla., April 14, 2025 (GLOBE NEWSWIRE) -- First Watch Restaurant Group, Inc. (NASDAQ: FWRG) (together with its subsidiaries “First Watch” or the “Company”), the leading Daytime Dining concept serving breakfast, brunch and lunch, today announced the acquisition of three of its franchise-owned restaurants and corresponding development rights in Missouri. "We’re proud to welcome the Lee’s Summit, West Columbia and South Columbia restaurant t ...

First Watch Restaurant Group TodayFWRGFirst Watch Restaurant Group$18.42 +0.51 (+2.85%) 52-Week Range$12.90▼$25.98P/E Ratio55.82Price Target$22.45Add to WatchlistFirst Watch Restaurant Group NASDAQ: FWRG is a first-rate small-cap growth stock on track to triple in size over the next ten years. The company stands out among restaurants in the sit-down breakfast category, serving above-average-quality traditional breakfast alongside an eclectic menu of appetizing choices. Customer favorites include the biscui ...

Core Insights - The article discusses the expertise of a specialized equity analyst in the restaurant sector, focusing on various dining segments in the U.S. market [1] Company Analysis - The company, Goulart's Restaurant Stocks, is dedicated to analyzing restaurant stocks across multiple segments, including 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] Industry Engagement - The analyst actively participates in academic and journalistic initiatives, contributing to institutions that promote individual and economic freedom [1] - Previous contributions include columns on monetary policy, financial education, and financial modeling aimed at making these topics accessible to a broader audience [1]

Core Insights - First Watch Restaurant Group, Inc. (FWRG) reported mixed results for the fourth quarter of fiscal 2024, with earnings missing expectations while revenues exceeded them [1][2][3] Financial Performance - Adjusted earnings per share (EPS) for Q4 were 1 cent, missing the Zacks Consensus Estimate of 2 cents, and down from 4 cents in the prior-year quarter [2] - Quarterly revenues reached $263.3 million, beating the consensus mark by 0.4% and increasing by 7.6% year-over-year, driven by new restaurant openings and menu price increases [3] - Same-restaurant sales declined by 0.3%, and same-restaurant traffic decreased by 3% [3] - General and administrative expenses rose to $30.7 million from $30 million in the prior-year quarter [4] - Restaurant-level operating profit was $49 million, up from $46.8 million in the prior-year quarter, with a margin of 18.8%, down from 19.4% [4] - Net income for the quarter was $0.7 million, down from $2.6 million in the prior-year quarter, with a net income margin decline of 80 basis points to 0.3% [5] - Adjusted EBITDA for Q4 was $24.3 million, slightly down from $24.6 million in the prior-year quarter, with a margin decline of 90 basis points to 9.2% [5] Fiscal Year Highlights - Total revenues for fiscal 2024 were $1.02 billion, up from $891.6 million in fiscal 2023 [6] - Adjusted EBITDA for fiscal 2024 totaled $113.8 million, compared to $99.5 million in fiscal 2023 [6] - Diluted EPS for fiscal 2024 was 30 cents, down from 41 cents in the previous year [6] Future Outlook - For fiscal 2025, the company anticipates low single-digit growth in same-restaurant sales, with total revenues projected to increase by approximately 20% [7] - Adjusted EBITDA is expected to range between $124 million and $130 million [7] - Expansion plans include opening 59 to 64 new system-wide restaurants, with capital expenditures estimated between $150 million and $160 million [8] - The company reaffirms long-term financial targets, including low double-digit percentage unit growth and approximately 3.5% same-restaurant sales growth [9]

Core Insights - First Watch Restaurant Group, Inc. (FWRG) reported quarterly earnings of $0.01 per share, missing the Zacks Consensus Estimate of $0.02 per share, representing a 50% earnings surprise [1] - The company posted revenues of $263.29 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 0.43% and showing an increase from $244.63 million year-over-year [2] - The stock has lost approximately 2.7% since the beginning of the year, while the S&P 500 has declined by 4.5% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.11 on revenues of $278.05 million, and for the current fiscal year, it is $0.44 on revenues of $1.17 billion [7] - The estimate revisions trend for First Watch Restaurant Group is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6] Industry Context - The Retail - Restaurants industry is currently in the top 35% of over 250 Zacks industries, suggesting that companies in this sector are likely to outperform those in the bottom 50% [8] - Darden Restaurants, a peer in the same industry, is expected to report quarterly earnings of $2.82 per share, reflecting a year-over-year change of +7.6%, with revenues anticipated to be $3.22 billion, up 8.2% from the previous year [9][10]

Financial Data and Key Metrics Changes - Total revenue for Q4 2024 reached $263.3 million, marking a 16.8% increase compared to the previous year, excluding the impact of the 53rd week in 2023 [29] - Adjusted EBITDA surpassed $24.3 million, an increase of nearly $5 million from $19.6 million in the previous year, with an adjusted EBITDA margin of 9.2% compared to 8.7% in Q4 2023 [34] - Net income was $700,000, resulting in a net income margin of 0.3% [35] Business Line Data and Key Metrics Changes - The company opened 50 new restaurants in 2024, including 25 in Q4 alone, contributing to a total of 572 restaurants by the end of the quarter [11][35] - Same restaurant sales experienced a slight decline of 0.3%, with a same restaurant traffic decline of 3% [29] Market Data and Key Metrics Changes - In-restaurant dining traffic outperformed off-premise traffic in Q4, with improvements noted in the third-party delivery sales channel due to recent changes implemented at the start of 2025 [30][19] - The average new restaurant opened in 2024 is projected to generate third-year sales of $2.6 million, approximately 20% above the current system average unit volumes [12] Company Strategy and Development Direction - The company aims to reach 2,200 locations in the Continental US, emphasizing a disciplined approach to pricing based on long-term inflation trends rather than short-term commodity spikes [12][24] - A significant increase in marketing spend is planned for 2025, focusing on targeted marketing efforts to raise brand awareness and attract new customers [14][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth prospects, despite facing challenges such as commodity inflation and a competitive market environment [39][46] - The company anticipates positive same restaurant sales growth in low single digits for 2025, with total revenue growth expected to be around 20% [40] Other Important Information - Commodity inflation is expected to remain in the high single digits, driven by increases in key ingredients such as eggs, pork, coffee, and avocados [42] - The company plans to invest $150 million to $160 million in capital expenditures, excluding franchise acquisitions [43] Q&A Session Summary Question: Concerns about slowing macroeconomic conditions affecting traffic - Management noted that Q4 traffic was better than Q3, and Q1 to date traffic is better than Q4, indicating a positive trend [50] Question: Details on marketing spend and its impact - Management is excited about the results from marketing campaigns tested in 2024 and has incorporated successful strategies into the 2025 plan, which includes a significant increase in marketing spend [54] Question: Specifics on egg commodity inflation - Eggs and potatoes account for about 15% of the market basket, with current egg costs affected by the need to supplement supply due to diminished flocks [58][60] Question: Approach to value and customer recognition - Management emphasized the importance of communicating everyday value without deep discounts, which has resonated well with consumers based on testing results [70][72] Question: Traffic growth drivers - Management expects marketing efforts to drive both frequency of visits from existing customers and attract new guests [93] Question: Geographic performance and customer data usage - Management confirmed that customer data can be leveraged without a loyalty program, focusing on effective communication and engagement strategies [98]

Restaurant Operations and Growth - As of December 29, 2024, the company operated a total of 572 restaurants across 29 states, with 489 being company-owned and 83 franchise-owned[15]. - In 2024, the company opened 50 new system-wide restaurants across 19 states, continuing its growth strategy targeting low double-digit annual percentage growth[20]. - The company acquired 22 operating restaurants from franchisees in 2024 and has agreements to acquire an additional 19 restaurants[22]. - The company has a robust growth plan with over 100 new restaurants in the development pipeline, necessitating a strong talent bench for general managers[45]. - As of December 29, 2024, the company had 11 franchisees operating 83 restaurants, with franchisees obligated to develop 29 new restaurants[36]. - The total number of franchise-owned restaurants is 83, which represents approximately 14.5% of the total restaurant count[195]. - The company has no company-owned restaurants in states like Arkansas, Louisiana, and Utah, indicating potential areas for expansion[195]. - The company may consider further market expansion in states with fewer locations to enhance its footprint[195]. Financial Performance and Projections - The average unit volume per restaurant is projected to be $2.2 million in 2024, operating only 7.5 hours per day[14]. - Same-restaurant sales growth is critical for profitability, and the company may not achieve expected growth rates in future periods[82]. - The profitability of new restaurants is uncertain, with initial operating profit margins typically lower during the first 12 months of operation[88]. - The company recorded a charge of $0.8 million for estimated probable losses related to unclaimed gift card balances in Q4 2023[122]. - A payment of $0.7 million was made to the State of Delaware to resolve escheat matters concerning unclaimed gift card balances[122]. - The principal amount of the company's term loans outstanding was $193.8 million as of December 29, 2024, which could significantly affect its business and financial condition[163]. - The company does not anticipate paying any dividends on its common stock in the foreseeable future, as it intends to use cash flow for business growth[181]. - The company may require additional capital for growth, which may not be available on favorable terms, impacting expansion opportunities[187]. Customer Engagement and Marketing - The company has gathered customer information for over 17.9 million unique customer profiles, with 7.7 million opting for direct communication[28]. - The alcohol menu is offered in about 90% of system-wide restaurants as of December 29, 2024, reflecting the company's culinary innovation[28]. - Significant investments are being made in digital marketing initiatives to enhance customer awareness and loyalty across multiple digital channels[110]. - The company heavily relies on social media for marketing, necessitating continuous innovation to maintain customer engagement and brand relevance[110]. Employee and Workplace Culture - The company employs over 15,000 restaurant employees, with no employees part of a collective bargaining agreement[29]. - More than 85% of the 510 employees promoted to general manager at corporate-owned restaurants since 2022 were promoted from within[44]. - The "You First" Emergency Assistance Fund has provided over $1 million in tax-free hardship grants to employees since its inception[41]. - The company operates on a "No Nights Ever" model, allowing employees to enjoy evenings with family, contributing to improved work-life balance[39]. - Maintaining corporate culture is critical for the company's success, and failure to do so could adversely impact operations and employee retention[131]. - The restaurant industry is experiencing aggressive competition for talent, leading to wage inflation and pressure to improve employee benefits[130]. Supply Chain and Cost Management - The company is experiencing significant increases in food costs, particularly for eggs, coffee, and avocados, due to supply chain disruptions and climate impacts[85]. - There is a reliance on a small number of suppliers for a substantial amount of food and coffee, increasing vulnerability to supply chain disruptions[70]. - The company faced supply chain disruptions in January 2024 due to a strike at its broad-line distributor, leading to increased costs and delays in food deliveries[104]. - The company sources nearly all pork from two suppliers, eggs from one supplier, and coffee from one supplier, creating potential risks for supply shortages[105]. Regulatory and Compliance Risks - The company faces risks related to compliance with nutritional disclosure laws, which could be costly and time-consuming[72]. - The company is subject to evolving privacy laws, including the California Consumer Privacy Act, which may increase compliance costs and legal liabilities[117]. - The company is subject to extensive federal, state, and local laws and regulations, which could adversely affect its results of operations if not complied with[152]. - Legal and regulatory risks related to employment and labor laws could result in substantial damages or settlement costs[135]. Financial and Market Risks - The company may face adverse impacts from economic downturns, geopolitical tensions, and inflation affecting consumer discretionary spending[70]. - Increased labor and healthcare costs due to regulatory changes could adversely affect financial performance[72]. - The company faces risks related to "dram shop" statutes, which could result in significant judgments and settlements that may not be covered by insurance[151]. - The market price of the common stock could decline significantly due to substantial sales by Advent, affecting capital raising efforts[184]. - The company's quarterly results may fluctuate significantly due to seasonality, potentially impacting stock price and investor expectations[182]. Cybersecurity and Technology - The company maintains a cybersecurity program and conducts annual risk assessments, but any breaches could have a material adverse effect on operations[192]. - The rapid evolution of artificial intelligence technologies may impact customer expectations and increase cybersecurity risks[112]. - The company faces risks related to cybersecurity, with potential interruptions in operations due to system failures or breaches, which could materially affect financial results[111]. Franchise Operations and Challenges - The company has limited control over franchisee operations, which could result in inconsistencies in service and quality, impacting brand reputation[101]. - As of December 29, 2024, 15% of system-wide restaurants were franchised, indicating a reliance on franchisee performance for overall financial health[100]. - The company’s restaurants are geographically concentrated in the southeast U.S., which may pose challenges when entering new markets[76]. Strategic and Competitive Positioning - The restaurant industry is highly competitive, with the company positioned to compete effectively due to its focus on quality breakfast, brunch, and lunch experiences[52]. - Competition in the restaurant industry is intense, with many competitors having greater financial and marketing resources, which could adversely affect customer traffic and sales[92]. - The company emphasizes high food quality and safety, with regular inspections and a commitment to operational excellence[27].

Financial Results Announcement - First Watch Restaurant Group, Inc. announced preliminary operational results for Q4 and fiscal year ended December 29, 2024[4] - The press release detailing the financial results was issued on January 13, 2025[4] Company Classification - The company is classified as an emerging growth company under the Securities Exchange Act[3]

Core Insights - First Watch Restaurant Group achieved significant financial milestones in 2024, surpassing $1 billion in total revenues and $100 million in adjusted EBITDA for the first time [2][7] Q4 2024 Highlights - Total revenues increased by 7.6% to $263.3 million in Q4 2024 from $244.6 million in Q4 2023 [8] - System-wide sales rose by 2.6% to $304.1 million in Q4 2024 from $296.5 million in Q4 2023 [8] - Same-restaurant sales growth was negative 0.3%, with same-restaurant traffic growth at negative 3.0% [8] - Income from operations decreased to $3.9 million in Q4 2024 from $6.9 million in Q4 2023, with an income from operations margin of 1.5% [8] - Net income for Q4 2024 was $0.7 million compared to $2.6 million in Q4 2023 [8] Fiscal Year 2024 Highlights - Total revenues for the fiscal year 2024 increased by 13.9% to $1.0 billion from $891.6 million in 2023 [8] - System-wide sales increased to $1.2 billion from $1.1 billion in 2023 [8] - Same-restaurant sales growth was negative 0.5%, with same-restaurant traffic growth at negative 4.0% [8] - Net income decreased to $18.9 million from $25.4 million in 2023 [8] - Adjusted EBITDA increased to $113.8 million from $99.5 million in 2023 [8] Outlook for Fiscal Year 2025 - The company projects total revenues of $1.0 billion, representing a 13.9% increase, and system-wide sales of $1.2 billion, up 7.4% [7] - Expected net income is $18.9 million with adjusted EBITDA of $113.8 million [7] - Plans to open 50 system-wide restaurants across 19 states [7] Operational Metrics - Restaurant level operating profit increased to $201.8 million in 2024 from $175.7 million in 2023, with a restaurant level operating profit margin of 20.1% [8] - The company opened 50 system-wide restaurants in 2024, resulting in a total of 572 restaurants across 29 states [8]